Exhibit 10.1

METROPOLITAN LIFE INSURANCE COMPANY

Mortgage Loan Application

Borrower applies for, and agrees to accept from Metropolitan Life Insurance
Company (“MetLife”) the mortgage loan described below (“Loan”), on the terms and
conditions set forth below and in the Closing Requirements which have been
delivered to Borrower.

TERMS

 

Application Number:   

Loan Amount: An amount

determined pursuant to the

terms of subsection 34, but not

to exceed $220,000,000.

  

Annual Interest Rate:

70 Basis Points above

LIBOR as Determined

below

  

Expiration Date:

90 days after the Delivery Date

Application Fee:

$550,000 (0.25%)

  

Processing Fee:

$None

  

Deposit:

$200,000

  

 

 

Borrower represents that it is:

 

SHR St. Francis, L.L.C., a Delaware limited liability company whose sole member
is Strategic Hotel Funding, L.L.C.

 

Address:

 

77 West Wacker, Suite 4600, Chicago, IL 60601

 

Taxpayer ID Number: TBD

 

Determination of Annual Interest Rate: The Annual Interest Rate shall be the sum
of (i) .70% plus (ii) the one-month “LIBOR Rate” (as hereinafter defined) as of
approximately 11:00 am London time on the second Business Day prior to the
Closing. MetLife shall notify the Borrower of such initial Annual Interest Rate
on or before the Closing, which initial Annual Interest Rate shall be effective
as of the Closing. The Annual Interest Rate will be reset by MetLife, effective
the first day of the second month following the month during which the Closing
occurs, and effective the first day of the first month of each successive
one-month period thereafter during the term of the Loan (the “Rate Reset
Dates”). The Annual Interest Rate will be reset as aforesaid to the rate equal
to the sum of (i) .70%) plus the one-month LIBOR Rate as of approximately 11:00
am London time on the second Business Day prior to each of the Rate Reset Dates.
“Delivery Date” means the date upon which MetLife receives this Application
executed by Borrower in a form satisfactory to MetLife together with the
Processing Fee and the Deposit. A “Business Day” is a day that both
(x) commercial banks in London are open for international business (including
dealings in U.S. dollar deposits) and (y) MetLife is open for business in New
York City. The term “LIBOR Rate” as used herein shall mean the one-month London
interbank offered rate for deposits in U.S. dollars rounded upwards if necessary
to the nearest one one-hundredth (1/100th) of one percent appearing on the
display designated as page 3750 on the Dow Jones Telerate Service, or such other
page as may replace page 3750 on that service (or, such other service as may be
nominated as the information vendor by the British Bankers’ Association for the
purpose of displaying British Bankers’ Association interest settlement rates for
U.S. dollar deposits as the composite offered rate for London interbank
deposits). If the aforementioned sources of the LIBOR Rate are no longer
available, then the term “LIBOR Rate” shall mean the one-month London interbank
offered rate for deposits in U.S. dollars rounded upwards if necessary to the
nearest one one-hundredth (1/100th) of one percent as shown on the appropriate
Bloomberg Financial Markets Services Screen or any successor index on such
service under the heading “USD”.

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

Repayment Terms: Borrower shall pay interest only in advance on the date of
Closing and shall then pay interest-only in arrears, on the first day of the
second month following the Closing and thereafter Borrower shall make payments
of interest only on the first day of each month following the Closing. The
entire outstanding principal balance of the Loan together with all accrued
interest and all other sums due under the Loan Documents, shall be paid on the
first day of the 25th month following the Closing (the “Maturity Date”) unless
the Maturity Date is extended pursuant to the terms of Provision 28 hereof.
Interest shall be calculated on a daily basis of the actual number of days
elapsed over a 360-day year.

Prepayment Privilege: The Loan may not be prepaid in whole or in part at any
time prior to the Maturity Date except as follows. Commencing on the first day
of the 7th month following the Closing, Borrower may prepay the entire
outstanding principal balance of the Loan, accrued interest and all other sums
due and payable under the Loan Documents (the “Indebtedness”) with a Prepayment
Fee, on 10 days’ prior written notice to MetLife.

Liable Party: Strategic Hotel Funding, L.L.C., a Delaware limited liability
company. At all times during the term of the Loan (including during any extended
loan terms) pursuant to the exercise of any Extension Options), Strategic Hotels
and Resorts, Inc. will own at least 51% of the equity of the Liable Party and
Control the Liable Party and Strategic Hotels and Resorts, Inc. will maintain a
market capitalization of no less than $1,000,000,000.

Addresses of Liable Party: 77 West Wacker, Suite 4600, Chicago, IL 60601

Improvements:

Hotel consisting of 1,195 guest rooms, including approximately 40,035 square
feet of retail space and a parking garage containing approximately 225 spaces.

Size, Location and Address of Real Property:

Approximately 1.8 acres of land located at 335 Powell Street, San Francisco, CA

Insurance: As long as SHR St. Francis, L.L.0 is the Borrower and Strategic Hotel
Funding is the Liable Party under the Loan, insurance coverage provided under
policies of insurance with the types and amounts of coverage set forth below
submitted to MetLife and to be Approved by MetLife at Closing (collectively, the
“Initial Insurance Policy”) and any renewal or extension of the Initial
Insurance Policy with the same types and amounts of coverage shall be deemed to
comply with the requirements for insurance herein and in Transaction Documents.

Full Replacement Cost: $ [See Schedule A attached to Closing Requirements]
including $ [See Schedule A attached to Closing Requirements] for Personal
Property.

Boiler and Machinery: $ [See Schedule A attached to Closing Requirements]

Business Income: $[See Schedule A attached to Closing Requirements]

Commercial General Liability: $[See Schedule A attached to Closing Requirements]

Earthquake Insurance: $ [See Schedule A attached to Closing Requirements]

Provision 12 of the Closing Requirements provides more details of the insurance
requirements.

Borrower is advised of the provisions of California Civil Code
Section 2955.5(a), which provides that “No lender shall require a borrower as a
condition of receiving or maintaining a loan secured by real property, to
provide hazard insurance coverage against risks to the improvements on that real
property in an amount exceeding the replacement value of the improvements on the
property”.

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

Mortgagee Designation:

Metropolitan Life Insurance Company,

its affiliates and/or successors and assigns

10 Park Avenue

Morristown, New Jersey 07962

Attention: Insurance Manager

 

Broker or Loan Originator (individually or

collectively, “Broker”):

 

Eastdil-Secured

  

Additional Application Provisions:

 

Nos. 21 through 42.

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

PROVISIONS

1. Closing. If the Application Provisions, Additional Application Provisions and
Closing Requirements have been fulfilled on or before the Expiration Date set
forth on page 1, the initial disbursement of the Loan, if any funds are
disbursed on the Closing Date, and recording of the Mortgage in the official
records of the county in which the Property is located (such recording shall
constitute the “Closing” and the date on which such recording occurs shall
constitute the “Closing Date”) shall occur on June 25, 2006. Borrower shall
provide MetLife written notice of the amount of the initial disbursement of the
Loan, if any, not less than 5 business days prior to the Closing Date. The
balance of the Loan proceeds shall be disbursed in not more than two additional
disbursements as provided in Provision 39 hereof (each, a “Subsequent Funding”)
on a date or dates (each a “Subsequent Funding Date”) to be specified in
Borrower’s written notice to MetLife not less than fifteen (15) business days
prior to the Subsequent Funding Date. In no event shall a Subsequent Funding or
a Subsequent Funding Date occur more than ninety (90) days following the Closing
Date (the “Subsequent Funding Expiration Date”). MetLife may grant
participations in the Loan or otherwise securitize the Loan provided MetLife
remains the master servicer for the Loan.

2. Property. The term “Property” shall mean the Real Property, the Personal
Property and the Intangible Property collectively. “Real Property” shall mean
the land which is described in the Terms (although the actual description of the
land will be set forth in the Mortgage) and the Improvements described on page 1
and all other improvements located on the land, and all fixtures, together with
all easements and appurtenances. “Personal Property” shall mean the appliances,
equipment, machinery, furnishings, furniture and other personal property
(including intellectual property) at any time located on or used in connection
with the Real Property, other than trade fixtures and other personal property of
tenants, including any replacements or additions to such personal property.
“Intangible Property” shall mean Borrower’s interest in all leases, policies of
insurance, licenses, franchises, permits, goodwill, trade names, service
contracts and other agreements and rights relating to the Real Property.

