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LOAN AGREEMENT
 
 
Floating Rate
 
 
Between
 
 
DESERT RIDGE RESORT, LLC,
 
 
as Borrower,
 
 
and
 
 
BARCLAYS CAPITAL REAL ESTATE INC.,
 
 
as Lender
 
 
Dated as of June 15, 2005
 

 

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                                                  TABLE OF CONTENTS
 

   
Page
 
ARTICLE 1
         
DEFINED TERMS AND CONSTRUCTION GUIDELINES
       
Section 1.01
Defined Terms
1
Section 1.02
General Construction
27
       
ARTICLE 2
         
MAXIMUM LOAN AMOUNT; PAYMNET TERMS; ADVANCES
       
Section 2.01
Commitment to Lend
28
Section 2.02
Calculation of Interest
28
Section 2.03
Payment of Principal and Interest
30
Section 2.04
Payments Generally
31
Section 2.05
Prepayment Rights
32
Section 2.06
Intentionally Omitted
34
Section 2.07
Interest Rate Cap/Hedge
34
       
ARTICLE 3
         
CASH MANGEMENT
       
Section 3.01
Marriott FF&E Reserve Account
35
Section 3.02
Deposits into Marriott FF&E Reserve Account
37
Section 3.03
Deposits into Cash Management Account
37
        Section 3.04
Other Deposits into the Cash Management Account
37
        Section 3.05
Other Deposits into Lockbox Account
37
Section 3.06
Transfers to Cash Management Account
38
 
ARTICLE 4
         
ESCROW AND RESERVE REQUIREMENTS
       
Section 4.01
Creation and Maintenance of Escrows and Reserves
38
Section 4.02
Tax Escrow
41
Section 4.03
Insurance Premium Escrow
41
Section 4.04
Ground Rents Escrow
42
Section 4.05
FF&E Reserve Account
43
Section 4.06
Advance Bookings Reserve Account
44
Section 4.07
Seasonal Reserve Account
45

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Section 4.08
Waiver of Certain Reserve Requirements
46
Section 4.09
Debt Service Reserve Account
46
Section 4.10
Cash Trap Reserve Account
46
     
 
ARTICLE 5
     
COMPLETION OF REPAIRS RELATED TO RESERVE ACCOUNTS;
CONDITIONS TO RELEASE OF FUNDS
 
Section 5.01
Conditions Precedent to Disbursements from Certain Reserve Accounts
47
Section 5.02
Wavier of Conditions to Disbursement
49
Section 5.03
Intentionally Omitted
49
Section 5.04
Performance of Reserve Items
49
     
ARTICLE 6
     
LOAN SECURITY AND RELATED OBLIGATIONS
     
Section 6.01
Security Instrument; Assignment of Lease and Receipts
50
Section 6.02
Assignment of Property Management Contracts
50
Section 6.03
Assignment of Rate Cap Agreement
50
Section 6.04
Assignment of Operating Agreements
50
Section 6.05
Pledge as Property; Grant of Security Interest
50
Section 6.06
Environmental Indemnity Agreement
51
Section 6.07
Guaranty
51
Section 6.08
Assignment of Lease and Receipts
51
     
ARTICLE 7
     
SINGLE PURPOSE ENTITY REQUIREMENTS
     
Section 7.01
Commitment to be a Single Purpose Entity
51
Section 7.02
Definition of Single Purpose Entity
54
     
ARTICLE 8
     
REPRESENTATIONS AND WARRANTIES
     
Section 8.01
Organization; Legal Status
57
Section 8.02
Power; Authorization; Enforceable Obligations
57
Section 8.03
No Legal Conflicts
57
Section 8.04
No Litigation
58
Section 8.05
Business Purpose of Loan
58
Section 8.06
Warranty of Title
58
Section 8.07
Condition of the Property
58
Section 8.08
No Condemnation
58
Section 8.09
Requirements of Law
58

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Section 8.10
Operating Permits
59
Section 8.11
Separate Tax Lot
59
Section 8.12
Flood Zone
59
Section 8.13
Adequate Utilities
59
Section 8.14
Public Access
59
Section 8.15
Boundaries
59
Section 8.16
Mechanic Liens
59
Section 8.17
Assessments
59
Section 8.18
Insurance
59
Section 8.19
Leases
60
Section 8.20
Management Agreement
60
Section 8.21
Financial Condition
60
Section 8.22
Taxes
60
Section 8.23
No Foreign Person
61
Section 8.24
Federal Regulations
61
Section 8.25
Investment Company Act; Other Regulations
61
Section 8.26
ERISA
61
Section 8.27
No Illegal Activity as Source of Funds
61
Section 8.28
Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money
Laundering Laws
61
Section 8.29
Brokers and Financial Advisors
61
Section 8.30
Complete Disclosure; No Material Change in Facts or Circumstances
62
Section 8.31
Ground Lease
62
Section 8.32
Survival
63
     
ARTICLE 9
       
BORROWER COVENANTS
       
Section 9.01
Payment of Debt and Performance of Obligations
63
Section 9.02
Payment of Taxes and Other Lienable Charges
63
Section 9.03
Insurance
64
Section 9.04
Obligations upon Condemnation or Casualty
68
Section 9.05
Inspections and Right to Entry
73
Section 9.06
Leases and Receipts
73
Section 9.07
Use of Property
74
Section 9.08
Maintenance of Property; Required Repairs
74
Section 9.09
Waste
75
Section 9.10
Compliance with Laws
75
Section 9.11
Financial Reports, Books and Records
75
Section 9.12
Performance of the Material Operating Agreements
78
Section 9.13
Existence; Change of Name; Location as a Registered Organization
78
Section 9.14
Property Management
78
Section 9.15
ERISA
79
 
Section 9.16
Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money
Laundering Laws
79

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Section 9.17
Requirements of Law; Permits, Licenses, Approvals
80
Section 9.18
Name
80
Section 9.19
Liquidity Facility
80
Section 9.20
Permitted Encumbrance Documents
81
Section 9.21
Ground Lease Covenants
81
     
ARTICLE 10
     
NO TRANSFERS OR ENCUMBRANCES; DUE ON SALE
     
Section 10.01
Prohibition Against Transfers
82
Section 10.02
Lender Approval
82
Section 10.03
Permitted Mezzanine Financing
83
Section 10.04
Other Releases of the Property
83
Section 10.05
Anti-Terrorism Compliance
83
     
ARTICLE 11
     
EVENTS OF DEFAULT; REMEDIES
     
Section 11.01
Events of Default
84
Section 11.02
Remedies
86
Section 11.03
Cumulative Remedies; No waiver; Other Security
88
Section 11.04
Enforcement Costs
88
Section 11.05
Application of Proceeds
89
     
ARTICLE 12
     
NONRECOURSE-LIMITATIONS ON PERSONAL LIABILITY
     
Section 12.01
Nonrecourse Obligation
89
Section 12.02
Personal Liability for Certain Losses
89
Section 12.03
Full Personal Liability
90
Section 12.04
No Impairment
90
Section 12.05
No Waiver of Certain Rights
91
     
ARTICLE 13
     
INDEMNIFICATION
     
Section 13.01
Indemnification Against Claims
91
Section 13.02
Duty to Defend
91

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ARTICLE 14
     
SUBROGATION; NO USURY VIOLATIONS
     
Section 14.01
Subrogation
92
Section 14.02
No Usury
92
ARTICLE 15
     
SALE OR SECURITIZATION OF LOAN
     
Section 15.01
Splitting the Note
92
Section 15.02
Lender’s Rights to Sell or Securitize
93
Section 15.03
Dissemination of Information
94
Section 15.04
Securitization Indemnification
94
Section 15.05
Additional Financial Information for Large Loans
95
     
ARTICLE 16
     
BORROWER’S FURTHER ACTS AND ASSURANCES;
PAYMENT OF SECURITY; RECORDING CHARGES
     
Section 16.01
Further Acts
96
Section 16.02
Replacement Documents
96
Section 16.03
Borrower Estoppel Certificates
96
Section 16.04
Recording Costs
97
Section 16.05
Intentionally Deleted
97
Section 16.06
Certain Additional Rights of Lender (VCOC)
98
     
ARTICLE 17
     
LENDER CONSENT
     
Section 17.01
No Joint Venture; No Third Party Beneficiaries
98
Section 17.02
Lender Approval
99
Section 17.03
Performance at Borrower’s Expense
99

ARTICLE 18
     
MISCELLANEOUS PROVISONS
     
Section 18.01
Notices
99
Section 18.02
Entire Agreement; Modifications; Time of Essence
101
Section 18.03
Binding Effect; Joint and Several Obligations
101
Section 18.04
Duplicate Originals; Counterparts
101
Section 18.05
Unenforceable Provisions
101

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Section 18.06
Governing Law
101
Section 18.07
Consent to Jurisdiction
102
Section 18.08
WAIVER OF TRAIL BY JURY
103
     
Exhibit A
Compliance Certificate Form
 
Exhibit B
Description of Ground Lease
 
Exhibit C
Prepayment Percentages
 
Exhibit D
Organizational Chart
 
Exhibit E
Rent Roll
 
Exhibit F
Required Repairs
 
Exhibit G
List of Qualified Managers
 
Exhibit H
NOT USED
 
Exhibit I
Certificate of Executive Officer of Borrower
 
Exhibit J
NOT USED
 
Exhibit K
NOT USED
 
Exhibit L
Exceptions to Representations and Warranties
 
Exhibit M
NOT USED
 
Exhibit N
Form of Lockbox Agreement
 
Exhibit O
Liquidity Facility Documents
 

 

 

 

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LOAN AGREEMENT
 
Floating Rate
 
THIS AGREEMENT (this “Agreement”) is made as of this 15th day of June, 2005 by
and among DESERT RIDGE RESORT, LLC, a Delaware limited liability company
(“Borrower”), as borrower and BARCLAYS CAPITAL REAL ESTATE INC., a Delaware
corporation (together with its successors and assigns, “Lender”), as lender.
 
Background
 
Borrower desires to obtain a commercial mortgage loan from Lender in the
original principal amount of Two Hundred Seventy Million and No/100ths Dollars
($270,000,000.00) in lawful money of the United States of America. Lender is
willing to make such loan to Borrower on the terms and conditions set forth in
this Agreement.
 
Agreement
 
NOW, THEREFORE, in consideration of such loan and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, Borrower and Lender agree as follows:
 
ARTICLE 1  
 

 
DEFINED TERMS AND CONSTRUCTION GUIDELINES
 
Section 1.01  Defined Terms.  The following terms have the meanings set forth
below:
 
  “Acceptable Management Period” means any period during which Acceptable
Manager is managing the Property pursuant to the Property Management Contracts.
 
  “Acceptable Manager” shall mean (i) any manager listed on Exhibit G, provided
each such property manager continues to be (A) Controlled by substantially the
same Persons Controlling such property manager as of the Closing Date (or if
such Property Manager is a publicly traded company, such Property Manager
continues to be publicly traded on an established securities market) and (B) and
such Property Manager is managing hotels of quality and at least 90% of the
number of hotels and rooms equal to or exceeding the hotels and rooms such
Property Manager managed as of the Closing Date and (ii) any Affiliate
Controlled by any of the foregoing Persons.
 
  “Accounting Period” means (a) if a Marriott Management Period no longer
exists, each calendar month, and (b) if a Marriott Management Period exists,
each of the four (4)-week accounting periods having the same beginning and
ending dates as Property Manager’s four (4)-week accounting periods, except that
an Accounting Period may occasionally contain five (5) weeks when necessary to
conform the Property Manager’s accounting system to the calendar; there are
thirteen Accounting Periods in a Fiscal Year of Property Manager.

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  “Act” means the Delaware Limited Liability Company Act, Section 18-101 et.
seq. of the Delaware Code, as amended from time to time.
 
  “Additional Mezzanine Financing” shall have the meaning set forth in Section
9.19(b).
 
  “Adjustment Rights” means, collectively, Lender’s rights under this Agreement
to (a) change the Payment Due Date to a different calendar day pursuant to
Section 2.03(b), (b) change the Interest Rate Adjustment Date to a different day
pursuant to the definition of “Interest Rate Adjustment Date” and (c) change the
Interest Period to reflect any change made to the Payment Due Date pursuant to
Section 2.03(b).
 
  “Advance Bookings” means all commitments, reservations and agreements
regarding future use of guest rooms, banquet rooms, conference rooms and other
facilities constituting part of the Property.
 
  “Advance Bookings Deposits” means all deposits, advance payments and similar
items for Advance Bookings.
 
  “Advance Bookings Reserve Account” means a sub-account of the Cash Management
Account held by Lender, or Lender’s designee, in which the Advance Bookings
Reserve Funds will be held, which shall not constitute a trust fund, all as more
specifically set forth in Section 4.06 and subject to Section 4.08.
 
  “Advance Bookings Reserve Funds” has the meaning set forth in Section 4.06(a)
hereof, subject to adjustment as set forth in Sections 4.06(b) and (c) hereof.
 
  “Advance Bookings Reserve Statement” means the quarterly statement delivered
pursuant to Section 9.11(a)(ii)(D) hereof and setting forth all the then
unearned or otherwise refundable Advance Bookings Deposits made with respect to
the Property.
 
  “Affiliate” of any Person means (a) any other Person which (i) directly or
indirectly, owns more than forty-nine percent (49%) of the beneficial or equity
interests in such Person or (ii) directly or indirectly, is in Control of, is
Controlled by or is under common Control with, such Person; (b) any other Person
who is a director or officer of (i) such Person, (ii) any subsidiary of such
Person, or (iii) any Person described in clause (a) above; or (c) any
corporation, limited liability company or partnership which has as a director
any Person described in clause (b) above; provided that notwithstanding the
foregoing, the Marriott Entities and the CNL Entities are not Affiliates of each
other under the Loan Documents by reason of clauses (b) and (c) above.
 
  “Aggregate Debt Service” means, with respect to any particular period of time,
the aggregate debt service of the Loan and the Mezzanine Loan calculated using
the Loan Constant.
 
  “Annual Period” means any period of four (4) consecutive Fiscal Quarters.

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  “Anti-Terrorism Laws” shall mean, collectively, (a) the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (Public Law 107 56) (The USA PATRIOT Act),
(b) Executive Order No. 13224 on Terrorist Financing, effective September 24,
2001, and relating to Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism, (c) the
International Emergency Economic Power Act, 50 U.S.C. §1701 et seq. and (d) all
other Legal Requirements relating to money laundering or terrorism.
 
  “Applicable Interest Rate” has the meaning set forth in Section 2.02(b)
hereof. It is the interest rate from time to time accruing on the Loan.
 
  “Approved Budget” has the meaning set forth in Section 9.11(a)(v) hereof.
 
  “Assignment of Interest Rate Cap” means the Collateral Assignment of Interest
Rate Protection Agreement dated as of the Closing Date executed by Borrower in
favor of Lender, assigning to Lender all of Borrower’s rights, title and
interest in and to the Rate Cap Agreement.
 
  “Assignment of Leases and Receipts” means the Assignment of Leases and
Receipts dated as of the Closing Date executed by Borrower in favor of Lender,
assigning to Lender all of Borrower’s right, title and interest in and to the
Leases and the Receipts with respect to the Property.
 
  “Assignment of Property Management Contracts” means the Assignment of
Management Agreements and Other Contracts, Licenses and Permits dated as of the
Closing Date, with respect to the Property Management Contracts, executed by
Borrower and Property Manager in favor of Lender or, as applicable, any other
Assignment of Property Management Contract executed pursuant to Section 9.14
hereof.
 
  “Bankruptcy Code” means the Bankruptcy Reform Act of 1978 codified as 11
U.S.C. §101 et seq., and the regulations issued thereunder, both as previously
and hereafter modified from time to time.
 
  “Barclays” has the meaning set forth in Section 16.06 hereof.
 
  “Borrower” has the meaning in the introductory paragraph of this Agreement.
 
  “Business Day” or “business day” means any day other than a Saturday, a
Sunday, or days when Federal Banks located in the State of New York are closed
for a legal holiday or by government directive. When used with respect to the
Interest Rate Adjustment Date, “Business Day” shall mean a day on which banks
are open for dealing in foreign currency and exchange in London and New York
City.
 
  “Case Goods” shall mean furniture and furnishings used in the Property,
including, without limitation: chairs, beds, chests, headboards, desks, lamps,
tables, television sets, mirrors, pictures, wall decorations and similar items.

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  “Cash Flow Available for Debt Service” means, for a specified period: (i) if
such period ends during a Marriott Management Period, the aggregate Operating
Profit (as defined in each of the Property Management Contracts) for such
period; and (ii) if such period does not end during a Marriott Management Period
(a) Operating Income, minus (b) Operating Expenses, as determined in accordance
with the Uniform System of Accounts, and minus (c) without duplication, amounts
required to be deposited into the FF&E Reserve Account in accordance with this
Agreement.
 
  “Cash Management Account” shall have the meaning set forth in the Cash
Management Agreement.
 
  “Cash Management Agreement” means the Cash Management Agreement dated as of
the Closing Date between Borrower, Property Manager and Lender.
 
  “Cash Trap Period” means any period during which the Cash Flow Available for
Debt Service (calculated by Lender each month based on a trailing twelve month
basis based on Borrower’s financial statements required to be delivered
hereunder) is less than the applicable Cash Trap Trigger Amount for two (2)
consecutive months.
 
  “Cash Trap Reserve Account” means a sub-account of the Cash Management Account
held by Lender, or Lender’s designee, pursuant to the Cash Management Agreement,
in which the Cash Trap Reserve Deposits will be held, which shall not constitute
a trust fund.
 
  “Cash Trap Reserve Deposits” shall have the meaning set forth in Section 4.10.
 
  “Cash Trap Termination Event” means if, after the occurrence of a Cash Trap
Period, the Cash Flow Available for Debt Service (calculated by Lender each
month based on a trailing twelve month basis based on Borrower’s financial
statements required to be delivered hereunder) is greater than the applicable
Cash Trap Trigger Amount for two (2) consecutive months.
 
  “Cash Trap Trigger Amount” means (a) during the period from and after the
Closing Date until the 23rd Payment Due Date, $23,500,000 and (b) from and after
the 23rd Payment Due Date until the Maturity Date, an amount equal to the
product of (i) outstanding principal balance of the Loan and the Mezzanine Loan
times (ii) the sum of the applicable LIBOR Strike Rate and the Margin times
(iii) 1.33, but, in no event, shall such amount be less than $27,000,000.
 
  “Casualty” means the occurrence of damage or destruction to the Property, or
any part thereof, by fire, flood, vandalism, windstorm, hurricane, earthquake,
acts of terrorism or any other casualty.
 
  “Closing Date” means June 15, 2005.
 
  “CNL” means CNL Hotels & Resorts, Inc., a Maryland corporation.

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  “CNL Entity” means any Person that is both (i) at least fifty-one percent
(51%) owned, directly or indirectly by CNL and (ii) Controlled by, Controlling
or under common Control with CNL.
 
  “CNL Guarantor” means CNL Hospitality Partners, LP, a Delaware limited
partnership.
 
  “Compliance Certificate” means a compliance certificate substantially in the
form of Exhibit A hereto, signed by a Responsible Officer of Borrower.
 
  “Condemnation” means the taking by any Governmental Authority of the Property
or any part thereof through eminent domain or otherwise (including, without
limitation, any transfer made in lieu of or in anticipation of the exercise of
such taking).
 
  “Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person whether
through ownership of voting securities, beneficial interests, by contract or
otherwise. The definition is to be construed to apply equally to variations of
the word “Control” including “Controlled,”“Controlling” or “Controlled by.”
 
  “Covered Disclosure Information” has the meaning set forth in Section 15.04
hereof.
 
  “Debt” means the aggregate of all principal and interest payments that accrue
or are due and payable in accordance with this Agreement, together with any
other amounts due under the Loan Documents. The terms “Debt” and “Loan” have the
same meaning whenever used in the Loan Documents.
 
  “Debt Service Coverage Constant Ratio” means, as to a specific period, the
ratio of (a) the Cash Flow Available for Debt Service, to (b) the Aggregate Debt
Service
 
  “Debt Service Reserve Account” means a sub-account of the Cash Management
Account held by Lender, or Lender’s designee, pursuant to the Cash Management
Agreement, in which the Debt Service Reserve Deposit will be held, which shall
not constitute a trust fund.
 
  “Debt Service Reserve Deposit” has the meaning set forth in Section 4.09(b)
hereof.
 
  “Default Rate” has the meaning set forth in Section 2.04(e) of this Agreement.
 
  “Disbursement Request” means a written request from Borrower delivered to
Lender, in a form reasonably acceptable to Lender, signed by a Responsible
Officer of Borrower and requesting Lender to disburse funds from a Reserve
Account. Each Disbursement Request shall describe in reasonable detail the use
of the funds requested by the Disbursement Request and shall have attached to
it, as applicable: (a) copies of invoices for all items or materials purchased
or services performed which are to be funded by the Disbursement Request, to the
extent available, and (b) copies of all permits, licenses and approvals, if any,
by any Governmental Authority confirming completion of the Reserve Items. If a
copy of an invoice is not available, Borrower shall be required to evidence, to
Lender’s reasonable satisfaction, the amounts expended for which reimbursement
is requested.

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  “Disclosure Documents” has the meaning set forth in Section 15.03 of this
Agreement.
 
  “DRRP” means Desert Ridge Resort Partners, LLC, a Delaware limited liability
company.
 
“Eligibility Requirements” shall mean, with respect to any Person, that such
Person (i) has total assets (in a name or under management) in excess of
$600,000,000 and (except with respect to a pension advisory firm or similar
fiduciary) capital/statutory surplus or shareholder’s equity of $250,000,000 and
(ii) is regularly engaged in the business of making or owning commercial real
estate loans or mezzanine loans or operating commercial mortgage properties.
 
  “Eligible Account” means a separate and identifiable account from all other
funds held by the holding institution that is either (a) an account or accounts
maintained with a federal or state-chartered depository institution or trust
company which complies with the definition of Eligible Institution or (b) a
segregated trust account or accounts maintained with the corporate trust
department of a federal or state-chartered depository institution or trust
company acting in its fiduciary capacity which, in the case of a state-chartered
depository institution or trust company is subject to regulations substantially
similar to 12 C.F.R. §9.10(b), having in either case a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal and state authority. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.
 
  “Eligible Institution” means (a) KeyBank, N.A., or (b) a federal or
state-chartered depository institution or trust company insured by the Federal
Deposit Insurance Corporation the short term unsecured debt obligations or
commercial paper of which are rated at least A-1 by S&P, P-1 by Moody’s
Investors Service, Inc. and F-1+ by Fitch, Inc. in the case of accounts in which
funds are held for thirty (30) days or less or, in the case of accounts in which
funds are held for more than thirty (30) days, the long term unsecured debt
obligations of which are rated at least “AA” from Fitch, Inc. and S&P and “Aa2”
from Moody’s Investors Service, Inc.
 
  “Environmental Indemnity” means the Environmental Indemnity Agreement dated as
of the Closing Date from Borrower and Guarantor to Lender.
 
  “Equity Interests” means (a) partnership interests (whether general or
limited) in an entity which is a partnership; (b) membership interests in an
entity which is a limited liability company; or (c) the shares or stock
interests in an entity which is a corporation.
 
  “ERISA” means the Employee Retirement Income Security Act of 1974, and the
regulations issued thereunder, all as amended or restated from time to time.
 
  “Event of Default” means any of the events specified in Section 11.01 hereof.

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  “Extension Fee” means, as applicable, an amount equal to one quarter of one
percent (0.25%) of the outstanding principal amount of the Loan as of the date
on which each Extension Term commences.
 
  “Extension Term” has the meaning set forth in Section 2.03(d) hereof.
 
  “FF&E” shall mean furniture, furnishings, fixtures, Soft Goods, Case Goods,
signage, audio-visual equipment, kitchen appliances, vehicles, carpeting and
equipment, including front desk and back-of-the house computer equipment, and
all other items of personal property (other than goods held for consumption) in
which Borrower or Lessee has any right, title or interest and customarily used
in connection with the operation of the Property and shall include, at any time
that the Property Management Contracts are in full force and effect, “FF&E” as
defined therein, but shall not include Fixed Asset Supplies or Software.
 
  “FF&E Expenditures” shall mean costs incurred in connection with (i) the
repair and replacement of FF&E, and (ii) at any time that the current Property
Management Contracts are in full force and effect, “Routine Capital
Expenditures” as defined therein or other expenditures to be made from the
Marriott FF&E Reserve Account.
 
  “FF&E Funds” has the meaning set forth in Section 4.05(b) hereof.
 
  “FF&E Reserve Account” means, at such time as a Marriott Management Period no
longer exists, a sub-account of the Cash Management Account held by Lender, or
Lender’s designee, in which the FF&E Funds will be held, which shall not
constitute a trust fund, all as more specifically set forth in Section 4.05 and
subject to Section 4.08. The FF&E Reserve Account does not include the Marriott
FF&E Reserve Account.
 
  “FF&E Work” shall mean repairs and replacements of FF&E performed in
accordance with the Approved Budget, the Property Management Contracts and, at
any time that a Marriott Management Period does not exist, this Agreement.
 
  “First Extended Maturity Date” has the meaning set forth in Section 2.03(d)
hereof.
 
  “First Extension Term” has the meaning set forth in Section 2.03(d) hereof.
 
  “Fiscal Quarter” means (a) if determined on a date during a Marriott
Management Period, each of the following four periods: (i) the period of the
first three Accounting Periods in a Fiscal Year of Property Manager; (ii) the
period of the fourth, fifth and sixth Accounting Periods in a Property Manager’s
Fiscal Year of Property Manager; (iii) the period of the seventh, eighth and
ninth Accounting Periods in a Fiscal Year of Property Manager; and (iv) the
period of the last four Accounting Periods in a Fiscal Year of Property Manager,
and (b) if determined on any other date, each calendar quarter ending on the
last day of March, June, September or December of each calendar year.
 
  “Fiscal Year of Property Manager” shall mean the Property Manager’s fiscal
year which, as of the Closing Date, ends at midnight on the Friday closest to
December 31 in each calendar year; the new Fiscal Year of Property Manager
begins on the Saturday immediately following said Friday.

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  “Fitch” means Fitch, Inc., and any successor thereto.
 
  “Fixed Asset Supplies” shall mean items included within “Property and
Equipment” under the Uniform System of Accounts including, but not limited to,
linen, china, glassware, tableware, uniforms, and similar items, whether used in
connection with public space or Guest Rooms.
 
  “GAAP” means generally accepted accounting principles in the United States of
America as in effect from time to time.
 
“Ground Lease” means those certain ground leases described on Exhibit B.
 
“Ground Lessor” shall mean the ground lessor or landlord under the Ground Lease.
 
“Ground Rents Escrow” means an account held by Lender, or Lender’s designee, in
which Borrower’s initial deposit for Ground Rents is made and the Monthly Ground
Rent Deposits will be held, which shall not constitute a trust fund.
 
  “Ground Rents” means all rents and other charges due under the Ground Lease.
 
  “Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any Person exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to such
government.
 
  “Guarantor” means collectively, the CNL Guarantor and the Marriott Guarantor,
each of which is executing the Guaranty as guarantor and the Environmental
Indemnity, as indemnitor.
 
  “Guaranty” means the Guaranty of Exceptions to Nonrecourse Liability dated as
of the Closing Date from Guarantor to Lender.
 
  “Improvements” has the meaning set forth in the Security Instrument.
 
  “Indemnified Claim” means the basis for the Indemnified Party’s claim for
indemnification under Article 13 hereof.
 
  “Indemnified Parties” means Lender, together with its successors and assigns,
any servicer of the Loan, any investor, or holder of a full or partial interest
in the Loan, any receiver or other fiduciary appointed in a foreclosure or other
proceeding under any Requirements of Law regarding creditors’ rights, any
officers, directors, shareholders, partners, members, employees, agents,
servants, representatives, contractors, subcontractors, Affiliates of any and
all of the foregoing, in all cases whether during the term of the Loan or as
part of, or following, a foreclosure of the Security Instrument.

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  “Independent Director” or “Independent Manager” means an individual who shall
not have been at the time of such individual’s initial appointment, and may not
have been at any time during the preceding five years, and shall not be at any
time while serving as an Independent Director of Borrower either (a) a
shareholder of, or an officer, director (except in his or her capacity as an
Independent Director of Borrower), trustee, attorney, counsel, partner or
employee of, Borrower or any its shareholders, partners, members, subsidiaries
or Affiliates, (b) a creditor of, customer of, or supplier to, Borrower or any
of its shareholders, partners, members, subsidiaries or Affiliates, (c) a person
or other entity Controlling or under common Control with any such shareholder,
officer, director, partner, member, employee, supplier, customer, or other
person in (a) or (b) above, or (d) a member of the immediate family of any such
shareholder, officer, director, partner, member, employee, supplier, customer,
or other person in (a) or (b) above. A natural person who satisfies the
foregoing definition other than subparagraph (b) shall not be disqualified from
serving as an Independent Director of Borrower, if such individual is an
Independent Director provided by a nationally-recognized company (it being
agreed that Global Securitization Services, LLC is approved) that provides
professional independent directors (a “Professional Independent Director”) and
other corporate services in the ordinary course of its business. A natural
person who otherwise satisfies the foregoing definition other than subparagraph
(a) by reason of being the independent director of a “special purpose entity”
affiliated with Borrower shall not be disqualified from serving as an
Independent Director of Borrower if such individual is either (i) a Professional
Independent Director or (ii) the fees that such individual earns from serving as
independent director of Affiliates of Borrower in any given year constitute in
the aggregate less than five percent (5%) of such individual’s annual income for
that year. Notwithstanding the immediately preceding sentence, an Independent
Director may not simultaneously serve as Independent Director of Borrower and
independent director of a special purpose entity that owns a direct or indirect
equity interest in Borrower, or a direct or indirect interest in any co-borrower
with Borrower. Without limiting the foregoing, an Independent Director of
Borrower shall not serve as an independent director or officer (or similar
capacity) of CNL Phoenix GP Corp., CNL DRR Investor LP, Desert Ridge Resort
Partners, LLC, DRR Junior Mezz, LLC, DRR Senior Mezz, LLC or DRR Tenant
Corporation. For purposes of this definition, a “special purpose entity” is an
entity, whose organizational documents contain restrictions on its activities
and impose requirements intended to preserve such entity’s separateness that are
substantially similar to the restrictions set forth in Article 7 hereof.
 
  “Initial Interest Period” means (i) if the Closing Date occurs on or before
the eighth (8th) calendar day of a calendar month, the period commencing on the
Closing Date and ending on (and including) the eighth (8th) day of the calendar
month in which the Closing Date occurs and (ii) if the Closing Date occurs on or
after the ninth (9th) day of a calendar month, the period commencing on the
Closing Date and ending on (and including) the eighth (8th) day of the following
calendar month.
 
“Institutional Lender” shall mean any Person reasonably acceptable to Lender in
all respects that is either (a) a real estate investment trust, bank, saving and
loan association, investment bank, insurance company, trust company, commercial
credit corporation, pension plan, pension fund or pension advisory firm, mutual
fund, government entity or plan, provided that any such Person referred to in
this clause (a) satisfies the Eligibility Requirements; (b) an investment
company, money management firm or “qualified institutional buyer” within the
meaning of Rule 144A under the Securities Act of 1933, as amended, or an
institutional “accredited investor” within the meaning of Regulation D under the
Securities Act of 1933, as amended, provided that any such Person referred to in
this clause (b) satisfies the Eligibility Requirements; (c) an institution
substantially similar to any of the foregoing entities described in clauses (a)
or (b) that satisfies the Eligibility Requirements; or (d) any entity controlled
by any of the entities described in clauses (a) or (c) above.

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  “Insurance Premiums” means the premiums for the insurance Borrower is required
to provide or cause to be provided pursuant to Section 9.03 hereof.
 
  “Insurance Premium Escrow Account” means a sub-account of the Cash Management
Account held by Lender, or Lender’s designee, in which the Monthly Insurance
Deposits will be held, all as more specifically set forth in Section 4.03 and
subject to Section 4.08.
 
  “Interest Period” means (a) for the first period hereunder, the Initial
Interest Period and (b) for each Interest Period thereafter commencing July 9,
2005, the period commencing on the ninth (9th) calendar day of each calendar
month and ending on (and including) the eighth (8th) calendar day of the
following calendar month. Each Interest Period as set forth in clause (b) above
shall be a full month and shall not be shortened by reason of any payment of the
Loan prior to the expiration of such Interest Period.
 
  “Interest Rate Adjustment Date” means, with respect to each Interest Period,
the date that is two (2) LIBOR Business Days prior to the fifteenth (15th)
calendar day of the calendar month in which such Interest Period commences;
provided, however, that Lender shall have the right, one time only, to change
the Interest Rate Adjustment Date to any other day upon at least ten (10) days’
notice to Borrower (in which event such change shall then be deemed effective)
and, if requested by Lender, Borrower shall promptly execute an amendment to
this Agreement to evidence such change.
 
  “Interest Rate Index” means the weekly average yield on United States Treasury
Securities adjusted to a constant maturity of one year, as made available by the
Federal Reserve Board forty-five (45) days prior to each Interest Rate
Adjustment Date.
 
  “Issuer Group” has the meaning set forth in Section 15.04 hereof.
 
  “Issuer Person” has the meaning set forth in Section 15.04 hereof.
 
  “Land” has the meaning set forth in the Security Instrument.
 
  “Lease” has the meaning set forth in the Security Instrument but excluding
temporary occupancy agreements for a term of thirty (30) days or less.
 
“Leasehold Estate” shall have the meaning set forth in the Security Agreement.
 
“Legal Requirements” shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting Borrower or the
Property or any part thereof or the construction, use, alteration or operation
thereof, or any part thereof, whether now or hereafter enacted and in force,
including, without limitation, the Americans with Disabilities Act of 1990, and
all permits, licenses and authorizations and regulations relating thereto, and
all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower, at any time in force
affecting the Property or any part thereof, including, without limitation, any
which may (i) require repairs, modifications or alterations in or to the
Property or any part thereof, or (ii) in any way limit the use and enjoyment
thereof.

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  “Lender” has the meaning in the introductory paragraph hereof.
 
  “Lessee” means DRR Tenant Corporation, a Delaware corporation.
 
  “LIBOR Business Day” shall mean a day upon which United States dollar deposits
may be dealt in on the London and the New York City interbank markets and
commercial banks and foreign exchange markets are open in London and New York
City.
 
  “LIBOR Rate” means, with respect to each Interest Period, the average of
London Interbank Offered Rates (in U.S. dollar deposits) for a term of one month
determined solely by Lender, rounded upwards to the nearest one hundredth of one
percent (.01%), as of each Interest Rate Adjustment Date. On each Interest Rate
Adjustment Date, Lender will obtain the close-of-business LIBOR Rate from “Page
3750” on the Telerate Service. If Telerate Service ceases publication or ceases
to publish the LIBOR Rate, Lender shall select a comparable publication to
determine the LIBOR Rate and provide notice thereof to Borrower. The LIBOR Rate
may or may not be the lowest rate based upon the market for U.S. dollar deposits
in the London Interbank Eurodollar Market at which Lender prices loans on the
date on which the LIBOR Rate is determined by Lender as set forth above.
 
  “LIBOR Rate Loan” means the Loan at any time in which the Applicable Interest
Rate is calculated at the LIBOR Rate plus the Margin in accordance with
Section 2.02(b).
 
  “LIBOR Strike Rate” means (a) 4.50% until the Maturity Date; (b) for each
Extension Term, a rate per annum that when added to the Margin it achieves a
Debt Service Coverage Constant Ratio of at least 1.33:1.0 (calculated as of the
commencement date of each Extension Term based on the most current financial
information provided by Borrower pursuant to Section 9.11).
 
  “Lien” means any mortgage, pledge, hypothecation, assignment, encumbrance,
lien (statutory or otherwise), security interest or other security agreement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, the filing of any financing statement
under the UCC or comparable law of any jurisdiction in respect of any of the
foregoing and a mechanics’ or materialman’s lien).
 
  “Liquidity Facility” means the obligations, liabilities and indebtedness set
forth in that certain Loan Agreement dated as of the date hereof, between DRRP,
as borrower and Marriott, as lender, as evidenced and secured by the loan
documents listed on Exhibit O as the same may be amended, supplemented or
modified from time to time.

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  “Liquidity Facility Lender” means the lender of the Liquidity Facility.
 
  “Loan” means the aggregate of all principal and interest payments that accrue
or are due and payable in accordance with this Agreement, together with any
other amounts due under the Loan Documents. The terms “Loan” and “Debt” have the
same meaning whenever used in the Loan Documents.
 
  “Loan Agreement” means this Agreement.
 