3. Documentation and Approvals by MetLife. Borrower shall execute a note which
evidences the Indebtedness (the “Note”), a mortgage, deed to secure debt, or
deed of trust to secure the Note (the “Mortgage”), an assignment of leases (the
“Assignment”), an environmental unsecured indemnity agreement (the “Indemnity
Agreement”) and such other documents as MetLife deems appropriate for the Loan.
In addition, at the election of MetLife, the Liable Party shall execute a
guaranty to guaranty the obligations of Borrower with respect to (a) the
recourse provisions of the Loan which are set forth in Provision 4(f) of this
Application and (b) the Indemnity Agreement (the “Guaranty”). The Note,
Mortgage, Assignment, and such other documentation as MetLife may require in
connection with the Loan are collectively referred to as “Loan Documents”. The
Indemnity Agreement and Guaranty are not Loan Documents and shall survive
repayment of the Loan or other termination of the Loan Documents. The Loan
Documents, the Indemnity Agreement and the Guaranty (collectively, the
“Transaction Documents”) shall be in a form Approved by MetLife. Whenever
reference is made in this Application or in the Closing Requirements to
“MetLife’s Approval” or “Approved by MetLife”, unless otherwise specified, each
term means accepted or approved in the commercially reasonable discretion of
MetLife as evidenced in writing by an officer of MetLife.

4. Specific Provisions in Loan Documents. In addition to any other provisions
that MetLife may require, the Note and/or Mortgage shall provide for the
following:

a. Late Charge and Default Interest. Payment by Borrower of a late charge of 3%
of any amount which is not received within 7 days of the due date of such
payment and default interest upon a default at the lesser of an annual rate
equal to 400 basis points plus the Annual Interest Rate, or the highest interest
rate permitted under applicable law.

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

b. Default Prepayment Fee and Prepayment Fee. Borrower will not have any right
to prepay the Note, in whole or in part, except as may be expressly provided in
the Loan Documents. If a prepayment of all or any part of the Note is made
following an acceleration of the Maturity Date, or in connection with a purchase
of the Property at a foreclosure sale, then to compensate MetLife for the loss
of the investment, Borrower shall pay an amount equal to the Default Prepayment
Fee. The “Default Prepayment Fee” shall be equal to the greater of (a) the
present value of all remaining Partial Monthly Payments of Interest (as defined
below), discounted at the rate which, when compounded monthly, is equivalent to
the Treasury Rate, compounded semi-annually, or (b) one percent (1%) of the
amount of the principal being prepaid. A “Partial Monthly Payment of Interest”
shall be defined as the outstanding principal balance of the Loan multiplied by
.70%, divided by 360, multiplied by 365 and divided by 12. The “Treasury Rate”
shall be the annualized yield on securities issued by the United States Treasury
having a maturity equal to the remaining stated term of the Note, as quoted in
the Federal Reserve Statistical Release [H. 15 (519)]under the heading “U.S.
Government Securities - Treasury Constant Maturities” for the date which is 5
Business Days prior to the date on which prepayment is being made. If this rate
is not available on such date, the Treasury Rate shall be determined by
interpolating between the yield on securities of the next longer and next
shorter maturity. If the Treasury Rate is no longer published, MetLife shall
select a comparable rate. MetLife will, upon request, provide an estimate of the
amount of the Prepayment Fee two weeks before the date of the scheduled
prepayment for purposes of this provision 4(b). The number of “remaining”
Partial Monthly Payments of Interest to be used in the calculation of the
Default Prepayment Fee shall be equal to the number of remaining monthly
installments of interest due on the Loan to and including the Maturity Date.

The “Prepayment Fee” shall be equal to sixty-five basis points of the principal
being prepaid (0.65%) during months 7-12; then thirty-five basis points of the
principal being prepaid (0.35%) during months 13-18; then par thereafter.

c. Deposits for Impositions and Insurance Premiums. Borrower will make monthly
deposits of all real estate and other taxes, assessments (collectively,
“Impositions”) and insurance premiums in an amount equal to one-twelfth
(1/12) of the annual charges for these items as reasonably estimated by MetLife
until such time as Borrower has deposited an amount equal to the annual charges
for these items. Borrower shall pay Impositions and insurance premiums thirty
(30) days’ prior to their due date unless Borrower has paid deposits for such
amounts to MetLife. The deposits shall be held by MetLife in an interesting
bearing account, such interest to be credited to Borrower, and MetLife may
commingle the deposits with other funds of MetLife.

d. Transfers. Except as provided in Provision 21, Borrower may not cause or
permit: (i) any part of the Property or any interest in the Property, to be
conveyed, transferred, assigned, encumbered, sold or otherwise disposed of, or
(ii) any change in the individual(s) comprising, or in the partners, or
stockholders, or members or beneficiaries of, Borrower from those represented to
MetLife on the date of this Application, or (iii) any merger, reorganization,
dissolution or other change in the ownership structure of Borrower or any of the
general partners of Borrower, including, without limitation, any conversion of
the Borrower or any general partner of Borrower from a general partnership to a
limited partnership, a limited liability partnership or a limited liability
company (collectively, “Transfers”), any such Transfers shall be an Event of
Default under the Loan Documents. However, these prohibitions will not apply to
(x) transfers of ownership as a result of the death, or in connection with
estate planning, of a natural person to a spouse, son or daughter or descendant
of either, or to a stepson or stepdaughter or descendant of either, or
(y) subject to the applicable provisions of Paragraph 5 below, any leasing or
subletting of the Leased Improvements (as defined in the Operating Lease) in
accordance with the terms and conditions of that Operating Lease dated June 1,
2006, between Borrower and DTRS St. Francis, LLC, a Delaware limited liability
company, (the “Operating Lessee”) as hereafter amended or supplemented (the
“Operating Lease”).

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

e. Secondary Financing. Except as provided in Provisions 21, 37 and 38 or
elsewhere herein, it will be an event of default under the Loan Documents if
there is (i) any financing in addition to the Loan that is secured by a lien,
security interest or other encumbrance of any part of the Property, or (ii) any
pledge or encumbrance of a partnership, member, shareholder or other beneficial
interest in Borrower (individually or collectively, “Secondary Financing”).

f. Exculpation of Borrower.

(1) Except as expressly set forth ‘in the balance of this Provision f or in the
Indemnity Agreement or Guaranty, anything contained herein, in the Note or in
any other Loan Documents to the contrary notwithstanding, no recourse shall be
had for the payment of the principal or interest on the Note or for any other
obligation hereunder or under the Transaction Documents against (i) any
affiliate, parent company, trustee or advisor of Borrower, Operating Lessee,
Liable Party, or owner of a direct or indirect beneficial or equitable interest
in Borrower, Operating Lessee or Liable Party, any member in Borrower or
Operating Lessee, or any partner, shareholder or member therein (other than
against Liable Party pursuant to the Guaranty or Indemnity Agreement); (ii) any
legal representative, heir, estate, successor or assign of any thereof;
(iii) any corporation (or any officer, director, employee or shareholder
thereof), individual or entity to which any ownership interest in Borrower,
Operating Lessee or Liable Party shall have been transferred; (iv) any purchaser
of any asset of Borrower or Operating Lessee; or (v) any other Person (except
Borrower and Liable Party pursuant to the Guaranty), for any deficiency or other
sum owing with respect to the Note. It is understood that the Note (except as
set forth in the balance of this Provision f and in the Indemnity Agreement or
Guaranty) may not be enforced against any person described in clauses
(i) through (v) above (other than against Liable Party pursuant to the Indemnity
Agreement or Guaranty as set forth in clauses (i) and (v) above) unless such
person is independently liable for the obligations under the Loan Documents, the
Indemnity Agreement, the Guaranty or other document relating to the Loan, and
MetLife agrees not to sue or bring any legal action or proceeding against any
such person in such respect. However, nothing contained in this subparagraph f
or in the Transaction Documents shall:

(A) prevent recourse to the Borrower or, if and to the extent applicable, the
Liable Party or the assets of Borrower, or, if an to the extent applicable, the
assets of the Liable Party, or enforcement of the Mortgage or other instrument
or document by which Borrower is bound pursuant to the Transaction Documents;

(B) limit MetLife’s rights to institute or prosecute a legal action or
proceeding or otherwise make a claim against Borrower and/or the Liable Party
for damages and losses to the extent arising directly or indirectly from any of
the following or against the person or persons committing any of the following:

(i) fraud or intentional misrepresentation by Borrower, Operating Lessee and/or
the Liable Party,

(ii) the misappropriation by Borrower, Operating Lessee or any affiliate of
Borrower or Operating Lessee of any proceeds (including, without limitation, any
Rents, security deposits, tenant letters of credit, insurance proceeds and
condemnation proceeds), including (x) the failure to pay any such amounts to
MetLife as and to the extent required under the Transaction Documents, (y) the
collection of Rents for a period of more than 30 days in advance, and (z) such
amounts received after an Event of Default and not applied to the Loan or in
accordance with the Transaction Documents to operating and maintenance expenses
of the Property,

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

(iii) the breach of any representation, warranty, covenant or indemnification
provision in the Indemnity Agreement or in the Mortgage with respect to
Hazardous Materials,

(iv) physical damage to the Property from intentional waste committed by
Borrower, Operating Lessee or any affiliate of Borrower or Operating Lessee,

(v) any and all liabilities, obligations, losses, damages, costs and expenses
(including, without limitation, reasonable attorneys’ fees, causes of action,
suits, claims, demands and adjustments of any nature or description whatsoever)
which may at any time be imposed upon, incurred by or awarded against MetLife,
in the event (and arising out of such circumstances) that Borrower should raise
any defense, counterclaim and/or allegation in any foreclosure action by MetLife
relative to the Property, or in any claim or action by MetLife relative to the
assignment of Borrower’s rights to the Interest Rate Cap Agreement (including
the right to receive any proceeds derived therefore) or any part thereof, which
is found by a court of competent jurisdiction to have been raised by Borrower or
Operating Lessee in bad faith or to be without basis in fact or law,

(C) limit MetLife’s rights to recover damages to the extent arising from
Borrower’s or Operating Lessee’s failure to comply with the provisions of the
Mortgage pertaining to ERISA,

(D) limit MetLife’s right, ,to recover all amounts due and payable pursuant to
Sections 11.06 and 11.07 of the Mortgage [the provisions of the Mortgage which
refer to out of pocket expenses incurred by MetLife] and any amount expended by
MetLife in connection with the foreclosure of the Mortgage,

(E) limit MetLife’s rights to enforce any leases entered into by Borrower or its
affiliates as tenant, guarantees, or other agreements entered into by Borrower
in a capacity other than as borrower or any policies of insurance; or

(F) limit MetLife’s rights to recover from Borrower damages and losses to the
extent arising directly or indirectly from the failure of Borrower or Operating
Lessee to pay any deductible or self insured amounts under the Initial Insurance
Policy relating to earthquake, or any extension or renewal thereof; provided
however, that MetLife shall have no right to recover such damages and losses
described in this subparagraph f.l(F) from the Liable Party.

(2) Notwithstanding the foregoing, this limitation of liability shall not apply
and the Loan will be a fully recourse Loan to Borrower and to Liable Party:

(A) in the event of any Transfer of the Property in violation of this Loan
Application or in the event Borrower or Operating Lessee enters into any
indebtedness for borrowed money which is secured by a lien, security interest or
other encumbrance of any part of the Property, other than the Loan and any
related obligations to MetLife or except either allowed by this Loan Application
or Approved by MetLife;

(B) if (i) Borrower, Operating Lessee or Liable Party commences a voluntary
bankruptcy or insolvency proceeding under the Bankruptcy Code which is not

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

dismissed within 90 days of filing, or (ii) an involuntary- case is commenced
against Borrower, Operating Lessee or Liable Party under the Bankruptcy Code
which is not dismissed within 90 days of filing, or (iii) an involuntary case is
commenced against Borrower or Operating Lessee under the Bankruptcy Code with
the collusion of Borrower or Operating Lessee, Liable Party or any of their
affiliates or related entities, or (iv) a petition for relief is filed with
respect to Borrower or Operating Lessee or Liable Party under the Bankruptcy
Code through the actions of Borrower or Operating Lessee, Liable Party or any of
their affiliates or related entities which is not dismissed within 90 days of
filing. Notwithstanding the previous sentence, neither Borrower nor Liable Party
shall be personally liable for payment of the Loan merely by reason of an
involuntary bankruptcy (irrespective of its duration) as to which the following
conditions are satisfied (1) such involuntary bankruptcy is not solicited,
procured or supported by Borrower or any Related Person (defined below); there
is no debt or other obligation and there are no creditors, in any case which are
prohibited by the Loan Documents; (3) Borrower and each Related Person in such
involuntary bankruptcy proceeding will consent to and support and perform all
actions requested by MetLife to obtain relief from the automatic stay and to
obtain adequate protection for MetLife; (4) none of the Borrower nor any Related
Persons shall propose or in any way support any plan of reorganization which in
any way modifies or seeks to modify any provisions of the Loan Documents or any
of MetLife’s rights under the Loan documents; and (5) none of Borrower nor any
Related Persons shall propose or consent to any use of cash collateral except
with MetLife’s consent, which may be withheld in MetLife’s sole discretion. As
used herein, a “Related Person” shall mean (a) any guarantor or other person or
entity which is liable in any way (including contingently liable) for any part
of the Loan, (b) person or entity which has any direct or indirect interest in
Borrower or in which Borrower has any direct or indirect interest, or (c) any
person who, by reason of any relationship with any of the foregoing, would be
reasonably expected to a ct in accordance with the request of any of the
foregoing.

(3) Notwithstanding the foregoing, MetLife agrees that its sole recourse against
any Operating Lessee for such Operating Lessee’s obligations hereunder or under
the other Loan Documents shall be to the collateral owned by such Operating
Lessee and pledged to MetLife pursuant to the terms of the Transaction
Documents; provided however, the foregoing shall not limit MetLife’s rights
against Borrower and/or Liable Party with respect to the obligations of
Operating Lessee to the extent otherwise permitted under the Loan Documents.

(4) At the election of MetLife, the Liable Party shall, by entering into the
Guaranty, guaranty the obligations under this Provision 4(f).

g. Transfer of Loan. The Loan Documents shall provide that MetLife may, at any
time, sell, transfer or assign the Loan, the Loan Documents, the Indemnity
Agreement and the Guaranty, and its servicing rights with respect to the Loan
(except in connection with the a Securitization, in which event MetLife shall
retain its servicing rights), grant participations in the Loan, or issue
mortgage pass-through certificates or other securities evidencing a beneficial
interest in the Loan (the “Securities”) in a rated or unrated public offering or
private placement (such issuance of Securities is referred to herein as a
“Securitization”, which together with each of the foregoing actions is referred
to herein as a “Loan Transfer”); provided that Borrower and Operating Lessee
will not in any event be required to incur, suffer or accept (except to a de
minimis extent) (i) any lesser rights or greater obligations than as currently
set forth in the Loan Documents and (ii) any expense or any liability in
connection with such Loan Transfer. MetLife shall use commercially reasonable
efforts to provide Borrower 30 days advance notice of any Securitization (a
“Securitization Notice”). MetLife may forward to each purchaser, transferee,
assignee, servicer, participant, investor or prospective investor in such
Securities (collectively, the “Investor”), or any “Rating Agency” rating or
assigning value to such Securities, or prospective Investor all documents and
information MetLife has with respect to the Loan. Borrower and the Liable Party,
if

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

any, shall furnish and consent to MetLife furnishing this information pertaining
to the Loan, the Property, the Leases and the financial condition of Borrower,
the Liable Party, and the Property as MetLife, the Investor or Rating Agency may
request Borrower and Liable Party shall provide an estoppel certificate or any
other documents to the Investor or the Rating Agency as may be reasonably
required by MetLife. “Rating Agency” shall mean any credit rating agency which
rates or assigns values to Securities.

h. Reports. Borrower shall deliver to MetLife in a form satisfactory to MetLife
(in addition to other financial reports related to the Property which may be
required) (i) an annual statement of all income of the Property and all Property
expenses, and a then current rent roll, each in electronic form, (ii) quarterly
operating statements for the Property and (iii) an annual operating budget for
the Property for the upcoming one (1) year period at least fifteen (15) days
prior to the beginning of each calendar year.

5. Leases.

a. Form of Lease. All existing leases and leases entered into after the Closing
(the “Leases”) and the Operating Lease shall be assigned to MetLife as security
for the Loan. All Leases (which is exclusive of the Operating Lease) shall be on
a standard form of lease which shall be subject to MetLife’s Approval. Leases
entered into after the Closing which are not on the standard form or which do
not comply with the Leasing Guidelines (as defined below) must be approved by
MetLife. Any modifications or amendments to the Operating Lease must be Approved
by MetLife; provided however, that Borrower and Operating Lessee may without
MetLife’s Approval agree to non-material modifications or amendments to the
Operating Lease which do not materially alter the obligations of Borrower as
Operating Lessor, grant Operating Lessee any rights or powers with respect to
the Property that are inconsistent with the rights and obligations of Borrower
under the Loan Documents, or grant or confer upon any third party any of the
rights, benefits or obligations under the Operating Lease, including without
limitation any right to receive any of the income, revenue or profits of the
Property.

b. Leasing Guidelines. The Mortgage will contain “Leasing Guidelines” which will
include (i) minimum and maximum lease terms, (ii) minimum annual rent payable
per square foot for retail leases and (iii) a provision requiring that all
payments of rent, additional rent or any other amounts due from a tenant to a
landlord under a Lease shall be made in money of the United States of America
that at the time of payment shall be legal tender for the payment of all
obligations. Except as otherwise Approved by MetLife, each net Lease shall
contain provisions requiring the tenant to pay its proportionate share of
operating expenses and taxes and all other Leases shall contain provisions
requiring the tenant to pay, after the first year, its proportionate share of
increases in taxes and operating expenses. The Operating Lease shall not be
subject to the Leasing Guidelines or the provisions of this subparagraph b,
provided however that any leasing or subleasing of all or any part of the Leased
Improvements as defined in the Operating Lease pursuant to the Operating Lease
shall be subject to the Leasing Guidelines.

c. Subordination. All Leases and the Operating Lease shall be subordinate to the
lien of the Mortgage and shall provide that MetLife may elect to make the Leases
superior to the Mortgage and to require the tenant to attorn to MetLife. At
Borrower’s written request and expense, MetLife shall provide a non-disturbance
agreement on its standard form to any tenant under a Lease approved by MetLife.
Any tenant to whom non-disturbance is granted shall execute MetLife’s standard
form of non-disturbance agreement.