  “Loan Constant” means (a) 6.75% until the Maturity Date; (b) for each
Extension Term, a rate per annum equal to the newly calculated LIBOR Strike Rate
for such Extension Term plus the Margin.
 
  “Loan Documents” means, collectively, this Agreement, the Note, the Security
Instrument, the Assignment of Leases and Receipts, the Assignment of Property
Management Contracts, the Environmental Indemnity, the Guaranty, the Lockbox
Agreement (if any), the Marriott FF&E Account Control Agreement, the Cash
Management Agreement, the Assignment of Interest Rate Cap, the Rate Cap Provider
Consent and any and all other documents and agreements executed by or on behalf
of Borrower, Lessee or Guarantor in connection with the Loan, as each such
agreement may be modified, supplemented, consolidated, extended or reinstated
from time to time.
 
  “Lockbox Account” shall have the meaning set forth in Section 3.05.
 
  “Lockbox Agreement” shall have the meaning set forth in Section 3.05.
 
  “Losses” means any and all claims, suits, liabilities (including, without
limitation, strict liabilities and liabilities under federal and state
securities laws), actions, proceedings, obligations, debts, damages, losses,
costs, expenses, fines, penalties, charges, fees, judgments, awards, and amounts
paid in settlement of whatever kind or nature (including without limitation
reasonable legal fees and other costs of defense).
 
  “Margin” has the meaning set forth in Section 2.02(b) hereof.
 
  “Marriott” means Marriott International, Inc., a Delaware corporation.
 
  “Marriott Entity” means Marriott and any Person that is both (i) at least
fifty-one percent (51%) owned, directly or indirectly, by Marriott, and
(ii) Controlled by, Controlling or under Common Control with Marriott.
 
  “Marriott FF&E Account Bank” means Bank of America, N.A., or any replacement
Marriott FF&E account bank reasonably approved by Lender in advance in writing.
 
  “Marriott FF&E Account Control Agreement” means that certain Account Control
Agreement executed by Borrower, Lender, Property Manager and Marriott FF&E
Account Bank, or any replacement FF&E reserve account control agreement
reasonably approved by Lender in advance in writing.

--------------------------------------------------------------------------------

 
  “Marriott FF&E Reserve Account” means the Deposit Accounts (as defined in the
Marriott FF&E Account Control Agreement) maintained with Marriott FF&E Account
Bank, or any replacement FF&E reserve accounts reasonably approved by Lender in
advance in writing.
 
  “Marriott Guarantor” means Marriott Hotel Services, Inc., a Delaware
corporation or a substitute guarantor as expressly permitted pursuant to the
terms of the Guaranty and the Environmental Indemnity.
 
  “Marriott Management Period” means any period during which (a) Marriott is
managing the Property pursuant to the Property Management Contracts and (b) none
of the Property Management Contracts have been terminated pursuant to the terms
thereof.
 
  “Marriott SNDA” means that certain Subordination, Non-Disturbance and
Attornment Agreement dated the date hereof by and among Lender, Property Manager
and Borrower, relating to the Property Management Contracts.
 
  “Material Adverse Effect” means, with respect to Borrower and Lessee,
collectively, or the Property any circumstance, act, condition or event of
whatever nature (including any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding), whether singly or in
conjunction with any other then-existing event, act, condition circumstances,
whether or not related, in Lender’s reasonable judgment, a material adverse
change in, or a materially adverse effect upon (a) the business, operations,
prospects or financial condition of such Persons; (b) the ability of Borrower or
Lessee to perform its obligations under any Loan Document to which it is a
party; (c) the value or condition of the Property; (d) compliance of the
Property with any Requirements of Law; or (e) the validity, priority or
enforceability of any Loan Document or the liens, rights (including, without
limitation, recourse against the Property) or remedies of Lender hereunder or
thereunder.
 
  “Material Operating Agreements” means, collectively, (i) the Operating Lease;
(ii) that certain Integration Agreement, dated as of December 21, 2000, by and
among Borrower, Lessee and Property Manager, as amended by that certain First
Amendment to Integration Agreement dated as of April 26, 2004; (iii) that
certain Shared Services Agreement, dated as of December 31, 2004, by and between
Marriott Resorts Hospitality Corporation and Marriott Hotel Services, Inc.; and
(iv) that certain Golf Rights Agreement, dated as of December 21, 2000, by and
between Borrower and Marriott Ownership Resorts, Inc.
 
  “Maturity Date” has the meaning set forth in Section 2.03(c) hereof. If
Borrower has extended the Maturity Date in accordance with this Agreement,
references thereafter in this Agreement shall mean the Maturity Date as so
extended, unless the context otherwise requires.
 
  “Maximum Loan Amount” means the maximum principal amount of Two Hundred
Seventy Million and No/100ths Dollars ($270,000,000.00), in lawful money of the
United States of America, to be advanced to Borrower pursuant to this Agreement.
Reference in this Agreement to “Maximum Loan Amount” mean the maximum principal
amount, irrespective of actual principal amount outstanding or actually advanced
to Borrower during the term of the Loan.

--------------------------------------------------------------------------------

 
“Mezzanine Loan” means that certain loan from Mezzanine Lender to Mezzanine
Borrower in the original principal amount of Thirty One Million Five Hundred
Thousand and No/100ths Dollars ($31,500,000.00) made pursuant to a certain
Mezzanine Loan Agreement, dated as of the date hereof, between Mezzanine
Borrower and Mezzanine Lender.
 
“Mezzanine Lender” means Barclays Capital Real Estate Inc., a Delaware
corporation, together with its successors and assigns.
 
“Mezzanine Borrower” means Parent.
 
“Mezzanine Loan Agreement” means that certain Loan Agreement, dated as of the
date hereof, by and between Mezzanine Lender and Mezzanine Borrower.
 
“Mezzanine Loan Documents” mean the Loan Documents as defined in the Mezzanine
Loan Agreement.
 
  “Monthly Ground Rent Deposit” means, with respect to the specified period, an
amount equal to one-twelfth (1/12) of the Ground Rents that Lender determines
will be payable during the next ensuing twelve (12) months under the Ground
Lease.
 
  “Monthly Insurance Deposit” means, with respect to the specified period, an
amount equal to one-twelfth (1/12) of the Insurance Premiums that Lender
estimates will be payable during the next ensuing twelve (12) months, subject to
adjustment as set forth in Section 4.03(d) hereof.
 
  “Monthly Tax Deposit” means, with respect to the specified period, an amount
equal to one-twelfth (1/12) of the Taxes that Lender estimates will be payable
during the next ensuing twelve (12) months, subject to adjustment as set forth
in Section 4.02(d) hereof.
 
  “Moody’s” means Moody’s Investors Service, Inc., and any successor thereto.
 
  “Mortgage” means the Security Instrument.
 
  “Note” means the Promissory Note dated as of the Closing Date from Borrower to
the order of Lender in the original principal amount equal to the Maximum Loan
Amount.
 
  “Obligations” means the Loan, and all other obligations and liabilities of
Borrower to Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with the Loan the Loan Documents, whether on account of
principal, interest, fees, indemnities, costs, expenses (including, without
limitation, all reasonable fees and disbursements of legal counsel) or
otherwise.
 
  “OFAC List” means the list of specially designated nationals and blocked
persons subject to financial sanctions that is maintained by the U.S. Treasury
Department, Office of Foreign Assets Control and any other similar list
maintained by the U.S. Treasury Department, Office of Foreign Assets Control
pursuant to any Requirements of Law, including, without limitation, trade
embargo, economic sanctions, or other prohibitions imposed by Executive Order of
the President of the United States. The OFAC List is accessible through the
internet website www.treas.gov/ofac/t11sdn.pdf.

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  “Open Date” has the meaning set forth in Section 2.05(a) hereof.
 
  “Operating Agreements” has the meaning set forth in the Security Instrument,
but excluding the Property Management Contracts.
 
  “Operating Expenses” means all cash expenses actually incurred by or charged
by Borrower or Lessee (appropriately pro-rated for any expenses that, although
actually incurred in a particular period, also relate to other periods), with
respect to the ownership, operation, leasing and management of the Property in
the ordinary course of business, determined in accordance with the Uniform
System of Accounts, and adjusted by Lender to the extent necessary to reflect an
FF&E reserve deposit in an amount equal to actual FF&E reserve deposits for such
period (except that if a Marriott Management Period no longer exists, then the
greater of (a) actual FF&E reserve deposits for such period, or (b) or four and
one-half percent (4.5%) of Operating Income for such period). Operating Expenses
specifically exclude (1) capital expenditures, (2) depreciation, (3) payments
made in connection with the payment of the outstanding principal balance of the
Loan, (4) costs of Restoration following a Casualty or Condemnation, (5) funds
disbursed from any Reserve Account, and (6) any other non-cash items.
 
  “Operating Income” means all gross cash income, revenues and consideration
received or paid to or for the account or benefit of Borrower or Lessee
resulting from or attributable to the ownership and operation of the Property
determined in accordance with the Uniform System of Accounts and including, but
not limited to, Receipts, but excluding sales, use and occupancy or other taxes
on receipts required to be accounted for by Borrower Lessee or Property Manager
to any Governmental Authority, security deposits, refunds and uncollectible
accounts, proceeds of casualty insurance and Condemnation awards (other than
rental insurance or other loss of income insurance), income from the sale of
furniture, fixtures and equipment, any disbursements to or for the benefit of
Borrower of amounts from the Reserve Accounts established by this Agreement or
under the Property Management Agreements, any income or revenues from a sale,
refinancing, payment of rents more than one (1) month in advance, lease
termination payments, or payments from any other events not related to the
ordinary course of operations of the Property.
 
  “Operating Lease” means that certain Lease Agreement dated December 21, 2000
as amended by that certain First Amendment to Lease dated as of January 2, 2003
and as further amended by that certain Second Amendment to Lease dated as of the
date hereof, by and between Borrower, as landlord, and Lessee, as tenant, as
amended, and as the same may be further amended from time to time as permitted
under the terms of this Agreement.
 
  “Organizational Chart” means the chart attached hereto as Exhibit D which
shows all persons or entities having an ownership interest in Lessee and
Borrower.

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  “Other Charges” means all ground rents, maintenance charges, impositions
(other than Taxes) and similar charges (including, without limitation, vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining the Property), now or hereafter assessed or imposed against the
Property, or any part thereof, together with any penalties thereon.
 
  “Owner Agreement” means that certain Owner Agreement, by and among Borrower,
Lessee and Property Manager, dated as of December 21, 2000, as amended by that
certain First Amendment to Owner Agreement dated as of the date hereof, and as
may be further amended from time to time.
 
  “Parent” means DRR Senior Mezz, LLC, a Delaware limited liability company.
 
  “Payment Due Date” has the meaning set forth in Section 2.03(b) hereof. It is
the date that a regularly scheduled payment of interest is due.
 
  “Permitted Encumbrances” means only (a) the Liens and security interests
created in favor of Lender under the Loan Documents, (b) those exceptions shown
in the Title Insurance Policy, (c) Liens, if any, for Taxes imposed by any
Governmental Authority not yet due or delinquent, (d) Liens, if any, relating to
FF&E leases and security interests related to any financing of such FF&E, in
each case only to the extent permitted under Section 7.02(a)(vi)(c), only on the
applicable FF&E which is the subject of such lease or financing), (e) public,
utility or immaterial private easements which, individually or in the aggregate,
do not have a Material Adverse Effect, and (f) each other Lien which has been
approved in writing by Lender, which Liens and encumbrances referred to in
clause (e) above (without duplication of the materiality standard set forth in
clause (e)) do not materially and adversely affect (1) the ability of Borrower
to pay in full the Obligations in a timely manner, (2) the use of the Property
for the use currently being made thereof, or (3) the operation of the Property
as currently being operated, or (4) the value of the Property.
 
  “Permitted Encumbrance Documents” means any easements, agreements and other
documents creating, evidencing or governing any Permitted Encumbrances described
in clauses (b) or (e) of the definition of Permitted Encumbrances, but
specifically excluding the Property Management Contracts.
 
  “Permitted Investments” means any one or more of the following obligations or
securities acquired at a purchase price of not greater than par:
 
(i)  obligations of, or obligations fully guaranteed as to payment of principal
and interest by, the United States or any agency or instrumentality thereof
provided such obligations are backed by the full faith and credit of the United
States of America;
 
(ii)  obligations of the following United States of America government sponsored
agencies, provided such obligations are backed by the full faith and credit of
the United States of America: Federal Home Loan Mortgage Corp. (debt
obligations), the Farm Credit System (consolidated systemwide bonds and notes),
the Federal Home Loan Banks (consolidated debt obligations), the Federal
National Mortgage Association (debt obligations), the Financing Corp. (debt
obligations), and the Resolution Funding Corp. (debt obligations);

--------------------------------------------------------------------------------

 
(iii)  federal funds, unsecured certificates of deposit, time deposits, bankers’
acceptances and repurchase agreements with maturities of not more than 365 days
of any bank, the short-term obligations of which are rated in the highest
short-term rating category by the Rating Agencies;
 
(iv)  certificates of deposit, time deposits, demand deposits or banker’s
acceptances issued by any depository institution or trust company incorporated
under the laws of the United States or of any state thereof and subject to
supervision and examination by federal and/or state banking authorities, the
short-term obligations of which are rated in the highest short-term rating
category by the Rating Agencies, which investments are fully insured by the
Federal Deposit Insurance Corp.;
 
(v)  debt obligations with maturities of not more than 365 days and rated by the
Rating Agencies in its highest long-term unsecured rating category;
 
(vi)  commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) with maturities of not
more than 270 days and that is rated by the Rating Agencies in their highest
short-term unsecured debt rating; and
 
(vii)  any other demand, money market or time deposit, demand obligation or any
other obligation, security or investment, which Lender shall have approved in
writing and for which Borrower shall have delivered a Rating Confirmation;
 
provided, however, that (A) the investments described in clauses (i) through
(vii) above must have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, (C) such
investments must not be subject to liquidation prior to their maturity or have
an “r” highlighter affixed to its rating by S&P, and (D) such investments must
not be subject to liquidation prior to their maturity; and provided, further,
that, in the judgment of Lender, such instrument continues to qualify as a “cash
flow investment” pursuant to Tax Code Section 860G(a)(6) earning a passive
return in the nature of interest and that no instrument or security shall be a
Permitted Investment if such instrument or security evidences (x) a right to
receive only interest payments or (y) the right to receive principal and
interest payments derived from an underlying investment at a yield to maturity
in excess of 120% of the yield to maturity at par of such underlying investment.
 
  “Permitted Leases” means (a) each of the Leases now or hereinafter executed
relating to the existing retail space located in the Property as of the date
hereof, and (b) any other Lease covering in the aggregate for all such other
Leases collectively, less than 10,000 rentable square feet of space located
outside the existing retail space at the Property as of the date hereof,
including any expansion options, provided, in the case of each of the foregoing
clauses (a) and (b), such Lease is an arms-length transaction between Borrower
and the tenant thereunder.

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  “Permitted Lender” means (a) a Marriott Entity or (b) any Institutional
Lender.
 
  “Permitted Transfer” means each of the following:
 
(a)  Sales, conveyances, assignments, transfers or other dispositions (but not
mortgages, hypothecations, pledges or other encumbrances) of direct or indirect
Equity Interests in DRRP which, in the aggregate over the term of the Loan
(i) do not exceed forty-nine percent (49%) of the total direct or indirect
Equity Interests in DRRP (provided that the transfers permitted in clauses (b)
and (f) of this definition shall be excluded in determining whether a transfer
is permitted under this clause (a)(i)); (ii) do not result in any Person that
(together with its Affiliates) did not hold directly or indirectly more than
forty-nine percent (49%) of the total Equity Interests in Lessee or Borrower, as
applicable, on the Closing Date, holding (together with its Affiliates) any
direct or indirect Equity Interest in Lessee or Borrower, as applicable, which
exceeds forty-nine percent (49%) of the total Equity Interests in Lessee or
Borrower, as applicable; (iii) do not result in a change of Control of Lessee,
Borrower or DRRP and (iv) do not result in any CNL or Marriott owning in the
aggregate less than thirty percent (30%) of the direct and indirect Equity
Interests in Borrower;
 
(b)  Transfers of any direct or indirect Equity Interests in DRRP to a Marriott
Entity or a CNL Entity, provided that if any such Transfers is to a Person other
than a CNL Entity that (together with its Affiliates) did not hold directly or
indirectly more than forty-nine percent (49%) of the total Equity Interests in
Lessee or Borrower, as applicable, on the Closing Date, and such Transfer will
result in such Person (together with its Affiliates) holding direct or indirect
Equity Interest in Lessee or Borrower, as applicable, in excess of forty-nine
percent (49%) of the total Equity Interests in Lessee or Borrower, as
applicable, then prior to such Transfer, Borrower shall deliver to Lender an
updated non-consolidation legal opinion delivered by Borrower’s counsel to
Lender which may be relied upon by Lender, the Rating Agencies and their
respective counsel, with respect to such proposed Transfer, which
non-consolidation legal opinion shall be reasonably acceptable to Lender and
approved the Rating Agencies;
 
(c)  Transfers of any direct or indirect Equity Interests in DRRP by a Marriott
Entity, provided that (i) do not exceed forty-nine percent (49%) of the total
direct or indirect Equity Interests in DRRP; (ii) do not result in any Person
that (together with its Affiliates) did not hold directly or indirectly more
than forty-nine percent (49%) of the total Equity Interests in Lessee or
Borrower, as applicable, on the Closing Date, holding (together with its
Affiliates) any direct or indirect Equity Interest in Lessee or Borrower, as
applicable, which exceeds forty-nine percent (49%) of the total Equity Interests
in Lessee or Borrower, as applicable; and (iii) do not result in a change of
Control of Lessee, Borrower or DRRP;

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(d)  Transfers of publicly-traded shares of stock in Marriott so long as
Marriott’s stock is traded on a nationally recognized stock exchange;
 
(e)  Transfers of outstanding and widely-held shares of stock in CNL in
connection with (i) an initial pubic offering of shares of CNL or a listing of
such shares on a nationally recognized stock exchange; and/or (ii) a merger or
reverse merger of CNL with any Person whose stock is publicly traded on a
national exchange, provided, that in each case, the Person in Control of
Borrower as of the date hereof remain in Control after such events;
 
(f)  Transfers of direct partnership interests in Desert Ridge Resort, Ltd.,
provided that no such Transfers shall cause any Person (together with its
Affiliates) that did not hold directly or indirectly more than forty-nine
percent (49%) of the total Equity Interests in Lessee or Borrower, as
applicable, on the Closing Date, to hold (together with its Affiliates) any
direct or indirect Equity Interest in Lessee or Borrower, as applicable, in
excess of forty-nine percent (49%) of the total Equity Interests in Lessee or
Borrower, as applicable;
 
(g)  Transfers which have been approved by Lender in accordance with
Section 10.02 hereof;
 
(h)  Permitted Encumbrances;
 
(i)  All Transfers of worn out or obsolete furnishings, fixtures or equipment
that are promptly replaced with property of equivalent value and functionality;
 
(j)  All Permitted Leases;
 
(k)  All other Leases which are not Permitted Leases and which have been
approved by Lender pursuant to this Agreement or that do not require Lender’s
approval pursuant to this Agreement;
 
(l)  The Operating Lease;
 
(m)  Transfers (but not mortgages, hypothecations, pledges or other
encumbrances) of direct Equity Interests in Lessee which, in the aggregate over
the term of the Loan (i) do not exceed forty-nine percent (49%) of the total
direct Equity Interests in Lessee; (ii) do not result in any Person that
(together with its Affiliates) did not hold directly or indirectly more than
forty-nine percent (49%) of the total Equity Interests in Lessee, on the Closing
Date, holding (together with its Affiliates) any direct or indirect Equity
Interest in Lessee, which exceeds forty-nine percent (49%) of the total Equity
Interests in Lessee; and (iii) do not result in a change of Control of Lessee;
 
(n)  Pledges of Equity Interests in DRR Junior Mezz, LLC and Parent, as may be
required under the Liquidity Facility or the Equity Interest in Parent as may be
required under the Additional Mezzanine Financing and the Transfers resulting
from the enforcement by the lenders thereunder in accordance with the applicable
documents (including a foreclosure sale, sale by power of sale or sale in lieu
of foreclosure); and if such lenders acquire any direct or indirect Equity
Interests of Borrower as permitted by this subsection (n) such lenders may
thereafter make Permitted Transfers, without Lender’s consent;

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(o)  That certain pledge by Mezzanine Borrower of its one hundred percent (100%)
limited liability interest in Borrower pursuant to and in accordance with the
terms and conditions of the Loan Documents and the Mezzanine Loan Documents; or
 
(p)  A Transfer resulting from the enforcement by Mezzanine Lender of its
remedies under and in accordance with the Mezzanine Loan Documents (including a
foreclosure sale, sale by power of sale or sale in lieu of foreclosure);
 
provided, in the case of any such Transfers otherwise permitted under
clauses (a) through (l) above, that after giving effect to the same,
(A) Borrower continues to own at least 51% of the Equity Interests in Lessee and
Controls Lessee, (B) Mezzanine Borrower continues to own directly 100% of the
Equity Interests in Borrower and Controls Borrower (C) DRR Junior Mezz, LLC
continues to own directly 100% of the Equity Interests in Mezzanine Borrower and
Controls Mezzanine Borrower, (D) DRRP continues to own directly 100% of the
Equity Interests in DRR Junior Mezz, LLC and Controls DRR Junior Mezz, LLC,
(E) a CNL Entity or a Marriott Entity continues to own directly not less than
51% of the common Equity Interests in DRRP and Controls DRRP, (F)  other than
with respect to clause (a) above and except as expressly permitted in the
Guaranty, a CNL Entity continues to own directly not less than 51% of the common
Equity Interests in CNL Guarantor and Controls CNL Guarantor, and (G) except as
expressly permitted in the Guaranty, a Marriott Entity continues to own directly
not less than 51% of the common Equity Interests in Marriott Guarantor and
Controls Marriott Guarantor.
 
  “Person” means an individual, partnership, limited partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.
 
  “Personal Property” has the meaning set forth in the Security Instrument.
 
  “Prepayment Fee” means the product derived by multiplying the principal amount
of the Loan being prepaid by the Prepayment Percentage.
 
  “Prepayment Percentage” means the percentage for the applicable period listed
on Exhibit C.
 
“Prior Loan” means that certain indebtedness in an original principal amount
advanced equal to approximately $179,000,000 with respect to senior mortgage
loan from certain institutional investors to Borrower dated as of December 21,
2000 and $2,321,000 with respect to a junior loan from Marriott International
Capital Corporation to Borrower dated December 21, 2000 together with all other
indebtedness, obligations and liabilities under the documents evidencing and/or
securing the Prior Loan.
 
“Prior Loan Documents” means the documents evidencing and securing the Prior
Loan.

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  “Proceeds Shortfall Failure” has the meaning set forth in Section 9.03(g)(ii)
hereof.
 
  “Prohibited Prepayment” has the meaning set forth in Section 2.05(c) hereof.
 
  “Prohibited Prepayment Fee” has the meaning set forth in Section 2.05(c)
hereof.
 
  “Property” has the meaning set forth in the Security Instrument.
 
  “Property Manager” means (a) Marriott, (b) any Qualified Manager permitted
under Section 9.14 or (c) any replacement property manager approved by Lender in
advance in writing.
 
  “Property Management Contracts” means (i) during the period that the Property
is managed by Marriott (A) that certain Management Agreement, dated as of
December 21, 2000, by and between Lessee and Property Manager, as amended by
that certain First Amendment to Management Agreement, dated as of January 1,
2002 and as further amended by that certain Second Amendment to Management
Agreement dated as of the date hereof, as may be further amended from time to
time, and (B) the Owner Agreement; (ii) during the period, if any, that the
Property is managed by a Qualified Manager (other than Marriott), the management
agreement approved by Lender pursuant to Section 9.14; (iii) at such time, if
any, that the Property is managed by a Person other than Marriott or a Qualified
Manager, the management agreement entered into by and between or on behalf of
Borrower and such person as Property Manager, pursuant to which the Property
Manager is to provide management and other services with respect to the
Property, which management agreement has been approved by Lender in advance in
writing.
 
  “Provided Information” has the meaning set forth in Section 15.04 hereof.
 
  “Qualified Insurance Program” means (i) a blanket insurance program maintained
by Marriott or its subsidiaries providing insurance coverage in the Property
required in the Property Management Contracts, as in effect on the date hereof,
or (ii) similar blanket insurance program approved by Lender which is maintained
by CNL (and its subsidiaries) for a substantial portion of CNL’s hotel
portfolio, provided that the property insurance companies shall have an "A"
rating or better from claims paying ability assigned by S&P (or if any property
insurance company within such property insurance program fails to have at least
an "A" rating, then such program shall be credit enhanced within such blanket
insurance program through its "financial contingency policy" or such similar
financial enhancement).
 
  “Qualified Manager” shall mean (i) any Acceptable Manager, (ii) any other
hotel management company that manages a system of at least six (6) hotels or
resorts of a class and quality of at least as comparable to the Property (as
reasonably determined by Property Manager and Lessee; provided, however, Lessee
shall obtain Lender's prior approval of such determination, not to be
unreasonably withheld) and containing not fewer than 5,000 hotel rooms in the
aggregate (including condominium units under management) in the aggregate, (iii)
any Affiliate Controlled by any of the foregoing Persons or (iv) any other
reputable and experienced professional hotel management company (A) whose
competence, qualifications, and experience in managing properties of a quality
equal to or exceeding the quality of the Property are comparable to, or greater
than that of the current Property Manager as of the Closing Date, or an
Affiliate Controlled by such hotel management company and (B) with respect to
which a Rating Agency Confirmation has been obtained.

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  “Rate Cap” means each interest rate cap required under this Agreement.
 
  “Rate Cap Agreement” means the written agreement evidencing the financial and
performance terms of the Rate Cap purchased by Borrower from the Rate Cap
Provider which satisfies all requirements of Section 2.07 hereof.
 
  “Rate Cap Provider” means the counterparty issuing a Rate Cap to Borrower.
 
  “Rate Cap Provider Consent” means the Rate Cap Provider Consent and
Acknowledgement with respect to the assignment of the Rate Cap from Borrower to
Lender, executed by the Rate Cap Provider in favor of Lender.
 
  “Rating Agencies” means Fitch, Moody’s and S&P, or any successor entity of the
foregoing, or any other nationally recognized statistical rating organization to
the extent that any of the foregoing have been or will be engaged by Lender or
its designees in connection with or in anticipation of Securitization or any
other sale or grant of participation interest in the Loan (or any part thereof).
 
  “Rating Confirmation” with respect to any transaction, matter or action in
question, means: (i) if all or any portion of the Loan, by itself or together
with other loans, has been the subject of a Securitization in which the related
securities have themselves been rated, the written confirmation of the Rating
Agencies that such transaction, matter or action shall not, in and of itself,
result in the downgrading, withdrawal or qualification of the then-current
ratings assigned to any of the securities issued in connection with the
Securitization; and (ii) if no portion of the Loan has been the subject of a
Securitization in which the related securities have themselves been rated,
Lender shall have determined in its reasonable discretion (taking into
consideration such factors as Lender may determine, including the attributes of
the loan pool in which any portion of the Loan may reasonably be expected to be
securitized) that no rating for any securities that would be issued in
connection with a Securitization involving any of such portion of the Loan would
be downgraded, qualified, or withheld by reason of such transaction, matter or
action.
 
  “Receipts” means all rents, moneys payable as damages or in lieu of rent,
revenues, receipts, deposits (including, without limitation, security, utility
and other deposits), accounts, cash, issues, profits, charges for services
rendered, and other consideration of whatever form or nature received by or paid
to or for the account of or benefit of Borrower, Lessee, Property Manager or
their respective Affiliates, agents or employees from any and all sources
arising from or attributable to the Property or the ownership or operation
thereof, including, without limitation, (a) all hotel and golf course receipts,
revenues and credit card receipts collected from guest rooms, restaurants, bars,
conference rooms, meeting rooms, banquet rooms, exhibit halls, ball rooms, golf
courses and other recreational facilities, incidental charges to hotel guests,
golf course patrons or other users or customers, any payments (and the right to
receive payments) from credit card companies, travel agents or reservation
systems or services relating to the Property, all receivables, customer
obligations, installment payment obligations and other obligations now existing
or hereafter arising or created out of the sale, lease, sublease, license,
concession or other grant of the right of the use and occupancy of property or
rendering of services by Borrower, Lessee or any operator or manager of the
Property or the hotels, golf course and commercial space located thereon or
acquired from others (including, without limitation, from the rental of any
office space, retail space, guest rooms or other space, halls, stores, and
offices, and deposits securing reservations of such space), license, lease,
sublease and concession fees and rentals, health club use and membership fees
and other health club and personal care revenues, golf course use and membership
fees and other golf course revenues, food and beverage wholesale and retail
sales (including without limitation room service dining and mini bar sales),
service charges, proceeds payable to Borrower and/or Lessee from vending machine
sales, telephone and telecommunications receipts (including without limitation
DSL access fees), and any charges of any kind that appear on any bill or
statement rendered to any guest or other user or customer of the Property,
(b) all Rents received from any tenant, licensee or other Person occupying space
at, or providing services related to or for the benefit of the Property and all
payments in lieu of Rents, and (c) proceeds, if any, from business interruption
or other loss of income insurance.

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  “Related Party ” or “Related Parties” shall have the meaning set forth in
Section 7.01(i)(A).
 
  “Rent Roll” means a statement from Borrower substantially in the form attached
hereto as Exhibit E detailing the names of all tenants of the Property, the
portion of Property occupied by each tenant, the base rent and any other charges
payable under each Lease, the term of each Lease, the beginning date and
expiration date of each Lease, whether any tenant is known to be materially in
default under its Lease (and detailing the nature of such default), and any
other information as is reasonably required by Lender for Leases of 10,000
square feet or more , all certified by a Responsible Officer to be true, correct
and complete.
 
  “Rents” has the meaning set forth in the Security Instrument.
 
  “Reporting Default” means, without reference to any cure period under Article
11, each instance that any of the following occur: (a) failure to deliver any of
the reports, information, statements or other materials required under
Section 9.11 hereof and such failure continues for more than five (5) Business
Days after written notice from Lender, or (b) failure to provide the Compliance
Certificate at the times required under this Agreement and such failure
continues for more than ten (10) Business Days after written notice from Lender.
 
  “Required Repairs” has the meaning set forth in Section 9.08(b).
 
  “Requirements of Law” means (a) all requirements, limitations, terms,
covenants and conditions set forth in, or mandated by, the organizational
documents of an entity, and (b) any law, regulation, ordinance, code, decree,
treaty, ruling or determination of an arbitrator, court or other Governmental
Authority, or any Executive Order issued by the President of the United States,
in each case applicable to or binding upon such Person or to which such Person,
any of its property or the conduct of its business is subject including, without
limitation, laws, ordinances and regulations pertaining to the zoning, occupancy
and subdivision of real property.

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  “Reserve Accounts” means, individually and collectively, as the context
requires, the Tax Escrow Account, the Insurance Premium Escrow Account, the FF&E
Reserve Account, the Advance Bookings Reserve Account, the Seasonal Reserve
Account, the Debt Service Reserve Account and the Ground Rents Escrow.
 
  “Reserve Item” means the FF&E Work.
 
  “Responsible Officers” means, as to any Person, an individual who is a
managing member, a general partner, the chief executive officer, the president
or any vice president of such Person or, with respect to financial matters, the
chief financial officer or treasurer of such Person or any other officer
authorized by such Person to deliver documents with respect to financial matters
pursuant to this Agreement.
 
  “Restoration” means the repairs, replacements, improvements, or rebuilding of
or to the Property following a Casualty or Condemnation.
 
  “Restoration Deficiency Deposit” has the meaning set forth in Section 9.04(d)
hereof. All amounts deposited by Borrower with Lender as the Restoration
Deficiency Deposit shall become a part of the Restoration Proceeds and disbursed
by Lender for Restoration on the same conditions applicable to disbursement of
Restoration Proceeds and, until so disbursed, are pledged to Lender as security
for the Loan and Obligations.
 
  “Restoration Holdback” has the meaning set forth in Section 9.04(e) hereof.
 
  “Restoration Proceeds” has the meaning set forth in Section 9.03(b) hereof.
 
  “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.
 
  “Seasonal Reserve Account” means a sub-account of the Cash Management Account
held by Lender, or Lender’s designee, in which the Seasonal Reserve Funds will
be held, which shall not constitute a trust fund, all as more specifically set
forth in Section 4.07 and subject to Section 4.08.
 
  “Seasonal Reserve Deposit Months” means each calendar month in any year other
than the Seasonal Reserve Disbursement Months.
 
  “Seasonal Reserve Disbursement Months” means the calendar months of each year
during which the projected Cash Flow Available for Debt Service is insufficient
to pay the debt service payments due under the Loan and Mezzanine Loan for such
months as determined in each year by Lender in its reasonable discretion based
on the most recent Approved Budget as well as any other calendar month from time
to time reasonably selected by Lender (based upon the financial results of the
Property) as a Seasonal Reserve Disbursement Month.

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  “Seasonal Reserve Funds” has the meaning set forth in Section 4.07(a) hereof,
subject to adjustment as set forth in Sections 4.07(b) and (c) hereof.
 
  “Second Extended Maturity Date” has the meaning set forth in Section 2.03(d)
hereof.
 
  “Second Extension Term” has the meaning set forth in Section 2.03(d) hereof.
 
  “Securities Act” means the Securities Act of 1933 and any successor statute
thereto and the related regulations issued thereunder, all as amended from time
to time.
 
  “Securities Exchange Act” means the Securities Exchange Act of 1934, and any
successor statute thereto and the related regulations issued thereunder, all as
amended from time to time.
 
  “Securities Liabilities” has the meaning provided in Section 15.04 hereof.
 
  “Securitization” or “Securitize” means the sale of the Loan, by itself or as
part of a pool with other loans, in a transaction whereby mortgage pass-through
certificates or other securities evidencing a beneficial interest, backed by the
Loan or such pool of loans, will be sold as a rated or unrated public offering
or private placement.
 
  “Security Instrument” means (a) the Fee and Leasehold Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing
encumbering the Property and executed by Borrower to Lender or to a trustee for
the benefit of Lender, as the case may be and (b) the Tenant Subordination
Agreement, which secure Borrower’s payment of the Loan and performance of the
Obligations.
 
  “Single Purpose Entity” has the meaning set forth in Section 7.02 hereof.
 
  “Soft Goods” shall mean all fabric, textile and flexible plastic products (not
including items which are classified as “Fixed Asset Supplies” under the Uniform
System of Accounts) which are used in furnishing the Property or any portion
thereof, including, without limitation: carpeting, drapes, bedspreads, wall and
floor coverings, mats, shower curtains and similar items.
 
  “Software” shall mean all computer software and accompanying documentation
(including all future upgrades, enhancements, additions, substitutions and
modifications thereof), other than computer software which is generally
commercially available, which are used by Property Manager in connection with
operating or otherwise providing services to the Property and/or any other
hotels or other properties which are operated by Property Manager (or one of its
Affiliates), including without limitation the property management system, the
reservation system and the other electronic systems used by Property Manager in
connection with operating or otherwise providing services to the Property and/or
any other hotels or other properties which are operated by Property Manager (or
one of its Affiliates).
 
  “SPE Affiliate” means with respect to any Person, any other person that,
directly or indirectly, controls, is under common control with, or is controlled
by that Person. For purposes of this definition, “control” (including, with
correlative meaning, the terms “controlled by” and “under common control with”),
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct and cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.

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  “Tax Code” means the Internal Revenue Code of 1986 and the related Treasury
Department regulations issued thereunder, including temporary regulations, all
as amended from time to time.
 
  “Tax Escrow Account” means a sub-account of the Cash Management Account held
by Lender, or Lender’s designee, in which Borrower’s initial deposit, if any,
for Taxes made on the Closing Date and the Monthly Tax Deposits will be held,
which shall not constitute a trust fund.
 
  “Taxes” means all real estate taxes, government assessments or impositions,
lienable water charges, lienable sewer rents, assessments due under owner
association documents, ground rents, vault charges and license fees for the use
of vaults chutes and all other charges (other than the Other Charges), now or
hereafter levied or assessed against the Land and Improvements; except that no
Tax escrow will be required if any such charges are payable on a monthly basis
and are paid in a timely manner.
 
  “Tenant Subordination Agreement” means that certain Collateral Assignment of
Agreements and Items Affecting Operations and Subordination of Lease dated as of
the date hereof between Lender and Lessee.
 
  “Third Extended Maturity Date” has the meaning set forth in Section 2.03(d)
hereof.
 