6. Indemnity Agreement. The Indemnity Agreement will indemnify and hold MetLife
harmless from any losses, costs, damages or liabilities (including without
limitation, reasonable attorneys’ fees and disbursements and/or reasonable
environmental investigation costs and fees) to the extent arising directly or
indirectly from the presence of hazardous materials on or under the Property,
including costs incurred in enforcement proceedings. The Indemnity Agreement
shall survive repayment of the Loan or other termination of the Mortgage and is
not a Loan Document.

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

At the election of MetLife, the Liable Party shall, by entering into the
Guaranty, guaranty the obligations under this provision.

7. ERISA Representations. The Loan Documents shall contain a provision in
substantially the following form, effective as of the date of the Closing:

Borrower hereby represents, warrants and agrees that (i) it is acting on its own
behalf and that it is not an employee benefit plan as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which
is subject to Title 1 of ERISA, nor a plan as defined in Section 4975(e)(1) of
the Internal Revenue Code of 1986, as amended (each of the foregoing hereinafter
referred to collectively as a “Plan”), (ii) Borrower’s assets do not constitute
“plan assets” of one or more such Plans within the meaning of Department of
Labor Regulation Section, 2510.3-101 and (iii) it will not be reconstituted as a
Plan or as an entity whose assets constitute “plan assets”.

8. Representations of Borrower. Borrower represents that, and agrees to furnish
MetLife on request evidence confirming that: (i) no partner, member or
stockholder of Borrower is an officer or director of MetLife or is a son,
daughter, mother, father or spouse of an officer or director of MetLife;
(ii) neither Borrower nor any partner, member or stockholder of Borrower is, and
no legal or beneficial interest in a partner, member or stockholder of Borrower
is or will be held, directly or indirectly by: (a) a “foreign person” within the
meaning of Sections 1445 and 7701 of the Internal Revenue Code of 1986, and the
amendments of such Code or Regulations as promulgated pursuant to such Code and
the Borrower is not a “disregarded entity” within the meaning of such Code or
Regulations; [in the event Borrower is a “disregarded entity” within the meaning
of such Code or Regulations the Borrower shall cause its “beneficial owner”
within the meaning of such Code or Regulations to represent that, and to furnish
evidence confirming that, such “beneficial owner” is not a “foreign person”]; or
(b) a person or entity that appears on a list of individuals and/or entities for
which transactions are prohibited by the US Treasury Office of Foreign Assets
Control or any similar list maintained by any other governmental authority, with
respect to which entering into transactions with such a person or entity would
violate the US Patriot Act or regulations or any Presidential Executive Order or
any other similar applicable law, ordinance, order, rule or regulation;
(iii) the information and statements contained in this Application are true and
correct in all material respects; and (iv) the parties that shall execute the
Loan Documents on behalf of Borrower shall have the legal capacity and authority
to execute the documents.

9. Application Fee and Processing Fee. A cashier’s or certified check in the
amount of the Application Fee also accompanies this Application. If MetLife
accepts this Application, the Application Fee shall be retained by MetLife as
its fee for the issuance of the Commitment. If MetLife does not accept this
Application, the Application Fee shall be returned to Borrower except for any
out of pocket expenses incurred by MetLife in connection with this Application
or the Closing Requirements. A cashier’s or certified check in the amount of the
Processing Fee accompanies this Application. Borrower acknowledges that the
Processing Fee has already been earned by MetLife and that no portion of this
fee will be returned under any circumstances whatsoever.

10. Deposit. A cashier’s or certified check for the Deposit accompanies this
Application. The Deposit may also be in the form of a clean irrevocable sight
draft letter of credit, issued by a bank and in a form Approved by MetLife. The
Deposit will be returned to Borrower on the date of the Closing, subject to
MetLife’s right to keep the Deposit in the circumstances described below.
Borrower agrees that the acceptance of the Deposit does not constitute an
acceptance of this Application by MetLife. If MetLife does not accept this
Application, the Deposit shall be returned to Borrower except for any out of
pocket expenses incurred by MetLife in connection with this Application or the
Closing Requirements which exceed the amount of the Application Fee.

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

METLIFE WELL BE ENTERING INTO CONTRACTS WITH OTHER PARTIES IN RELIANCE UPON
BORROWER’S FULFILLMENT OF BORROWER’S OBLIGATIONS UNDER THIS APPLICATION,
INCLUDING AGREEMENTS WITH RESPECT TO THE FIXING OF THE INTEREST RATE PRIOR TO
THE FUNDING OF THE LOAN. IF BORROWER ATTEMPTS TO REVOKE THIS APPLICATION PRIOR
TO THE DATE OF ITS ACCEPTANCE BY METLIFE OR IF METLIFE ACCEPTS THIS APPLICATION,
AND THE TERMS OF THIS APPLICATION AND THE CLOSING REQUIREMENTS ARE NOT COMPLETED
OR SATISFIED BY THE EXPIRATION DATE AND METLIFE DOES NOT DISBURSE THE LOAN,
METLIFE SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN AN AMOUNT EQUAL TO THE AMOUNT
OF THE DEPOSIT. THESE LIQUIDATED DAMAGES ARE INTENDED TO COMPENSATE METLIFE FOR
LOSSES SUSTAINED ON ITS OTHER CONTRACTS, TIME SPENT, LABOR AND SERVICES
PERFORMED, LOSS OF INTEREST AND ANY OTHER LOSS WHICH MIGHT BE INCURRED BY
METLIFE IN CONNECTION WITH THIS TRANSACTION. BOTH PARTIES AGREE THAT METLIFE’S
DAMAGES AS A RESULT OF A DEFAULT ARE NOT FULLY CAPABLE OF BEING ASCERTAINED AT
THIS TIME AND THE AMOUNT OF LIQUIDATED DAMAGES REPRESENTS BORROWER’S AND
METLIFE’S BEST ESTIMATION AT THIS TIME OF THESE DAMAGES. HOWEVER, NOTHING
CONTAINED IN THIS PROVISION SHALL RELEASE BORROWER FROM OR LIMIT THE LIABILITY
OF BORROWER FOR THE COSTS AND EXPENSES SET FORTH IN PROVISION 11 OF THIS
APPLICATION.

11. Expenses. Borrower shall be responsible for payment of all fees, costs, and
expenses incurred by MetLife and/or Borrower in connection with the Loan and the
transactions contemplated by this Application, including without limitation all
survey costs, costs of inspections and reports required in this Application or
in the Closing Requirements, appraisal fees, brokerage commissions, title
charges, title insurance premiums, recording charges, architect’s, ‘engineer’s,
environmental consultant’s and reasonable attorney’s fees and expenses, taxes
and revenue stamps applicable to the Note and/or Mortgage, travel expenses of
MetLife’s Architectural and Engineering Services employees and, a real estate
tax service contract. These expenses shall be paid by Borrower even if MetLife
does not accept this Application or, if this Application is accepted and MetLife
does not disburse the Loan, unless the failure to disburse constitutes a default
by MetLife. Borrower’s obligation for the expenses set forth in this provision
is in addition to its obligation to pay the Application Fee, Processing Fee and
Deposit.

12. Broker. Borrower represents that Broker is its broker in connection with
this Application and agrees to pay the fees of Broker. MetLife shall have no
obligation for, and Borrower shall indemnify and hold MetLife harmless from, the
payment of any brokerage commissions or fees of any kind and any legal fees
and/or expenses incurred by MetLife in connection with any claims for brokerage
commissions or fees with respect to this Application or the Loan. Borrower
acknowledges that MetLife may be affiliated with, or may have been involved in
other transactions with Broker, and Borrower agrees that it shall have no rights
against MetLife or defenses to Borrower’s obligations under this Application or
under the Loan Documents because of any such relationship.