  “Third Extension Term” has the meaning set forth in Section 2.03(d) hereof.
 
  “Title Insurance Policy” means the mortgagee title insurance policy obtained
by Lender in connection with the Loan, and, until the issuance of such policy,
the commitment for title insurance as marked-up as of the Closing Date, in
either case in form and substance (with such endorsements and affirmative
coverages) as is satisfactory to Lender, insuring that the Security Instrument
constitutes a perfected first Lien against the Property in the Maximum Loan
Amount, subject only to Permitted Encumbrances, and including such co-insurance
and re-insurance with respect thereto as is satisfactory to Lender.
 
  “Transfer” means any action by which either (a) the legal or beneficial
ownership of the Equity Interests in Lessee or Borrower or in the Guarantor or
(b) the legal or equitable title to the Property, or any part thereof, or
(c) the cash flow from the Property or any portion thereof, are sold, assigned,
transferred, hypothecated, pledged or otherwise encumbered or disposed of, in
each case (a), (b) or (c) whether undertaken, directly or indirectly, or
occurring by operation of law or otherwise, including, without limitation, each
of the following actions:
 
(i)  the sale, conveyance, assignment, grant of an option with respect to,
mortgage, deed in trust, pledge, grant of a security interest in, or any other
transfer, as security or otherwise, of the Property or with respect to the
Leases or Receipts (or any thereof);

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(ii)  the grant of an easement across the Property (other than easements that
constitute a Permitted Encumbrance) or any other agreement granting rights in or
restricting the use or development of the Property (including, without
limitation, air rights);
 
(iii)  an installment sale wherein Borrower agrees to sell the Property for a
price to be paid in installments; or
 
(iv)  an agreement (other than the Operating Lease) by Borrower leasing all or a
substantial part of the Property for other than actual occupancy by a space
tenant thereunder.
 
  “UCC” means the Uniform Commercial Code in effect in the State where the
Property is located or such other State which governs the perfection of a
security interest in the applicable collateral, as from time to time amended or
restated. For purposes of the application of the UCC to the Lockbox Account, the
Marriott FF&E Reserve Account, the Cash Management Account and the Reserve
Accounts, the parties agree that (unless otherwise agreed in writing by Lender)
the jurisdiction of the bank maintaining each such account shall be deemed to be
the State of New York.
 
  “Underwriter Group” has the meaning provided in Section 15.04 hereof.
 
  “Uniform System of Accounts” shall mean the Uniform System of Accounts for the
Lodging Industry, Ninth Revised Edition, 1996, as published by the American
Hotel & Motel Association.
 
Section 1.02  General Construction.
 
Defined terms used in this Agreement may be used interchangeably in singular or
plural form, and pronouns are to be construed to cover all genders. All
references to this Agreement or any agreement or instrument referred to in this
Agreement shall mean such agreement or instrument as originally executed and as
hereafter amended, supplemented, extended, consolidated or restated from time to
time. The words “herein,”“hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular subdivision;
and the words “Article” and “section” refer to the entire article or section, as
applicable and not to any particular subsection or other subdivision. Reference
to days for performance means calendar days unless business days are expressly
indicated.

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ARTICLE 2  
 

 
MAXIMUM LOAN AMOUNT; PAYMENT TERMS; ADVANCES
 
Section 2.01  Commitment to Lend.
 
(a)  Maximum Loan Amount Approved. Subject to the terms and conditions set forth
herein, and in reliance on Borrower’s representations, warranties and covenants
set forth herein, Lender agrees to loan the Maximum Loan Amount to Borrower. The
Loan shall be evidenced by this Agreement and by the Note made by Borrower to
the order of Lender and shall bear interest and be paid upon the terms and
conditions provided herein.
 
(b)  Advance of Maximum Loan Amount. On the Closing Date, Lender shall advance
the entire Maximum Loan Amount to Borrower.
 
Section 2.02  Calculation of Interest.
 
(a)  Calculation Basis. Interest due on the Loan shall be paid in arrears,
calculated based on a 360-day year and paid for the actual number of days
elapsed for any whole or partial month in which interest is being calculated.
 
(b)  Applicable Interest Rate and Interest Rate Adjustment Date. Interest shall
accrue on outstanding principal at the rate (“Applicable Interest Rate”) which
is the LIBOR Rate plus two percent (2.00%) (“Margin”). Adjustments to the
Applicable Interest Rate in connection with changes in the LIBOR Rate shall be
made on the Interest Rate Adjustment Date. The Applicable Interest Rate
effective on the Closing Date for the Initial Interest Period is equal to 5.22%.
 
(c)  LIBOR Unascertainable. Lender’s obligation to maintain interest based on
the LIBOR Rate shall be suspended and the Applicable Interest Rate shall be
based on the Interest Rate Index (plus Margin) upon Lender’s determination, in
good faith, that adequate and reasonable means do not exist for ascertaining the
LIBOR Rate (which determination by Lender shall be conclusive and binding on
Borrower in the absence of manifest error). Computation of the Applicable
Interest Rate based on the Interest Rate Index shall continue until Lender
determines that the circumstances giving rise to Lender’s substitution of the
Interest Rate Index for the LIBOR Rate no longer exist, in which event the
Applicable Interest Rate shall be the LIBOR Rate commencing with the first day
of the Interest Period next following such determination. Lender shall promptly
notify Borrower of each such determination. For any period where the Applicable
Interest Rate is based on the Interest Rate Index, the Margin shall be a rate
equal to the Margin, less seven (7) basis points (0.07%).
 
(d)  Adjustment Due to Calculation Errors. If, at any time, Lender determines
that it has miscalculated the Applicable Interest Rate (whether because of a
miscalculation of the LIBOR Rate or otherwise), Lender shall notify Borrower of
the necessary correction. If the corrected Applicable Interest Rate represents
an increase in the applicable monthly payment, Borrower shall, within ten (10)
days thereafter, pay to Lender the corrected amount. If the corrected Applicable
Interest Rate represents an overpayment by Borrower to Lender and no Event of
Default then exists, Lender shall refund the overpayment to Borrower or, at
Lender’s option, credit such amounts against Borrower’s payment next due
hereunder.

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(e)  Adjustment for Impositions on Loan Payment. All payments made by Borrower
hereunder shall be made free and clear of, and without reduction for, or on
account of, any income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions or withholdings hereafter imposed, levied, collected, withheld
or assessed by any government or taxing authority (other than taxes on the
overall net income or overall gross receipts of Lender imposed as a result of a
present or former connection between Lender and the jurisdiction of the
government or taxing authority imposing such net income or gross receipts tax).
If any such amounts are required to be withheld from amounts payable to Lender,
the amounts payable to Lender under these Loan Documents shall be increased to
the extent necessary to yield to Lender, after payment of such amounts, interest
or any such other amounts payable at the rates or in the amounts specified
herein. If any such amounts are payable by Borrower, Borrower shall pay all such
amounts by their due date and promptly send Lender a certified copy of an
original official receipt showing payment thereof. If Borrower fails to pay such
amounts when due or to deliver the required receipt to Lender, Borrower shall
indemnify Lender for any incremental taxes, interest or penalties that may
become payable by Lender as a result of any such failure.
 
(f)  Increased Costs of Maintaining Interest. If Lender determines that the
adoption of any law, regulation, rule or guideline (including, without
limitation, any change regarding the imposition or increase in reserve
requirements), whether or not having the force of law, does or will have the
effect of reducing Lender’s rate of return on the Loan or results in an increase
in the cost to Lender in making, funding or maintaining interest on the Loan at
the rate herein provided, then, from time to time, within five (5) business days
after written demand by Lender, Borrower shall pay Lender such additional amount
as will compensate Lender for its reduction or increased costs.
 
(g)  Borrower agrees to indemnify Lender and hold Lender harmless from any loss
or expenses (other than consequential and punitive damages) which Lender
sustains or incurs arising from interest or fees payable by Lender to lenders of
funds obtained by it in order to maintain a LIBOR Rate Loan hereunder as a
consequence of (i) any default by Borrower in payment of the principal of, or
interest on, a LIBOR Rate Loan, and (ii) any prepayment (whether voluntary or
mandatory) of the LIBOR Rate Loan on a day that (A) is not a Payment Due Date or
(B) is a Payment Due Date, however Borrower did not give the prior written
notice of such prepayment required pursuant to the terms of this Agreement.
 
(h)  Acceleration. Notwithstanding anything to the contrary contained herein, if
Borrower is prohibited by law from paying any amount due to Lender under
Section 2.02(e) or (f), Lender may elect to declare the unpaid principal balance
of the Loan, together with all unpaid interest accrued thereon and any other
amounts due hereunder, due and payable within ninety (90) days of Lender’s
written notice to Borrower. No Prepayment Fee or Prohibited Prepayment Fee shall
be due in such event. Lender’s delay or failure in accelerating the Loan upon
the discovery or occurrence of an event under Section 2.02(e) or (f), shall not
be deemed a waiver or estoppel against the exercise of such right.

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Section 2.03  Payment of Principal and Interest.
 
(a)  Payment at Closing. Borrower shall make a payment to Lender of interest
only on the date hereof for the Initial Interest Period.
 
(b)  Payment Dates. Commencing on the ninth (9th) day of August, 2005 and
continuing on the ninth (9th) day of each and every successive month thereafter
(each, a “Payment Due Date”), through and including the Payment Due Date
immediately prior to the Maturity Date, Borrower shall pay consecutive monthly
payments of interest only, at the Applicable Interest Rate (determined as of the
immediately preceding Interest Rate Adjustment Date), based on principal
advanced and outstanding during the Interest Period ending immediately prior to
such Payment Due Date and any amounts due pursuant to Section 2.02 of this
Agreement. Lender shall have the one-time right, in its sole discretion, upon
not less than ten (10) days prior written notice to Borrower, to change the
Payment Due Date to a different calendar day (provided that such change does not
result in two payments in the same month) and, if Lender shall have elected to
change the Payment Due Date as aforesaid, Lender shall change the Maturity Date
and each Extended Maturity Date, if any, to the same day of the month as
corresponds to the new day of the month on which the Payment Due Date falls (but
without changing the month or the year of the Maturity Date or any such Extended
Maturity Date) and Lender shall have the option, but not the obligation, to
adjust the interest accrual period correspondingly and, if requested by Lender,
Borrower shall promptly execute an amendment to this Agreement to evidence such
changes.
 
(c)  Maturity Date. On the ninth (9th) day of July, 2007 (such date, as the same
may be changed in accordance with Section 2.03(b) above, the “Maturity Date”),
Borrower shall pay the entire outstanding principal balance of the Loan,
together with all accrued but unpaid interest thereon and all other amounts due
under this Agreement, the Note or any other Loan Document.
 
(d)  Extension of Maturity Date.
 
(i)  Extension Option. Borrower has the right to extend the Maturity Date of the
Loan for three (3) additional terms (each an “Extension Term”), with the first
additional term having twelve (12) months (“First Extension Term”) and extending
the Maturity Date to July 9, 2008 (such date, as the same may be changed in
accordance with Section 2.03(b) above, “First Extended Maturity Date”), the
second additional term having twelve (12) months (“Second Extension Term”) and
extending the First Extended Maturity Date to July 9, 2009 (such date, as the
same may be changed in accordance with Section 2.03(b) above, “Second Extended
Maturity Date”) and the third additional term having twelve (12) months (“Third
Extension Term”) and extending the Second Extended Maturity Date to July 9, 2010
(such date, as the same may be changed in accordance with Section 2.03(b) above,
“Third Extended Maturity Date”). Upon Borrower’s proper and timely exercise of
its rights under this Section 2.03(d), the term “Maturity Date” shall be deemed
to be the First Extended Maturity Date, the Second Extended Maturity Date and
the Third Extended Maturity Date, as applicable.

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(ii)  Conditions Precedent to Maturity Date Extension. Each of the following
conditions must be satisfied in a manner acceptable to Lender (or waived in
writing by Lender) as a condition precedent to extension of the Maturity Date:
 
(A)  Borrower delivers written notice to Lender not more than sixty (60) days
and not less than thirty (30) days prior to the expiring Maturity Date advising
that Borrower is exercising its extension option, together with drafts of all
materials needed by Lender to confirm that the Rate Cap satisfies the criteria
identified in subsection (D) below.
 
(B)  On or prior to the commencement date of the applicable Extension Term,
Borrower pays to Lender the Extension Fee.
 
(C)  No Event of Default exists on the date Borrower exercises such extension
option or on the commencement date of the relevant Extension Term.
 
(D)  On or prior to the commencement date of the applicable Extension Term,
Borrower obtains, and assigns to the benefit of Lender, a Rate Cap which
(1) will be effective for the Extension Term and provide for payments whenever
the LIBOR Rate exceeds the LIBOR Strike Rate, (2) with a notional amount equal
to the outstanding principal balance of the Loan, and (3) otherwise satisfies
all requirements of Section 2.07 of this Agreement.
 
(E)  the Cash Flow Available for Debt Service for the trailing twelve (12) month
period is at least $30,000,000.
 
(F)  If required by Lender, Borrower executes and delivers to Lender an
amendment to this Agreement, reasonably acceptable to Lender in all respects,
which confirms the date to which the Maturity Date has been extended and the
principal and interest amounts payable during the Extension Term.
 
Section 2.04  Payments Generally.
 
(a)  Delivery of Payments. All payments due to Lender under this Agreement and
the other Loan Documents are to be paid to Lender at Lender’s office located at
200 Park Avenue, New York, New York 10166, Attn: Lori Rung/CMBS Servicing, or at
such other place as Lender may designate to Borrower in writing from time to
time. All amounts due under this Agreement and the other Loan Documents shall be
paid in immediately available funds without setoff, counterclaim or any other
deduction whatsoever.
 
(b)  Credit for Payment Receipt. No payment due under this Agreement or any of
the other Loan Documents shall be deemed paid to Lender until received by Lender
at its designated office on a business day prior to 2:00 p.m. Eastern Time. Any
payment received after the time established by the preceding sentence shall be
deemed to have been paid on the immediately following business day. Where a
Payment Due Date falls on a date other than a business day, the Payment Due Date
shall be deemed the first business day immediately thereafter.

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(c)  Invalidated Payments. If any payment received by Lender is deemed by a
court of competent jurisdiction to be a voidable preference or fraudulent
conveyance under any bankruptcy, insolvency or other debtor relief law, and is
required to be returned by Lender, then the obligation to make such payment
shall be reinstated, notwithstanding that the Note may have been marked
satisfied and returned to Borrower or otherwise canceled, and such payment shall
be immediately due and payable upon demand.
 
(d)  Late Charges. If any payment due on a Payment Due Date is not received by
Lender in full on or before the Payment Due Date, Borrower shall pay to Lender,
immediately and without demand, a late fee equal to five percent (5%) of such
delinquent amount.
 
(e)  Default Interest Rate. If the Loan is not paid in full on or before the
Maturity Date (subject to any extension thereto properly exercised by Borrower
in accordance with this Agreement), any other payment due hereunder (including,
without limitation, late charges and fees for legal counsel) is not received by
Lender on or before the date on which such payment originally was due without
regard to any notice or cure periods provided for herein or in the other Loan
Documents or following any other Event of Default and during the continuance
thereof, the interest rate payable on the Loan shall immediately increase to the
Applicable Interest Rate plus five hundred (500) basis points (“Default Rate”)
and continue to accrue at the Default Rate until full payment is received or
such Event of Default is cured, as applicable. Interest at the Default Rate also
shall accrue on any judgment obtained by Lender in connection with collection of
the Loan or enforcement of any obligations due under the other Loan Documents
until such judgment amount is paid in full.
 
(f)  Application of Payments. Payments of principal and interest due from
Borrower shall be applied first to the payment of late fees, then to Lender
advances made to protect the Property or to perform obligations which Borrower
failed to perform, then to the payment of accrued but unpaid interest, and then
to reduction of the outstanding principal. Following an Event of Default, Lender
may apply all payments to amounts then due in any manner and in any order
determined by Lender, in its sole discretion. No principal amount repaid may be
reborrowed.
 
Section 2.05  Prepayment Rights.
 
(a)  Open Date. Borrower acknowledges that Lender is making the Loan to Borrower
at the interest rate and upon the other terms herein set forth in reliance upon
Borrower’s promise to pay the Loan over the full stated term of this Agreement
and that Lender may suffer loss or other detriment if Borrower were to prepay
all or any portion of the Note more than six (6) months prior to its stated
Maturity Date. Borrower may not prepay the Loan in whole or in part at any time
until after the twelfth (12th) Payment Due Date (“Open Date”).
 
(b)  Prepayment After Open Date. After the Open Date, Borrower may prepay
principal in whole, or in part, as long as each of the following conditions are
satisfied:
 
(i)  Borrower provides written notice to Lender of its intent to prepay not more
than sixty (60) days and not less than ten (10) days prior to the intended
prepayment date.

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(ii)  If Event of Default exists on the date of such prepayment, Borrower shall
reimburse Lender for all actual costs reasonably incurred by Lender in
processing the prepayment request, including, without limitation, reasonable
legal fees and expenses.
 
(iii)  Borrower pays with such prepayment all accrued interest and all other
outstanding amounts then due and unpaid under this Agreement and the other Loan
Documents including the Prepayment Fee, if any.
 
(iv)  If prepayment is not made on a Payment Due Date, Borrower pays with such
prepayment (in addition to all other amounts due under this Section 2.05(b)) an
amount equal to the unearned interest (if applicable, at the Default Rate)
computed on the principal amount being prepaid which would accrue for the period
from the date of prepayment through and including the end of the Interest Period
in which such prepayment occurs;
 
(v)  Notwithstanding anything contained herein to the contrary, no prepayment
shall be permitted on any date during the period commencing on the first
calendar day immediately following a Payment Due Date to, but not including, the
Interest Rate Adjustment Date in such calendar month, unless consented to by
Lender in its sole and absolute discretion; and
 
(vi)  Mezzanine Borrower shall have made a proportionate prepayment of the
Mezzanine Loan in accordance with the Mezzanine Loan Documents.
 
(c)  Prohibited Prepayment Prior to Open Date. Except as otherwise set forth in
Section 2.05(d), if payment of all or any part of the principal balance of the
Loan is tendered by Borrower, Lessee, a purchaser at foreclosure, Guarantor, or
any other Person prior to the Open Date, whether by reason of acceleration of
the Loan or otherwise (a “Prohibited Prepayment”), such tender shall be deemed
an attempt to circumvent the prohibition against prepayment set forth in
Section 2.05(a) and, at Lender’s option, shall be an Event of Default. If a
Prohibited Prepayment occurs and is accepted voluntarily or otherwise by Lender,
then, in addition to all other rights and remedies available to Lender upon an
Event of Default, a prepayment premium equal to two percent (2%) of the Maximum
Loan Amount (“Prohibited Prepayment Fee”) shall be due to compensate Lender for
damages suffered as a result of the Prohibited Prepayment, such amount shall be
due in addition to the outstanding principal balance, all accrued and unpaid
interest (and in the event that such Prohibited Prepayment is accepted
voluntarily or otherwise by Lender on a date which is not a Payment Due Date,
such accrued and unpaid interest shall include interest which would accrue on
the outstanding principal balance calculated through and including the end of
the Interest Period in which such Prohibited Payment occurs, it being understood
that any interest payable in connection with a Prohibited Prepayment with
respect to a portion of an Interest Period prior to the applicable Interest Rate
Adjustment Date shall be determined by Lender in its sole and absolute
discretion) and other outstanding amounts due under the Loan Documents,
including, without limitation, any amounts due to Lender under Section 2.02(g)
hereof.
 
(d)  Prepayment as a Result of a Casualty or Condemnation. Prepayments arising
from Lender’s application of insurance proceeds upon the occurrence of a
Casualty or the application of a condemnation award upon the occurrence of a
Condemnation may be made prior to the Open Date without being deemed a
Prohibited Prepayment and, whenever made, without payment of the Prepayment Fee
or a Prohibited Prepayment Fee.

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(e)  Notice Irrevocable. Notwithstanding any provision of this Agreement to the
contrary, Borrower’s notice of prepayment in accordance with
subsection 2.05(b) above shall be irrevocable, and the principal balance to be
prepaid shall be absolutely and unconditionally due and payable on the date
specified in such notice; provided, however, Borrower’s notice of prepayment may
be revoked not more than two (2) times in any twelve (12) month period and if
revoked, Borrower shall reimburse Lender for all actual costs reasonably
incurred by Lender in processing such extension request, including, without
limitation, reasonable legal fees and expenses.
 
Section 2.06  Intentionally Omitted.
 
Section 2.07  Interest Rate Cap/Hedge.
 
(a)  Initial Interest Rate Cap. On or before the date hereof, Borrower shall
obtain a Rate Cap with a notional amount equal to the Maximum Loan Amount for
the benefit of Lender which provides for payments to be made by the Rate Cap
Provider if, at any time during the term of the Loan, the LIBOR Rate exceeds the
LIBOR Strike Rate. Each Rate Cap required hereunder must: (i) be issued by a
Rate Cap Provider that satisfies the credit criteria set forth below in
Section 2.07(c); (ii) be fully effective as of the Closing Date; (iii) permit
Borrower’s interest in the Rate Cap to be assigned to Lender (and further
assignable by Lender) without the payment of fees or costs and without Rate Cap
Provider’s consent; (iv) contain no cross-defaults to any other agreements among
Borrower, Rate Cap Provider and Lender, or any of their respective Affiliates;
(v) contain no performance obligations of Borrower or Lender beyond Borrower’s
payment of a one-time fee at the effective date of the Rate Cap Agreement;
(vi) be evidenced by a Rate Cap Agreement acceptable to Lender in all respects
in Lender’s sole good faith discretion and delivered to Lender on the Closing
Date, fully executed, along with a legal opinion from Rate Cap Provider’s
counsel (which may be in-house counsel) as to the authorization, execution and
delivery by Rate Cap Provider and enforceability in accordance with its terms);
(vii) comply with criteria issued by any of the Rating Agencies regarding
interest rate cap agreements including, without limitation, the requirement for
additional legal opinions from Rate Cap Provider’s counsel; (viii) otherwise be
satisfactory to Lender in all respects; and (ix) have a notional amount equal to
the Maximum Loan Amount.
 
(b)  Assignment to Lender as Collateral. The Rate Cap and each replacement of a
Rate Cap (including each Rate Cap that Borrower is required to provide in
connection with the extension of the Maturity Date) shall be assigned to Lender
as security for the Debt. Borrower acknowledges that Borrower’s assignment of
the Rate Cap to Lender shall not be deemed completed until such time as Borrower
has delivered to Lender a written acknowledgement from the Rate Cap Provider of
Borrower’s assignment of the Rate Cap to Lender that is acceptable to Lender in
all respects. All payments made by the Rate Cap Provider shall be made directly
to the Cash Management Account and shall be subject to the terms of the Cash
Management Agreement, provided that if a Lockbox Account is in effect, then such
payments shall be deposited into the Lockbox Account in accordance with this
Agreement and the Lockbox Agreement. Failure by the Rate Cap Provider to make
any payment under the Rate Cap shall not relieve Borrower of any of its
obligations to make any payments hereunder or under any other Loan Documents.

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(c)  Credit Rating of Cap Provider; Replacement Upon Adverse Change in Rating.
The Rate Cap must be issued by a Rate Cap Provider having (i) either (A) a
long-term unsecured debt rating of not less than “AA-” from S&P if Rate Cap
Provider has only a long-term rating from S&P or (B) a long-term unsecured debt
rating of not less than “A+” from S&P and a short-term rating of not less than
“A-1” from S&P if Rate Cap Provider has both a long-term and a short-term rating
from S&P, (ii) either (A) a long-term unsecured debt rating of not less than
“Aa3” from Moody’s if Rate Cap Provider has only a long-term rating from Moody’s
or (B) a long-term unsecured debt rating of not less than “A1” from Moody’s and
a short-term rating of not less than “P1” from Moody’s if Rate Cap Provider has
both a long-term and a short-term rating from Moody’s and (C) if Rate Cap
Provider is rated by Fitch, either a long-term unsecured debt rating of not less
than “A” from Fitch or a short-term rating of not less than “F-1” from Fitch.
If, at any time during the term of the Loan, any of the Rate Cap Provider’s
credit ratings falls below those required in the previous sentence, Borrower
shall, at Borrower’s expense, provide a replacement Rate Cap from a different
Rate Cap Provider which satisfies the required credit ratings. Each replacement
Rate Cap shall satisfy all requirements of this Section 2.07 and, unless
otherwise agreed by Lender, shall be substantially in the form of the Rate Cap
Agreement assigned to Lender as of the Closing Date. Each replacement Rate Cap
and all required documents must be delivered to Lender within thirty (30)
business days of Lender’s notification that a replacement Rate Cap is required.
 
(d)  Borrower’s Payment of Lender Review Expenses. Borrower shall pay all
expenses incurred by Lender in connection with Lender’s review and approval of
the initial Rate Cap and Rate Cap Provider, each Rate Cap required in connection
with an extension of the Maturity Date, and each replacement of a Rate Cap that
is required under the terms of this Agreement, including, without limitation,
reasonable legal fees and expenses.
 
ARTICLE 3  
 

 
CASH MANAGEMENT
 
Section 3.01  Marriott FF&E Reserve Account. 
 
(a)  Control of Marriott FF&E Reserve Account. On or before the Closing Date,
Borrower shall cause Lessee or Marriott to establish the Marriott FF&E Reserve
Account with Marriott FF&E Reserve Account Bank. The Marriott FF&E Reserve
Account shall be an Eligible Account. The Marriott FF&E Reserve Account shall be
under the sole dominion and control of Lender. Notwithstanding the foregoing,
Marriott shall have the right to withdraw funds from the Marriott FF&E Reserve
Account subject to the terms and conditions set forth in the Property Management
Contracts. Borrower shall not have any right to withdraw funds from the Marriott
FF&E Reserve Account.
 
(b)  Security Interest in Marriott FF&E Reserve Account. Concurrently herewith,
Borrower has caused Lessee to grant to Lender a first-priority security interest
in the Marriott FF&E Reserve Account and the proceeds thereof pursuant to the
Loan Documents. Borrower shall, or shall cause Lessee to, take such action as
requested by Lender to cause Lender to maintain a first-priority perfected
security interest in the Marriott FF&E Reserve Account.

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(c)  Application of Funds in Marriott FF&E Reserve Account. Funds held in the
Marriott FF&E Reserve Account are to be applied in the manner provided set forth
in the Property Management Contracts.
 
(d)  No Waiver of Default. No agreement by Lender to permit funds on deposit in
the Marriott FF&E Reserve Account to be used by Property Manager for any purpose
at a time when a Default or Event of Default has occurred and is then continuing
shall be deemed a waiver or cure by Lender of that Default or Event of Default,
nor shall Lender’s rights and remedies by prejudiced in any manner thereby.
 
(e)  Investment of Funds. All or a portion of any amounts in the Marriott FF&E
Reserve Account shall, so long as a Marriott Management Period is continuing, be
invested and reinvested by Marriott FF&E Reserve Account Bank in accordance with
written instructions delivered by Marriott, or if a Marriott Management Period
is no longer continuing, by Lender, in one or more Permitted Investments
(subject to the availability of such Permitted Investments), provided, however,
that:
 
(i)  the maturity of the Permitted Investments on deposit therein shall be at
the discretion of Marriott, if a Marriott Management Period is continuing, or
Lender, if a Marriott Management Period is no longer continuing, but in any
event no later than the Business Day of or immediately preceding the date on
which such funds are reasonably expected to be required to be withdrawn
therefrom pursuant to the Property Management Contracts and this Agreement;
 
(ii)  at any time that a Marriott Management Period is no longer continuing,
Marriott shall not have any right to direct investment of the balance in the
Marriott FF&E Reserve Account; and
 
(iii)  all such Permitted Investments shall be held in the name of Lessee and
shall be credited to the Marriott FF&E Reserve Account.
 
Lender shall have no liability for any loss in investments of funds in the
Marriott FF&E Reserve Account and no such loss shall affect Borrower’s
obligation to fund, or liability for funding, the Marriott FF&E Reserve Account,
the Lockbox Account, the Cash Management Account or any Reserve Account. All
interest paid or other earnings on funds deposited into the Marriott FF&E
Reserve Account shall be deposited into such Marriott FF&E Reserve Account.
Lessee shall include all earnings on the Marriott FF&E Reserve Account as income
of Lessee for federal and applicable state tax purposes.
 
(f)  Changes in Marriott FF&E Reserve Account. In the event that Marriott
exercises any right that Marriott may have to change the account that
constitutes the “FF&E Reserve” (as defined in the Property Management Contracts)
from the then-existing Marriott FF&E Reserve Account to another account,
Borrower shall: (i) enter into, and cause Marriott and the new Marriott FF&E
Account Bank to enter into, a replacement Marriott FF&E Account Control
Agreement with respect to such account (which account shall thereafter
constitute the Marriott FF&E Reserve Account hereunder) in form and substance
reasonably acceptable to Lender, (ii) deliver to Lender a new or updated opinion
of Borrower’s counsel opining, with respect to the new Marriott FF&E Account
Control Agreement, as to due authorization, execution and delivery by Borrower,
enforceability and perfection, all in form and substance reasonably acceptable
to Lender, and (iii) deliver to Lender a new or updated opinion of Marriott’s
counsel opining, with respect to the new Marriott FF&E Account Control
Agreement, as to due authorization, execution and delivery by Marriott and
enforceability, all in form and substance reasonably acceptable to Lender.

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(g)  Event of Default. Nothing contained in Section 2.04(f) or Section 3.01(f)
shall in any way limit any rights and remedies otherwise available to Lender
under this Agreement, the other Loan Documents or applicable law upon an Event
of Default.
 
Section 3.02  Deposits into Marriott FF&E Reserve Account.
 
During a Marriott Management Period, Borrower shall cause Lessee or Marriott to
deposit into the Marriott FF&E Reserve Account all amounts required to be
deposited by Marriott therein in accordance with the terms of the Property
Management Contracts.
 
Section 3.03  Deposits into the Cash Management Account.
 
Borrower shall or shall cause Lessee and/or Property Manager to deposit (i) all
amounts payable to Borrower by Lessee, Property Manager and/or any other party
under the Operating Lease, Property Management Contracts and/or from whatever
source and (ii) all amounts payable to Lessee by Property Manager and/or any
other party under the Property Management Contracts and/or from whatever source
into the Cash Management Account as and when required to be paid to Borrower or
Lessee, as applicable, in accordance with the terms and provisions of the
Operating Lease and/or the Property Management Contracts.
 
Section 3.04  Other Deposits into the Cash Management Account.
 
If at any time during a Marriott Management Period or an Acceptable Management
Period, Borrower or Lessee shall receive any Receipts, whether from Property
Manager or Lessee or another party, Borrower shall, and shall cause Lessee to,
promptly deposit the same into the Cash Management Account in accordance with
the terms of the Property Management Contracts and applicable Loan Documents.
 
Section 3.05  Other Deposits in Lockbox Account.  If at any time neither a
Marriott Management Period nor Acceptable Management Period shall exist,
Borrower shall or shall cause Lessee to:
 
(a)  establish and maintain a lockbox or clearing account which qualifies as an
Eligible Account at an Eligible Institution (“Lockbox Account”) pursuant to an
agreement substantially in the form attached hereto as Exhibit N;
 
(b)  direct all tenants (including, without limitation, Lessee) under the Leases
(if any) (including, without limitation, the Operating Lease)to pay all Rents
thereunder directly into the Lockbox Account, and deliver irrevocable (without
Lender’s written consent) letters of direction to such effect to such tenants in
Lender’s reasonable form;

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(c)  instruct each of the credit card banks, credit card companies or other
credit card receipt intermediaries with which Borrower, Lessee or Property
Manager has entered into merchant, clearing or other agreements with respect to
the Property that all credit card receipts with respect to the Property cleared
by such credit card banks, credit card companies or other intermediaries shall
be transferred by such credit card banks, credit card companies or other
intermediaries by wire transfer or the ACH system to the Lockbox Account, and
deliver irrevocable (without Lender’s prior written consent) instruction letters
to such effect to such Persons (and obtain each such Person’s acknowledgment and
agreement thereto) in Lender’s reasonable form;
 
(d)  instruct all Persons that maintain open accounts with Borrower, Lessee or
Property Manager or with whom Borrower, Lessee or Property Manager does business
on an “accounts receivable” basis with respect to the Property to deliver all
payments due under such accounts to the Lockbox Account, and deliver to such
Persons irrevocable (without Lender’s written consent) letters of instruction in
Lender’s reasonable form; and
 
(e)  deposit (or cause to be deposited) any and all other Receipts promptly into
the Lockbox Account and in no event later than one Business Day after the same
are paid to or for the benefit of Borrower, Lessee or Property Manager.
 
Borrower shall not and shall not permit Lessee to (x) terminate, amend, revoke
or modify any tenant direction letter or instruction letter provided pursuant to
Sections 3.04(a), (b) and (c) above to a credit card bank, credit card company
or other intermediary or other Person (each a “Direction Letter”) in any manner
whatsoever, or (y) direct or cause any Person receiving or bound by a Direction
Letter, or purportedly or intended or required to receive or be bound or
instructed by a Direction Letter, to pay any amount in any manner other than as
provided in the related Direction Letter. To the extent that Borrower, Lessee or
any Person on their behalf (other than Property Manager) holds any Receipts or
Advance Bookings Deposits, whether in accordance with this Agreement or
otherwise, (1) such amounts shall be deemed to be collateral for the Loan and
shall be held in trust for the benefit, and as the property, of Lender, and
(2) such amounts shall not be commingled with any other funds or property of
Borrower or Lessee.
 
Section 3.06  Transfers to Cash Management Account.
 
Amounts on deposit in the Lockbox Account (if any) shall be transferred to the
Cash Management Account and/or remitted to Borrower in accordance with the terms
and provisions of the Lockbox Agreement (if any) and/or the Cash Management
Agreement, (as the case may be) to be applied, in the case of amounts
transferred to the Cash Management Account, in accordance with the terms and
provisions of the Cash Management Agreement.

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ARTICLE 4  
 

 
ESCROW AND RESERVE REQUIREMENTS
 
Section 4.01  Creation and Maintenance of Escrows and Reserves.
 

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(a)  Control of Reserve Accounts. On the Closing Date, each of the Reserve
Accounts shall be established by Lender. Each Reserve Account required under
this Agreement shall be an Eligible Account. Each Reserve Account shall be under
the sole dominion and control of Lender, and Borrower shall not have any right
to withdraw funds from a Reserve Account. Upon the occurrence of an Event of
Default, Lender may, subject to Section 4.01(h) hereof, in addition to any and
all other rights and remedies available to Lender, apply any sums then present
in any or all of the Reserve Accounts to the payment of the Debt in any order as
determined by Lender in its sole discretion.
 
(b)  Funds Dedicated to Particular Purpose. Funds held in a Reserve Account are
not to be used to fund Reserve Items or expenses contemplated by a different
Reserve Account, and Borrower may not use and Lender shall have no obligation to
apply funds from one Reserve Account to pay for Reserve Items or expenses
contemplated by another Reserve Account. For example, (i) funds held in the Tax
Escrow Account shall not be used to pay for FF&E Expenditures; and (ii) funds
held in the FF&E Reserve Account shall not be used to pay for Insurance
Premiums.
 
(c)  Release of Reserves Upon Payment of Debt. Upon payment in full of the Loan,
Lender shall disburse to Borrower all unapplied funds held by Lender in the
Reserve Accounts pursuant to this Agreement.
 
(d)  No Obligation of Lender. Nothing in this Agreement shall: (i) make Lender
responsible for making or completing any Reserve Item; (ii) require Lender to
advance, disburse or expend funds in addition to funds then on deposit in the
related Reserve Account to make or complete any Reserve Item; or (iii) obligate
Lender to demand from Borrower additional sums to make or complete any Reserve
Item.
 
(e)  No Waiver of Default. No disbursements made from a Reserve Account at the
time when a Borrower default or Event of Default has occurred and is then
continuing shall be deemed a waiver or cure by Lender of that default or Event
of Default, nor shall Lender’s rights and remedies by prejudiced in any manner
thereby.
 
(f)  Insufficient Amounts in a Reserve Account. Notwithstanding that Lender has
the right to require Borrower to pay any deficiency in a Reserve Account if
Lender reasonably determines that amounts in a Reserve Account are insufficient,
the insufficiency of funds in a Reserve Account, or Lender’s application of
funds in a Reserve Account following an Event of Default other than for funding
of the Reserve Items, shall not relieve Borrower from its obligation to perform
in full each of its: (i) obligations and covenants under this Agreement;
(ii) agreements or covenants with tenants under the Leases (if any); and
(iii) agreements with leasing agents.

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(g)  Investment of Funds. All or a portion of any amounts in the Reserve
Accounts shall, so long as no Event of Default has occurred, be invested and
reinvested by Lender in accordance with written instructions delivered by
Borrower, or after an Event of Default has occurred, by Lender, in one or more
Permitted Investments (subject to the availability of such Permitted
Investments), provided, however, that:
 
(i)  the maturity of the Permitted Investments on deposit therein shall be at
the discretion of Borrower, but in any event no later than the Business Day of
or immediately preceding the date on which such funds are reasonably expected to
be required to be withdrawn therefrom pursuant to this Agreement and the Cash
Management Agreement;
 
(ii)  after an Event of Default has occurred, Borrower shall not have any right
to direct investment of the balance in any Reserve Account;
 
(iii)  all such Permitted Investments shall be held in the name of Lender or its
servicer and shall be credited to the applicable Reserve Account; and
 
(iv)  if no written investment direction is provided to Lender by Borrower,
Lender may at Lender’s option invest any balance in each such Reserve Account in
such Permitted Investments as may be selected by Lender.
 
Lender shall have no liability for any loss in investments of funds in any
Reserve Account that are invested in Permitted Investments and no such loss
shall affect Borrower’s obligation to fund, or liability for funding, any
Reserve Account. All interest paid or other earnings on funds deposited into any
Reserve Account hereunder shall be deposited into such Reserve Account. Borrower
shall include all earnings on the Reserve Accounts as income of Borrower for
federal and applicable state tax purposes. If no written investment direction is
provided to Lender by Borrower, Lender may at its option invest such amounts in
a Permitted Investment selected by Lender.
 
(h)  Event of Default. After an Event of Default has occurred, Borrower shall
not be permitted to direct Lender or any other Person to make any withdrawal(s)
from any of the Cash Management Account or any Reserve Account and Lender, in
Lender’s sole and absolute discretion, may liquidate any Permitted Investments
of the amount on deposit in such accounts and/or withdraw and use such amounts
on deposit in such accounts to make payments in accordance with Section 2.04(f),
provided, however, while an Event of Default exists, Lender agrees that (i) any
amounts on deposit in the Tax Escrow Account shall be used to pay any applicable
Taxes prior to the date when delinquent, (ii) any amounts on deposit in the
Ground Rents Escrow Account shall be used to pay any Ground Rents when due under
the Ground Lease and (iii) any amount on deposit in the Advance Bookings Reserve
Account that is unearned by Borrower shall be held by Lender and applied to the
Advance Bookings to which it relates and any amount on deposit in the Advance
Bookings Reserve Account that is refundable by Borrower shall be refunded by
Lender to the Person entitled to such refund. Nothing contained in
Section 2.04(f) or this Section 4.01(h) shall in any way limit any rights and
remedies otherwise available to Lender under this Agreement, the other Loan
Documents or applicable law upon an Event of Default.

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Section 4.02  Tax Escrow.
 
(a)  Deposits to the Tax Escrow Account. On the Closing Date, Borrower shall pay
or cause to be paid to Lender such amount as is noted on the closing statement
relating to the closing of the Loan for deposit into the Tax Escrow Account
(which is the amount reasonably determined by Lender that is necessary to pay
when due Borrower’s obligation for Taxes upon the due dates established by the
appropriate tax or assessing authorities during the next ensuing twelve (12)
months, taking into consideration the Monthly Tax Deposits to be collected from
the first Payment Due Date to the due date for payment of Taxes). Thereafter,
beginning on the first Payment Due Date and on each Payment Due Date thereafter,
Borrower shall deliver or cause to be delivered to Lender the Monthly Tax
Deposit.
 
(b)  Disbursement from Tax Escrow Account. Provided amounts in the Tax Reserve
Account are sufficient to pay the Taxes then due and no Event of Default exists,
Lender shall pay the Taxes as they become due on their respective due dates on
behalf of Borrower by applying the funds held in the Tax Escrow Account to the
payments of Taxes then due. In making any payment of Taxes, Lender may do so
according to any bill, statement or estimate obtained from the appropriate
public office with respect to Taxes without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof.
 
(c)  Surplus or Deficiency in Tax Escrow Account. If amounts on deposit in the
Tax Escrow Account collected for an annual tax period exceed the Taxes actually
paid during such tax period, Lender shall, in its discretion, return the excess
to Borrower or credit the excess against the payments Borrower is to make to the
Tax Escrow Account for the next tax period. If amounts on deposit in the Tax
Escrow Account collected for an annual tax period are insufficient to pay the
Taxes actually due during such tax period, Lender shall notify Borrower of the
deficiency and, within ten (10) days thereafter, Borrower shall deliver to
Lender such deficiency amount. If, however, Borrower receives notice of any such
deficiency on a date that is within ten (10) days prior to the date that Taxes
are due, Borrower will deposit or cause to be deposited the deficiency amount
within one (1) business day after its receipt of such deficiency notice.
 
(d)  Changes in Amount of Taxes Due; Changes in the Monthly Tax Deposit.
Borrower shall notify Lender immediately of any changes to the amounts,
schedules and instructions for payment of any Taxes of which it has or obtains
knowledge and authorizes Lender or its agent to obtain the bills for Taxes
directly from the appropriate taxing authority. If the amount due for Taxes
shall increase and Lender reasonably determines that amounts on deposit in the
Tax Escrow Account will not be sufficient to pay Taxes due for an annual tax
period, Lender shall notify Borrower of such determination and of the increase
needed to the Monthly Tax Deposit. Commencing with the Payment Due Date
specified in such notice from Lender, Borrower shall make deposits at the
increased amount of the Monthly Tax Deposit.
 
Section 4.03  Insurance Premium Escrow.
 
Subject to Section 4.08 below:
 
(a)  Deposits to Insurance Premium Escrow Account. Beginning on the first
Payment Due Date on which a Marriott Management Period no longer exists and on
each Payment Due Date thereafter, Borrower shall deliver to Lender for deposit
to the Insurance Premium Escrow Account the amount reasonably determined by
Lender that is necessary to pay when due Borrower’s obligation for Insurance
Premiums during the next ensuing twelve (12) months, taking into consideration
the Monthly Insurance Deposits to be collected from the next Payment Due Date to
the due date for payment of such Insurance Premiums. Thereafter, beginning on
the next Payment Due Date and on each Payment Due Date thereafter, Borrower
shall deliver to Lender the Monthly Insurance Deposit.

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(b)  Disbursement from Insurance Premium Escrow Account. Provided amounts in the
Insurance Premium Escrow Account are sufficient to pay the Insurance Premiums
then due and no Event of Default exists, Lender shall pay the Insurance Premiums
as they become due on their respective due dates on behalf of Borrower by
applying funds held in the Insurance Premium Escrow Account to the payments of
Insurance Premiums then due. In making any payment relating to Insurance
Premiums, Lender may do so according to any bill, statement or estimate procured
from the insurer without inquiry into the accuracy of such bill, statement or
estimate.
 
(c)  Surplus or Deficiency in Insurance Premium Escrow Account. If amounts on
deposit in the Insurance Premium Escrow Account collected for an annual period
exceed the Insurance Premiums actually paid during such period, Lender shall
either return such excess to Borrower or credit such excess against the payments
Borrower is to make to the Insurance Premium Escrow Account for the next annual
period (the determination of which of these two actions Lender shall take to be
made by Lender in its reasonable discretion). If amounts on deposit in the
Insurance Premium Escrow Account collected for an annual premium period are
insufficient to pay the Insurance Premiums actually due during such annual
period Lender shall notify Borrower of the deficiency and, within ten (10) days
thereafter, Borrower shall deliver to Lender such deficiency amount. If,
however, Borrower receives notice of any such deficiency on a date that is
within ten (10) days prior to the date that Insurance Premiums are due, Borrower
will deposit the deficiency amount within one (1) business day after its receipt
of such deficiency notice.
 
(d)  Changes in Insurance Premium Amounts; Change in Monthly Deposit Amount.
Borrower shall notify Lender promptly of any changes to the amounts, schedules
and instructions for payment of any Insurance Premiums of which it has or
obtains knowledge and authorizes Lender or its agent to obtain the bills for the
Insurance Premiums directly from the insurance provider or its agent. If the
amount due for Insurance Premiums shall increase and Lender reasonably
determines that amounts on deposit in the Insurance Premium Escrow Account will
not be sufficient to pay the Insurance Premiums, Lender shall notify Borrower of
such determination and of the increase needed to the Monthly Insurance Deposit.
Commencing with the Payment Due Date specified in such notice from Lender,
Borrower shall make deposits at the increased amount of the Monthly Insurance
Deposit.
 
Section 4.04  Ground Rents Escrow.
 
(a)  Deposits to the Ground Rents Escrow. On the Closing Date, Borrower has
deposited with Lender such amount as is noted on the Closing Statement for
obligations due under the Ground Lease to the Ground Rents Escrow which is the
amount determined by Lender that is necessary to pay when due Ground Rents upon
the due dates established under the Ground Lease during the next ensuing twelve
(12) months, taking into consideration the Monthly Ground Rent Deposits to be
collected from the first Payment Due Date to the due date for payments under the
Ground Lease. Thereafter, beginning on the first Payment Due Date and on each
Payment Due Date thereafter, Borrower shall deliver to Lender the Monthly Ground
Rent Deposit.

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(b)  Disbursement from Ground Rents Escrow. Provided amounts in the Ground Rents
Escrow are sufficient to pay the Ground Rents then due under the Ground Lease
and no Event of Default exists, Lender shall pay the Ground Rents under the
Ground Lease as they become due on their respective due dates on behalf of
Borrower by applying the funds held in the Ground Rents Escrow to the payments
of Ground Rents then due. In making any payments under the Ground Lease, Lender
may do so according to any bill, statement or estimate obtained from the Ground
Lessor (as defined in the Security Instrument) with respect to Ground Rents
without inquiry into the accuracy of such bill, statement or estimate or into
the validity thereof.
 
(c)  Surplus or Deficiency in Ground Rents Escrow. If amounts on deposit in the
Ground Rents Escrow collected for any calendar year exceed Ground Rents actually
paid during such calendar year, Lender shall, in its discretion, return the
excess to Borrower or credit the excess against the payments Borrower is to make
to the Ground Rents Escrow for the next twelve month period. If amounts on
deposit in the Ground Rents Escrow collected for any calendar year are
insufficient to pay Ground Rents actually due during such calendar year, Lender
shall notify Borrower of the deficiency and, within ten (10) days thereafter,
Borrower shall deliver to Lender such deficiency amount. If, however, Borrower
receives notice of any such deficiency on a date that is within ten (10) days
prior to the date that any Ground Rents are due, Borrower will deposit the
deficiency amount within one (1) business day after its receipt of such
deficiency notice.
 
(d)  Changes in Ground Rents Due; Changes in the Monthly Ground Rent Deposit.
Borrower shall notify Lender immediately of any changes to the amounts,
schedules and instructions for payment of any obligations due under the Ground
Lease of which it has or obtains knowledge and authorizes Lender or its agent to
obtain the bills for Ground Rents directly from the Ground Lessor. If the amount
due for Ground Rents shall increase and Lender determines that amounts on
deposit and to be deposited in the Ground Rents Escrow will not be sufficient to
pay Ground Rents due for a twelve month period, Lender shall notify Borrower of
such determination and of the increase needed to the Monthly Ground Rent
Deposit. Commencing with the next Payment Due Date following such notice from
Lender, Borrower shall make deposits at the increased amount of the Monthly
Ground Rent Deposit.
 
Section 4.05  FF&E Reserve Account.
 
Subject to Section 4.08 below:
 
(a)  FF&E Reserve Generally. Amounts in the FF&E Reserve Account are to be used
for the purpose of funding the FF&E Expenditures, which Borrower covenants and
agrees to perform (or to cause Property Manager to perform) in accordance with
the terms of this Agreement.

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(b)  Deposits to the FF&E Reserve Account. Beginning on the first Payment Due
Date on which a Marriott Management Period no longer exists and on each Payment
Due Date thereafter, Borrower shall pay to Lender (or cause Property Manager to
pay to Lender) for deposit to the FF&E Reserve Account, an amount equal to the
greater of: (i) the amount required to be deposited under any Property
Management Contracts then in effect as a reserve for FF&E Expenditures for the
second full calendar month or Accounting Period (as applicable) prior to the
Payment Due Date in question; and (ii) an amount equal to four and one-half
percent (4.5%) of the Operating Income for the second full calendar month prior
to the Payment Due Date in question (e.g., 4.5% of Operating Income for February
will be deposited during the month of April) (all such amounts so deposited
shall hereinafter be referred to collectively as the “FF&E Funds”).
 
(c)  Disbursements from the FF&E Reserve Account. Lender shall make
disbursements of amounts on deposit in the FF&E Reserve Account upon Borrower’s
performance, to Lender’s reasonable satisfaction, of all conditions to
disbursement set forth in Article 5 of this Agreement.
 
Section 4.06  Advance Bookings Reserve Account. 
 
(a)  Deposits to the Advance Bookings Reserve Account. Beginning on the first
Payment Due Date upon which a Marriott Management Period no longer exists and on
each Payment Due Date thereafter, Borrower shall pay to Lender as a deposit to
the Advance Bookings Reserve Account, an amount equal to the amount, if any, by
which the aggregate of all then unearned or otherwise refundable Advance
Bookings Deposits (as set forth on the then most recent Advance Bookings Reserve
Statement) are in excess of the balance then on deposit in the Advance Bookings
Reserve Account (all such amounts so deposited on the Closing Date and
thereafter shall hereinafter be referred to collectively as the “Advance
Bookings Reserve Funds”).
 
(b)  Disbursements from the Advance Bookings Reserve Account. In the event that,
on any Payment Due Date upon which a Marriott Management Period no longer
exists, the balance on deposit in the Advance Bookings Reserve Account is
greater than the aggregate of all then unearned or otherwise refundable Advance
Bookings Deposits (as set forth on the then most recent Advance Bookings Reserve
Statement), then Lender shall disburse the difference into the Lockbox Account
for application as set forth in the Lockbox Account Agreement.
 
(c)  Reassessment of Required Deposit. If at any time Lender reasonably
determines that the Advance Bookings Reserve Funds then on deposit in the
Advance Bookings Reserve Account are less than the aggregate of all then
unearned or otherwise refundable Advance Bookings Deposits, Lender may, if a
Marriott Management Period no longer exists, notify Borrower of such
determination and of the amount estimated by Lender to make-up such deficiency
as reasonably determined by Lender. Within ten (10) days after such notice from
Lender, Borrower shall deliver (or cause to be delivered) the deficiency amount
to Lender, and Lender shall deposit the same in the Advance Bookings Reserve
Account and hold and administer same in accordance with this Agreement.

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Section 4.07  Seasonal Reserve Account.
 
(a)  Deposits into the Seasonal Reserve Account. On each Payment Due Date
occurring in a Seasonal Reserve Deposit Month, except for any such Payment Due
Date which occurs during a Marriott Management Period, Borrower shall pay to
Lender as a deposit to the Seasonal Reserve Account, an amount equal to the
lesser of (i) an amount reasonably determined by Lender as sufficient, when
aggregated with all other deposits expected to be made into the Seasonal Reserve
Account in other Seasonal Reserve Deposit Months, to fund projected shortfalls
in cash flow available to pay debt service on the Loan and Operating Expenses
(to the extent not paid directly by the Property Manager) and to make required
deposits into the other Reserves during Seasonal Reserve Withdrawal Months, and
(ii) all available cash flow from the Property after payment of debt service on
the Loan and Operating Expenses (to the extent not paid directly by the Property
Manager) and after making required deposits into the other Reserves, such
Seasonal Reserve Account to be maintained for the purpose of establishing and
maintaining a reserve to pay debt service on the Loan, make required deposits
into other Reserves and pay Operating Expenses (all such amounts so deposited
shall hereinafter be referred to collectively as the “Seasonal Reserve Funds”).
 
(b)  Disbursements from the Seasonal Reserve Account. In the event that, on any
Payment Due Date upon which a Marriott Management Period no longer exists, the
balance on deposit in the Lockbox Account (after application of the same in
accordance with the Lockbox Account Agreement) is insufficient to pay debt
service on the Loan and Operating Expenses (to the extent not paid directly by
the Property Manager) and to make required deposits into the other Reserves,
then so long as no Default or Event of Default exists at the time of any
requested distribution of funds from the Seasonal Reserve Account, Lender shall,
at Borrower’s request, disburse from the Seasonal Reserve Account into the
Lockbox Account an amount equal to such deficiency for application as set forth
in the Lockbox Account Agreement, provided each of the following terms and
conditions shall have been satisfied: (i) all Seasonal Reserve Funds released by
Lender into the Lockbox Account shall be used to pay or reimburse Borrower for
payment of debt service on the Loan, to make required deposits into the Reserves
and to pay Operating Expenses (to the extent not paid directly by the Property
Manager) (in the order set forth in the Lockbox Account Agreement); (ii) all
requests by Borrower for a disbursement of Seasonal Reserve Funds shall be in
writing and shall not be made more frequently than once per month; (iii) such
disbursement shall not exceed debt service, Reserve deposits and Operating
Expenses, as applicable, (incurred pursuant to the Approved Budget) payable in
the applicable month; (iv) unless otherwise approved by Lender, funds shall be
disbursed from the Seasonal Reserve Account only during Seasonal Reserve
Disbursement Months; and (v) Borrower shall provide such evidence as Lender may
reasonably request regarding the use of such funds. If an Event of Default
exists, Lender may apply the Seasonal Reserve Funds, together with any interest
accrued thereon, to reduce the amounts owed by Borrower under the Loan in such
order and priority as Lender may determine.
 
(c)  Reassessment of Required Deposit. If at any time Lender reasonably
determines that the Seasonal Reserve Funds will not be sufficient to pay debt
service on the Loan and Operating Expenses and to make required deposits into
the other Reserves in the applicable months, Lender may notify Borrower of such
determination and of the amount estimated by Lender to make-up such deficiency
as reasonably determined by Lender based upon changes in circumstances. Within
ten (10) days after such notice from Lender, Borrower shall deliver the
deficiency amount to Lender, and Lender shall deposit in the Seasonal Reserve
Account and hold and administer same in accordance with this Agreement;
provided, however, that in no event shall Borrower be required to deposit
amounts under this Section 4.07(c) in excess of the amount of all available cash
flow from the Property after payment of debt service on the Loan and Operating
Expenses (to the extent not paid directly by the Property Manager) and after
making required deposits into the other Reserves.

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Section 4.08  Waiver of Certain Reserve Requirements.
 
Notwithstanding anything to the contrary set forth above in this Article 4, so
long as a Marriott Management Period is continuing, then:
 
(a)  Provided Property Manager accrues for Insurance Premiums in accordance with
the Property Management Contracts, Borrower shall have no obligation to deposit
any amounts into the Insurance Premium Escrow Account pursuant to Section 4.03
above.
 
(b)  Provided Property Manager maintains reserves in the Marriott FF&E Reserve
Account for FF&E Expenditures in accordance with the Property Management
Contracts, Borrower shall have no obligation to deposit any amounts into the
FF&E Reserve Account pursuant to Section 4.05 above.
 
(c)  There shall be no Monthly Insurance Deposit in respect of coverage under
any Qualified Insurance Program.
 
Section 4.09  Debt Service Reserve Account.
 
(a)  Debt Service Reserve Generally. Amounts in the Debt Service Reserve Account
are to be held as additional Collateral for the Loan until used for the purpose
of paying, in full, the principal installment (if any), accrued interest due
from Borrower on a Payment Due Date in accordance with this Agreement.
 
(b)  Deposits to the Debt Service Reserve Account. On each Payment Due Date, an
amount necessary to pay the amount required under Section 2.03(b), shall be
deposited in the Debt Service Reserve Account (all such amounts so deposited
shall hereinafter be referred to collectively as the “Debt Service Reserve
Deposits”).
 
(c)  Disbursements from the Debt Service Reserve Account. Lender shall disburse
on each Payment Due Date amounts from the Debt Service Reserve Account to pay,
in full, the installment of interest due under Section 2.03(b) from Borrower on
such Payment Due Date in accordance with this Agreement.
 
Section 4.10  Cash Trap Reserve Account.
 
(a)  Section 4.10Cash Trap Reserve Generally. Amounts in the Cash Trap Reserve
Account are to be held as additional Collateral for the Loan and (without
limiting Borrower’s obligation to pay the same), used for the purpose of paying,
in full, the principal installment (if any), accrued interest and deposits to
Reserve Accounts due from Borrower on a Payment Due Date in accordance with
Article 4 of this Agreement.
 
(b)  Deposits to the Cash Trap Reserve Account. On each Payment Due Date during
a Cash Trap Period, after all deposits required under Article 4 of this
Agreement are made and/or applied to the sub-accounts as specified in the Cash
Management Agreement, all excess funds on deposit in the Cash Management Account
shall be deposited in the Cash Trap Reserve Account (all such amounts so
deposited shall hereinafter be referred to collectively as the “Cash Trap
Reserve Deposits”).
 
(c)  Disbursements from the Cash Trap Reserve Account. Upon the occurrence of a
Cash Trap Termination Event, the funds on deposit in the Cash Trap Reserve
Account shall be released to Borrower.

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ARTICLE 5  
 

 
COMPLETION OF REPAIRS RELATED TO RESERVE ACCOUNTS;
 
CONDITIONS TO RELEASE OF FUNDS
 
Section 5.01  Conditions Precedent to Disbursements from Certain Reserve
Accounts.
 
The following provisions apply to each request for disbursement from the FF&E
Reserve Account:
 
(a)  Disbursement only for Completed Repairs. Disbursements shall be limited to
Reserve Items that are completed and paid for by Borrower, except to the extent
permitted under Section 5.01(b) of this Agreement. At no time shall Lender be
obligated to pay amounts to Borrower in excess of the current balance in the
applicable Reserve Account at the time of disbursement.
 
(b)  Partial Completion. Lender may agree to disburse funds for Reserve Items
prior to completion thereof where (i) the contractor performing such work
requires periodic payments pursuant to the terms of its written contract with
Borrower and Lender has given its prior written approval to such contract, and
(ii) the cost of the portion of the Reserve Item to be completed under such
contract exceeds $1,000,000.
 
(c)  Disbursement Request; Maximum Frequency and Amount. Borrower shall submit
to Lender a Disbursement Request together with such additional information as
Lender may reasonably request in connection with the Disbursement Request at
least ten (10) business days prior to the date on which Borrower requests Lender
to make a disbursement from a Reserve Account. Unless otherwise agreed to by
Lender, Borrower may not submit, and Lender shall not be required to make, more
than one (1) disbursement from each Reserve Account during any calendar month.
No Disbursement Request shall be made for less than $2,500 or the total cost of
the Reserve Items, if less.
 
(d)  No Existing Event of Default. Lender may refuse to make any disbursement if
an Event of Default exists as of the date on which Borrower submits the
Disbursement Request or on the date the disbursement is actually to be made.

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(e)  Responsible Officer Certificate. Lender must receive a certificate, signed
by a Responsible Officer of Borrower (and, at Lender’s option, also signed by
Borrower’s project architect or engineer if the cost of a single Reserve Item or
the aggregate amount of the Disbursement Request exceeds $500,000), which
certifies that:
 
(i)  All information stated in the Disbursement Request is true and correct in
all material respects, each attachment to the Disbursement Request is correct
and complete, and if the attachment is a copy of the original, that it is a true
and an accurate reproduction of the original;
 
(ii)  Each of the Reserve Items to be funded in connection with the Disbursement
Request was performed in a good and workmanlike manner and in accordance with
all Requirements of Law and has been or will be paid in full by Borrower;
 
(iii)  Subject to Section 5.03, each party that supplied materials, labor or
services has been or will be paid in full (for the portion for which
disbursement is sought in the case of disbursements authorized in accordance
with Section 5.01(b) hereof); and
 
(iv)  In the case of disbursements authorized in accordance with Section 5.01(b)
hereof, the materials for which the request are made are on-site at the Property
and properly secured or have been installed in the Property.
 
(f)  Inspection to Confirm Completion. Prior to making any disbursement, Lender
may require an inspection of the Property, performed at Borrower’s expense, to
verify completion thereof.
 
(g)  Absence of Liens. Lender may require that Borrower provide Lender with any
or all of the following: (i) a written lien waiver acceptable to Lender from
each party to be paid in connection with the Disbursement Request; (ii) a search
of title to the Property effective to the date of the disbursement which shows
no Liens other than the Permitted Encumbrances; or (iii) an endorsement to the
Title Insurance Policy which updates the effective date of such policy to the
date of the disbursement and shows no Liens other than the Permitted
Encumbrances.
 
(h)  Payment of Lender’s Expenses. Borrower shall pay all reasonable expenses
incurred by Lender in processing Borrower’s Disbursement Request including,
without limitation, any inspection costs (whether performed by Lender or an
independent inspector selected by Lender) and reasonable legal fees and
expenses.
 
(i)  Other Items Lender Deems Necessary. Lender shall have received such other
evidence as Lender reasonably requests in connection with its confirmation that
each Reserve Item to be paid in connection with the Disbursement Request has
been completed or performed in accordance with the terms of this Agreement.
 
(j)  Other Insurance. In addition to any insurance required under the Loan
Documents, Borrower shall provide or cause to be provided workmen’s compensation
insurance, builder’s risk, and public liability insurance and other insurance to
the extent required under applicable law in connection with any Reserve Items.
Evidence of such insurance shall be promptly provided by Borrower upon request
by Lender.

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Section 5.02  Waiver of Conditions to Disbursement.
 
No waiver given by Lender of any condition precedent to disbursement from a
Reserve Account shall preclude Lender from requiring that such condition be
satisfied prior to making any other disbursement from a Reserve Account.
 
Section 5.03  Intentionally Omitted. 
 
Section 5.04  Performance of Reserve Items.
 
(a)  Performance of Reserve Items. Borrower shall complete each Reserve Item in
a good and workmanlike manner, using only new materials of the same or better
quality than that being replaced. All Reserve Items shall be performed in
accordance with, and upon completion shall comply with, all Requirements of Law
(including without limitation obtaining and maintaining in effect all necessary
permits and governmental approvals) and all applicable insurance requirements.
 
(b)  Entry onto Property. In order to perform inspections or, following an Event
of Default, to complete Reserve Items which Borrower has failed to perform,
Borrower hereby grants Lender and its agents the right, from time to time, to
enter onto the Property.
 
(c)  Lender Remedy for Failure to Perform. In addition to Lender’s remedies
following an Event of Default, Borrower acknowledges that Lender shall have the
right (but not the obligation) to complete or perform the Reserve Items for
which amounts have been reserved under this Agreement and for such purpose,
Borrower hereby appoints Lender its attorney-in-fact with full power of
substitution (and which shall be deemed to be coupled with an interest and
irrevocable until the Loan is paid in full and the Security Instrument is
discharged of record, with Borrower hereby ratifying all that its said attorney
shall do by virtue thereof): (i) to complete or undertake such work in the name
of Borrower; (ii) to proceed under existing contracts or to terminate existing
contracts (even where a termination penalty may be incurred) and employ such
contractors, subcontractors, watchman, agents, architects and inspectors as
Lender’ determines necessary or desirable for completion of such work; (iii) to
make any additions, changes and corrections to the scope of the work as Lender
deems necessary or desirable for timely completion; (iv) to pay, settle or
compromise all existing bills and claims which are or may become Liens against
the Property or as may be necessary or desirable for completion of such work;
(v) to execute all applications and certificates in the name of Borrower which
may be required to obtain permits and approvals for such work or completion of
such work; (vi) to prosecute and defend all actions or proceedings in connection
with the repair or improvements to the Property; and (vii) to do any and every
act which Borrower might do in its own behalf to fulfill the terms of Borrower’s
obligations under this Agreement. Lender will not exercise such power of
attorney unless an Event of Default exists. Amounts expended by Lender which
exceed amounts held in the Reserve Accounts shall be added to the Maximum Loan
Amount, shall be immediately due and payable, and shall bear interest at the
Default Rate from the date of disbursement until paid in full.

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ARTICLE 6  
 

 
LOAN SECURITY AND RELATED OBLIGATIONS
 
Section 6.01  Security Instrument; Assignment of Leases and Receipts.
 
Payment of the Loan and performance of the Obligations shall be secured, inter
alia, by (a) the Security Instrument and (b) the Assignment of Leases and
Receipts. Borrower shall execute at closing (a) the Security Instrument and
(b) the Assignment of Leases and Receipts, and abide by its obligations
thereunder.
 
Section 6.02  Assignment of Property Management Contracts.
 
Borrower and the Property Manager shall execute at closing the Assignment of
Property Management Contracts and abide by their respective obligations
thereunder.
 
Section 6.03  Assignment of Rate Cap Agreement.
 
Borrower shall execute and deliver on the Closing Date the assignment and
consent with respect to the Rate Cap as are contemplated by Section 2.07 of this
Agreement and abide by its obligations thereunder.
 
Section 6.04  Assignment of Operating Agreements.
 
As security for payment of the Loan and performance by Borrower of all
Obligations, Borrower hereby transfers, sets over and assigns to Lender all of
Borrower’s right, title and interest in and to the Operating Agreements to
Lender for security purposes to the fullest extent that the same are assignable.
 
Section 6.05  Pledge as Property; Grant of Security Interest.
 
As security for payment of the Loan and performance by Borrower of all
Obligations, Borrower hereby pledges, assigns, sets over and transfers to
Lender, and grants to Lender a continuing security interest in and to: (a) each
of the Reserve Accounts, the Lockbox Account, the Marriott FF&E Reserve Account
and the Cash Management Account, (b) all funds and monies from time to time
deposited or held in each of the Reserve Accounts, the Lockbox Account, the
Marriott FF&E Reserve Account and the Cash Management Account, and (c) all
interest accrued, if any, with respect to the Reserve Accounts, the Lockbox
Account, the Marriott FF&E Reserve Account and the Cash Management Account;
provided that Lender shall make disbursements from each of the Reserve Accounts
when, as and to the extent required by this Agreement and shall cause or permit
amounts on deposit in the Lockbox Account, the Marriott FF&E Reserve Account and
the Cash Management Account to be applied in accordance with the terms and
provisions of this Agreement, the Lockbox Account Agreement, the Marriott FF&E
Account Control Agreement and the Cash Management Agreement. The parties agree
that each of the Reserve Accounts, the Lockbox Account, the Marriott FF&E
Reserve Account and the Cash Management Account is a “deposit account” within
the meaning of Article 9 of the UCC, that each of the Reserve Accounts, the
Lockbox Account, the Marriott FF&E Reserve Account and the Cash Management
Account is a "securities account" within the meaning of Article 8 of the UCC and
that this Agreement also constitutes a “security agreement” within the meaning
of Article 9 of the UCC. Borrower shall not, without Lender’s prior written
consent, further pledge, assign, transfer or grant any security interest in any
of the Reserve Accounts, the Lockbox Account, the Marriott FF&E Reserve Account
or the Cash Management Account nor permit any Lien to attach thereto, except as
may be created in favor of Lender in connection with the Loan.

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Section 6.06  Environmental Indemnity Agreement.
 
Borrower and the Guarantor will be required to execute at closing the
Environmental Indemnity and to abide by their obligations thereunder.
 
Section 6.07  Guaranty.
 
Guarantor will be required to execute at closing the Guaranty of Exceptions to
Nonrecourse Liability and to abide by its obligations thereunder.
 
Section 6.08  Assignment of Leases and Receipts.
 
As security for payment of the Loan and performance by Borrower of all
Obligations, Borrower hereby absolutely and unconditionally assigns to Lender,
Borrower’s right, title and interest in all current and future Leases and
Receipts, it being intended by Borrower that this assignment constitutes a
present, absolute assignment and not an assignment for additional security only.
Such assignment to Lender shall not be construed to bind Lender to the
performance of any of the covenants, conditions or provisions contained in any
such Lease or otherwise impose any obligation upon Lender. Borrower shall
execute and deliver to Lender such additional instruments, in form and substance
reasonably satisfactory to Lender, as may hereafter be reasonably requested in
writing by Lender to further evidence and confirm such assignment. Nevertheless,
subject to the terms of this Section 6.08, Lender grants to Borrower a license
to maintain, operate and manage the Property and to collect, use and apply the
Receipts in accordance with the terms hereof, which license shall be deemed
automatically revoked upon the occurrence and during the continuance of an Event
of Default under this Agreement. Any portion of the Receipts held by Borrower
shall be held in trust for the benefit of Lender for use in the payment of the
Debt. Upon the occurrence of an Event of Default and during the continuance
thereof, the license granted to Borrower herein shall automatically be revoked,
and Lender shall immediately be entitled to possession of all Receipts, whether
or not Lender enters upon or takes control of the Property. Lender is hereby
granted and assigned by Borrower the right, at its option, upon revocation of
the license granted herein, to enter upon the Property in person, by agent or by
court-appointed receiver to collect the Receipts. Any Receipts collected after
the revocation of the license may be applied as provided in Section 2.04(f).
 
ARTICLE 7  
 

 
SINGLE PURPOSE ENTITY REQUIREMENTS
 
Section 7.01  Commitment to be a Single Purpose Entity.
 
Borrower represents, warrants and covenants to Lender as follows:
 
(a)  Borrower has at all times since its formation been a Single Purpose Entity,
is a Single Purpose Entity and will continue to be a Single Purpose Entity at
all times until the Loan has been paid in full.
 
(b)  The Organizational Chart attached to this Agreement is true, complete and
correct as of the date hereof.
 
(c)  All of the factual assumptions made in the non-consolidation legal opinion
delivered by Borrower’s counsel to Lender, of even date herewith, are true and
correct in all respects.

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(d)  The “single purpose entity” provisions included in the organizational
documents of Borrower shall not, without Lender’s prior written consent, be
amended, rescinded or otherwise revoked until the Loan has been paid in full.
 
(e)  Prior to the withdrawal or the disassociation of Parent from Borrower,
Borrower shall immediately appoint a new managing member whose organizational
documents are substantially similar to those of the Parent and, if an opinion
letter pertaining to substantive consolidation was required at closing, deliver
a new substantive non-consolidation opinion letter with respect to the new
managing member of Borrower and its equity owners which is acceptable in all
respects to Lender and to the Rating Agencies if a Securitization has occurred.
(The requirements of this subsection shall not be construed to permit a Transfer
in violation of Article 10.)
 
(f)  (i) Borrower has, with the exception of the Property, owned no interest in
any property, (ii) Borrower is currently not liable for any indebtedness or
obligations and, upon closing of the Loan, the Prior Loan will be fully
satisfied with the proceeds of the Loan and Borrower shall not have any
continuing liability, actual or contingent with respect thereto except for
customary contingent liabilities relating to environmental and similar typical
post-payoff contingent liabilities, (iii) Borrower has no contingent liability
for any environmental noncompliance or contamination or any other material
actual or contingent liabilities, (iv) Borrower has provided Lender with true,
correct and complete copies of Borrower’s current (and since the date of
inception) financial statements and with true, correct and complete copies of
all environmental reports in Borrower’s possession concerning the Property, and
(v) Borrower’s certifications and statements set forth in the certificates
attached hereto as Exhibit I are true and correct.
 
(g)  For the period from December 21, 2000 to the date of this Agreement,
Borrower has complied with the “special purpose entity” provisions of its
organizational documents.
 
(h)  None of Desert Ridge Resort, Ltd., the limited partners of Desert Ridge
Resort, Ltd., DRR Partners, Inc., nor the equity holders of DRR Partners, Inc.
is Controlled by, in control of, or under common Control with any CNL Entity.
 