13. Prohibitions on Assignment. Borrower may not assign or otherwise transfer
its rights under this Application whether voluntarily or by operation of law
without MetLife’s Approval, which may be given or withheld in its sole
discretion. Any assignment or transfer without MetLife’s Approval, which may be
given or withheld in its sole discretion, or any change in Borrower’s structure
(if Borrower is a legal entity other than an individual), including but not
limited to, a change in partners, or stockholders, or members, or trustees or
beneficiaries, or their respective interests, without MetLife’s

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

Approval, shall constitute a default and release MetLife from its obligations
under this Application or the Commitment. MetLife may, at its option, assign
this Application to, or enter into co-lending arrangements with, its
subsidiaries and/or affiliates.

14. Governing Law. The rights and obligations of the parties with respect to
this Application, the Closing Requirements and any Commitment resulting from the
acceptance by MetLife of the offer contained in this Application, shall be
determined in accordance with the laws of the state of New York. The rights and
obligations of the parties with respect to the Loan Documents, the Indemnity
Agreement and the Guaranty shall be determined in accordance with the laws of
the state in which the Property is located.

15. Waiver of Defaults,. All waivers of any breach or default must be in writing
to be effective. No waiver shall be deemed or construed to be a waiver of any
other breach or default. The failure on the part of either party to complain of
any act, or failure to act, or to declare the other party in default shall not
constitute a waiver by such party of its rights under this Application or the
Closing Requirements.

16. Entire Agreement; Amendment. This Application and the Closing Requirements
contain the entire agreement and understanding of the parties with respect to
the Loan. All prior discussions, negotiations, commitments, and understandings
related to the Loan are merged into this Application and the Closing
Requirements. Except for the exercise of unilateral rights which are granted to
a party under this Application or the Closing Requirements, this Application
cannot be changed, modified or amended except by an instrument in writing signed
by the affected party. Titles used in this Application and the Closing
Requirements are for convenience only and neither limit nor amplify their
provisions.

17. Time is of the Essence. Time is of the essence with respect to the
performance of Borrower’s obligations contained in this Application and the
Closing Requirements.

18. Additional Application Provisions. The attached Additional Application
Provisions which are referred to in the Terms are incorporated into and made
part of this Application.

19. Closing Requirements. If MetLife accepts this Application, its obligations
under the Commitment shall be conditioned upon the fulfillment by Borrower of
the terms of this Application as well as each of the Closing Requirements.

20. Irrevocable Offer. This Application constitutes an offer to borrow which
shall be irrevocable by Borrower for a period of 30 days following the date this
Application has been received by MetLife. MetLife may accept this offer by
signing in the space provided on the enclosed copy and mailing the signed copy
to Borrower. If MetLife accepts this offer to borrow, this Application shall
constitute a Commitment that shall be binding upon Borrower and MetLife and
enforceable by both parties. If MetLife does not accept this offer within this
30 day period, this Application shall be void (except provisions that impose
obligations on the Borrower even if this Application is not accepted) unless
MetLife, having the sole option to do so, extends the period in which this
Application is irrevocable and the Expiration Date for 40 days by written notice
to Borrower.

 

Dated: 6/15/06   SHR ST. FRANCIS, L.L.C.   a Delaware limited liability company
  By:  

/s/ Ryan M. Bowie

  Its:  

Assistant Treasurer

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

MetLife hereby accepts this Application this 27 day of June, 2006.

 

METROPOLITAN LIFE INSURANCE COMPANY, a

New York corporation

By:  

/s/ Joel R. Redmon

Its:      Title:     

ECOA Notice. If this Application is not accepted by MetLife, Borrower has the
right to a written statement of the specific reasons for the non-acceptance. To
obtain the statement, please contact the person whose name, address and
telephone number is set forth below as Borrower’s Loan Representative, within 60
days from the date Borrower is notified of MetLife’s decision. MetLife will send
to Borrower a written statement of reasons for the denial within 30 days of
receiving Borrower’s request for the statement.

Notice: The Federal Equal Credit Opportunity Act prohibits creditors from
discriminating against credit applicants on the basis of race, color, religion,
national origin, sex, marital status, age (provided the applicant has the
capacity to enter into a binding contract); because all or part of the
applicant’s income derives from any public assistance program; or because the
applicant has in good faith exercised any right under the Consumer Credit
Protection Act. The federal agency that administers compliance with this law
concerning this creditor is the Federal Trade Commission - Equal Credit
Opportunity - Washington, D.C. 20580.

USA Patriot Act Notice. In accordance with the USA Patriot Act, notice is hereby
given that MetLife intends to obtain, verify and record information related to
Borrower’s identity in connection with the transaction contemplated by this
Application. In connection with the foregoing, Borrower hereby consents to
MetLife seeking and obtaining information that will allow MetLife to verify
Borrower’s identity including requesting identifying documents (such as in the
case of an individual a driver’s license or other identifying documents),
checking references with financial institutions and using commercially available
information and databases to verify Borrower’s identity.

LOAN REPRESENTATIVE:

 

Jeanine Kranitz    Telephone: .650-638-7107 MetLife — Real Estate Investments   
400 S. El Camino Real, Suite 800    San Mateo, CA 94402   

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

ADDITIONAL APPLICATION PROVISIONS,

MetLife’s commitment to make the Loan and Borrower’s obligations hereunder are
each subject to the following Additional Application Provisions. All terms used
in these Additional Application Provisions have the same meaning as in the
Application.

21. One Time Transfer Right and other Permitted Transfers.

a. The Mortgage shall provide that Borrower shall have a one time right to
transfer the Property, subject to the following conditions: (i) there being no
Event of- Default under the Loan Documents, the Indemnity Agreement or the
Guaranty at the time of the transfer, (ii) MetLife’s Approval of the transferee,
(iii) the transferee shall be able to make and shall make the ERISA
representations set forth in the Loan Documents and in clauses (i) and (ii) of
Provision 8 of this Application, (iv) the cash flow, in the opinion of MetLife,
derived from the Property shall be no less than 2.25x times the annual payments
required under the Loan, (v) the loan to value ratio of the Property at the time
of the transfer shall not be greater than 50%, (vi) Borrower or the transferee
shall pay a fee equal to one-half of one percent (0.50%) of the outstanding
principal balance of the Note at the time of the assumption together with a
processing fee in the amount of $10,000.00, (vii) the transferee shall expressly
assume the Loan Documents and the Indemnity Agreement in a manner satisfactory
to MetLife and additional Liable Parties acceptable to MetLife shall execute the
Guaranty with respect to events arising or occurring from and after the date of
the transfer, which additional Liable Parties must have (in the aggregate if
more than one) a net worth of not less than $250 million, (viii) the transferee
must have a net worth not less than $220 million, (ix) the transferee must be
experienced in the ownership, management and leasing of properties similar to
the Property, (x) Borrower or transferee shall pay all costs and expenses
incurred by MetLife in connection with the transfer, including title insurance
premiums, documentation costs and reasonable attorneys’ fees and (xi) if the
Loan has been securitized, Lender shall have received confirmation that the
assumption of the Loan by the transferee will not result in an adverse change in
the rating of the Securities by the Rating Agency. No transfer shall release
Borrower or Liable Party from their obligations under the Loan Documents, the
Indemnity Agreement or the Guaranty with respect to events arising or occurring
prior to the date of transfer. MetLife, in its reasonable discretion, may elect
to document the assumption of the Loan with a new Promissory Note, Mortgage and
such other transaction documents (“New Loan Documents”) as it reasonably deems
necessary or desirable to be executed by such transferee, which New Loan
Documents shall contain terms substantially identical to the terms of the
existing Loan Documents, except as modified to reflect the transaction

For the purposes of complying with sub sections (ii), (viii) and (ix) of
Provision 21 above only, MetLife hereby Approves a transfer of the Property
under this Provision 21(a) to a single purpose entity wholly owned by a
Permitted Transferee (defined below) or by an entity listed on Schedule B
(“Pre-Approved Transferee”), provided that such transferee is not a Disqualified
Transferee and complies with the representations, warranties and covenants
contained in Provision 31 hereof (as if such transferee shall have remade all of
such representations, warranties and covenants as of, and after giving effect
to, the proposed transaction).

b. In addition to the transfer permitted pursuant to Provision 21(a), the
holders of any direct or indirect interest in Borrower shall have right to
transfer (but not pledge, hypothecate or encumber) its direct or indirect equity
interest in Borrower to a Permitted Transferee without the consent of MetLife if
the following conditions (A) through (D) are satisfied after giving effect to
such transfer.