(i)  Borrower hereby represents and warrants that from the date of its formation
on July 3, 2000 to December 21, 2000 that it:
 
(A)  has not entered into any contract or agreement with any CNL Entity or any
constituent, owner (but not owners of shares in Publicly Traded Entity), or
guarantor of any obligation of any CNL Entity (individually, a “Related Party”
and collectively, the “Related Parties”), except upon terms and conditions that
are commercially reasonable and substantially similar to those available in an
arm’s-length transaction with an unrelated party;
 
(B)  has not had paid any of its debts and liabilities from any asset of any CNL
Entity;

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(C)  has done or caused to be done all things necessary to observe all
organizational formalities applicable to it and to preserve its existence;
 
(D)  has maintained all of its books, records, financial statements and bank
accounts separate from those of any CNL Entity;
 
(E)  has not had its assets listed as assets on the financial statement of any
CNL Entity;
 
(F)  has filed its own tax returns (except to the extent that it has been a
tax-disregarded entity not required to file tax returns under applicable law)
and, if it is a corporation, has not filed a consolidated federal income tax
return with any CNL Entity;
 
(G)  has been, and at all times has held itself out to the public as, a legal
entity separate and distinct from any CNL Entity or other Related Party;
 
(H)  has corrected any known misunderstanding regarding its status as an entity
separate from any CNL Entity;
 
(I)  has not conducted any of its business nor held any of its assets in the
name of CNL Entity;
 
(J)  has not identified itself or any CNL Entity as a division or part of the
other;
 
(K)  has maintained and utilized stationery, invoices and checks separate from
those of any CNL Entity;
 
(L)  has not commingled its assets with those of any CNL Entity nor held any of
its assets in the name of any CNL Entity;
 
(M)  has not guaranteed or become obligated for the debts of any CNL Entity;
 
(N)  has not held itself out as being responsible for the debts or obligations
of any CNL Entity;
 
(O)  has allocated fairly and reasonably any overhead expenses that have been
shared with a CNL Entity, including paying for office space and services
performed by any employee of a CNL Entity or Related Party;
 
(P)  has not pledged its assets to secure the obligations of any CNL Entity and
no such pledge remains outstanding except in connection with the Loan;
 
(Q)  has maintained adequate capital in light of its contemplated business
operations;

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(R)  has not owned any equity interest in any CNL Entity;
 
(S)  has not incurred any indebtedness that is still outstanding other than
indebtedness that is permitted under the Loan Documents;
 
(T)  has not had any of its obligations guaranteed by a CNL Entity, except for
guarantees that have been either released or discharged (or that will be
discharged as a result of the closing of the Loan) or guarantees that are
expressly contemplated by the Loan Documents; and
 
(U)  none of the current owners of equity interests in such entity is affiliated
with any of the owners of equity interests in such entity during the period July
3, 2000 through December 21, 2000 other than Marriott.
 
Section 7.02  Definition of Single Purpose Entity.
 
(a)  Borrower Criteria. A “Single Purpose Entity” means a limited liability
company which, at all times has complied with the covenants set forth in Section
7.01(g) and (i) and at all times from the date of this Agreement and thereafter:
 
(i)  shall not engage in any business unrelated to the ownership of the
Property;
 
(ii)  shall not have any assets other than the Property;
 
(iii)  shall not, to the fullest extent permitted by law, engage in, seek or
consent to, any dissolution, winding up, liquidation, consolidation, merger,
asset sale, or amendment of the certificate of formation or the limited
liability company agreement;
 
(iv)  shall have a board of directors that shall have, the irrevocable authority
to act on the matters which are the subject of the requirements set forth in
Section 7.02(a)(xxviii);
 
(v)  Intentionally Deleted;
 
(vi)  shall not incur, any debt, secured or unsecured, direct or contingent
(including, without limitation, guaranteeing any obligation), other than (A) the
Loan, (B) customary unsecured trade payables incurred in the ordinary course of
owning and operating the Property provided the same are not evidenced by a
promissory note, do not exceed, in the aggregate for Lessee and Borrower, at any
time a maximum amount of five percent (5%) of the outstanding principal amount
of the Loan and are paid within sixty (60) days of the date incurred and
(C) FF&E financing leases, in each case incurred in the ordinary course of
business in connection with the financing of FF&E used on the Property, the
payments upon which are made currently and in any event prior to delinquency,
provided, (i) that the aggregate capitalized amount of all such permitted
financing leases, in the aggregate for Lessee and Borrower, shall not at any
time be in excess of one and one-half percent (1.5%) of the outstanding
principal amount of the Loan or require payments aggregating, for Lessee and
Borrower, in excess of $2,000,000.00 in any one calendar year, and (ii) the
aggregate outstanding amount of (X) all trade payables described in clause (B)
above, plus (Y) the aggregate capitalized amount of all permitted FF&E financing
leases, shall not at any time be in excess of five percent (5%) of the
outstanding principal amount of the Loan;

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(vii)  shall not fail to correct any known misunderstanding regarding its
separate identity;
 
(viii)  shall maintain its accounts, books and records separate from any other
Person;
 
(ix)  shall maintain its books, records, resolutions and agreements as official
records;
 
(x)  other than in connection with the performance of Property Manager’s
functions under the Property Management Contracts as between Lessee, Property
Manager, and Borrower, shall not commingle, its funds or assets with those of
any other Person and Borrower has held, and shall hold, its assets in its own
name;
 
(xi)  shall conduct its business in its own name;
 
(xii)  shall maintain its accounting records and other entity documents separate
from any other Person;
 
(xiii)  shall prepare separate tax returns and financial statements, or if part
of a consolidated group, Borrower has been shown, and will be shown, as a
separate member of such group and, with respect to financial statements, such
will include an appropriate notation indicating that Borrower’s assets and
credit are not available to satisfy the debts of such other consolidated
entities;
 
(xiv)  except as Property Manager may access Borrower’s funds to pay Borrower’s
expenses under the Property Management Contracts, shall pay its own liabilities
and expenses out of its own funds and assets;
 
(xv)  will observe all limited liability company formalities and record keeping
necessary to conduct its business and maintain its existence as a legally
distinct entity;
 
(xvi)  except for the Owner Agreement, shall not assume, guarantee or become
obligated for, the debts of any other Person and has not held out, and shall not
hold out, its credit as being available to satisfy the obligations of any other
Person other than Lessee;
 
(xvii)  shall not acquire obligations or securities of any Person;
 
(xviii)  shall allocate, fairly and reasonably, the costs associated with common
employees and any overhead for shared office space and Borrower shall use,
separate stationery, invoices and checks, except to the extent, if any, that
Marriott, in its capacity as property manager of the Property, may, in acting as
agent for Borrower or Lessee, use its own stationery, invoices and checks, as
management agent for the Property;

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(xix)  shall not pledge its assets to secure the obligations of any other
Person;
 
(xx)  shall hold itself out and identify itself as, a separate and distinct
entity under its own name and not as a division or part of any other Person;
 
(xxi)  shall not make loans to any Person;
 
(xxii)  shall not identify its member(s) or any SPE Affiliates of its member(s)
as a division or part of it;
 
(xxiii)  shall not enter into or be a party to, any transaction with its
member(s) or any SPE Affiliates of its members, except in the ordinary course of
its business pursuant to written agreements and on terms intrinsically fair and
no less favorable to it than obtainable in a comparable arm’s-length transaction
with an unrelated third party; provided, however, that Borrower may receive
equity contributions from Parent;
 
(xxiv)  shall have a board of directors that has considered, and shall consider,
to the fullest extent permitted by law, including Section 18-1101(c) of the Act,
the interests of the creditors of Borrower in connection with all company
action;
 
(xxv)  shall pay the salaries of its own employees and has maintained, and shall
maintain, a sufficient number of employees in light of its contemplated business
operations;
 
(xxvi)  shall maintain adequate capital in light of its contemplated business
operations;
 
(xxvii)  shall maintain at least two Independent Directors on its board of
directors;
 
(xxviii)  until such time as the Loan has been paid in full or is otherwise
completely discharged, Borrower shall not be permitted to take any of the
following actions, without the unanimous affirmative vote of 100% of the members
of the board of directors, including both Independent Directors: (A) the
institution of proceedings to have Borrower adjudicated bankrupt or insolvent;
(B) the consent to the institution of bankruptcy or insolvency proceedings
against Borrower; (C) the filing of a petition seeking or consenting to
reorganization or relief with respect to Borrower under any applicable federal,
state or local law relating to bankruptcy; (D) the consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of Borrower or a substantial part of the Property; (E) the making of
any assignment for the benefit of creditors of Borrower; (F) the admission in
writing of Borrower’s inability to pay its debts generally as they become due;
and (G) the taking of any action in furtherance of any of the foregoing actions.
Borrower nor its Independent Directors has taken any of the actions described in
this Section 7.02(b)(xxviii) prior to the date hereof;

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(xxix)  shall be formed and organized under Delaware law and shall comply with
all other Rating Agency criteria for single member limited liability companies;
 
(xxx)  shall preserve its existence as an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation or organization; and
 
(xxxi)  shall not form, acquire or hold any subsidiary or equity interest in any
other entity other than its equity interest in Lessee.
 
ARTICLE 8  
 

 
REPRESENTATIONS AND WARRANTIES
 
Borrower represents and warrants to Lender that, as of the Closing Date:
 
Section 8.01  Organization; Legal Status.
 
Borrower is duly organized, validly existing and in good standing under the laws
of its state of formation: (a) is duly qualified to transact business and is in
good standing in the state where the Property is located; and (b) has all
necessary approvals, governmental and otherwise, and full power and authority to
own, operate and lease the Property and otherwise carry on its business as now
conducted and proposed to be conducted. Borrower’s correct legal name is set
forth on the first page of this Agreement. Borrower is a “registered
organization” within the meaning of the UCC and Borrower’s organization
identification number issued by its state of organization is correctly stated on
the signature page to this Agreement.
 
Section 8.02  Power; Authorization; Enforceable Obligations.
 
Borrower has full power, authority and legal right to execute, deliver and
perform its obligations under the Loan Documents. Borrower has taken all
necessary action to authorize the borrowing of the Loan on the terms and
conditions of this Agreement and the other Loan Documents, and Borrower has
taken all necessary action to authorize the execution and delivery of its
performance under the Loan Documents. The officer or representative of Borrower
signing the Loan Documents has been duly authorized and empowered to do so. The
Loan Documents constitute legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their terms.
 
Section 8.03  No Legal Conflicts.
 
The borrowing of the Loan and Borrower’s execution, delivery and performance of
its obligations under the Loan Documents will not: (a) violate, conflict with,
result in a default (following notice and/or expiration of the related
grace/cure period without cure or both, as applicable) under any agreement or
other instrument to which Borrower is a party or by which the Property may be
bound or affected, or any Requirements of Law (including, without limitation,
usury laws); (b) result in the creation or imposition of any Lien whatsoever
upon any of its assets, except the Liens created by the Loan Documents; nor
(c) require any authorization or consent from, or any filing with, any
Governmental Authority (except for the recordation of the Security Instrument in
the appropriate land records in the state where the Property is located and UCC
filings relating to the security interest created hereby and by the Security
Instrument which are necessary to perfect Lender’s security interest in the
Property).

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Section 8.04  No Litigation.
 
No action, suit or proceeding, or investigation, judicial, administrative or
otherwise (including, without limitation, any reorganization, bankruptcy,
insolvency or similar proceeding) currently is pending or, to the best of
Borrower’s knowledge, threatened or contemplated against or affecting Borrower,
the Guarantor or the Property that has not been disclosed by Borrower in writing
to Lender and which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect.
 
Section 8.05  Business Purpose of Loan.
 
Borrower will use the proceeds of the Loan solely for the purpose of carrying on
a business or commercial enterprise and not for personal, family or household
purposes.
 
Section 8.06  Warranty of Title.
 
Borrower has good and insurable fee simple title of record to the portion of the
Property owned in fee and good and insurable leasehold title to the portion of
the Property encumbered by the Ground Lease, free and clear of all Liens
whatsoever except for the Permitted Encumbrances. The Security Instrument and
Assignment of Leases and Receipts, when properly recorded in the appropriate
recording office, together with the UCC financing statements required to be
filed in connection therewith, will create (a) a valid, first priority,
perfected lien on the Property subject only to Permitted Encumbrances; and
(b) perfected security interests in and to, and perfected assignments as
collateral of, all Personal Property (including, without limitation, the
Leases), all in accordance with the terms thereof, in each case subject only to
any Permitted Encumbrances. None of the Permitted Encumbrances, individually or
in the aggregate: (a) materially interfere with the benefits of the security
intended to be provided by the Security Instrument, (b) materially and adversely
affect the value of the Property, or (c) materially and adversely impair the use
and operations of the Property. Borrower owns or has rights in all collateral
given as security for the Loan, free and clear of any and all Liens except for
the Liens created in favor of Lender in connection with the Loan. Borrower shall
forever warrant, defend and preserve the title and the validity and priority of
the Liens created in favor of Lender in connection with the Loan and shall
forever warrant and defend the same to Lender against the claims of all persons
whomsoever.
 
Section 8.07  Condition of the Property.
 
The Improvements are structurally sound, in good repair and, to the best of
Borrower’s knowledge, free of defects in materials and workmanship and have been
constructed and installed in substantial compliance with the plans and
specifications relating thereto. All major building systems located within the
Improvements (including, without limitation, the heating and air conditioning
systems, the electrical systems, plumbing systems, and all liquid and solid
waste disposal, septic and sewer systems) are in compliance in all material
respects with all Requirements of Law and, to the best of Borrower’s knowledge,
in good working order and condition. Except as set forth on Exhibit L, the
Property is free from damage caused by fire or other casualty.
 
Section 8.08  No Condemnation.
 
No Condemnation proceeding has been commenced or, to the best of Borrower’s
knowledge, is contemplated with respect to all or any portion of the Property or
for the relocation of roadways providing access to the Property.
 
Section 8.09  Requirements of Law.
 
The Property and its present and contemplated use and occupancy are in
compliance in all material respects with all applicable Requirements of Law.

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Section 8.10  Operating Permits.
 
Borrower has obtained all material licenses, permits, registrations,
certificates and other approvals, governmental and otherwise (including, without
limitation, zoning, building code, land use and environmental), necessary for
the use, occupancy and operation of the Property and the conduct of its business
thereat, all of which are in full force and effect as of the date hereof. No
event or condition currently exists which could result in the revocation,
suspension, or forfeiture thereof which could reasonably be expected to result
in a Material Adverse Effect.
 
Section 8.11  Separate Tax Lot.
 
The Property is assessed for real estate tax purposes as one or more wholly
independent tax lot or lots, separate from any adjoining land or improvements
not constituting a part of the Property.
 
Section 8.12  Flood Zone.
 
Except as otherwise disclosed on the survey of the Property provided to Lender
in connection with the Loan, no portion of the Improvements is located in an
area identified by the Federal Emergency Management Agency or any successor
thereto, as an area having special flood hazards.
 
Section 8.13  Adequate Utilities.
 
The Property is adequately served by all utilities required for the current or
contemplated use thereof. All water and sewer systems are provided to the
Property by public utilities, and the Property has accepted or is equipped to
accept such utility services.
 
Section 8.14  Public Access.
 
All public roads and streets necessary for access to the Property for the
current or contemplated use thereof have been completed, are serviceable and
all-weather, and are physically and legally open for use by the public.
 
Section 8.15  Boundaries.
 
Except as may be revealed in the Survey provided by Borrower, all of the
Improvements lie wholly within the boundaries and building restriction lines of
the Property, and no easements or other encumbrances affecting the Property
(including, without limitation, the Permitted Encumbrances) encroach upon any of
the Improvements, and no improvements on adjacent properties encroach upon the
Property.
 
Section 8.16  Mechanic Liens.
 
No mechanics’, materialmen’s or similar liens or claims have been, or may be,
filed for work, labor or materials affecting the Property which are or may be
Liens prior, equal or subordinate to the Security Instrument (unless disclosed
in writing in writing to Lender prior to the closing and insured against
enforcement under the Title Insurance Policy).
 
Section 8.17  Assessments.
 
Except as reflect in the Title Policy, and to the best of Borrower’s knowledge,
no unpaid assessments for public improvements or assessments otherwise affecting
the Property currently exist or, to the best of Borrower’s knowledge, are
pending, nor are improvements contemplated to the Property that may result in
any such assessments.
 
Section 8.18  Insurance.
 
Borrower has caused Property Manager to obtain and deliver to Lender all
insurance policies Lender has required pursuant to Section 9.03 of this
Agreement, with all Insurance Premiums prepaid thereunder, reflecting the
insurance coverages, amounts and other requirements set forth in this Agreement.
No party, including Borrower, has to Borrower’s knowledge done, by act or
omission, anything which would impair the coverage of any of such insurance
policies and, except as set forth on Exhibit L, no claims have been made under
any of such insurance policies.

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Section 8.19  Leases.
 
With respect to the Leases: (a) the Rent Roll dated as of the Closing Date is
true, complete and correct and the Property is not subject to Leases other than
the Leases identified on such Rent Roll; (b) Borrower has delivered to Lender
complete and accurate copies of all Leases and no verbal or written agreements
exist which terminate, modify or supplement the Leases, except as otherwise
disclosed to Lender in writing and acknowledged by Lender; (c) each Lease is in
full force and effect and there are no defaults thereunder by either party known
to Borrower; (d) each Lease, by its terms, is subordinate to the lien of the
Security Instrument or the subject of a separate subordination non-disturbance
and attornment agreement subordinating the Lease to the lien of the Security
Instrument; (e) Borrower or Lessee is the sole owner of the entire lessor’s
interest in the Leases and has not assigned, pledged or otherwise transferred
the Rents reserved in the Leases (except to Lender); (f) all of the Leases are
bona fide, arms-length agreements with tenants (except for Lessee under the
Operating Lease) unrelated to Borrower; (g) none of the Rents have been
collected for more than one (1) month in advance (and for such purpose, a
security deposit shall not be deemed rent collected in advance); (h) all
security deposits reflected on the Rent Roll have been collected and are being
held by Borrower Lessee or Property Manager in the full amount reported on the
Rent Roll; (i) except as set forth on Exhibit L, all work to be performed by
Borrower under each Lease has been performed as required and has been accepted
unconditionally by the applicable tenant; (j) to the best of Borrower’s
knowledge, no offsets or defenses exist in favor of any tenant to the payment of
any portion of the Rents and Borrower has no monetary obligation to any tenant
under any Lease other than the proper application or refund of any security
deposits; (k) all payments due from tenants under the Leases are current; (l) to
Borrower’s knowledge no tenant under any Lease is in default thereunder, or is a
debtor in any bankruptcy, reorganization, insolvency or similar proceeding, or
has demonstrated, to Borrower’s knowledge, a history of payment problems which
suggest financial difficulty; (m) no Lease contains an option to purchase, right
of first refusal to purchase, or any other similar provision; and (n) no
brokerage commissions, finders fees or similar payment obligations are due and
unpaid by Borrower or any Affiliate of Borrower regarding any Lease. No portion
of the Property is licensed to or occupied by any Affiliate of Borrower other
than Lessee.
 
Section 8.20  Management Agreement.
 
No change in the Property Manager or any Property Management Contract has
occurred since the date of the most recent information submitted to Lender with
respect thereto, other than those disclosed in writing to Lender.
 
Section 8.21  Financial Condition.
 
Borrower currently is solvent and has received reasonably equivalent value for
its granting of the Liens in favor of Lender in connection with the Loan. No
change has occurred in the financial condition of Borrower, Lessee or Guarantor
which would have a Material Adverse Effect since the date of the most recent
financial statements submitted to Lender with respect to each such party, other
than has been disclosed in writing to Lender.
 
Section 8.22  Taxes.
 
Borrower has filed all federal, state, county, municipal, and city income tax
returns required to have been filed by it and has paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them, except where any such failure could not have a
Material Adverse Effect. Except as may be reflected in the Title Insurance
Policy, Borrower does not know of any basis for any additional assessment in
respect of any such taxes and related liabilities for prior years.

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Section 8.23  No Foreign Person.
 
Borrower is not a “foreign person” within the meaning of §1445(f)(3) of the Tax
Code.
 
Section 8.24  Federal Regulations.
 
Borrower is not engaged nor will it engage, principally, or as one of its
important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” within the respective meanings of
each of the quoted terms under Regulation U or Regulation G.
 
Section 8.25  Investment Company Act; Other Regulations.
 
Borrower is not an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940
and the regulations issued thereunder, each as amended. Borrower is not subject
to regulations under any federal or state statute or regulation which limits its
ability to incur indebtedness.
 
Section 8.26  ERISA.
 
(a) Borrower is not and will not be an “employee benefit plan,” as defined in
§ 3(3) of ERISA, subject to Title I of ERISA, (b) none of the assets of Borrower
constitute or will constitute “plan assets” of one or more such plans within the
meaning of 29 C.F.R. § 2510.3-101, (c) Borrower is not and will not be a
“governmental plan” within the meaning of § 3(3) of ERISA, and (d) transactions
by or with Borrower are not and will not be subject to state statutes regulating
investment of, and fiduciary obligations with respect to, governmental plans.
 
Section 8.27  No Illegal Activity as Source of Funds.
 
No portion of the Property has been or will be purchased, improved, equipped or
furnished with proceeds of any illegal activity.
 
Section 8.28  Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money
Laundering Laws
 
Borrower and Guarantor and to the best of Borrower’s knowledge (a) each Person
owning an interest in Borrower and Guarantor and (b) each tenant at the
Property: (i) is not currently identified on OFAC List, and (ii) is not a Person
with whom a citizen of the United States is prohibited to engage in transactions
by any trade embargo, economic sanction, or other prohibition of United States
law, regulation, or Executive Order of the President of the United States,
including, without limitation, any Anti-Terrorism Laws. Borrower agrees to
confirm this representation and warranty in writing on an annual basis if
requested by Lender to do so.
 
Section 8.29  Brokers and Financial Advisors.
 
Borrower has not dealt with any financial advisor, broker, underwriter,
placement agent or finder in connection with the transaction contemplated by
this Agreement who may be owed a commission or other compensation which Borrower
will not have paid in full as of the Closing Date.

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Section 8.30  Complete Disclosure; No Material Change in Facts or Circumstances
 
Borrower has disclosed to Lender all material facts and has not failed to
disclose any material fact that could cause any representation or warranty made
herein to be materially inaccurate, incomplete or misleading. All information
provided in or supplied with the application for Loan, or in satisfaction of the
terms thereof, remains true, complete and correct in all material respects, and
no adverse change in any condition or fact has occurred that would make any of
such information materially inaccurate, incomplete or misleading.
 
Section 8.31  Ground Lease.
 
(a)  Recording. The Ground Lease or a memorandum thereof has been duly recorded,
the Ground Lease permits the interest of the lessee thereunder to be encumbered
by the Security Instrument, subject to the provisions of the Ground Lease
including compliance by Lender with the filing provisions under Section 20.2 of
each Ground Lease, and there has not been a material change in the terms of the
Ground Lease since its recordation.
 
(b)  No Senior Liens. Except for the Permitted Encumbrances, Borrower’s interest
in the Ground Lease is not subject to any liens or encumbrances superior to, or
of equal priority with, the Security Instrument, other than the related ground
lessor’s related fee interest.
 
(c)  Ground Lease Assignable. Borrower’s interest in the Ground Lease is
assignable to Lender upon notice to, but without the consent of, the ground
lessor. The Ground Lease does not prohibit Lender from further assigning the
Ground Lease to a third party in connection with any transfer of the Loan
without the consent of the ground lessor.
 
(d)  Default. The Ground Lease is in full force and effect and no default by
Borrower has occurred under the Ground Lease and there is no existing condition
which, but for the passage of time or the giving of notice, would result in a
default by Borrower under the terms of the Ground Lease.
 
(e)  Notice. The Ground Lease requires the ground lessor thereunder to give
notice of any default by Borrower to any mortgagee and provides that notice of
termination given under the Ground Lease is not effective against such mortgagee
unless a copy of the notice has been delivered to the mortgagee in the manner
described in the Ground Lease.
 
(f)  Cure. Lender is permitted a reasonable opportunity (including, where
necessary, certain time period to gain possession of the interest of Borrower
under the Ground Lease) to cure any default under the Ground Lease, which is
curable after the receipt of notice of the default before the ground lessor
thereunder may terminate the Ground Lease.
 
(g)  Term. The Ground Lease has a term which extends not less than twenty (20)
years beyond the Maturity Date.
 
(h)  New Lease. Pursuant to Arizona State Law, the Ground Lease requires the
ground lessor to enter into a new lease upon termination of the Ground Lease by
reason of the rejection of the Ground Lease in a bankruptcy proceeding, provided
that Lender cures any defaults which are susceptible to being cured.

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(i)  Subleasing. The Ground Lease does not impose commercially unreasonable
restrictions on subletting.
 
Section 8.32  Survival.
 
The representations and warranties contained in this Article 8 survive for so
long as the Loan remains payable and any Obligation remains to be performed.
 
ARTICLE 9  
 

 
BORROWER COVENANTS
 
Section 9.01  Payment of Debt and Performance of Obligations.
 
Borrower shall fully and punctually pay the Loan and perform the Obligations
when and as required by the Loan Documents. Borrower may not prepay the Loan
except in strict accordance with this Agreement.
 
Section 9.02  Payment of Taxes and Other Lienable Charges.
 
(a)  Payment Obligation. Borrower shall promptly and fully pay, or cause to be
paid, by their due date all Taxes and Other Charges now or hereafter assessed or
charged against the Property as they become due and payable. Borrower shall
promptly cause to be paid (or bonded over and released) and discharged any Lien
which may be or become a Lien against the Property (including, without
limitation, mechanic’s or materialman’s liens). Except to the extent sums
sufficient to pay Taxes or Other Charges have been deposited with Lender in
accordance with this Agreement, Borrower shall furnish to Lender, upon request,
evidence satisfactory to Lender that all Taxes and Other Charges have been paid
and are not delinquent.
 
(b)  Right to Contest. After prior written notice to Lender, Borrower, at its
own expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith with due diligence, the amount or validity or
application in whole or in part of any of the Taxes or Other Charges, provided
that: (i) no Event of Default exists; (ii) such proceeding suspends the
collection of such Taxes or Other Charges and the Property will not be in danger
of being sold for such unpaid Taxes or Other Charges, or Borrower has paid all
of such Taxes or Other Charges under protest; (iii) such proceeding is permitted
under and is conducted in accordance with the provisions of any other instrument
to which Borrower or the Property is subject and does not constitute a default
thereunder; (iv) if Borrower has not paid the disputed amounts in full under
protest, Borrower shall deposit with Lender cash (or other security as may be
approved, in writing, by Lender) in an amount Lender deems sufficient to insure
the payment of any such Taxes or Other Charges together with interest and
penalties thereon, if any, provided that after a Securitization, one hundred ten
percent (110%) of the contested amount (plus anticipated penalty and interest)
shall be deposited with Lender; (v) Borrower furnishes to Lender all other items
reasonably requested by Lender; and (vi) upon a final determination thereof,
Borrower promptly pays the amount of any such Taxes or Other Charges, together
with all costs, interest and penalties which may be payable in connection
therewith. Lender may pay over any security held by Lender pursuant to this
Section to the claimant entitled thereto at any time when, in Lender’s judgment,
the entitlement of such claimant is established, and, to the extent the security
posted by Borrower with Lender is insufficient to pay the full amount due
(including, without limitation, any penalties or interest thereon), Borrower
shall be liable for the deficiency. If Lender pays the deficiency (which Lender
shall not be obligated to do), the amount paid by Lender shall be added to
principal, shall bear interest at the Default Rate until paid in full and
payment of such amounts shall be secured by the Security Instrument and other
collateral given to secure the Loan.

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Section 9.03  Insurance.
 
(a)  Insurance Required During the Loan Term. Subject to Section 9.03(g) below,
Borrower, at Borrower’s expense, shall obtain and maintain during the term of
the Loan such insurance coverage (including, without limitation, type, minimum
coverage amount, maximum deductible and acceptable exclusions) for Borrower and
the Property as Lender deems reasonably necessary considering, among other
things, the location and occupancy of the Property and all uses of the Property.
Lender reserves the right to periodically review the insurance coverage Lender
has required (types, minimum coverage amounts and maximum deductibles) and to
increase or otherwise change the required coverage should Lender deem an
increase or change to be reasonably necessary under then existing circumstances.
Without limiting Lender’s rights hereunder in any respect, it shall be deemed
reasonable for Lender to require no less coverage than the coverage in place on
the Closing Date. Subject to the foregoing, Lender shall require the following
insurance coverage to be effective during the term of the Loan, coverage amounts
and deductibles to be acceptable to Lender:
 
(i)  Property Insurance. Casualty insurance must be maintained for the
Improvements and all Personal Property insuring against any peril now or
hereafter included within the classification “all risks of physical loss” and in
an amount at all times sufficient to prevent Borrower or Lender from becoming a
co-insurer within the terms of the applicable policies but in any event at all
times equal to the full replacement cost (as reasonably determined and adjusted
from time to time by Lender) of the Improvements and Personal Property (without
taking into account any depreciation and exclusive of excavations, footings and
foundations, landscaping and paving), without any exclusions for windstorms. In
all cases where (A) the outstanding principal balance on the Note exceeds $5
million, or (B) any part of the Improvements constitutes a legal non-conforming
use under the Requirements of Law, such insurance must include “Ordinance of Law
Coverage,” with “Time Element,”“Loss to the Undamaged Portion of the
Building,”“Demolition Cost” and “Increased Cost of Construction” endorsements,
in the amount of coverage requested by Lender. The policy must name Lender as an
insured mortgagee under a standard mortgagee clause. The deductible shall not
exceed $50,000.00.
 
(ii)  Insurance against Acts of Terrorism. The insurance coverage provided under
Section 9.03(a) in effect as of the Closing Date and during the Loan term must
also insure against loss or damage resulting from acts of terrorism or
comparable coverage acceptable to Lender in its discretion; provided, however,
that (A) such terrorism coverage shall be required only so long as, and to the
extent, such terrorism coverage is commercially available; and (B) in no event
shall Borrower be required to pay in excess of commercially reasonable rates.
The deductible shall not exceed $50,000.00.

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(iii)  Boiler and Machinery Insurance. Broad form boiler and machinery insurance
(without exclusion for explosion) and systems breakdown coverage must be
maintained, covering all steam boilers, pipes, turbines, engines or other
pressure vessels, electrical machinery, HVAC equipment, refrigeration equipment
and other similar mechanical equipment located in, on or about the Property in
such amount per accident equal to the full replacement cost thereof (as
reasonably determined and adjusted from time to time by Lender) and also
providing coverage against loss of occupancy or use arising from any breakdown
thereof. The policy must name Lender as an insured under a standard joint loss
clause and provide that all proceeds are to be paid to Lender.
 
(iv)  Flood Insurance. Flood insurance must be maintained if any portion of the
Improvements is located in an area identified by the Federal Emergency
Management Agency or any successor thereto as a 100-year flood zone or special
hazard area. The required coverage amount shall be equal to the full replacement
cost of the Improvements and Personal Property (without taking into account any
depreciation and exclusive of excavations, footings and foundations, landscaping
and paving). Such coverage may need to be purchased through excess carriers if
the required coverage exceeds the maximum insurance available for the Property
under the then-current guidelines published by the Federal Emergency Management
Agency or any successor thereto. The policy must name Lender as an insured
mortgagee under a standard mortgagee clause.
 
(v)  Business Interruption. Business interruption insurance must be maintained
in an amount sufficient to provide the lost rental income for the Property for a
period of not less than 18 months from the date of Casualty, with a 12 month
extended period of indemnity. For purposes of this coverage, “rental income”
means the sum of (a) the total, then ascertainable Receipts, including Rents
payable under any Leases, and (b) the total ascertainable amount of all other
payments to be received by Borrower from third parties which are the legal
obligation of the tenants, reduced to the extent such amounts would not be
received because of operating expenses not incurred during the period that any
portion of the Property cannot be occupied as a result of the Casualty. The
policy must name Lender as a loss payee and provide that all proceeds are to be
paid to Lender.
 
(vi)  Liability Insurance. Commercial general liability insurance coverage must
be maintained, covering bodily injury or death and property damage, including
all legal liability to the extent insurable and all court costs, legal fees and
expenses, arising out of, or connected with, the possession, use, leasing,
operation, maintenance or condition of the Property in such amounts generally
required by institutional lenders for properties comparable to the Property but
in no event for a combined single limit of less than $5,000,000.00 and
$2,500,000.00 per occurrence. The required coverage must provide for claims to
be made on an occurrence basis. The policy must name Lender as an additional
insured. The insurance coverage required under this subsection (vi) may be
satisfied by a layering of Commercial General Liability, Umbrella and Excess
Liability Policies, but in no event will the Commercial General Liability policy
be written for an amount less than $2,500,000.00 per occurrence and
$5,000,000.00 aggregate for bodily injury and property damage liability. Lender
may require umbrella coverage which will be evaluated on a case by case basis
but in no event shall the amount of umbrella coverage be less than
$50,000,000.00.

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(vii)  Workers’ Compensation Insurance. Workers’ compensation insurance must be
maintained with respect to all employees employed at the Property, in compliance
with the laws of the state in which the Property is located.
 
(viii)  Earthquake Insurance. If the Property is located in a high earthquake
hazard area, earthquake must be maintained in form, amount and with deductibles
satisfactory to Lender.
 
(ix)  Other Coverage. Without limiting Lender’s rights under this
Section 9.03(a), Lender may also require Borrower to maintain builder’s risk
insurance during any period of construction, renovation or alteration of the
Improvements, motor vehicles liability insurance in connection with all owned or
non-owned motor vehicles used in connection with the management or maintenance
of the Property, “dram shop” or similar coverage if alcoholic beverages are sold
at the Property, fidelity bond coverage for employees handling Receipts and
other income from the Property, environmental insurance, sinkhole coverage and
other insurance with respect to the Property or on any replacements or
substitutions thereof or additions thereto against other insurable hazards or
casualties which at the time are commonly insured against in the case of
property similarly situated, due regard being given to the height and type of
buildings, their construction, location, use and occupancy.
 
(b)  Qualified Insurers; Lender’s Consent. All insurance must be issued under
valid and enforceable policies of insurance acceptable to Lender and issued by
one or more domestic primary insurers authorized to issue insurance in the state
in which the Property is located. Each insurer must have a minimum claims paying
ability rating of “A+” or better from S&P. Lender’s approval of insurance
coverage at any time is not a representation or warranty concerning the
sufficiency of any coverage or the solvency of any insurer, and Lender shall not
be responsible for, nor incur any liability for, the insolvency of the insurer
or other failure of the insurer to perform.
 
(c)  Policy Requirements. All policies must be for a term of not less than a
year and name Lender as a beneficiary of such coverage as provided in this
Section 9.03 or otherwise identified by Lender. Each policy must also contain:
(i) an endorsement or provision that permits recovery by Lender notwithstanding
the negligent or willful acts or omission of Borrower; (ii) a waiver of
subrogation endorsement as to Lender to the extent available at commercially
reasonable rates; (iii) a provision that prohibits cancellation or termination
before the expiration date, denial of coverage upon renewal, or material
modification without at least thirty (30) days prior written notice to Lender in
each instance; and (iv) effective waivers by the insurer of all claims for
Insurance Premiums against Lender. If the required insurance coverage is to be
provided under a blanket policy covering the Property and other properties and
assets not part of the Property, such blanket policy must specify the portion of
the total coverage that is allocated to the Property and any sublimit in such
blanket policy which is applicable to the Property and shall otherwise comply in
all respects with the requirements of this Section 9.03.

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(d)  Evidence of Insurance. Borrower must deliver to Lender certificates
evidencing all insurance required hereunder in form and substance reasonably
acceptable to Lender. In addition, Lender shall have the right to inspect
(i) the original of each insurance policy required hereunder or (ii) a copy of
such policy certified by the insurance agent to be a true, correct and complete
copy of the original, in either case, at the office of Property Manager during
reasonable business hours. Evidence of the required coverage for the first year
of the Loan (as well as proof of payment of the first years premium) must be
delivered to Lender on or before the Closing Date and thereafter not less than
thirty (30) days prior to the expiration date of each policy.
 
(e)  Lender’s Right to Obtain Insurance for Borrower. If Borrower fails to
deliver to Lender the evidence of insurance coverage required by this Agreement
and does not cure such deficiency within ten (10) days after Lender’s notice of
nondelivery, an Event of Default shall be deemed to have occurred (without
further cure period or notice) and Lender may procure such insurance at
Borrower’s expense, without prejudice to Lender’s rights upon an Event of
Default. All amounts advanced by Lender to procure the required insurance shall
be added to principal, secured by the Security Instrument and bear interest at
the Default Rate. Lender shall not be responsible for, nor incur any liability
for the insolvency of the insurer or other failure of the insurer to perform,
even though Lender has caused the insurance to be placed with the insurer after
Borrower’s failure to furnish such insurance.
 
(f)  Additional Insurance. Borrower shall not obtain insurance for the Property
in addition to that required by Lender without Lender’s prior written consent,
which consent will not be unreasonably withheld provided that (i) Lender is
named insured on such insurance, (ii) Lender receives evidence of such insurance
as required by subsection (d) above, and (iii) such insurance complies with all
of the applicable requirements set forth in this Agreement.
 