(A) the Property will continue to be directly owned by Borrower;

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

(B) Liable Party or a Close Affiliate of Liable Party owns directly or
indirectly at least fifty one percent (51%) of the equity interests in each of
the Borrower and/or Operating Lessee and the Person that is the proposed
transferee is not a Disqualified Transferee;

(C) after giving effect to any such transfer, at all times, (i) Strategic Hotels
Funding, L.L.C. remains as the Liable Party, and (ii) the Liable Party or a
Close Affiliate of Liable Party Controls Borrower and/or Operating Lessee. In
the event that Control shall be exercisable jointly by Liable Party or a Close
Affiliate of Liable Party with any other Person or Persons, then Liable Party or
such Close Affiliate shall be deemed to have Control only if Liable Party or
such Close Affiliate retains the ultimate right as between the Liable Party or
such Close Affiliate and such

(D) other Person to unilaterally make all material decisions with respect to the
operation, management, financing and disposition of the Property; and

(E) Borrower shall pay all costs and expenses incurred by MetLife in connection
with the transfer, including title insurance premiums, documentation costs and
reasonable attorneys’ fees.

c. Notwithstanding the provisions of Provision 4d and 4e to the contrary,
(1) under no circumstances shall there be any restriction or limitation with
respect to the transfer of any direct or indirect legal, beneficial or direct or
indirect equitable interest in Strategic Hotels & Resorts, Inc., and (2) subject
to the terms and provisions of this Provision 21(c), there shall be no
restriction or limitation in any respect to (and no Event of Default shall
result or arise from) the sale, assignment, conveyance, or transfer, mortgage,
hypothecation or other disposition or other encumbering of any direct or
indirect legal, beneficial or direct or indirect equitable interest in Liable
Party or any Person owning a direct or indirect interest therein provided that:

(A) at all times, Strategic Hotels Funding, LLC remains the Liable Party under
the Loan, and the Liable Party or a Close Affiliate of Liable Party Controls
Borrower and/or Operating Lessee;

(B) at all times, Strategic Hotels & Resorts, Inc. Controls the Liable Party;

(C) if there shall be a pledge, hypothecation or other encumbering of a direct
or indirect ownership interest in Liable Party or any Person owning a direct or
indirect interest therein (collectively, “Pledge”), such Pledge shall be in
connection only with financing provided by a Qualified Institutional Investor,
and any transfer of any direct or indirect legal, beneficial or direct or
indirect equitable interest in Liable Party or any Person owning a direct or
indirect interest therein as a result of default under such financing shall be
to a Qualified Institutional Investor; and

(D) Borrower or transferee shall pay all costs and expenses incurred by MetLife
in connection with the transfer, including title insurance premiums,
documentation costs and reasonable attorneys’ fees.

Specifically, subject to the conditions of sub-clauses (A) through (D) of this
Provision 21(c), the provisions of Provisions 4d and 4e shall not apply to the
Revolver Loan. For purposes of this Loan Application, “Revolver Loan” shall mean
that certain revolving credit facility from Deutsche Bank Trust Company Americas
to Strategic Hotel Funding, L.L.C., evidenced by that certain Amended and
Restated

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

Credit Agreement, dated as of November 9, 2005 (the “Original Revolver Loan”),
among Strategic Hotel Funding, L.L.C., various financial institutions, as
lenders specified therein, Deutsche Bank Trust Company Americas, as the
administration agent and Wachovia Bank, National Association, as the syndication
agent, as the same may be amended, restated, supplemented or otherwise modified
or replaced from time to time, which Revolver Loan shall not at any time be
secured by a lien, pledge or security interest or other encumbrance of any part
of the Property.

d. Unless otherwise specifically referenced, the following terms shall have the
following meanings for purposes of this Provision 21 only:

“Affiliate” shall mean a Person or Persons directly or indirectly, through one
or more intermediaries, that Controls, is Controlled by or is under common
Control with the Person or Persons in question.

“Control” and “Controlling” shall mean the ability, directly or indirectly,
whether through the ownership of voting securities, by contract, or otherwise
(including by being a managing member, general partner, officer or director of
the person or entity in question), to both (A) direct or cause the direction of
the management and policies of the Person in question, and (B) conduct the
day-to-day business operations of the Person in question.

“Close Affiliate” shall mean with respect to any Person (the “First Person”) any
other Person (each, a “Second Person”) which is an Affiliate of the First Person
and in respect of which any of the following are true: (a) the Second Person
owns, directly or indirectly, at least 75% of all of the legal, beneficial
and/or equitable interest in such First Person, (b) the First Person owns,
directly or indirectly, at least 75% of all of the legal, Beneficial and/or
equitable interest in such Second Person, or (c) a third Person owns, directly
or indirectly, at least 75% of all of the legal, Beneficial and/or equitable
interest in both the First Person and the Second Person.

“Disqualified Transferee” shall mean any Person or any Affiliate of such Person
that, (i) has (within the past ten (10) years) defaulted, or is now in default,
beyond any applicable cure period, of its material obligations, under any
written agreement with MetLife or any Affiliate of MetLife; (ii) has been
convicted in a criminal proceeding for a felony or a crime involving moral
turpitude or that is an organized crime figure or is reputed (as determined by
the Servicer in its sole discretion) to have substantial business or other
affiliations with an organized crime figure; (iii) has at any time filed a
voluntary petition under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency law; (iv) as to which an involuntary petition has at
any time been filed under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency law; (v) has at any time filed an answer consenting to
or acquiescing in any involuntary petition filed against it by any other Person
under the Bankruptcy Code or any other federal or state bankruptcy or insolvency
law; (vi) has at any time consented to or acquiesced in or joined in an
application for-the appointment of a custodian, receiver, trustee or examiner
for itself or any of its property; (vii) has at any time made an assignment for
the benefit of creditors, or has at any time admitted its insolvency or
inability to pay its debts as they become due; (viii) has been found by a court
of competent jurisdiction or other Governmental Authority in a comparable
proceeding to have violated any federal or state securities laws or regulations
promulgated thereunder; or (ix) has at any time filed or been a party to a
claim, petition or cause of action (collectively, “Claim”) in any municipal,
state or federal court or other administrative or regulatory agency that names
MetLife and/or its affiliates or subsidiaries as defendant or the subject of
such Claim.

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

“Permitted Interest Transfers” shall mean any transfer permitted pursuant to
Provision 21(b) and (c) herein.

“Permitted Transferee” shall mean any entity (i) that is experienced in owning
and operating properties similar in size and complexity to the Property,
(ii) (a) with a net worth, as of a date no more than six (6) months prior to the
date of the transfer of at least $1 Billion and (b) who, immediately prior to
such transfer, Controls, together with its Close Affiliates real estate equity
assets of at least $1 Billion, (iii) which, together with its Close Affiliates
own or have under management, at the time of the transfer, not fewer than 20
first class full service resort or business hotel properties (excluding the
Property) containing not fewer than 5,000 hotel rooms in the aggregate and
(iv) that is not a Disqualified Transferee.

“Qualified Institutional Lender” shall mean any insurance company, bank,
investment bank, savings and loan association, trust company, commercial credit
corporation, pension plan, pension fund or pension fund advisory firm, mutual
fund or other investment company, government entity or plan,, or real estate
investment trust, in each case having at least $1 Billion in capital/statutory
surplus, shareholder’s equity or net worth, as applicable, and being experienced
in making commercial real estate loans or otherwise investing in commercial real
estate.

22. Waiver of Insurance Premiums Deposits. Although the Mortgage will provide
for insurance premium deposits, if (i) the insurance required to be maintained
pursuant to the Mortgage is provided under a blanket policy approved by MetLife,
or (ii) Borrower, Operating Lessee or Manager pay, reserve or set aside funds on
a monthly basis in amounts sufficient to provide for the payment of all
insurance premiums when due (and such funds need not be segregated or deposited
into a specific fund or account), MetLife agrees not to require these deposits
unless and until (a) there has occurred an Event of Default under the Loan
Documents, the Guaranty or the Indemnity Agreement, (b) Borrower, or a Permitted
Transferee or a Pre-Approved Transferee no longer owns the Property; (c) except
for Permitted Interest Transfers (defined in Provision 21), there has been a
change in the general partners, stockholders or members of Borrower or in the
constituent general partners or controlling shareholders or controlling members
of any of the entities comprising Borrower; or (d) at any time Borrower fails to
furnish to MetLife, not later than fifteen (15) days after the dates on which
any insurance premiums would become delinquent, receipts for the payment of such
insurance premiums or appropriate proof of issuance of a new policy which
continues in force the insurance coverage of the expiring policy. In the event
any of these events described in clauses (a) through (d) occur, MetLife reserves
the right to require insurance premiums deposits at any time in its absolute
discretion notwithstanding the fact that the default may be cured, or that the
transfer or change be approved by MetLife. To the extent that MetLife does not
require insurance premiums deposits pursuant to this waiver, Provision 4(f) of
this Application shall be deemed modified to provide that the Loan will be
recourse to the extent that any obligations for which an insurance premiums
deposit was not required was not paid by Borrower.