(g)  Additional Insurance, Escrow, Casualty and Condemnation Provision.
Notwithstanding anything above in this Section 9.03 or Section 9.04 to the
contrary, provided a Marriott Management Period is in existence and Borrower
participates in Marriott’s insurance programs, and there then exists no default
under the Property Management Contracts (beyond any applicable cure period),
Borrower shall enforce and comply with the insurance and damage, destruction and
condemnation requirements and obligations set forth in the Property Management
Contracts, and shall provide to Lender evidence reasonably acceptable to Lender
that such insurance is, at all times, in full force and effect as regards the
Property. So long as a Marriott Management Period exists:
 
(i)  Lender agrees that Borrower may comply with the requirements of
Section 9.03 above by causing Lessee to cause Marriott to maintain the types and
amounts of insurance coverage required under the Property Management Contracts,
or carrying the required coverage under blanket policies of CNL approved by
Lender provided that such program of insurance is a Qualified Insurance Program;

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(ii)  Lender agrees to make insurance or condemnation proceeds available if
required under the terms of the Property Management Contracts unless any of the
following (each, a “Proceeds Shortfall Failure”) shall occur:
 
(A)  the insurance or condemnation proceeds, as applicable, are insufficient to
pay the costs of Restoration and both Borrower and the Property Manager fail to
either (1) deposit any deficiency with Lender, (2) provide Lender with a letter
of credit or other security as shall be reasonably satisfactory to Lender to
insure that an amount equal to such deficiency will be available as and when
required to pay the costs of Restoration, together with a Rating Confirmation
with respect thereto, or (3) provide Lender with such other evidence as shall be
reasonably acceptable to Lender that an amount equal to such deficiency will be
available as and when required to pay the costs of Restoration, together with a
Rating Confirmation with respect thereto;
 
(B)  Lender determines that the Restoration is not reasonably capable of being
completed at least 6 months prior to the Maturity Date (as same may be extended
by Borrower in accordance with this Agreement, and if so, as so extended);
 
(C)  the Restoration can not be completed within 15 months (not to exceed the
number of months remaining until the Maturity Date, assuming all extension
periods available under Section 2.03(d) hereof will be exercised, provided that
Lender is satisfied that Borrower is able to satisfy the conditions set forth in
Section 2.03(d) hereof) from the date that the insured casualty or condemnation,
as applicable, occurred; or
 
(D)  the proceeds derived from available business interruption insurance shall
be insufficient to fully cover the period that the Property is undergoing
restoration.
 
Section 9.04  Obligations upon Condemnation or Casualty.
 
Subject to Section 9.03(g) above, if the Property, or any portion thereof, shall
be damaged or destroyed by a Casualty or become subject to any Condemnation, the
following shall apply:
 
(a)  Generally. Borrower shall promptly notify Lender, in writing, of any actual
or threatened Condemnation or of any Casualty that damages or renders unusable
the Property or any part thereof and, except as otherwise provided below, shall
promptly and diligently pursue Borrower’s claim for a Condemnation award or
insurance proceeds, as applicable. Borrower shall not make any agreement in lieu
of Condemnation or accept any Condemnation award without Lender’s prior written
consent. Borrower shall not accept any settlement of insurance proceeds with
respect to a Casualty without Lender’s prior written consent. If requested by
Lender, Borrower agrees to provide copies to Lender of all notices or filings
made or received by Borrower in connection with the Casualty or Condemnation or
with respect to collection of the insurance proceeds or Condemnation award, as
applicable. Notwithstanding that a Casualty or Condemnation has occurred, or
that rights to a Condemnation award or insurance proceeds are pending, Borrower
shall continue to pay the Loan at the time and in the manner provided in this
Agreement.

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(b)  Lender Right to Pursue Claim. Borrower hereby grants Lender the authority,
during the continuance of an Event of Default only, at Lender’s option, either:
(i) to settle and adjust any claim arising with respect to the Casualty or
Condemnation without Borrower’s consent, or (ii) to allow Borrower to settle and
adjust such claim; provided that, in either case, the insurance proceeds or
Condemnation award, as applicable, is paid directly to Lender. Borrower hereby
appoints Lender its attorney-in-fact with full power of substitution (and which
shall be deemed to be coupled with an interest and irrevocable until the Loan is
paid and the Security Instrument is discharged of record, with Borrower hereby
ratifying all that its said attorney shall do by virtue thereof) to endorse any
agreements, instruments or drafts received in connection with a Casualty or
Condemnation. If no Event of Default has occurred, Borrower shall not settle or
adjust any Casualty or Condemnation claim in excess of $10,000,000 without
Lender’s prior written consent (such consent not to be unreasonably withheld,
conditioned or delayed). If any portion of the insurance proceeds or
Condemnation award, as applicable, should be paid directly to Borrower, Borrower
shall be deemed to hold such amounts in trust for Lender and shall promptly
remit such amounts to Lender. If the Property is sold, through foreclosure or
otherwise, prior to the receipt of the Condemnation award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the proceeds of such sale in an amount
sufficient to pay the Loan in full. All expenses incurred by Lender in the
settlement and collection of amounts paid with respect to a Casualty or
Condemnation (including, without limitation, reasonable legal fees and expenses)
shall be deducted and reimbursed to Lender from the insurance proceeds or
Condemnation award, as applicable, prior to any other application thereof. The
insurance proceeds or Condemnation award paid or payable on account of a
Casualty or Condemnation, as applicable (including all business interruption
insurance proceeds paid as a result of such Casualty or Condemnation), less
expenses to be reimbursed to Lender hereunder, is referred to herein as the
“Restoration Proceeds.”
 
(c)  Application of Restoration Proceeds; Restoration Obligations. Except as
specifically hereafter provided in subsection (d) below, Lender may, in its sole
discretion, either (i) apply the Restoration Proceeds to payment of the Loan,
whether or not then due and payable, or (ii) hold and release the Restoration
Proceeds to Borrower (a) for the costs of Restoration undertaken by Borrower in
accordance with this Agreement and (b) to cover any shortfall in Operating
Income as a result of such Casualty or Condemnation that is necessary to pay in
full the debt service payments due from Borrower on each Payment Due Date and
other Operating Expenses falling due during the period until Restoration is
completed; provided, however, that Lender shall have no obligation to release
Restoration Proceeds to fund amounts contemplated by clause (b) unless
(1) Lender is satisfied that Restoration Proceeds are sufficient to pay in full
the estimated cost to complete Restoration and (2) all Operating Expenses to be
funded with Restoration Proceeds are approved by Lender. If Lender applies
Restoration Proceeds to payment of the Loan and the Loan is still outstanding,
interest will continue to accrue and be due on the unpaid principal at the
Applicable Interest Rate. If Lender makes the Restoration Proceeds available to
Borrower for Restoration, Borrower shall diligently pursue Restoration so as to
restore the Property to at least equal value and substantially the same
character as existed immediately prior to such Casualty or Condemnation. All
plans and specifications for the Restoration and all contractors, subcontractors
and materialmen to be engaged in the Restoration, as well as the contracts under
which they have been engaged, shall be subject to Lender’s prior review and
approval. Lender may engage, at Borrower’s expense, an independent engineer or
inspector to assist Lender in its review of the approvals requested of Lender in
connection with the Restoration and to periodically inspect the Restoration in
progress and upon substantial completion.

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(d)  Condition to Release of Restoration Proceeds for Restoration. Lender agrees
to make the Restoration Proceeds available to Borrower for Restoration pursuant
to Section 9.03(g) if applicable, or otherwise, as long as the following
conditions have been satisfied:
 
(i)  No Event of Default exists.
 
(ii)  Borrower demonstrates to Lender’s satisfaction that the Restoration
Proceeds are sufficient to pay in full the estimated cost to complete
Restoration and any shortfalls in Operating Income as a result of such Casualty
or Condemnation that are anticipated until Restoration is substantially
completed, or, if the Restoration Proceeds are determined by Lender to be
insufficient to pay such costs in full, Borrower deposits with Lender, in cash
or by a cash equivalent acceptable to Lender, the additional amount estimated by
Lender to be necessary to pay the full cost of Restoration (“Restoration
Deficiency Deposit”).
 
(iii)  Restoration can be completed not later than the earlier of
(A) twelve (12) months from the date the Casualty or Condemnation occurred,
(B) six (6) months prior to the Maturity Date (assuming all extension periods
available under Section 2.03(d) hereof will be exercised, provided that Lender
is satisfied that Borrower is able to satisfy the conditions set forth in
Section 2.03(d) hereof), (C) the earliest date by which completion is required
under the Requirements of Law to preserve the right to rebuild the Improvements
as they existed prior to the Casualty or Condemnation or (D) the expiration of
Borrower’s business interruption insurance.
 
(iv)  If a Condemnation has occurred, less than 10% of the Land is taken and the
land taken is along the perimeter or periphery of the Land, and no portion of
the Improvements are taken.
 
(v)  If a Casualty has occurred, less than 25% of the total floor area of the
Improvements is damaged or rendered unusable by the Casualty and Borrower
demonstrates to Lender’s satisfaction that a reasonable means of access exists
to the Property and within the Improvements unaffected by the Casualty.
 
(vi)  Borrower demonstrates to Lender’s satisfaction that, upon completion of
Restoration, the net cash flow of the Property will be restored to a level
sufficient to cover all Operating Expenses of the Property, including, without
limitation, supporting a Debt Service Coverage Constant Ratio at least equal to,
or greater than, the Debt Service Coverage Constant Ratio existing as of the
Closing Date.

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(vii)  The Property and its use after completion of Restoration will be in
compliance with, and permitted under, all Requirements of Law.
 
(e)  Disbursement Procedure; Holdback. If the Restoration Proceeds will be made
available by Lender to Borrower for Restoration and the estimated cost of
Restoration approved by Lender (together with all other amounts then held by
Borrower pursuant to this subsection (e)) is less than $10,000,000, Lender shall
disburse the entire amount of the Restoration Proceeds to Borrower (or, at
Lender’s option, to Property Manager), and Borrower hereby covenants and agrees
to use the Restoration Proceeds solely for Restoration performed in accordance
with this Agreement. If, however, the estimated cost of Restoration approved by
Lender (together with all other amounts then held by Borrower pursuant to this
subsection (e)) is more than $10,000,000, Lender may retain the Restoration
Proceeds in an interest bearing escrow account and make periodic disbursements
to Borrower as follows:
 
(i)  Disbursements for Restoration. (A) Lender will disburse Restoration
Proceeds for the costs of Restoration to, or as directed by, Borrower from time
to time during the course of the Restoration, upon receipt of evidence
reasonably satisfactory to Lender that (1) all materials installed and work and
labor performed in connection with the Restoration have been paid in full
(except to the extent that they are to be paid out of the requested
disbursement), and (2) there exist no notices of pendency, stop orders,
mechanic’s or materialman’s liens or notices of intention to file same, or any
other Liens of any nature whatsoever on the Property arising out of the
Restoration which have not either been fully bonded and discharged of record or,
in the alternative, fully insured to Lender’s reasonable satisfaction by the
title company insuring the Lien of the Security Instrument.
 
(B)  Lender may limit disbursements to not more than one (1) per month.
 
(C)  Lender may hold-back from each requested disbursement an amount equal to
the greater of (1) ten percent (10%) of the requested disbursement or (2) the
amount which Borrower is permitted to withhold under its contract with the
contractor or supplier to be paid with the proceeds of such disbursement (either
a “Restoration Holdback”). Amounts held as the Restoration Holdback shall be
disbursed once: (1) Lender receives satisfactory evidence that Restoration has
been fully completed in accordance with all Requirements of Law; (2) Lender
receives satisfactory evidence that all Restoration costs have been paid in full
or will be fully paid from the remaining Restoration Proceeds and the
Restoration Holdback; and (3) Lender receives, at Lender’s option, a search of
title to the Property, effective as of the date on which the Restoration
Holdback is to be disbursed, showing no Liens other than the Permitted
Encumbrances or an endorsement to its Title Insurance Policy which updates the
effective date of such policy to the date on which the Restoration Holdback is
to be disbursed and which shows no Liens since the date of recordation of the
Security Instrument (other than the Permitted Encumbrances).

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(D)  Notwithstanding subsection (C) above, Lender may release from the
Restoration Holdback payments to a contractor or supplier if: (1) Lender
receives satisfactory evidence that such contractor has satisfactorily completed
its contract with Borrower; (2) such contractor or supplier delivers to Lender
an acceptable written waiver of its mechanic’s lien, in recordable form; and
(3) Borrower provides written consent from the surety company, if any, which has
issued a payment or performance bond with respect to such contractor or
supplier. In this context, Lender shall not unreasonably withhold is consent to
a general reduction of the retainage percentage to five percent (5%) after
Restoration is at least fifty percent (50%) complete.
 
(ii)  Disbursements for Shortfalls in Operating Income. Provided that Lender
reasonably determines that the Restoration Proceeds are sufficient to pay in
full the estimated cost to complete Restoration, Lender will disburse
Restoration Proceeds (including all excess business interruption insurance
proceeds paid as a result of such Casualty or Condemnation) not reserved for
Restoration to pay the shortfall in Operating Income necessary to pay (A) first,
the debt service payments due from Borrower on the Loan and Mezzanine Borrower
on the Mezzanine Loan on each Payment Due Date falling due from the date of the
Casualty or Condemnation through the date on which Restoration is substantially
completed (B) then, any Operating Expenses (C) then, deposits to any Reserve
Accounts required to be paid pursuant to this Agreement and (D) then the payment
of rent due from Lessee to Borrower under the Operating Lease. Lender may
require satisfactory evidence that Operating Expenses to be paid have been
incurred and may issue payments directly to the Person entitled to the payment
claimed as an Operating Expense.
 
(iii)  Restoration Proceeds Deemed Insufficient. If, in Lender’s reasonable
judgment, at any time during Restoration, the undisbursed portion of the
Restoration Proceeds shall not be sufficient to pay the costs remaining for
Restoration to be completed or to pay any shortfall in Operating Income needed
to pay in full Borrower’s debt service payments on the Loan and Operating
Expenses anticipated to be incurred during the period of Restoration, Borrower
shall deposit the deficiency with Lender, in cash or by a cash equivalent
acceptable to Lender (also called a “Restoration Deficiency Deposit”), within
ten (10) days after Lender’s notice of such deficiency, and no further
disbursement of the Restoration Proceeds will be made until such funds are
deposited. Amounts held by Lender as the Restoration Deficiency Deposit shall be
disbursed in accordance with this Section 9.04.
 
(iv)  Consequence of Event of Default. Lender shall not be obligated to disburse
Restoration Proceeds or amounts from the Restoration Holdback when an Event of
Default exists, and upon the occurrence of an Event of Default, any undisbursed
portion of the Restoration Proceeds (including the Restoration Deficiency
Deposit and the Restoration Holdback) may, at Lender’s option, be applied
against the Loan, whether or not then due or accelerated, in such order and
manner as Lender determines.
 
(v)  Surplus Restoration Proceeds After Restoration Completion. Any Restoration
Proceeds remaining after full payment of Restoration costs and unpaid expenses
due to Lender for which Lender is permitted reimbursement under this
Section 9.04 shall be released to Borrower provided no Event of Default exists,
and Borrower delivers evidence satisfactory to Lender that (i) Restoration has
been completed in accordance in all material respects with all Requirements of
Law and (ii) the Property is free and clear of all Liens which may be asserted
with respect to the Restoration; provided, however, if the Mezzanine Loan is
then outstanding, Borrower hereby instructs and directs Lender to pay such
excess to Mezzanine Lender.

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Section 9.05  Inspections and Right of Entry.
 
Lender and its agents may enter the Property upon prior notice to Borrower
(notice to be given unless an Event of Default or an emergency exists, as
determined by Lender in good faith) to inspect the Property and Borrower’s books
and records relating to the Property. In making such entry and inspection,
Lender agrees to use reasonable efforts to minimize disturbance to Borrower and
tenants of the Property. Lender and its agents shall have access, at all
reasonable times, to the Property, including, without limitation, all contracts,
plans and specifications, permits, licenses and approvals required or obtained
in connection with the Property.
 
Section 9.06  Leases and Receipts.
 
(a)  Right to Enter into New Leases. Borrower may enter into new Permitted
Leases for space at the Property and renew or extend existing Leases without
Lender’s prior written consent. All proposed Leases that are not Permitted
Leases require Lender’s prior written approval (not to be unreasonably withheld,
conditioned or delayed) at Borrower’s expense (including reasonable legal fees
and expenses). Borrower shall promptly deliver to Lender a copy of each Lease
entered into after the Closing Date, together with written certification from a
Responsible Officer which confirms that (x) the copy delivered is a true,
complete and correct copy of such Lease and (y) Borrower has satisfied all
conditions of this Section. Lender’s acceptance of Borrower’s certification or a
copy of any Lease shall not be deemed a waiver of the requirements of this
Section if the Lease is not in compliance herewith. Notwithstanding the
foregoing (i) Borrower shall not terminate the Operating Lease nor enter into
any material amendment, modification or supplement to the Operating Lease
without, in either case, Lender’s prior written consent (which consent shall not
be unreasonably withheld, conditioned or delayed so long as the Operating Lease
is not being terminated, the rent is not being reduced and the term is not being
extended), and (ii) Borrower shall promptly provide Lender with a copy of any
termination, amendment, modification or supplement to the Operating Lease
entered into by Borrower, together with written certification from a Responsible
Officer which confirms that (x) the copy delivered is a true, complete and
correct copy of such termination, amendment, modification or supplement and
(y) Borrower has satisfied all conditions of this Section.
 
(b)  Leasing Decisions. Provided no Event of Default exists, and except as
otherwise provided in this Subsection, Borrower may, without Lender’s prior
written consent: (i) amend or supplement any Permitted Lease or waive any term
thereof (including, without limitation, shortening the lease term, reducing
rents, granting rent abatements, or accepting a surrender of all or any portion
of the leased space); (ii) cancel or terminate any Permitted Lease;
(iii) consent to a tenant’s assignment of its Permitted Lease or subleasing of
space; or (iv) amend, supplement, waive or terminate any Lease guaranty. Any
action with respect to any Lease that does not satisfy the requirements set
forth in this Section requires Lender’s prior written approval at Borrower’s
expense (including reasonable legal fees).

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(c)  Observance of Lessor Obligations. Borrower (i) shall observe and perform in
all material respects all obligations imposed upon the lessor under the Leases
and shall not do or permit to be done anything to materially impair the value of
any of the Leases as security for the Loan; (ii) upon Lender’s request, shall
promptly send copies to Lender of all notices of default which Borrower shall
send or receive (or may have sent or received) under any Lease (other than a
Permitted Lease); (iii) shall enforce in a commercially reasonable manner all of
the material terms, covenants and conditions contained in the Leases to be
observed or performed by the tenant; (iv) shall not collect any Rents more than
one (1) month in advance (and for this purpose a security deposit shall not be
deemed rent collected in advance); (v) shall not execute any assignment or
pledge of the lessor’s interest in any of the Leases or the Rents (other than in
connection with the Loan); and (vi) shall not convey or transfer or suffer or
permit a conveyance or transfer of the Property or of any interest therein so as
to effect a merger of the estates and rights of, or a termination or diminution
of the obligations of, lessees thereunder.
 
Section 9.07  Use of Property.
 
Borrower shall not allow material changes in the use of the Property without
Lender’s prior written consent (which consent shall not be unreasonably
withheld, conditioned or delayed). Borrower shall not, without Lender’s prior
written consent, initiate, join in, or consent to any change in any private
restrictive covenant or zoning or land use ordinance limiting or defining the
uses which may be made of the Property. If use of all or any portion of the
Property is or shall become a nonconforming use, Borrower will not cause or
permit the nonconforming use to be discontinued or the nonconforming portion of
the Property to be abandoned without Lender’s prior written consent (not to be
unreasonably withheld, conditioned or delayed).
 
Section 9.08  Maintenance of Property; Required Repairs.
 
 
 
(a)  Borrower shall maintain the Property in a good and safe condition and
repair. No portion of the Property (except for immaterial portions of the
Personal Property) shall be removed, demolished or materially altered (except
for normal repair or replacement) without Lender’s prior written consent;
provided, however, that Lender’s prior written consent shall not be required for
repairs, alterations, improvements, renewals or replacements to the Property
(a) which are non-structural in nature, and (b) the cost of which does not
exceed Five Million and No/100 Dollars ($5,000,000.00) in any single instance or
Ten Million and No/100 Dollars ($10,000,000.00) in the aggregate over the term
of the Loan. Borrower shall promptly repair or replace any portion of the
Property which may become damaged, worn or dilapidated.
 
(b)  Notwithstanding the foregoing, Borrower shall or shall cause Lessee to
perform the repairs at the Property specified on Exhibit F (such repairs
hereinafter referred to as the “Required Repairs”). Borrower shall complete the
Required Repairs on or before the required deadline for each repair specified on
Exhibit F and shall provide notice to Lender that such work has been completed.
It shall be an Event of Default under this Agreement if Borrower does not
complete the Required Repairs at the Property within thirty (30) days after
notice from Lender that such Required Repairs have not been completed within the
time period set forth in Exhibit F, provided, however, the time periods on
Exhibit F are extended by force majeure events and for so long as Borrower is
diligently pursuing the completion of such Required Repairs. Upon completion of
the Required Repairs, Borrower shall provide Lender with a certificate from
Borrower stating that all Required Repairs have been completed in a good and
workmanlike manner and in accordance with all applicable Legal Requirements
required to commence and/or complete the Required Repairs.

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Section 9.09  Waste.
 
Borrower shall not commit or suffer any physical waste of the Property or do or
permit to be done thereon anything that may in any way impair the value of the
Property or invalidate the insurance coverage required hereunder to be
maintained by Borrower. Borrower will not, without Lender’s prior written
consent, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the surface or the subsurface of the Property,
regardless of the depth thereof or the method of mining or extraction thereof.
 
Section 9.10  Compliance with Laws.
 
(a)  Obligation to Perform. Borrower shall promptly and fully comply in all
material respects with all Requirements of Law now or hereafter affecting the
Property. Borrower shall notify Lender promptly of Borrower’s knowledge or
receipt of any notice related to a material violation of any Requirements of Law
or of the commencement of any proceedings or investigations which relate to
material compliance with Requirements of Law. At Lender’s request, Borrower
shall provide Lender with copies of all notices, reports or other documents
relating to any litigation or governmental investigation relating to Borrower or
the Property.
 
(b)  Right to Contest. After prior written notice to Lender, Borrower, at its
own expense, may contest by appropriate legal proceedings, promptly initiated
and conducted in good faith and with due diligence, the Requirements of Law
affecting the Property or alleged violation thereof, provided that: (i) no Event
of Default exists; (ii) such proceedings shall be permitted under and be
conducted in accordance with the Requirements of Law; (iii) the Property will
not be in danger of being sold, forfeited, terminated, cancelled or lost;
(iv) non-compliance with such Requirement of Law shall not impose any civil,
criminal or environmental liability on Lender or Borrower; (v) Borrower deposits
with Lender cash (or other security acceptable to Lender) in such amount as
Lender deems sufficient to cover loss or damage that may result from Borrower’s
failure to prevail in such contest, provided that after a Securitization, one
hundred ten percent (110%) of the amount estimated by Lender is deposited;
(vi) Borrower furnishes to Lender all other items reasonably requested by
Lender; and (vii) upon a final determination thereof, Borrower promptly complies
with the obligations determined to be applicable.
 
Section 9.11  Financial Reports, Books and Records.
 
(a)  Delivery of Financial Statements. Borrower shall keep adequate books and
records of account with respect to its financial condition and the operation of
the Property, in accordance with GAAP consistently applied (or such other method
which is reasonably acceptable to Lender), and shall furnish the following to
Lender, each prepared in such detail as reasonably required by Lender and
certified by a Responsible Officer to be true, complete and correct:

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(i)  as soon as available, but in any event within twenty-five (25) days after
the end of each Accounting Period, a statement in form and substance reasonably
satisfactory to Lender, setting forth with respect to the Property, the
following, provided, however, that for any Accounting Period during a Marriott
Management Period, Borrower shall not be required to deliver more information
under this Section 9.11(a)(i) than Borrower receives from Property Manager,
 
(A)  a report detailing Receipts, Operating Income and the Operating Expenses,
in each case on a trailing four (4) Fiscal Quarter basis;
 
(B)  revenue reports, an occupancy report including the occupancy percentage, an
average daily room rate, and RevPar for the applicable Accounting Period and an
advance booking report, and, in all cases, any other information as is
reasonably required by Lender;
 
(C)  monthly STAR Reports or other industry standard equivalent publication
acceptable to Lender;
 
(D)  Accounting Period and year-to-date operating statements for the Property
prepared for such Accounting Period, each of which shall include an itemization
of actual (not pro forma) FF&E Expenditures during the applicable period, and a
comparison on a year-to-date basis to budget and prior year, for the Property
and Borrower;

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(E)  the Debt Service Coverage Constant Ratio as of the end of such Accounting
Period; and
 
(F)  the Cash Flow Available for Debt Service as of the end of Accounting
Period.
 
(ii)  No later than forty-five (45) days following the end of each Fiscal
Quarter, a statement in form and substance reasonably satisfactory to Lender,
setting forth with respect to the Property,
 
(A)  quarterly and year-to-date operating statements, each of which shall
include an itemization of budgeted and actual (not pro forma) capital
expenditures and FF&E Expenditures during the applicable period;
 
(B)  a quarterly and year-to-date comparison of the budgeted income and expenses
with the actual income and expenses for such quarter and year to date, together
with if requested by Lender, a detailed explanation of any variances between
budgeted and actual amounts that are in excess of five percent (5%) for each
line item therein;
 
(C)  any deposits into and disbursements from the Seasonal Reserve Account; and
 
(D)  Advance Bookings Reserve Statement with respect to the Property.
 
(iii)  within forty-five (45) days after the end of each Fiscal Quarter, a
Compliance Certificate;
 
(iv)  as soon as available, but in any event within one hundred twenty (120)
days after the close of Borrower’s fiscal year, (A) an annual Rent Roll,
presented on an annual basis consistent with the initial Rent Roll delivered on
or prior to the Closing Date; (B) an annual operating statement for the Property
presented on an annual basis consistent with the monthly and quarterly operating
statements described above and audited (which audit may be performed on a
consolidated basis together with financial statements of Lessee, Borrower,
Parent and DRRP) by American Express Tax and Business Services or a “Big Four”
accounting firm or other independent certified public accountant acceptable to
Lender; (C) an annual balance sheet and profit and loss statement for Borrower
audited by a “Big Four” accounting firm or other independent certified public
accountant acceptable to Lender; and (D) a statement of change of financial
position of Borrower, setting forth in comparative form the figures for the
previous fiscal year;
 
(v)  as soon as available, but in no event later than January 15 of each
calendar year, an annual operating budget for the Property presented on a
monthly basis consistent with the information required in the monthly and
quarterly operating statement described above which budget shall (if a Marriott
Management Period no longer exists) be subject to Lender’s approval (each such
budget as approved, or if no approval is required, the “Approved Budget”); and
 
(vi)  such other financial information or property management information
(including, without limitation, copies of any state and federal tax returns
filed by Lessee or Borrower, information on tenants under any Leases to the
extent such information is available to Borrower or Lessee, and an accounting of
security deposits and updated Rent Roll information) as may reasonably be
required by Lender from time to time.
 
(b)  Lender Audit Rights. Lender and its agents have the right, upon prior
written notice to Borrower (notice to be given unless an Event of Default
exists), to examine the records, books and other papers which reflect upon
Borrower’s financial condition or pertain to the income, expense and management
of the Property and to make copies and abstracts from such materials. Lender
also shall have the right, from time to time (but, in the absence of an Event of
Default existing, not more than annually) and upon prior notice to Borrower
(notice to be given unless an Event of Default exists) and Property Manager, to
have an independent audit conducted of any of Borrower’s and Lessee’s financial
information. Lender shall pay the cost of such audit unless Lender performed the
audit following the occurrence of an Event of Default (provided however that the
frequency of such audits following an Event of Default shall be limited in
Lender’s reasonable discretion) or if the results of Lender’s audit disclose an
error by more than ten percent (10%), in which case (and in addition to Lender’s
other remedies) Borrower shall pay the cost incurred by Lender with respect to
such audit upon Lender’s demand. Upon Borrower’s failure to pay such amounts,
and in addition to Lender’s remedies for Borrower’s failure to perform, the
unpaid amounts shall be added to principal, shall bear interest at the Default
Rate until paid in full, and payment of such amounts shall be secured by the
Security Instrument and other collateral given to secure the Loan.

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(c)  Financial Reports from Guarantor. Borrower shall cause the Guarantor to
provide to Lender (i) within one hundred twenty (120) days after the close of
such party’s fiscal year, such party’s balance sheet and profit and loss
statement (or if such party is an individual, within one hundred twenty (120)
days after the close of each calendar year, such party’s personal financial
statements) in form reasonably satisfactory to Lender and certified by such
party to be accurate and complete; and (ii) such additional financial
information (including, without limitation, copies of state and federal tax
returns) as Lender may reasonably require from time to time and in such detail
as reasonably required by Lender.
 
Section 9.12  Performance of the Material Operating Agreements.
 
Borrower shall observe and perform in a timely manner each and every obligation
to be observed or performed by Borrower pursuant to the terms of any agreement
or recorded instrument affecting or pertaining to the Property or used in
connection with the operation of the Property (including, without limitation,
the Material Operating Agreements). Without limiting the foregoing, Borrower
shall (except where the failure to perform such obligation could not have a
Material Adverse Effect) (a) give prompt notice to Lender of any notice received
by Borrower with respect to any of the Material Operating Agreements which
alleges a default or nonperformance by Borrower thereunder, together with a
complete copy of any such notice; (b) enforce, short of termination, performance
of the Material Operating Agreements to be performed or observed or (c) not
terminate or amend, or waive compliance with, any of the Material Operating
Agreements without Lender’s prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed) and, except, as may be
(i) permitted pursuant to the respective terms thereof or (ii) absent the
existence of an Event of Default, done in the ordinary course of business. If
the absence of an Material Operating Agreement that has terminated will have a
Material Adverse Effect on the value of the Property, Borrower agrees to enter
into a new Material Operating Agreement in replacement of the terminated
Material Operating Agreement, containing terms and conditions no less favorable
to Borrower than the terminated Material Operating Agreement. Borrower shall
notify Lender if Borrower does not replace the terminated Material Operating
Agreement.
 
Section 9.13  Existence; Change of Name; Location as a Registered Organization.
 
Borrower shall continuously maintain (a) its existence and shall not dissolve or
permit its dissolution, and (b) its rights and franchises to do business in the
state where the Property is located. Borrower shall not change Borrower’s name,
legal entity, or its location as a registered organization within the meaning of
the UCC, without notifying Lender of such change in writing at least thirty (30)
days prior to its effective date. The notification requirements set forth in
this Section are in addition to, and not in limitation of, the requirements of
Article 7. Borrower shall pay all costs and expenses incurred by Lender
(including, without limitation, reasonable legal fees) in connection with any
change described herein.
 
Section 9.14  Property Management.
 (a) Borrower shall cause the Property Manager to manage the Property in all
material respects in accordance with the terms of the Property Management
Contracts. Borrower shall not remove or replace the Property Manager (which,
with respect to a Property Manager which is an Affiliate of Borrower, shall be
deemed to occur upon a change of Control of the Property Manager), or modify or
waive any material terms of any Property Management Contract, or replace the
Property Manager or enter into any replacement Property Management Contract,
without (in any such case) Lender’s prior written consent and, if requested by
Lender, a Rating Confirmation; provided further, however, Lender’s consent and a
Rating Confirmation shall not be required if the Property Manager is replaced
with a Qualified Manager. Upon replacement of the Property Manager, Borrower
shall, and shall cause the new manager of the Property to, enter into a new
Property Management Contract approved by Lender and execute an Assignment of
Property Management Contract in form and substance similar to the Assignment of
Property Management Contract executed by Borrower and Property Manager.

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(b)  Termination of Property Manager. If (A) a default has occurred under any
Property Management Contract and has continued beyond any applicable notice
and/or grace period, (B) Property Manager becomes insolvent (and provided in the
case of either of the foregoing clauses (A) or (B) that Borrower shall have the
right to terminate any Property Management Contract), or (C) any other act,
omission, event or condition shall occur or exist which results in Borrower
having the right to terminate any Property Management Contract, then, if an
Event of Default shall exist, Borrower shall, at the request of Lender,
terminate any or all applicable Property Management Contacts and require
Property Manager to transfer its responsibilities for the management of the
Property or applicable portion thereof to a management company acceptable to
Lender.
 
Section 9.15  ERISA.
 
Borrower shall not engage in any transaction which would cause any obligation or
action taken or to be taken hereunder by Borrower (or the exercise by Lender of
any of its rights under any of the Loan Documents) to be a non-exempt (under a
statutory or administrative class exemption) prohibited transaction under ERISA.
Borrower agrees to deliver to Lender such certifications or other evidence
throughout the term of the Loan as requested by Lender in its sole discretion to
confirm compliance with Borrower’s obligations under this Section 9.15 or to
confirm that Borrower’s representations and warranties regarding ERISA remain
true.
 
Section 9.16  Compliance with Anti-Terrorism, Embargo, Sanctions and Anti-Money
Laundering Laws.
 
Borrower shall comply with all Requirements of Law relating to money laundering,
anti-terrorism, trade embargos and economic sanctions, now or hereafter in
effect, including, without limitation, Anti-Terrorism Laws. Without limiting the
foregoing, Borrower shall not take any action, or permit any action to be taken,
that would cause Borrower’s representations and warranties in Section 8.28 of
this Agreement to become untrue or inaccurate at any time during the Loan term.
Borrower shall notify Lender promptly of Borrower’s actual knowledge that the
representations and warranties in Section 8.28 of this Agreement may no longer
be accurate or that any other violation of the foregoing Requirements of Law has
occurred or is being investigated by Governmental Authorities. In connection
with such an event, Borrower shall comply with all applicable Requirements of
Law and directives of Governmental Authorities and, at Lender’s request, provide
to Lender copies of all notices, reports and other communications exchanged
with, or received from, Governmental Authorities relating to such event.
Borrower shall also reimburse Lender for any expense incurred by Lender in
evaluating the effect of such an event on the Loan and Lender’s interest in the
collateral for the Loan, in obtaining any necessary license from Governmental
Authorities as may be necessary for Lender to enforce its rights under the Loan
Documents, and in complying with all Requirements of Law applicable to Lender as
the result of the existence of such an event and for any penalties or fines
imposed upon Lender as a result thereof.

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Section 9.17  Requirements of Law; Permits, Licenses, Approvals.
 
Borrower shall (A) comply with the Requirements of Law of any Governmental
Authority in all jurisdictions in which it is now doing business or may
hereafter be doing business, except where the failure to comply cannot
reasonably be expected to result in a Material Adverse Effect, (B) maintain in
full force and effect all permits, licenses, certificates and other governmental
or quasi-governmental or administrative approvals necessary for the lawful use,
occupancy and operation of the Property full service first class hotel resort
with two (2) first class golf courses and a health spa (including without
limitation all applicable hotel, food, beverage and liquor licenses and
permits), except where the failure to maintain such permits and approvals cannot
reasonably be expected to result in a Material Adverse Effect, and (C) perform,
observe, comply and fulfill all of its obligations, covenants and conditions
contained in any material agreement pertaining to the Property except where the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
 
Section 9.18  Name.
 
Borrower shall not change the name under which the Property is operated or
otherwise make, suffer or permit any change in franchise of “flag” or brand or
other affiliation of the Property.
 
Section 9.19  Liquidity Facility.
 
 (a) Borrower shall not (and shall not permit Parent to) amend, restate,
supplement or otherwise modify the Liquidity Facility without Lender’s prior
written consent, which consent may be granted or withheld in Lender’s sole
discretion, provided, however, that if the proposed action would not increase
the principal amount of the Liquidity Facility or otherwise materially change
the economic terms of the Liquidity Facility and if Lender has obtained a Rating
Confirmation with respect thereto, then Lender shall not unreasonably withhold
its consent to the same.
 
(b)  Notwithstanding the foregoing, Lender shall not withhold its consent to an
increase in the principal balance of the Liquidity Facility or additional
mezzanine financing from a Permitted Lender (“Additional Mezzanine Financing”)
by an amount not to exceed $25,000,000.00 provided that: (a) no Event of Default
exists as of the date thereof; (b) the proceeds thereof are contributed by
Parent as a capital contribution to Borrower and used by Borrower to finance the
addition of a ballroom facility; (c) Borrower has delivered evidence reasonably
satisfactory to Lender that Cash Flow Available for Debt Service on a trailing
twelve (12) month basis (tested as of the end of the fiscal period of Borrower
then most recently ended as of the date of the proposed increase in the
principal balance of the Liquidity Facility) is greater than $26,000,000; (d)
Borrower shall deliver a new subordination and inter-creditor agreement (or
reaffirmation or amendment to the existing subordination and inter-creditor
agreement) executed by Liquidity Facility Lender and the Permitted Lender (if
the Additional Mezzanine Financing is outstanding) in form and substance
reasonably acceptable to Lender and approved by each of the Rating Agencies; (e)
if the funding of the Additional Mezzanine Financing occurs after the first
anniversary of the Closing Date, Lender has obtained a Rating Confirmation; (f)
Borrower reimburses Lender for all costs reasonably incurred by Lender in
processing the consent request, including, without limitation, reasonable legal
fees and expenses and (g) the Additional Mezzanine Financing (i) is subordinate
to, the Loan and the Mezzanine Loan and (ii) cannot be a revolving line of
credit. So long as any Obligations remain outstanding, the Liquidity Facility
Lender shall continue to be a Permitted Lender. Lender acknowledges that if the
Liquidity Facility Lender or any Marriott Entity provides the Additional
Mezzanine Financing, Lender shall not unreasonably withhold its consent to
Liquidity Facility Lender amending and restating the Liquidity Facility loan
documents to be in substantially similar form (other than economic terms) to the
Mezzanine Loan Documents.

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Section 9.20  Permitted Encumbrance Documents.
 
Borrower shall not amend, restate, supplement or otherwise modify (or consent to
any of the foregoing), any Permitted Encumbrance Document without Lender’s prior
written consent, which consent shall not be unreasonably withheld, conditioned
or delayed.
 
Section 9.21  Ground Lease Covenants.
 
 (a) Borrower covenants and agrees as follows: (i) promptly and faithfully to
observe, perform and comply in all material respects with all of the terms,
covenants and provisions of the Ground Lease; (ii) to refrain from doing
anything and not do or permit any act, event or omission, as a result of which,
there is likely to occur a default or breach under the Ground Lease; (iii) to
promptly give Lender notice of any default under the Ground Lease upon learning
of such default and immediately deliver to Lender a copy of each notice of
default and all responses to such notice of default and all other material
instruments, notices or demands received or delivered by Borrower under or in
connection with the Ground Lease; (iv) to promptly notify Lender in writing in
the event of the initiation of any litigation or arbitration proceeding
affecting Borrower or the Property under or in connection with the Ground Lease;
(v) within ten (10) Business Days of each request by Lender to furnish to Lender
an estoppel certificate from Borrower in such form as Lender may reasonably
request from time to time (provided no Event of Default exists, in no event more
than two (2) times in any twelve (12) month period) concerning Borrower’s due
observance, performance and compliance in all material respects with the terms,
covenants and provisions of the Ground Lease; (vi) it will not voluntarily or
involuntarily, directly or indirectly, assign, transfer or convey the Property
or the Leasehold Estate in violation of the Ground Lease or this Agreement, nor
surrender, terminate or cancel the Ground Lease nor, without the prior written
consent of Lender, fail to exercise in a timely manner any purchase option(s) or
renewal option(s) contained in the Ground Lease, if applicable, nor, without the
prior written consent of Lender; and (vii) modify, alter or amend the Ground
Lease, either orally or in writing
 
Any assignment, transfer, conveyance, surrender, termination, cancellation,
modification, alteration or amendment of the Ground Lease in contravention of
the foregoing shall be void and of no force and effect.
 
(b)  Default. In the event of a default by Borrower under the Ground Lease,
then, in each and every such case, Lender may (but shall not be obligated to),
in its sole discretion and without notice to Borrower, cause such default or
defaults by Borrower to be remedied and otherwise take or perform such other
actions as Lender may reasonably deem necessary or desirable as a result thereof
or in connection therewith. Borrower shall, on demand, reimburse Lender for all
advances reasonably made and expenses reasonably incurred by Lender in curing
any such default(s) (including, without limitation, reasonable attorneys’ fees),
together with interest thereon from the date if different until the same is paid
in full to Lender and all such sums so advanced shall be secured hereby. The
provisions of this subsection are in addition to any other right or remedy given
to or allowed Lender under the Ground Lease or otherwise.
 
(c)  Cancellation or Termination. If the Ground Lease is cancelled or
terminated, Lender or its nominee shall acquire an interest in any new lease of
the Leasehold Estate subject to and in accordance with the terms of the Ground
Lease.

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(d)  Ground Lease Estoppel Certificate. Borrower shall from time to time within
ten (10) Business Days of Lender’s request to make a request to Ground Lessor to
obtain and deliver (or cause to be delivered) to Lender, an estoppel
certificate, from the Ground Lessor in form and substance reasonably acceptable
to Lender, but such estoppel certificate shall not be inconsistent with
applicable limitations set forth in the Ground Lease.
 
(e)  No Liability. Notwithstanding anything contained herein or otherwise to the
contrary, Lender shall not have any liability or obligation under the Ground
Lease, by virtue of its acceptance of this Security Instrument. Borrower
acknowledges and agrees that Lender shall be liable for the obligations of
Borrower arising under the Ground Lease, as applicable, for only that period of
time, if any, during which Lender is in possession of the Leasehold Estate, as
applicable, or has acquired, by foreclosure, power of sale or otherwise, and is
holding, all of Borrower’s right, title and interest as tenant in the Leasehold
Estate.
 
(f)  Bankruptcy. Notwithstanding anything contained herein or otherwise to the
contrary, Borrower hereby assigns, transfers and sets over to Lender any and all
rights and interests that may arise in favor of Borrower in connection with or
as a result of the bankruptcy or insolvency of the Ground Lessor, as applicable,
including, without limitation, all of Borrower’s right, title and interest in,
to and under §365 of the Bankruptcy Code (11 U.S.C. §365), as the same may be
amended, supplemented or modified from time to time.
 
(g)  Taxes. In the event that it is claimed by any governmental agency,
authority or subdivision that any tax or governmental charge or imposition is
due, unpaid or payable by Borrower upon or in connection with the Ground Lease,
Borrower shall promptly either (i) pay such tax, charge or imposition when due
and deliver to Lender reasonably satisfactory proof of payment thereof or
(ii) contest such tax in accordance with the applicable provisions of this
Agreement. If liability for such tax is asserted against Lender, Lender will
give to Borrower prompt notice of such claim, and Borrower, upon complying with
the provisions of this Agreement shall have full right and authority to contest
such claim of taxability.
 
ARTICLE 10  
 

 
NO TRANSFERS OR ENCUMBRANCES; DUE ON SALE
 
Section 10.01  Prohibition Against Transfers.
 
Borrower shall not permit any Transfer to be undertaken or cause any Transfer to
occur other than a Permitted Transfer, subject to the consent of Mezzanine
Lender to the extent required under the Mezzanine Loan Documents. Any Transfer
made in violation of this Agreement shall be void.
 
Section 10.02  Lender Approval.
 
Lender’s decision to approve any Transfer proposed by Borrower for which
approval is required shall be made in Lender’s reasonable discretion and upon
Lender’s receipt of a Rating Agency Confirmation at Lender’s reasonable request.
Lender shall not be obligated to approve any Transfer following Securitization
without a Rating Confirmation. Borrower agrees to supply all information Lender
may request to evaluate a Transfer, including, without limitation, information
regarding the proposed transferee’s ownership structure, financial condition and
management experience for comparable properties. Borrower acknowledges that
Lender may impose conditions to its approval of a Transfer, including, without
limitation, (i) no Event of Default, or an event which with the giving of notice
or lapse of time or both could become an Event of Default, has occurred and is
continuing, (ii) approval of the proposed transferee’s ownership structure,
financial condition and management experience for comparable properties,
(iii) payment of an assumption fee equal to one percent (1%) of the outstanding
principal balance of the Loan, (iv) adding guarantors or changing the scope of
the Guaranty (which may result in the release of the Marriott Guarantor and/or
the CNL Guarantor, as applicable, from their obligations under the Guaranty
pursuant to Section 3.12(c) of the Guaranty, provided Lender receives a
Substitute Guaranty (as defined in the Guaranty) from a Substitute Guarantor (as
defined in the Guaranty) approved by Lender pursuant to Section 3.12(a) of the
Guaranty), (v) assumption in writing (acceptable to Lender in its sole
discretion) by the transferee and a guarantor (which guarantor must be
acceptable to Lender in its sole discretion) of all obligations of the
transferor and Guarantor under the Loan Documents and execution and delivery of
such other documentation as may be required by Lender and the Rating Agencies,
(vi) delivery of a new substantive nonconsolidation opinion and other applicable
opinions as reasonably required by Lender and the Rating Agencies,
(vii) adjusting amounts required for the Reserve Accounts, and (viii) obtaining
Rating Confirmations. Borrower agrees to pay all of Lender’s actual, reasonable
expenses incurred in connection with reviewing and documenting a Transfer
(including, without limitation, the costs of obtaining Rating Confirmations if
required), which amounts must be paid by Borrower whether or not the proposed
Transfer is approved. Upon Borrower’s failure to pay such amounts, and in
addition to Lender’s remedies for Borrower’s failure to perform, the unpaid
amounts shall be added to principal, shall bear interest at the Default Rate
until paid in full, and payment of such amounts shall be secured by the Security
Instrument and other collateral given to secure the Loan.

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Section 10.03  Permitted Mezzanine Financing.
 
(a)   Notwithstanding anything to contrary contained in Article 10, Mezzanine
Borrower shall be permitted to pledge direct or indirect interests in Borrower
in connection with the Mezzanine Loan pursuant to the Mezzanine Loan Documents.
 
Section 10.04  Other Releases of the Property.
 
Lender may release any other portion of the Property for such consideration and
upon such conditions as Lender may require without, as to the remainder of the
Property, in any way impairing or affecting the Lien or priority of the Security
Instrument or improving the position of any subordinate lienholder with respect
thereto, except to the extent that the obligations hereunder shall have been
reduced by the actual monetary consideration, if any, received by Lender for
such release, and Lender may accept by assignment, pledge or otherwise any other
property in place thereof as Lender may require without being accountable for so
doing to any other lienholder. Notwithstanding anything to the contrary herein,
Borrower shall have no right to request and Lender shall have no obligation to
grant its consent to any release pursuant this Section 10.04.
 
Section 10.05  Anti-Terrorism Compliance.
 
Notwithstanding anything to the contrary contained in this Section 10 no
transfer (whether or not such transfer shall constitute a Transfer) shall be
made to any Person on the OFAC list or shall result in any failure of Borrower
to comply with Anti-Terrorism Laws.

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ARTICLE 11  
 

 
EVENTS OF DEFAULT; REMEDIES
 
Section 11.01  Events of Default.
 
The occurrence of any one or more of the following events shall, at Lender’s
option, constitute an “Event of Default” hereunder:
 
(a)  If any payment of principal and interest (or interest if the Loan is
interest-only) is not paid in full on or before the Payment Due Date on which
such payment is due;
 
(b)  If any monthly payment required to be made to a Reserve Account is not paid
in full on or before the Payment Due Date on which such payment is due;
 
(c)  If unpaid principal, accrued but unpaid interest and all other amounts
outstanding under the Loan Documents are not paid in full on or before the
Maturity Date;
 
(d)  If an “Event of Default” as that term is defined under any other Loan
Document has occurred;
 
(e)  If any representation or warranty made by Borrower or Guarantor herein, in
the Guaranty, in the Environmental Indemnity or any other Loan Document, or any
material representation or warranty made in any certificate, report, financial
statement or other instrument or document furnished to Lender by or on behalf of
Borrower in connection herewith or hereafter, or in connection with any request
for consent by Lender made during the term of the Loan shall have been false or
misleading in any material respect as of the date made;
 
(f)  If Borrower or the Guarantor shall (i) make an assignment for the benefit
of creditors; (ii) generally not be paying its debts as they become due; or
(iii) admit in writing its inability to pay its debts as they become due;
 
(g)  If (i) Borrower or the Guarantor shall commence any case, proceeding or
other action under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or
relief of debtors (A) seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets; or (ii) there
shall be commenced against Borrower or the Guarantor any case, proceeding or
other action of a nature referred to in clause (i) above by any party other than
Lender which (A) results in the entry of an order for relief or any such
adjudication or appointment, or (B) remains undismissed, undischarged or
unbonded for a period of ninety (90) days; or (iii) there shall be commenced
against Borrower or the Guarantor any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
any order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within ninety (90) days from the entry thereof;
or (iv) Borrower or the Guarantor shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above;

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(h)  Any judgment for monetary damages is entered against Borrower or Lessee
which, in Lender’s reasonable judgment, has a Material Adverse Effect or is not
covered to Lender’s reasonable satisfaction by insurance proceeds;
 
(i)  If Borrower violates or fails to comply in any material respect with any
covenant contained in Article 7 of this Agreement (captioned: Single Purpose
Entity Requirements) or if any representation or warranty contained in Article 7
of this Agreement shall have been false or misleading in any material respect as
of the date made;
 
(j)  If Borrower violates or fails to comply in all material respects with any
of the provisions of Section 9.03 (captioned: Insurance), Section 9.06
(captioned: Leases and Receipts), or Section 9.13 (captioned: Existence, Change
of Name or Location as a Registered Organization);
 
(k)  If a Transfer, other than a Permitted Transfer, occurs without Lender’s
prior written consent or in violation of the terms of Lender’s consent;
 
(l)  If a Lien other than a Permitted Encumbrance is filed against the Property,
unless such Lien is promptly satisfied, or contested in good faith by Borrower
as permitted in accordance with Section 9.02 (b);
 
(m)  If a Proceeds Shortfall Failure shall occur and not be cured within
ten (10) days after notice from Lender;
 
(n)  if (i) any Rate Cap is terminated for any reason by Borrower or the Rate
Cap Provider, (ii) the Rate Cap Provider defaults in the performance of its
monetary obligations under the Rate Cap or (iii) Rate Cap Provider fails to
satisfy the credit ratings requirements set forth in Section 2.07(c) hereof, and
in each case, Borrower does not within ten (10) days after notice from Lender
(a) replace such Rate Cap with a replacement Rate Cap which satisfies all of the
requirements of Section 2.07 of this Agreement, and is otherwise in the same
notional amount and LIBOR Strike Rate as the Rate Cap it is replacing and
(b) deliver to Lender, in form and substance reasonably satisfactory to Lender
(x) an assignment of such Rate Cap from the replacement Rate Cap Provider,
(y) an acknowledgment and consent from such replacement Rate Cap Provider in
substantially the same form as the Rate Cap Provider Consent delivered to Lender
as of the Closing Date and (z) any other opinions or documents required pursuant
to Section 2.07 of this Agreement;
 
(o)  If any of the assumptions contained in the non-consolidation opinion
delivered to Lender in connection with the Loan, or in any update thereof or
additional non-consolidation opinion delivered subsequent to the closing of the
Loan, is or shall become untrue in any material respect;
 
(p)  If Borrower fails to pay the Prohibited Prepayment Fee when required;
 
(q)  If there is an event of default under the Ground Lease by Borrower beyond
applicable notice and cure periods under the Ground Lease, if any or if a Ground
Lease is amended, modified or terminated without Lender’s prior written consent;

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(r)  If Borrower ceases to operate (other than a temporary cessation in
connection with any renovations to the Property or restoration of the Property
after fire or other casualty or taking by a governmental authority having
jurisdiction over the Property) a first class hotel resort with two (2) golf
courses and a health spa on the Property;
 
(s)  If (i) Borrower fails to provide Lender (to the extent not previously
provided to Lender) with written evidence of receipt of all material permits and
licenses (including, without limitation, food, liquor and other beverage
licenses) in connection with Borrower’s ownership and Borrower’s or Property
Manager’s operation of the Property within thirty (30) days after Lender’s
written request therefor, or (ii) any liquor license(s) or any other required
permit(s) for the operation of the Property as a full service first class hotel
resort with two (2) golf courses and a health spa shall be revoked or terminated
or expire, or liquor, food and other beverages can no longer be legally sold at
the Property, in any such case, for a period of longer than thirty (30) days; or
 
(t)  Except for the specific defaults set forth in this Section 11.01, if any
other default occurs hereunder or under any other Loan Document which is not
cured (i) in the case of any default which can be cured by the payment of a sum
of money, within five (5) days after written notice from Lender to Borrower, or
(ii) in the case of any other default, within thirty (30) days after written
notice from Lender to Borrower; provided that if a default under clause (ii)
cannot reasonably be cured within such thirty (30) day period and Borrower has
responsibly commenced to cure such default promptly upon notice thereof from
Lender and thereafter diligently proceeds to cure same, such thirty (30) day
period shall be extended for so long as it shall require Borrower, in the
exercise of due diligence, to cure such default, but in no event shall the
entire cure period be more than sixty (60) days.
 
Section 11.02  Remedies.
 
If an Event of Default occurs, Lender may, at its option, and without prior
notice or demand, do and hereby is authorized and empowered by Borrower so to
do, any or all of the following:
 
(a)  Acceleration. Lender may declare the entire unpaid principal balance of the
Loan to be immediately due and payable. If such acceleration takes place prior
to the Open Date, an amount equal to the Prohibited Prepayment Fee shall be
added to balance of the Debt.
 
(b)  Recovery of Unpaid Sums. Lender may, from time to time, take legal action
to recover any sums as the same become due, without regard to whether or not the
Loan shall be accelerated and without prejudice to Lender’s right thereafter to
accelerate the Loan or exercise any other remedy, if such sums remain
uncollected.
 
(c)  Foreclosure. Lender may institute proceedings, judicial or otherwise, for
the complete or partial foreclosure of the Security Instrument or the complete
or partial sale of the Property under power of sale or under any applicable
provision of law. In connection with any such proceeding, Lender may sell the
Property as an entirety or in parcels or units and at such times and place (at
one or more sales) and upon such terms as it may deem expedient unless
prohibited by law from so acting.

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(d)  Receiver. Lender may apply for the appointment of a receiver, trustee,
liquidator or conservator of the Property, without regard for the adequacy of
the security for the Debt or a showing of insolvency, fraud or mismanagement on
the part of Borrower. Any receiver or other party so appointed has all powers
permitted by law which may be necessary or usual in such cases for the
protection, possession, control, management and operation of the Property.
Borrower hereby consents, to the extent permitted under applicable law, to the
appointment of a receiver or trustee of the Property upon Lender’s request if an
Event of Default has occurred. At Lender’s option, such receiver or trustee
shall serve without any requirement of posting a bond.
 
(e)  Recovery of Possession. Lender may enter into or upon the Property, either
personally or by its agents, and dispossess and exclude Borrower and its agents
and servants therefrom (without liability for trespass, damages or otherwise),
and take possession of all books, records and accounts relating to the Property,
and Borrower agrees to surrender possession of the Property and all other
Property, including without limitation, all documents, books, records and
accounts relating to the Property, to Lender upon demand. As a
mortgagee-in-possession of the Property, Lender shall have all rights and
remedies permitted by law or in equity to a mortgagee-in-possession, including,
without limitation, the right to charge Borrower the fair and reasonable rental
value for Borrower’s use and occupation of any part of the Property that may be
occupied or used by Borrower and the right to exercise all rights and powers of
Borrower with respect to the Property, whether in the name of Borrower or
otherwise (including, without limitation, the right to make, cancel, enforce or
modify Leases, obtain and evict tenants, and demand, sue for, collect and
receive all Rents of the Property).
 
(f)  UCC Remedies. Lender may exercise with respect to the Property, each right,
power or remedy granted to a secured party under the UCC, including, without
limitation, (i) the right to take possession of the Property and to take such
other measures as Lender deems necessary for the care, protection and
preservation of the Property, and (ii) the right to require that Borrower, at
its expense, assemble the Property and make it available to Lender at a
convenient place acceptable to Lender. Any notice of sale, disposition or other
intended action by Lender with respect to the Property sent to Borrower in
accordance with the provisions hereof at least ten (10) days prior to such
action, shall constitute reasonable notice to Borrower. Lender shall not have
any obligation to clean-up or otherwise prepare the Property for sale.
 
(g)  Apply Funds in Reserve Accounts. Except as expressly provided under Section
4.01(h) of this Agreement, Lender may apply any funds then deposited in any or
all of the Reserve Accounts and or otherwise held in escrow or reserve by Lender
under the Loan Documents (including without limitation Restoration Proceeds) as
a credit on to Loan, in such priority and proportion as Lender deems
appropriate.
 
(h)  Intentionally Deleted.
 
(i)  Protection of Lender’s Security and Right to Cure. Lender may, without
releasing Borrower from any obligation hereunder or waiving the Event of
Default, perform the obligation which Borrower failed to perform in such manner
and to such extent as Lender deems necessary to protect and preserve the
Property and Lender’s interest therein, including without limitation
(i) appearing in, defending or bringing any action or proceeding with respect to
the Property, in Borrower’s name or otherwise; (ii) making repairs to the
Property or completing improvements or repairs in progress; (iii) hiring and
paying legal counsel, accountants, inspectors or consultants; and (iv) paying
amounts which Borrower failed to pay. Amounts disbursed by Lender shall be added
to the Loan, shall be immediately due and payable, and shall bear interest at
the Default Rate from the date of disbursement until paid in full.

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(j)  Violation of Laws. If the Property is not in compliance with all
Requirements of Laws, Lender may impose additional requirements upon Borrower in
connection with such Event of Default including, without limitation, monetary
reserves or financial equivalents.
 
(k)  Intentionally Deleted.
 
(l)  Cooperation. Upon the request of Lender (or its nominees and successors and
assigns) in connection with a foreclosure, deed in lieu of foreclosure of other
acquisition of the Property or any part thereof resulting from an Event of
Default, Borrower shall, and shall cause Property Manager to, cooperate with
Lender (and its nominees and successors and assigns) in (i) the transfer to
Lender (or such nominee, successor or assign) of any licenses and permits
(including without limitation liquor licenses) necessary or appropriate for the
operation of the Property; (ii) the obtaining by Lender (or such nominee,
successor or assign) of any licenses and permits (including without limitation
liquor licenses) necessary or appropriate for the operation of the Property; and
(iii) the continuation by Borrower and Property Manager, as applicable, of any
existing licenses and permits (including without limitation liquor licenses)
and/or arrangements for liquor sales and service to be conducted by third party
venders, under catering licenses or otherwise, until new licenses and permits
are obtained.
 
Section 11.03  Cumulative Remedies; No Waiver; Other Security.
 
Lender’s remedies under this Agreement are cumulative (whether set forth in this
Article 11 or in any other Section of this Agreement) with those in the other
Loan Documents and otherwise permitted by law or in equity and may be exercised
independently, concurrently or successively in Lender’s sole discretion and as
often as occasion therefor shall arise. Lender’s delay or failure to accelerate
the Loan or exercise any other remedy upon the occurrence of an Event of Default
shall not be deemed a waiver of such right as remedy. No partial exercise by
Lender of any right or remedy will preclude further exercise thereof. Notice or
demand given to Borrower in any instance will not entitle Borrower to notice or
demand in similar or other circumstances (except where notice is expressly
required by this Agreement to be given) nor constitute Lender’s waiver of its
right to take any future action in any circumstance without notice or demand.
Lender may release security for the Loan, may release any party liable therefor,
may grant extensions, renewals or forbearances with respect thereto, may accept
a partial or past due payment or grant other indulgences, or may apply any other
security held by it to payment of the Loan, in each case without prejudice to
its rights under the Loan Documents and without such action being deemed an
accord and satisfaction or a reinstatement of the Loan. Lender will not be
deemed as a consequence of its delay or failure to act, or any forbearance
granted, to have waived or be estopped from exercising any of its rights or
remedies.
 
Section 11.04  Enforcement Costs.
 
Borrower shall pay, on written demand by Lender all costs incurred by Lender in
(a) collecting any amount payable under the Loan Documents, or (b) enforcing its
rights under the Loan Documents, in each case whether or not legal proceedings
are commenced or whether legal action is pursued to final judgment. Such fees
and expenses include, without limitation, reasonable fees for attorneys,
paralegals, law clerks and other hired professionals, a reasonable assessment of
the cost of services performed by Lender’s default management staff, court fees,
costs incurred in connection with pre-trial, trial and appellate level
proceedings, including discovery, and costs incurred in post-judgment collection
efforts or in any bankruptcy proceeding. Amounts incurred by Lender shall be
added to principal, shall be immediately due and payable, shall bear interest at
the Default Rate from the date of disbursement until paid in full, if not paid
in full within five (5) days after Lender’s written demand for payment, and such
amounts shall be secured by the Security Instrument and other collateral given
to secure the Loan.

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Section 11.05  Application of Proceeds.
 
The proceeds from disposition of the Property shall be applied by Lender as a
credit to the Loan and to recovery or reimbursement of the costs of enforcement
(contemplated by Section 11.04 above) in such priority and proportion as Lender
determines appropriate.
 
ARTICLE 12  
 

 
NONRECOURSE - LIMITATIONS ON PERSONAL LIABILITY
 
Section 12.01  Nonrecourse Obligation.
 
Except as otherwise provided in this Article 12, Section 15.04 or expressly
stated in any of the other Loan Documents, Lender shall enforce the liability of
Borrower to perform and observe the obligations contained in this Agreement and
in each other Loan Document only against the Property and other collateral given
by Borrower as security for payment of the Loan and performance of Borrower’s
obligations under the Loan Documents and not against Borrower or any of
Borrower’s principals, directors, officers or employees. Notwithstanding the
foregoing, this Article 12 is not applicable to the Environmental Indemnity or
to any Guaranty executed in connection herewith.
 
Section 12.02  Personal Liability for Certain Losses.
 
Section 12.01 above SHALL NOT APPLY and Borrower shall be PERSONALLY LIABLE for
all losses, claims, expenses or other liabilities incurred by Lender arising out
of, or attributable to, any of the following:
 
(a)  Fraud or material misrepresentation or failure to disclose a material fact
by Borrower, Guarantor or any of their respective Affiliates in connection with
(i) the application for the Loan or the execution and delivery of the Loan
Documents or making of the Loan, (ii) any financial statement or any other
material certificate, report or document required to be furnished by Borrower to
Lender herewith or hereafter, or (iii) any request for Lender’s consent made
during the term of the Loan;
 
(b)  Borrower’s misapplication or misappropriation of (i) insurance proceeds or
condemnation awards payable to Lender in accordance with this Agreement;
(ii) Receipts received by or on behalf of Borrower, (iii) Rent paid in advance
by tenants under the Leases; and (iv) tenant security deposits, if any, or other
refundable deposits held by or on behalf of Borrower in connection with Leases;

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(c)  Fees or commissions paid by Borrower, after the occurrence and during the
continuance of an Event of Default, to the Guarantor, any Affiliate, or any
principal of Borrower, the Guarantor or Affiliate, in violation of the Loan
Documents; notwithstanding anything in this Agreement to the contrary, Borrower
shall be entitled to pay any fees or commissions due to the Property Manager or
its Affiliates pursuant to the Property Manager Contracts after the occurrence
and during the continuance of an Event of Default;
 
(d)  Damage to or loss of all or any part of the Property as a result of
physical waste, gross negligence or willful misconduct by Borrower or its
agents, unless Borrower can demonstrate that such damage or loss was caused by
insufficient cash flow from the Property such that repairs and maintenance to
the Property could not be performed by Borrower during the period that such
damage or loss occurred;
 
(e)  Criminal acts of Borrower or any principal of Borrower resulting in the
seizure, forfeiture or loss of all or any part of the Property; and
 
(f)  Removal by Borrower of all or any portion of the Personal Property in
violation of this Agreement.
 
Section 12.03  Full Personal Liability.
 
Section 12.01 above shall BECOME NULL AND VOID and the Loan FULLY RECOURSE to
Borrower if: (a) Borrower, Parent, or DRR Junior Mezz LLC voluntarily and
materially violate any provision of Article 10 hereof; (b) if CNL or any CNL
Entity voluntarily and materially violates any provision of Article 10 hereof;
(c) if Marriott or any Marriott Entity voluntarily and materially violates any
provision of Article 10 hereof; (d) Borrower fails to comply with any covenant
contained in Article 7 hereof or Section 9.13 hereof or is in breach of any
representation contained in Article 7 hereof and such failure or breach is not
timely or effectively cured and causes Borrower to no longer be a bankruptcy
remote special purpose entity under applicable Rating Agency criteria; (e) the
Property or any part thereof becomes an asset in a voluntary bankruptcy or other
voluntary insolvency proceeding filed by Borrower or any of its Affiliates;
(f) Borrower voluntarily commences a bankruptcy or other insolvency proceeding;
or (g) if Borrower, Guarantor or any Affiliate or agent of (x) Borrower, or
(y) Guarantor has acted in concert with, colluded or conspired with any party to
cause the filing of any involuntary bankruptcy or other insolvency proceeding
against Borrower. Solely for purposes of Sections 12.03(a), (b) and (c) above, a
mechanics lien shall not be deemed to be a violation of Article 10 hereof.
 
Section 12.04  No Impairment.
 
Nothing contained in this Article 12 shall impair, release or otherwise
adversely affect: (a) any lien, assignment or security interest created by the
Loan Documents; (b) any indemnity, personal guaranty, master lease or similar
instrument now or hereafter made in connection with the Loan (including, without
limitation, the Environmental Indemnity and Guaranty); (c) Lender’s right to
have a receiver or trustee appointed for the Property; (d) Lender’s right to
name Borrower as a defendant in any foreclosure action or judicial sale under
the Security Instrument or other Loan Documents or in any action for specific
performance or otherwise to enable Lender to enforce obligations under the Loan
Documents or to realize upon Lender’s interest in any collateral given to Lender
as security for the Loan; or (e) Lender’s right to a judgment on the Note
against Borrower if necessary (i) to enforce any guaranty or indemnity provided
in connection with the Note (ii) to preserve or enforce its rights or remedies
against the Property or (iii) or to obtain any insurance proceeds or
condemnation awards to which Lender would otherwise be entitled under this
Agreement; provided, however, that any judgment obtained against Borrower shall,
except to the extent otherwise expressly provided in this Article 12, be
enforceable against Borrower only to the extent of Borrower’s interest in the
Property and other collateral securing payment of the Loan and performance of
Borrower’s obligations under the Loan Documents.

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Section 12.05  No Waiver of Certain Rights.
 
Nothing contained in this Article 12 shall be deemed a waiver of any right which
Lender may have under the Bankruptcy Code or applicable law to protect and
pursue its rights under the Loan Documents including, without limitation, its
rights under Sections 506(a) or any other provision of the Bankruptcy Code to
file a claim for the full amount of the Loan or to require that the collateral
continues to secure all of the indebtedness owing to Lender under Loan
Documents.
 
ARTICLE 13  
 

 
INDEMNIFICATION
 
Section 13.01  Indemnification Against Claims.
 
Borrower shall indemnify, defend, release and hold harmless Lender and each of
the other Indemnified Parties from and against any and all Losses directly or
indirectly arising out of, or in any way relating to, or as a result of
(a) accident, injury to or death of Persons, or loss of, or damage to, property
occurring in, on or with respect to the Property or on the adjoining sidewalks,
curbs, adjacent property or adjacent parking areas, streets or ways or otherwise
arising with respect to the use of the Property; (b) failure of the Property to
be in compliance with any Requirements of Law; (c) any breach by Borrower of its
obligations under, or any material misrepresentation by Borrower contained in,
this Agreement or the other Loan Documents; (d) the use or intended use of the
proceeds of the Loan; (e) any and all claims and demands whatsoever which may be
asserted against Lender by reason of any alleged obligations or undertakings on
its part to perform or discharge the lessor’s agreements contained in any Lease;
or (f) any claim, litigation, investigation or proceeding commenced or
threatened relating to any of the foregoing, whether or not Indemnified Party is
a party thereto; provided, however, any such indemnity shall not apply to any
Indemnified Party to the extent any such Losses arise from Indemnified Party’s
gross negligence or willful misconduct (collectively, “Indemnified Claims”).
 
Section 13.02  Duty to Defend.
 
If an Indemnified Party claims indemnification under this Agreement, the
Indemnified Party shall promptly notify Borrower of the Indemnified Claim. After
notice by any Indemnified Party, Borrower shall defend such Indemnified Party
against such Indemnified Claim (if requested by any Indemnified Party, in the
name of the Indemnified Party) by attorneys and other professionals reasonably
approved, in writing, by the Indemnified Party. Notwithstanding the foregoing,
any Indemnified Party may, in its sole discretion and at the expense of
Borrower, engage its own attorneys and other professionals to defend or assist
it if such Indemnified Party determines that the defense as conducted by
Borrower is not proceeding or being conducted in a satisfactory manner or that a
conflict of interest exists between any of the parties represented by Borrower’s
counsel in such action or proceeding. Within five (5) business days of
Indemnified Party’s demand, Borrower shall pay or, in the sole discretion of the
Indemnified Party, reimburse, the Indemnified Party for the payment of
Indemnified Party’s costs and expenses (including, without limitation,
reasonable attorney fees, engineer fees, environmental consultant fees,
laboratory fees and other professionals in connection therewith) in connection
with the Indemnified Claim. Payment not made timely shall bear interest at the
Default Rate until paid in full and payment of such amounts shall be secured by
the Security Instrument and other collateral given to secure the Loan.

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ARTICLE 14  
 

 
SUBROGATION; NO USURY VIOLATIONS
 
Section 14.01  Subrogation.
 
If the Loan is used to pay, satisfy, discharge, extend or renew any indebtedness
secured by a pre-existing mortgage, deed of trust or other Lien encumbering the
Property, then to the extent of funds so used, Lender shall automatically, and
without further action on its part, be subrogated to all rights, including lien
priority, held by the holder of the indebtedness secured by such prior Lien,
whether or not the prior Lien is released, and such former rights are not waived
but rather are continued in full force and effect in favor of Lender and are
merged with the Liens created in favor of Lender as security for payment of the
Loan and performance of the Obligations.
 
Section 14.02  No Usury.
 
At no time is Borrower required to pay interest on the Loan or on any other
payment due hereunder or under any of the other Loan Documents (or to make any
other payment deemed by law or by a court of competent jurisdiction to be
interest) at a rate which would subject Lender either to civil or criminal
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to pay. If interest (or such other
amount deemed to be interest) paid or payable by Borrower is deemed to exceed
such maximum rate, then the amount to be paid immediately shall be reduced to
such maximum rate and thereafter computed at such maximum rate. All previous
payments in excess of such maximum rate shall be deemed to have been payments of
principal (in inverse order of maturity) and not on account of interest due
hereunder. For purposes of determining whether any applicable usury law has been
violated, all payments deemed by law or a court of competent jurisdiction to be
interest shall, to the extent permitted by applicable law, be deemed to be
amortized, prorated, allocated and spread over the full term of the Loan in such
manner so that interest is computed at a rate throughout the full term of the
Loan which does not exceed the maximum lawful rate of interest.
 
 
ARTICLE 15  
 

 
SALE OR SECURITIZATION OF LOAN
 
Section 15.01  Splitting the Note.
 
Lender has the right from time to time to sever the Note into one or more
separate promissory notes in such denominations as Lender determines in its sole
discretion (including the creation of a mezzanine loan secured by a collateral
assignment of the equity interest in Borrower), which promissory notes may be
included in separate sales or securitizations undertaken by Lender. In
conjunction with any such action, Lender may redefine the interest rate;
provided, however, that the initial weighted average of the interest rates
contained in the severed promissory notes taken in the aggregate shall equal the
Applicable Interest Rate. Subject to the foregoing, each severed promissory
note, and the Loan evidenced thereby, shall be upon all of the terms and
provisions contained in this Agreement and the Loan Documents which continue in
full force and effect, except that Lender may allocate specific collateral given
for the Loan as security for performance of specific promissory notes, in each
case with or without cross default provisions. Borrower, at Lender’s expense,
agrees to cooperate with all reasonable requests of Lender to accomplish the
foregoing, including, without limitation, execution and prompt delivery to
Lender of a severance agreement and such other documents as Lender shall
reasonably require; Borrower’s failure to deliver any of the documents requested
by Lender hereunder for a period of ten (10) business days after such notice by
Lender shall, at Lender’s option, constitute an Event of Default hereunder.

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Section 15.02  Reallocation of Loan Amounts and Modification of Interest Rates.
 
Lender, at its sole cost and expense, without in any way limiting Lender’s other
rights hereunder, in its sole and absolute discretion, shall have the right at
any time prior to Securitization (A) to reallocate the amount of the Loan and
the Mezzanine Loan and/or (B) to establish different interest rates for each of
the Loan and the Mezzanine Loan, provided that (i) the aggregate principal
amount of the Loan and the Mezzanine Loan immediately following such
reallocation or modification, as applicable, shall equal the outstanding
principal balance of the Loan and the Mezzanine Loan immediately prior to such
reallocation or modification, as applicable, and (ii) the weighted average
interest rate of the Loan and the Mezzanine Loan immediately following such
reallocation or modification, as applicable, shall equal the weighted average
interest rate which was applicable to the Loan and the Mezzanine Loan
immediately prior to such reallocation or modification, as applicable. Borrower,
at no material cost or expense to Borrower, agrees to cooperate with all
reasonable requests of Lender to accomplish the foregoing, including, without
limitation, execution and prompt delivery to Lender of such documents as Lender
and any Rating Agency shall reasonably require. Borrower’s failure to deliver
any of the documents requested by Lender hereunder for a period of ten (10)
Business Days after such notice by Lender shall, at Lender’s option, constitute
an Event of Default hereunder.
 