23. Waiver of Impositions Deposits. Although the Mortgage will provide for
Impositions deposits, so long as Borrower, Operating Lessee or Manager pay,
reserve or set aside funds on a monthly basis in amounts sufficient to provide
for the payment of all Impositions as and when due (which funds need not be
segregated or deposited into a specific fund or account), MetLife agrees not to
require these deposits unless and until (a) there has occurred an Event of
Default under the Loan Documents, the Guaranty or the Indemnity Agreement,
(b) Borrower, or a Permitted Transferee, or a Pre-Approved Transferee no longer
owns the Property; or (c) except for Permitted Interest Transfers (defined in
Provision 21), there has been a change in the general partners, stockholders or
members of Borrower or in the constituent general partners or controlling
shareholders or controlling members of any of the entities

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

comprising Borrower. In the event any of these events described in clauses
(a) through (c) occur, MetLife reserves the right to require Impositions
deposits at any time in its absolute discretion notwithstanding the fact that
the default may be cured, or that the transfer or change be approved by MetLife.
To the extent that MetLife does not require Impositions deposits pursuant to
this waiver, Provision 4(f) of this Application shall be deemed modified to
provide that the Loan will be -recourse to the extent that any obligations for
which an Impositions - deposit was not required was not paid by Borrower.

24. [Reserved.]

25. Licenses and Permits. All authorizations, licenses and permits, including
without limitation, operating permits, liquor licenses and all other
authorizations or permits necessary or appropriate for the Improvements to be
fully operated as a first-class hotel shall have been validly obtained, paid for
and be in full force and effect. These authorizations, licenses and permits
shall, to the extent permitted by law, be assigned to MetLife as additional
security for the Loan.

26. [Reserved.]

27. Management Agreement.

a. The Management Agreement (as defined below) shall be in full force and effect
and Manager (as defined below) shall have no defenses or claims against Borrower
with respect thereto, and MetLife shall be furnished with evidence satisfactory
to MetLife, including but not limited to an estoppel certificate from Manager,
that the foregoing are true as of the Closing. The Management Agreement shall be
subordinated to the lien of the Mortgage pursuant to a subordination and
nondisturbance agreement (“Subordination of Management Agreement”) which is to
be insured under MetLife’s title policy, and further shall be assigned to
MetLife as additional security for the Loan. The subordination and
non-disturbance agreement shall be substantially in the form attached hereto.
The assignment agreement shall be in recordable form and subject to MetLife’s
Approval.

The term “Management Agreement” shall mean the agreement dated as of August 21,
1986, between Borrower’s predecessor in interest and Westin Hotel Company
(together with St. Francis Hotel Corporation, its successor by assignment, the
“Manager”), as amended by that undated First Amendment to Amended and Restated
Management Agreement of the Westin St. Francis Limited Partnership between
Manager and Borrower’s predecessor in interest and by that Amended and Restated
Second Amendment to Amended and Restated Management Agreement dated as of
April 25, 2000 between Manager and Borrower’s predecessor in interest. Any new
or subsequent agreements providing for the management and operation of the
Westin St. Francis Hotel shall be subject to MetLife’s Approval.

b. Notwithstanding any provision to the contrary contained herein or in the
other Loan Documents, the Borrower and Operating Lessee may not amend, modify,
supplement, alter or waive any right under the Management Agreement without the
written consent of MetLife, provided however, without any requirement for
consent, Borrower and Operating Lessee may agree to any nonmaterial
modification, change, supplement, alteration or amendment to the Management
Agreement and waiver of any nonmaterial rights thereunder, including without
limitation, any such modification, change, supplement, alteration, amendment or
waiver that does not affect the cash management procedures set forth in the
Management Agreement or the Loan Documents, decrease the cash flow of the
Property, adversely affect the marketability of the Property, change the
definitions of “default” or “event of default,” change the definitions of
“operating expense” or words of similar meaning to add additional items to or
delete items from such definitions, change the definitions of “owner’s
distribution” or “owner’s equity” or words of similar meaning so as to reduce
the payments due the Borrower thereunder, change the definition of “debt service
amount” or “owner indebtedness”, change the definition of “net

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

cash flow” or “net operating cash flow”, change the timing of remittances to the
Borrower or Operating Lessee thereunder, change the priority of distributions of
“net cash flow” to Borrower or Operating Lessee thereunder, increase or decrease
reserve requirements, change the term of the Management Agreement or increase
any Management Fees payable under such Management Agreement.

c. Borrower or Operating Lessee may enter into a new management agreement
approved by MetLife with an Acceptable Manager provided such Acceptable Manager
is not a Disqualified Transferee (as defined in Provision 21(d)).

d. For purposes of this Provision 27, the following terms shall have the
following meanings:

“Acceptable Manager” shall mean (i) the current Manager and current brand as of
the Closing Date as indicated on Schedule A hereto and, at any time prior to two
years after the Closing Date, the property managers and brands listed under
“Acceptable Manager” for the Property on Schedule A hereto, provided (x) each
such property manager or brand continues to be controlled by substantially the
same Persons Controlling (as defined in Provision 21 above) such property
manager or brand as of the Closing Date (or if such Manager is a publicly traded
company, such Manager continues to be publicly traded on an established
securities market), and (y) such property manager has under management, at the
time of its engagement as Manager, not fewer than 20 first class full service
resort or business hotel properties (excluding the Property) containing not
fewer than 5,000 hotel rooms in the aggregate; (ii) during such two year period,
any Close Affiliate (as defined in Provision 21 above) of any of the foregoing
Persons so long as such Close Affiliate continues to be Controlled by
substantially the same Persons Controlling such Close Affiliate as of the
closing date (or if such close affiliate is a publicly traded company, such
Close Affiliate continues to be publicly traded on an established securities
market)); or (iii) any other reputable and experienced professional hotel
management company (A) which, or a Close Affiliate of which, shall have at least
five years’ experience in the management of hotel properties substantially
similar in size and complexity to the Property, (B) which, or a Close Affiliate
of which, shall have under management, at the time of its engagement as Manager,
not fewer than 20 first class full service resort or business hotel properties
(excluding the Property) containing not fewer than 5,000 hotel rooms in the
aggregate, and (C) Approved in writing by MetLife.

28. Accounts Receivable. The Accounts Receivable (as defined below) and all
other property required to be presently collaterally assigned to MetLife as
additional security for the Loan shall be assigned to MetLife as collateral
security for the Loan subject to the rights of the Manager under the Management
Agreement as such rights are affected pursuant to the terms of the Subordination
of Management Agreement. The term “Accounts Receivable” shall mean any right of
Borrower, arising from the operation of the Property, to payment for goods sold
or leased, for services rendered, or for the rental or use of the Property,
whether or not yet earned by performance, including, without limiting the
generality of the foregoing, (i) all accounts arising from the operation of the
Property, and (ii) all rights to payment from any consumer credit or charge card
organization or entity (such as or similar to the organizations or entities
which sponsor and administer the American Express Card, the Visa Card, the Carte
Blanche Card and the Master Card). Accounts Receivable shall include all of the
foregoing rights to payment, whether now existing or hereafter created, and all
substitutions therefor, proceeds thereof (whether cash or non-cash, movable or
immovable, tangible or intangible) received upon the sale, exchange, transfer,
collection or other disposition thereof or substitution therefor, and all of the
proceeds from all of the foregoing.]

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

29. Furniture, Fixtures and Equipment. MetLife shall require a first lien
security interest on all furniture, fixtures and equipment located on or used in
connection with the Real Property or its occupancy or operation, including but
not limited to restaurant equipment. Borrower shall execute and deliver to
MetLife a security agreement with a complete inventory of the furniture,
fixtures and equipment located on or used in connection with the Real Property.
Proof satisfactory to MetLife shall be furnished that all furniture, fixtures
and equipment have been paid for in full. If any equipment is leased and MetLife
consents to such leasing, MetLife shall have the right to approve the terms of
any leases and to receive an assignment of the tenant’s interest in any leased
equipment. MetLife shall also receive from the lessor (provided lessor is an
entity unaffiliated with MetLife and its affiliates) of such equipment (i) an
estoppel certificate reflecting the lease agreement and the defaults, if any, of
Borrower under the lease agreement, and (ii) an agreement providing that if
MetLife shall ever become the owner of the Real Property, such lessor’s lease,
at MetLife’s option, may be assumed by MetLife at the same rental charges, and
under the same terms and conditions as are presently contained in such lease.
Any lease referred to in the preceding sentence shall be subject to MetLife’s
Approval.

30. Security for Loan. For purposes of Provision 4(f) of the Application, the
licenses and permits, the Management Agreement, the Accounts Receivable, and the
Furniture, Fixtures and Equipment shall be deemed to be part of the Property.