Section 15.03  Lender’s Rights to Sell or Securitize.
 
Borrower acknowledges that Lender, and each successor to Lender’s interest, may
(without prior notice to Borrower or Borrower’s prior consent), sell or grant
participations in the Loan (or any part thereof), sell or subcontract the
servicing rights related to the Loan, Securitize the Loan or include the Loan as
part of a Securitization and, in connection therewith, assign Lender’s rights
hereunder to a securitization trustee. Borrower agrees to cooperate with all
reasonable requests of Lender in connection with any of the foregoing including,
without limitation, executing any financing statements or other documents deemed
necessary by Lender or its transferee to create, perfect or preserve the rights
and interest to be acquired by such transferee, provide any updated financial
information with appropriate verification through auditors letters, revised
organizational documents (provided such revisions do not effect distributions or
other economic terms) and counsel opinions satisfactory to the Rating Agencies,
execute amendments to the Loan Documents (subject to the limitations set forth
in Section 15.01 above), and review information contained in a preliminary or
final private placement memorandum, prospectus, prospectus supplements or other
disclosure document providing a mortgagor estoppel certificate and such other
information about Borrower, Lessee, Guarantor or the Property as Lender may
require for Lender’s offering materials; provided, that Borrower shall not be
required to pay Lender’s expenses or incur material out of pocket costs (unless
Lender undertakes to pay the same or such costs pertain to deliveries and
documentation which Borrower is otherwise required to provide to Lender under
the provisions of the Loan Documents other than this Section 15.02), other than
the legal fees and expenses of Borrower’s counsel, except that Lender shall
reimburse Borrower for the reasonable legal fees and expenses incurred by
Borrower in preparing and delivering any new or updated legal opinions requested
by Lender. Lender agrees that, in the event of a sale or Securitization of all
or any portion of the Lender’s interest in the Loan (or any participation
therein), Borrower shall be provided with one Lender or servicer as Borrower’s
contact for purpose of obtaining the consent, approval, acceptance or
satisfaction of Lender in those instances where the same are required under the
Loan Documents and Borrower shall be entitled to rely on the response of such
Lender or servicer with respect to such matters and shall not be required to
obtain any separate consent, approval, acceptance or satisfaction directly from
multiple lenders, servicers or participants. Nothing contained herein shall
affect the decision-making process among any such lenders, servicers and
participants beyond providing that any decision shall be requested through, and
granted or denied through, the one lender or sevicer provided as Borrower's
contact for such purposes. Each lender, servicer or participant shall retain the
right to participate in reaching such decision to the extent provided in the
applicable agreements among such lenders, servicers and/or participants.

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Section 15.04  Dissemination of Information.
 
Borrower acknowledges that Lender may provide to third parties with an existing
or prospective interest in the servicing, enforcement, evaluation, performance,
ownership, purchase, participation or Securitization of the Loan, including,
without limitation, any Rating Agency and any entity maintaining databases on
the underwriting and performance of commercial mortgage loans, any and all
information which Lender now has or may hereafter acquire relating to the Loan,
the Property, Borrower or Guarantor, as Lender determines necessary or desirable
and that such information may be included in disclosure documents in connection
with a Securitization or syndication of participation interests, including,
without limitation, a prospectus, prospectus supplement, offering memorandum,
private placement memorandum or similar document (each, a “Disclosure Document”)
and also may be included in filing with the Securities and Exchange Commission
pursuant to the Securities Act or the Securities Exchange Act. To the fullest
extent permitted under applicable law, Borrower irrevocably waives all rights,
if any, to prohibit such disclosure, including, without limitation, any right of
privacy.
 
Section 15.05  Securitization Indemnification.
 
Borrower and Guarantor agree to provide in connection with each Disclosure
Document, an indemnification certificate: (a) certifying that any and all
financial and similar information provided at any time by Borrower or Guarantor
with respect to any of them or the Property (the “Provided Information”)
included within the sections of the Disclosure Document entitled “Special
Considerations,”“Risk Factors,”“Certain Legal Aspects of the Mortgage
Loan,”“Description of the Mortgage Loan and Mortgaged Property,”“Description of
the Mortgages,”“The Manager,” and/or “The Borrower,” and all sections relating
specifically to Borrower, Guarantor, their respective Affiliates, the Loan, the
Loan Documents and the Property, and that, to the best of such indemnitor’s
knowledge, such sections (and any other sections reasonably requested) (to the
extent such information relates to or includes any Provided Information (the
“Covered Disclosure Information”)) do not contain any untrue statement of a
material fact with respect to Borrower, Guarantor, their respective Affiliates,
the Loan, the Loan Documents and the Property; (b) indemnifying Lender (and for
purposes of this Section 15.04, Lender shall include its officers and directors)
and the Affiliate of Lender that (i) has filed the registration statement, if
any, relating to the Securitization and/or (ii) which is acting as issuer,
depositor, sponsor and/or a similar capacity with respect to the Securitization
(any Person described in (i) or (ii), an “Issuer Person”), and each director and
officer of any Issuer Person, and each Person or entity who controls any Issuer
Person within the meaning of Section 15 of the Securities Act or Section 20 of
the Securities Exchange Act (collectively, “Issuer Group”), and each Person
which is acting as an underwriter, manager, placement agent, initial purchaser
or similar capacity with respect to the Securitization, each of its directors
and officers and each Person who controls any such Person within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act
which is acting as an underwriter, manager, placement agent, initial purchaser
or similar capacity with respect to the Securitization, each of its directors
and officers and each Person who controls any such Person within the meaning of
Section 15 of the Securities Act and Section 20 of the Securities Exchange Act
(collectively, “Underwriter Group”) for any Losses to which Lender, the Issuer
Group or the Underwriter Group may become subject insofar as the Losses arise
out of or are based upon any untrue statement of any material fact contained in
the Covered Disclosure Information or arise out of or are based upon the
omission or alleged omission to state in the Covered Disclosure Information a
material fact required to be stated in such sections necessary in order to make
the statements in such sections or in light of the circumstances under which
they were made, not misleading (collectively, “Securities Liabilities”); and
(c) agreeing to reimburse Lender, the Issuer Group and the Underwriter Group for
any legal or other expenses reasonably incurred by Lender, the Issuer Group and
the Underwriter Group in investigating or defending the Securities Liabilities;
provided, however, that indemnitor will be liable under clauses (b) or (c) above
only to the extent that such Securities Liabilities arise out of, or are based
upon, any such untrue statement made therein in reliance upon, and in conformity
with, information furnished to Lender or any member of the Issuer Group or
Underwriter Group by or on behalf of Borrower or Guarantor in connection with
the preparation of the Disclosure Documents or in connection with the
underwriting of the Loan, including, without limitation, financial statements of
Borrower or Guarantor, and operating statements, rent rolls, environmental site
assessment reports and property condition reports with respect to the Property.
This indemnity is in addition to any liability which Borrower may otherwise have
and shall be effective whether or not an indemnification certificate described
in (a) above is provided and shall be applicable based on information previously
provided by or on behalf of Borrower or Guarantor if the indemnification
certificate is not provided.
 
Section 15.06  Additional Financial Information for Large Loans.
 
 (a) If requested by Lender in connection with a Securitization in which the
Loan constitutes at least ten percent (10%) of the assets of the Securitization,
Borrower, at no material cost or expense to Borrower, shall provide Lender with
all financial statements and other financial, statistical or operating
information, to the extent required pursuant to Regulation S-X of the Securities
Act or any other Requirements of Law in connection with any Disclosure Document
or Securities Filing. All financial statements provided by Borrower pursuant to
this Section shall be prepared in accordance with GAAP and shall meet the
requirements of Regulation S-X and other applicable Requirements of Law. All
financial statements reporting for a full operating year (i) shall be audited by
the independent accountants in accordance with generally accepted auditing
standards, Regulation S-X and all other applicable Requirements of Law,
(ii) shall be accompanied by the manually executed report of the independent
accountants thereon, which report shall meet the requirements of Regulation S-X
and all other applicable Requirements of Law, and (iii) shall be accompanied by
a manually executed written consent of the independent accountants, acceptable
to Lender, that authorizes the inclusion of such financial statements in any
Disclosure Document or Securities Filing and permits the use of the name of such
independent accountants and reference to such independent accountants as
“experts” in any Disclosure Document and Securities Filing, all of which shall
be provided, at Borrower’s expense, at the same time as the related financial
statements are required to be provided. All other financial statements shall be
certified by the chief financial officer of Borrower, which certification shall
state that such financial statements meet the requirements set forth in the
first sentence of this paragraph.

--------------------------------------------------------------------------------

 
(b)  If requested by Lender, Borrower shall provide Lender, promptly upon
request, with any other or additional financial statements or financial,
statistical or operating information as Lender determines to be required
pursuant to Regulation S-X or other legal requirements in connection with any
Disclosure Document or any filing under or pursuant to the Securities Exchange
Act in connection with or relating to a Securitization.
 
ARTICLE 16  
 

 
BORROWER’S FURTHER ACTS AND ASSURANCES;
 
PAYMENT OF SECURITY; RECORDING CHARGES
 
Section 16.01  Further Acts.
 
Borrower, at Borrower’s expense, agrees to take such further actions and execute
such further documents as Lender reasonably may request to carry out the intent
of the Loan Documents or to establish and protect the rights and remedies
created or intended to be created in favor of Lender under the Loan Documents or
to protect the value of the Property and Lender’s security interest or liens
therein. Borrower agrees to pay all filing, registration or recording fees or
taxes, and all expenses incident to the preparation, execution, acknowledgment,
or filing/recording of the Security Instrument, the Assignment of Leases and
Receipts, financing statements or any such instrument of further assurance,
except where prohibited by law so to do.
 
Section 16.02  Replacement Documents.
 
Upon receipt of an affidavit from an officer of Lender as to the loss, theft,
destruction or mutilation of the Note or any other Loan Document which is not of
public record, and, in the case of any such mutilation, upon surrender and
cancellation of such document, Borrower will issue a replacement original in
lieu thereof in the same original principal amount and otherwise on the same
terms and conditions as the original.
 
Section 16.03  Borrower Estoppel Certificates.
 
(a)  Borrower Information. Borrower, within fifteen (15) days of Lender’s
written request, but not more frequently than twice annually, shall furnish to
Lender or Lender’s designee a statement, duly acknowledged and certified by a
Responsible Officer, setting forth: (i) the Maximum Loan Amount and the amount
of principal advanced as of the certificate date; (ii) the unpaid principal
amount of the Loan; (iii) the calculation of the rate of interest accruing on
the Loan, including the then Applicable Interest Rate; (iv) the Payment Due
Date, the Maturity Date, any unexercised rights to extend the Maturity Date and
any exercised extension of the Maturity Date, if any; (v) the date installments
of interest and/or principal were last paid; (vi) that, except as provided in
such statement, no defaults or events exists which would be an Event of Default
with the giving of any applicable notice or the expiration of any applicable
grace or cure period or both; (vii) that the Loan Documents are valid, legal and
binding obligations and have not been modified or, if modified, giving the
particulars of such modification; (viii) whether any offsets or defenses exist
against Borrower’s obligation to pay the Loan and perform the Obligations and,
if any are alleged to exist, a detailed description thereof; (ix) that all
Leases (if any) are in full force and effect and have not been modified or if
modified, setting forth all modifications; (x) a current Rent Roll for the
Property, (xi) the date to which Rents under the Leases have been paid;
(xii) whether or not, to the best knowledge of Borrower, any of the tenants
under the Leases (if any) are in default under the Leases, and, if any of the
tenants are in default, setting forth the specific nature of all such defaults;
and (xiii) such other matters reasonably requested by Lender and reasonably
related to the Leases (if any) or the Property.

--------------------------------------------------------------------------------

 
(b)  Tenant Estoppels. Borrower shall use commercially reasonable efforts to
deliver to Lender (provided no Event of Default exists, not more than two (2)
times in any twelve (12) month period), promptly upon Lender’s written request
(but in any event no later than fifteen (15) business days following Lender’s
request), duly executed estoppel certificates from tenants identified by Lender
attesting to such facts regarding a tenant’s non-residential Lease as Lender may
require, including, without limitation: (i) that the Lease is in full force and
effect with no defaults thereunder on the part of any party, and no event exists
that would be an event of default thereunder with giving of any applicable
notice or the expiration of any applicable grace or cure period or both; (ii),
that none of the Rents have been paid more than one month in advance, except as
a security deposit; and (iii) that the tenant claims no defense or offset
against the full and timely performance of its obligations under the Lease.
 
(c)  Lender Statement of Loan Information. After written request by Borrower not
more than twice annually, Lender shall furnish Borrower a statement setting
forth: (i) the original Maximum Loan Amount and the amount of principal advanced
by Lender as of the certificate date; (ii) the unpaid principal amount of the
Loan; (iii) the rate of interest accruing on the Loan, including the then
Applicable Interest Rate; and (iv) the balance of amounts held in the Reserve
Accounts, if any.
 
Section 16.04  Recording Costs.
 
Borrower will pay all transfer taxes, filing, registration, recording or similar
fees, and all expenses incident to the preparation, execution, acknowledgment,
recording, filing and/or release or discharge of the Note, the Security
Instrument and each of the other Loan Documents, and all modifications,
extensions, consolidations, or restatements of the same, except where prohibited
by law so to do.
 
Section 16.05  Intentionally Deleted
 

--------------------------------------------------------------------------------

.
 
Section 16.06  Certain Additional Rights of Lender (VCOC).
 
Notwithstanding anything to the contrary which may be contained in this
Agreement, Lender shall have:
 
(a)  the right, in accordance with the terms of this Agreement (i) to consult
with and advise Borrower regarding the business operation of the Property, and
the financial and other conditions of Borrower or the Property, with Borrower’s
officers, employees, directors and managers, (ii) to discuss with Borrower any
significant business issues involved in negotiating a plan of reorganization for
Borrower, including Borrower’s proposed reorganization plans and operating plans
for proceeding following such plan of reorganization coming into effect, and
(iii) to request from Borrower such forecasts, projections and other financial
and business data as Lender may deem reasonably appropriate; provided, however,
that such consultations shall not include discussions of environmental
compliance programs or disposal of hazardous substances and not result in any
change in Borrower’s course of action. Consultation meetings should occur on a
regular basis (no less frequently than quarterly) with Lender having the right
to call special meeting at any reasonable time;
 
(b)  the right, in accordance with the terms of this Agreement, to examine the
books and records of Borrower at any time upon reasonable notice;
 
(c)  the right, in accordance with the terms of this Agreement, to receive
monthly, quarterly and year-end financial reports, including balance sheets,
statements of income, shareholders’ equity and cash flow, a management report
and schedules of outstanding indebtedness; provided, however, that if Lender or
any other party entitled to receive the aforementioned financial reporting
materials does not receive the requested materials as provided herein, Lender or
such other requesting party shall first request such materials from the servicer
of the Loan and, if the servicer does not deliver to Lender or such other
requesting party the requested materials, then the Person(s) permitted to act
under this Section 16.07 shall be entitled to request such information directly
from Borrower.
 
(d)  The rights described in this Section 16.07 may be exercised by any Person
which owns (i) directly or indirectly, substantially all of the interests in
Lender, (ii) a participation interest in the Loan or (iii) directly or
indirectly, substantially all of the interests in the holder of any such
participation interest (it being intended that any such Person described in
clauses (i), (ii) and (iii) of this sentence is intended to be a third party
beneficiary of the rights granted under this Section 16.07, with the direct
right to enforce such rights against Borrower, notwithstanding any provisions of
this Agreement to the contrary).
 
ARTICLE 17  
 

 
LENDER CONSENT
 
Section 17.01  No Joint Venture; No Third Party Beneficiaries.
 
Borrower and Lender intend that the relationships created hereunder and under
each of the other Loan Documents are solely those of Borrower and lender.
Nothing herein or in any of the other Loan Documents is intended to create, nor
shall it be construed as creating anything but a debtor-creditor relationship
between Borrower and Lender nor shall they be deemed to confer on anyone other
than Lender, and its successors and assigns, any right to insist upon or to
enforce the performance or observance of any of the obligations contained herein
or therein.

--------------------------------------------------------------------------------

 
Section 17.02  Lender Approval.
 
Wherever pursuant to a Loan Document (a) Lender exercises any right to approve
or disapprove or to grant or withhold consent; (b) any arrangement or term is to
be satisfactory to Lender; (c) a waiver is requested from Lender, or (d) any
other decision is to be made by Lender, all shall be made in Lender’s sole
discretion, unless expressly provided otherwise in such Loan Document. By
approving or granting consent, accepting performance from Borrower, or releasing
funds from a Reserve Account, Lender shall not be deemed to have warranted or
affirmed the sufficiency, completeness, legality or effectiveness of the subject
matter or of Borrower’s compliance with Requirements of Laws. Notwithstanding
any provision under the Loan Documents which provide Lender the opportunity to
approve or disapprove any action or decision by Borrower, Lender is not
undertaking the performance of any obligation of Borrower under any of the Loan
Documents or any of the other documents and agreements in connection with this
transaction (including, without limitation, the Leases, if any).
 
Section 17.03  Performance at Borrower’s Expense.
 
Borrower acknowledges and agrees that in connection with each request by
Borrower to: (a) modify or waive any provision of the Loan Documents;
(b) release or substitute Property; (c) obtain Lender’s approval or consent
whenever required by the Loan Documents including, without limitation, review of
a Transfer request, matters affecting a Lease, improvements or alterations to
the Property, and easements or other additions to Permitted Encumbrances; or
(d) provide a subordination, non-disturbance and attornment agreement, Lender
reserves the right to collect a review or processing fee from Borrower based on
a reasonable estimate of the administrative costs which Lender will incur to
connection therewith. Borrower agrees to pay such fee along with all reasonable
legal fees and expenses incurred by Lender and the fees required for a Rating
Confirmation or approval from the trustee if the Loan has been Securitized, as
applicable, irrespective of whether the matter is approved, denied or withdrawn.
Any amounts payable by Borrower hereunder, shall be deemed a part of the Loan,
shall be secured by this Agreement and shall bear interest at the Default Rate
if not fully paid within ten (10) days of written demand for payment.
 
ARTICLE 18  
 

 
MISCELLANEOUS PROVISIONS
 
Section 18.01  Notices.
 
All notices and other communications under this Agreement are to be in writing
and addressed to each party as set forth below. Default or demand notices shall
be deemed to have been duly given upon the earlier of: (a) actual receipt; or
(b) upon attempted delivery after having been timely deposited for overnight
delivery, fee prepaid, with a reputable overnight courier service, having a
reliable tracking system, or after having been deposited in any post office or
mail depository regularly maintained by the U.S. Postal Service and sent by
certified mail, postage prepaid, return receipt requested, and in the case of
clause (b) irrespective of whether delivery is accepted. A new address for
notice may be established by written notice to the other; provided, however,
that no change of address will be effective until written notice thereof
actually is received by the party to whom such address change is sent. Notice to
outside counsel or parties other than the named Borrower and Lender, now or
hereafter designated by a party as entitled to notice, are for convenience only
and are not required for notice to a party to be effective in accordance with
this section. Notice addresses are as follows:

--------------------------------------------------------------------------------

 
Address for Lender:
 

 
Barclays Capital Real Estate Inc.
 
200 Park Avenue
 
New York, NY 10166
 
Attn.: Lori Rung/CMBS Servicing
 
Fax: (212) 412-2496
 
and
 
Cadwalader, Wickersham & Taft LLP
 
One World Financial Center
 
New York, New York 10281
 
Attention: Fredric L. Altschuler, Esq.
 
Facsimile No.: (212) 504-6666
 
Address for Borrower:
 

 
c/o CNL Hospitality Partners, LP
 
450 South Orange Avenue, 12th Floor
 
Orlando, FL 32801
 
Attention: Office of General Counsel
 
Facsimile No.: (407) 650-1085
 
and
 
Lowndes, Drosdick, Doster, Kantor & Reed, PA
 
450 South Orange Avenue, Suite 800
 
Orlando, FL 32801
 
Attn: Richard J. Fildes, Esq.
 
Facsimile No.: (407) 843-4444
 
and with a copy to:
 

   
Marriott International, Inc.

 
10400 Fernwood Road
 
Bethesda, MD 20817
 
Attn: General Counsel
 
Facsimile No.: (301) 380-6727
 
and with a copy to:

--------------------------------------------------------------------------------

 

   
Arent Fox PLLC

 
1050 Connecticut Avenue, NW
 
Washington, DC 20036
 
Attention: Gerald L. Mitchell, Esq.
 
Telecopy: (202) 857-6395
 
Section 18.02  Entire Agreement; Modifications; Time of Essence.
 
This Agreement, together with the other Loan Documents, contain the entire
agreement between Borrower and Lender relating to the Loan and supersede and
replace all prior discussions, representations, communications and agreements
(oral or written). If any documents relating to the Loan are in conflict, the
Note shall control over this Agreement, and this Agreement shall control over
all of the other documents. No Loan Document shall be modified, supplemented or
terminated, nor any provision thereof waived, except by a written instrument
signed by the party against whom enforcement thereof is sought, and then only to
the extent expressly set forth in such writing. Time is of the essence with
respect to all of Borrower’s obligations under the Loan Documents.
 
Section 18.03  Binding Effect; Joint and Several Obligations.
 
This Agreement and each of the other Loan Documents shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors and
assigns, whether by voluntary action of the parties or by operation of law. (The
foregoing does not modify any conditions regulating Transfers.) If Borrower
consists of more than one party, each shall be jointly and severally liable to
perform the obligations of Borrower under the Loan Documents.
 
Section 18.04  Duplicate Originals; Counterparts.
 
This Agreement and each of the other Loan Documents may be executed in any
number of duplicate originals, and each duplicate original shall be deemed to be
an original. This Agreement and each of the other Loan Documents (and each
duplicate original) also may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together constitute a fully
executed agreement even though all signatures do not appear on the same
document.
 
Section 18.05  Unenforceable Provisions.
 
Any provision of this Agreement or any other Loan Documents which is determined
by a court of competent jurisdiction or government body to be invalid,
unenforceable or illegal shall be ineffective only to the extent of such holding
and shall not affect the validity, enforceability or legality of any other
provision, nor shall such determination apply in any circumstance or to any
party not controlled by such determination.
 
Section 18.06  Governing Law.
 
THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY
LENDER AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF
THE LOAN DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS
AND THE OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS), EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION,
PERFECTION, AND ENFORCEMENT OF THE LIEN AND SECURITY INTEREST CREATED PURSUANT
HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS (OTHER THAN WITH RESPECT TO
LIENS AND SECURITY INTERESTS IN PROPERTY WHOSE PERFECTION AND PRIORITY IS
COVERED BY ARTICLE 9 OF THE UCC (INCLUDING, WITHOUT LIMITATION, THE LOCKBOX
ACCOUNT, THE MARRIOTT FF&E RESERVE ACCOUNT, THE CASH MANAGEMENT ACCOUNT AND THE
RESERVE ACCOUNTS) WHICH SHALL BE GOVERNED BY THE LAW OF THE JURISDICTION
APPLICABLE THERETO IN ACCORDANCE WITH SECTIONS 9-301 THROUGH 9-307 OF THE UCC AS
IN EFFECT IN THE STATE OF NEW YORK) SHALL BE GOVERNED BY AND CONSTRUED ACCORDING
TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD
THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE
STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF
ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER.
TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND LENDER EACH HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, AND THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW EXCEPT AS
SPECIFICALLY SET FORTH ABOVE.
 
           Section 18.07  Consent to Jurisdiction.
 
ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF
OR RELATING TO THIS AGREEMENT MAY AT LENDER’S OPTION BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO
SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING.
 
BORROWER DOES HEREBY DESIGNATE AND APPOINT:
 

RICHARD J. FILDES, ESQ.
LOWNDES, DROSDICK, DOSTER, KANTOR & REED, PA
450 SOUTH ORANGE AVENUE, SUITE 800
ORLANDO, FL 32801

--------------------------------------------------------------------------------

 
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS, AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN, SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,
(II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK OR ORLANDO, FLORIDA, AS APPLICABLE
(WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS
FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF
ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR ORLANDO,
FLORIDA, AS APPLICABLE, OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
 
Section 18.08  WAIVER OF TRIAL BY JURY.
 
BORROWER AND LENDER EACH WAIVE THEIR RESPECTIVE RIGHT, TO THE FULLEST EXTENT
PERMITTED BY LAW, AND AGREE NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY
ISSUE ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE
RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER.
 
[Remainder of page is blank; signatures appear on next page.]

 
 

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IN WITNESS WHEREOF, Lender and Borrower hereby sign and deliver this Agreement
as of the date first set forth above.
 

       
         BORROWER:
 
 
   
 
 DESERT RIDGE RESORTS, LLC, a
 Delaware limited liability company
 
 
  By:   /s/ John X. Brady, Jr.  

--------------------------------------------------------------------------------

Name: John X. Brady, Jr.   Title: Vice President 

                                             Borrower's State Charter Number:
3254235
                                           Borrower's Tax Identification Number:
52-2268775
 

 
 

--------------------------------------------------------------------------------

 

       
         LENDER:
 
 
   
 
 BARCLAYS CAPITAL REAL ESTATE INC.,
a Delaware corporaton 

 
  By:   /s/ Haejin Baek  

--------------------------------------------------------------------------------

Name: Haejin Baek   Title: VP 

 

--------------------------------------------------------------------------------

 
EXHIBIT A
 
COMPLIANCE CERTIFICATE FORM
 
COMPLIANCE CERTIFICATE
 
Borrower Name:
 
DESERT RIDGE RESORT, LLC, a Delaware limited liability company
 
Property Address:
 
Loan Number:
 
Borrower is providing this Compliance Certificate in accordance with the terms
of the Loan Agreement dated as of June 15, 2005 (“Loan Agreement”) executed
between Borrower and Barclays Capital Real Estate Inc. (“Lender”). Capitalized
terms used in this Compliance Certificate and not specifically defined herein
have the meaning provided in the Loan Agreement.
 
This Compliance Certificate covers the period from ______________, 200_ through
_____________, 200__ , inclusive (“Covered Period”).
 
  Borrower hereby represents, warrants and certifies to Lender that, as of the
date hereof (or such other date as may be specified below), and unless otherwise
provided on Schedule A hereto:
 
1.  No Event of Default has occurred and is continuing, and no event or
condition exists that would be an Event of Default if notice had been given or
applicable grace/cure periods had expired (or both).
 
2.  The following financial statements of Borrower (“Financial Statements”)
attached hereto are true, accurate and complete reports of the period covered
thereby:
 
[___] [monthly][quarterly][year-to-date] operating statement for the Property
 
[___] [monthly][quarterly][year-to-date] balance statement
 
[___] [monthly][quarterly][year-to-date] changes in financial position
 
[___] [monthly][quarterly][year-to-date] profit/loss statement
 
3.  No Transfer has occurred in violation of the Loan Agreement. If any change
has occurred in Borrower’s Organization Chart, a new Organization Chart is
attached hereto.
 
4.  To Borrower’s knowledge, no event of default currently exists under any
Lease (other than Permitted Leases), and no event or condition exists that would
be an event of default under a Lease (other than Permitted Leases) if notice had
been given or applicable grace/cure periods had expired (or both).
 
5.  No event or condition exists which, in Borrower’s reasonable judgment, could
have Material Adverse Effect.
 
6.  No change has occurred with respect to any Property Management Contract. To
Borrower’s knowledge, no event of default currently exists under any Property
Management Contract, and no event or condition exists that would be an event of
default under any Property Management Contract if notice had been given or
applicable grace/cure periods had expired (or both).
 
7.  Borrower has not received notice that any insurance policy is to be
cancelled, not renewed, materially modified or existing coverage excluded.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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BY SIGNING BELOW, Borrower certifies that (a) all information provided in this
Compliance Certificate is true, accurate and correct in all material respects
and does not omit any material fact that would make any statement false or
misleading and (b) the undersigned representative is duly authorized to sign
this Compliance Certificate on Borrower’s behalf.
 

    Date:    

           
   
   
    By:   /s/   

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Name:   Title 

 
 

 

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EXHIBIT B
 
DESCRIPTION OF GROUND LEASE
 
Golf Course Ground Lease:
 
Commercial Lease No. 03-52884, dated as of July 7, 1993, originally executed by
and between the State of Arizona, as Trustee, through the State Land
Commissioner (“Ground Lessor”) and Northeast Phoenix Partners, an Arizona
general partnership (“Original Lessee”), as disclosed by Memorandum of Lease
dated July 7, 1993 and recorded on April 11, 1996 in 96-0246602 of the Official
Records of the Maricopa County Recorder (the “Official Records”), as the same
has been (i) amended pursuant to those certain Amendments to Arizona State Land
Department Commercial Lease No. 03-52884 dated April 2, 1997 and December 22,
1999, (ii) assigned to Desert Ridge Resort LLC, a Delaware limited liability
company (“Lessee”), pursuant to that certain Assignment and Assumption of Lease
dated August 17, 2000, executed by and between Original Lessee, as assignor, and
Lessee, as assignee, recorded on August 18, 2000 in 00-0637236 of the Official
Records, and (iii) amended by that certain Third Amendment to Commercial Lease
to Arizona State Land Department Commercial Lease No. 03-52884, dated as of the
date hereof, which is intended to be recorded on or about the date hereof in the
Official Records.
 
Resort Ground Lease:
 
Commercial Ground Lease No. 03-52416, dated as of July 7, 1993, originally
executed by and between Ground Lessor and Original Lessee, as disclosed by
Memorandum of Lease dated July 7, 1993 and recorded on April 11, 1996 in
96-0246602 of the Official Records, as the same has been (i) amended pursuant to
those certain Amendments to Arizona State Land Department Commercial Lease No.
03-52416 dated April 2, 1997 and December 22, 1999, respectively, (ii) assigned
to Lessee pursuant to that certain Assignment and Assumption of Lease dated
August 17, 2000, executed by and between Original Lessee, as assignor, and
Lessee, as assignee, recorded on August 18, 2000 in 00-0637235 of the Official
Records, and (iii) amended by that certain Third Amendment to Commercial Lease
to Arizona State Land Department Commercial Lease No. 03-52416, dated as of the
date hereof, which is intended to be recorded on or about the date hereof in the
Official Records.

 

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EXHIBIT C
 
PREPAYMENT PERCENTAGES
 

 
IF PREPAID AFTER THE FOLLOWING PAYMENT DUE DATE:
 
BUT BEFORE THE FOLLOWING PAYMENT DUE DATE:
 
PERCENTAGE (DECLINING SCHEDULE FROM 1.0% TO 0%) 
 
13th Payment Due Date
 
14th Payment Due Date
 
1.00%
 
14th Payment Due Date
 
15th Payment Due Date
 
0.83%
 
15th Payment Due Date
 
16th Payment Due Date
 
0.67%
 
16th Payment Due Date
 
17th Payment Due Date
 
0.50%
 
17th Payment Due Date
 
18th Payment Due Date
 
0.33%
 
18th Payment Due Date
 
19th Payment Due Date
 
0.17%
 
19th Payment Due Date
 
20th Payment Due Date
 
0.00%

 

 

 

 

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EXHIBIT D
 
ORGANIZATIONAL CHART
 
[See Attached]
 

 

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EXHIBIT E
 
RENT ROLL
 
[See Attached]

 

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EXHIBIT F
 
REQUIRED REPAIRS
 

 
DESCRIPTION OF REPAIR
 
TIME PERIOD TO COMPLETE
 
Commercially reasonable efforts to cause the repair or replacement of the
leaking transformer (leaking cooling vane) and clean up associated oil stain
behind the transformer located adjacent to the northern emergency generator
installation on the concrete transformer pad.
 
Within 60 days of the Closing Date
 
Register with ADEQ, a total of 30 dry wells and "interceptor basins" located at
the Property.
 
Within 60 days of the Closing Date

 

 

 

 

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EXHIBIT G
 
LIST OF QUALIFIED MANAGERS
 
Six Continents
 
Hilton Hotels Corporation
 
Fairmont Hotels & Resorts
 
Starwood Hotels and Resorts Worldwide, Inc.
 
Four Seasons Hotel Inc.
 
Hyatt
 
KSL II Management Operations, LLC
 

 

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EXHIBIT H
 
  NOT USED
 

 

 

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EXHIBIT I
 
CERTIFICATE OF EXECUTIVE OFFICER
 
OF BORROWER
 
  The undersigned, the ______ of _______________-., a Delaware limited liability
company (the “Borrower”), hereby certifies to BARCLAYS CAPITAL REAL ESTATE INC.,
a Delaware corporation (together with its successors and assigns “Lender”) that
from the date of its formation on ___________, to the date of this certificate
(this “Certificate”), Borrower:
 
1.  is and always has been duly formed, validly existing, and in good standing
in the state of its formation, in the State where the Property is located and in
all other jurisdictions where it is qualified to do business;
 
2.  has no judgments or liens of any nature against it except for tax liens not
yet due;
 
3.  is in compliance with all laws, regulations, and orders applicable to it and
has received all permits necessary for it to operate;
 
4.  is not aware of any pending or threatened litigation;
 
5.  is not involved in any dispute with any taxing authority;
 
6.  has paid all taxes which it owes;
 
7.  has never owned any property other than the Property and personal property
necessary or incidental to its ownership or operation of the Property and has
never engaged in any business other than the ownership and operation of the
Property;
 
8.  is not now, nor has ever been, party to any lawsuit, arbitration, summons,
or legal proceeding, except the matters disclosed on Schedule I attached hereto,
none of which matters (i) are still pending or (ii) resulted in a decision,
order or judgment that has not been paid in full or otherwise fully satisfied in
all respects;
 
9.  has provided Lender with complete financial statements that reflect a fair
and accurate view of Borrower's financial condition;
 
10.  has received a phase 1 (and if recommended therein, a phase 2) of the
Property, which did not disclose any environmental noncompliance or
contamination with respect to the Property or disclose any fact or condition
that would constitute or cause a breach under any environmental representation,
warranty, covenant or other provision contained in the Loan Agreement or any of
the other Loan Documents;
 
11.  has no material contingent or actual obligations not related to the
Property; and
 
12.  has materially complied with the separateness covenants referred to in the
Non-consolidation Opinion. “Non-consolidation Opinion” means, collectively
(a) that certain non-consolidation opinion delivered to Lender by
_______________ dated of even date with the Loan Agreement, and (b) that certain
non-consolidation opinion delivered to Lender by _______________ dated of even
date with the Loan Agreement.
 
Capitalized terms used in this Certificate but not otherwise defined shall have
the respective meanings assigned to them in the Loan Agreement.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the undersigned has hereunto set his hand this __ day of
__________, 2005.
 

           
   
   
    By:   /s/   

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Name:   Title: 

 
 

 

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EXHIBIT J
 
NOT USED
 

 

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EXHIBIT K
 
NOT USED

 

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EXHIBIT L
 
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
 
None.

 

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EXHIBIT M
 
NOT USED
 

 

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EXHIBIT N
 
FORM OF LOCKBOX AGREEMENT
 

 

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EXHIBIT O
 
LIQUIDITY FACILITY DOCUMENTS

Note: All documents listed below are dated as of June 15, 2005, unless otherwise
indicated.

1.  
Loan Agreement (Liquidity Facility) by and between DRRP and Marriott.

2.  
Promissory Note (Liquidity Facility) made by DRRP to the order of Marriott.

3.  
Assignment of Membership Interests and Security Agreement (Interests in DRR
Junior Mezz, LLC) by DRRP to and in favor of Marriott.

4.  
Assignment of Membership Interests and Security Agreement (Interests in DRR
Senior Mezz, LLC) by DRR Junior Mezz, LLC to and in favor of Marriott.

5.  
Termination and Release Agreement by and between DRRP and Drawbridge Special
Opportunities Fund LP, a Delaware limited partnership (“Drawbridge”).

6.  
Termination and Release Agreement by and between DRRP and Marriott.

7.  
UCC-1 Financing Statement naming DRRP, as debtor, and Marriott, as secured
party, to be filed with the Secretary of State of the State of Delaware.

8.  
UCC-1 Financing Statement naming DRR Junior Mezz, LLC, as debtor, and Marriott,
as secured party, to be filed with the Secretary of State of the State of
Delaware.

9.  
Payoff Notice to Drawbridge.