31. Single Purpose Entity. Borrower and Operating Lessee shall be a single
purpose entity and the Loan Documents and its organizational documents shall
provide that Borrower shall not: (i) engage in business other than owning and
operating the Property; (ii) acquire or own a material asset other than the
Property and incidental personal property; (iii) maintain assets in a way
difficult to segregate and identify or commingle its assets with the assets of
any other person or entity; (iv) fail to hold itself out to the public as a
legal entity separate from any other; (v) fail to conduct business solely in its
name or fail to maintain records, accounts or bank accounts separate from any
other person or entity; (vi) file or consent to a petition pursuant to
applicable bankruptcy, insolvency, liquidation or reorganization statutes, or
make an assignment for benefit of creditors without .the unanimous consent of
its partners or members, as applicable; (vii) incur additional indebtedness not
otherwise permitted by this Loan Application except for trade payables in the
ordinary course of business of owning and operating the Property, provided that
such indebtedness- is paid within 90 days of when incurred; (viii) dissolve,
liquidate, consolidate, merge or sell all or substantially all of its assets; or
(ix) modify, amend or revise its organizational documents.

32. Interest Rate Protection. If at any time during the term of the Loan,
including during any extended Loan terms) pursuant to the exercise of any
Extension Options, the net operating income of the Property, as determined by
MetLife in its sole discretion, is less than 1.60 times the monthly amount of
interest payments due under the Loan, Borrower shall enter into an Interest Rate
Cap Agreement which shall protect against an increase in interest rates which
would cause the Annual Interest Rate to exceed a rate to be determined by
MetLife in its sole discretion. The Interest Rate Cap Agreement (i) shall be in
form acceptable to MetLife, (ii) shall be with a counterparty acceptable to
MetLife and which counterparty shall have a credit rating of “A” or better by
Moody’s Investors Service, Inc., and “A” or better by Standard and Poor’s Rating
Group, (iii) shall direct such acceptable counterparty to deposit any and all
payments due under the Interest Rate Cap Agreement directly into an account
designated by MetLife so long as any portion of the Loan remains outstanding,
provided however, for purposes of this requirement, the Loan shall be deemed to
be remaining outstanding if the Property is transferred to MetLife (or its
nominee or designee) by judicial foreclosure or non judicial foreclosure or by
deed-in-lieu thereof, (iv) shall be for a term equal to the term of the Loan,
and (v) shall have an initial notional amount equal to the full principal
balance of the Loan. Borrower shall collaterally assign to MetLife all of its
right, title and interest to receive any and all payments under the Interest
Rate Cap Agreement, and shall deliver to MetLife an executed counterpart of such
Interest Rate Cap Agreement which shall by its terms

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

authorize the assignment to MetLife and require that payments be deposited
directly into the account as shall be designated by MetLife. Borrower shall
comply with all of its obligations under the Interest Rate Cap Agreement. All
amounts paid by the counterparty under the Interest Rate Cap Agreement to
Borrower or MetLife shall be deposited immediately into such account as shall be
designated by MetLife. The Interest Rate Cap Agreement and the aforesaid account
designated by MetLife shall be deemed to be part of the “Property” for purposes
of Provision 4(f) of the Application. Borrower shall take all actions reasonably
required by MetLife to enforce MetLife’s rights under the Interest Rate Cap
Agreement in the event of a default by the counterparty and shall not waive,
amend or otherwise modify any of its rights thereunder. In the event of a
downgrade, withdrawal or qualification of the rating of the counterparty by
Moody’s Investors Service, Inc., or by Standard & Poor’s Ratings Group, at
MetLife’s option, Borrower shall replace the Interest Rate Cap Agreement with a
replacement Interest Rate Cap Agreement with a counterparty acceptable to
MetLife not later than ten (10) business days following receipt of notice from
MetLife of such downgrade, withdrawal or qualification. In the event that
Borrower fails to purchase, deliver and/or maintain the Interest Rate Cap
Agreement or any replacement thereof as required hereby, MetLife may (in
addition to exercising any of its other rights and remedies) purchase such
Interest Rate Cap Agreement or any replacement thereof and the costs incurred by
MetLife in purchasing and maintaining the same shall be paid by Borrower with
interest thereon at the default rate from the date such cost was incurred by
MetLife until such cost is paid by Borrower to MetLife. In connection with the
Interest Rate Cap Agreement, Borrower shall obtain and deliver to MetLife at the
Closing [and at or prior to any extension of the Loan contemplated by Provision
28 hereof] an opinion of counsel for the counterparty (upon which MetLife and
its successors and assigns may rely) in form, scope and substance acceptable to
MetLife regarding the authorization of the counterparty, the legality, validity,
and binding effect of the Interest Rate Cap Agreement, and such other matters as
MetLife shall reasonably require. The obligation to purchase and maintain the
Interest Rate Cap Agreement and any replacement thereof shall be fully recourse
to Borrower and the Liable Party.

33. Loan Extensions. Borrower shall have three (3) one-year options to extend
the Maturity Date of the Loan (the “Extension Options”). The Extension Options
shall be subject to the following conditions: (i) there shall be no Event of
Default under the Loan Documents, the Indemnity Agreement or the Guaranty at the
time of the exercise of any Extension Option, (ii) the Borrower shall comply
with all of the requirements of Provision 32 hereof; and (iii) the Borrower
shall pay all costs and expenses incurred by MetLife in connection with such
extension including title insurance premiums, documentation costs and reasonable
attorneys fees (no loan fees will be due in connection with any of the extension
terms); and (iv) Borrower and the Liable Party shall execute extension documents
satisfactory to MetLife relating to the Loan Documents, Indemnity Agreement and
Guaranty.

The Annual Interest Rate during each of the extensions shall be the (a) the sum
of (x) the one-month LIBOR Rate plus (y) the Spread (.70%).

In the event Borrower wishes to exercise an Extension Option it shall provide
MetLife with notice that it shall exercise such Extension Option at least 90
days prior to the applicable Maturity Date of the Loan. MetLife shall determine
such initial Annual Interest Rate as of approximately 11:00 am London time on
the second Business Day prior to the applicable Maturity Date. MetLife shall
notify the Borrower of the initial Annual Interest Rate and acceptable terms for
the required interest rate protection instrument with respect to any extension
prior to such applicable Maturity Date. With respect to any extension, the
Annual Interest Rate will be reset by MetLife effective the first day of the
first month following the month during which the effective date of the extension
occurred and effective the first day of the first month of each successive one
month period thereafter during the remaining term of the Loan (the “Extension
Rate Reset Dates”) and Borrower shall comply with all of the requirements of
Provision 32 hereof. The Annual Interest Rate will be reset as aforesaid to the
rate equal to the sum of (x) the Spread (.70%) plus (ii) the one-month LIBOR
Rate as of approximately 11:00 am London time on the second Business Day prior
to each of the Extension Rate Reset Dates.

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

34. Reduction in Purchase Price. Borrower represents that it is purchasing the
Property or is purchasing all of the equity in the entity which owns the
Property for $440,000,000 (“Purchase Price”, excluding closing costs), provided
that any reduction in the Purchase Price shall result in a proportionate
reduction in the Loan Amount.

35. Loan Amount. The maximum proposed Loan Amount of $220 million is based upon
a proposed Appraised Value (as hereinafter defined) of the Real Property of $440
million, with a loan to value ratio of a 50% of Appraised Value. The actual Loan
Amount shall be determined in relation to the Appraised Value. The “Appraised
Value,” shall be the appraised value of the Real Property pursuant to the
Appraisal, as defined in the Closing Requirements Section 9 (v). In the event
the Appraised Value is less than $440 million, MetLife has the right to reduce
the loan amount such that the maximum loan amount does not exceed 72% of the
Appraised Value.

36. Assignment of Application. Notwithstanding Provision 13 hereof, this
Application may be assigned prior to Closing to an entity to be formed, which
entity shall be wholly owned directly or indirectly by Liable Party, and which
entity shall be managed by a Close Affiliate of Liable Party. Such entity shall
thereafter be “Borrower” under the Application and shall assume all of the
obligations of the original Borrower hereunder.

37. Permitted Debt. Borrower and Operating Lessee shall be allowed to incur the
following indebtedness and obligations, which other than the Loan under the
following clause (i) shall not be secured by the Property: (i) the Loan and any
related obligations to MetLife, (ii) unsecured amounts payable for or in respect
of the operation of the Property incurred in the ordinary course of Borrower’s
business (“Trade Payables”), paid by Borrower within sixty (60) days of
incurrence, provided that in no event shall the aggregate amount of such Trade
Payables incurred by Borrower exceed three percent (3%) of the aggregate Loan
Amount, (iii) purchase money indebtedness and capital lease obligations incurred
in the ordinary course of business and operation of the Property, but in no
event shall the annual scheduled debt service on such indebtedness or
obligations exceed the aggregate amount of $600,000, (iv) any management fees
accrued in accordance with the terms of the Management Agreement but which are
not yet due and payable, (v) Impositions not yet due and payable or delinquent
or which are being diligently contested in good faith in. accordance with the
terms and conditions of Section 2.04 of the Mortgage, and (vi) indebtedness
relating to liens in respect of property or assets imposed by law which were
incurred in the ordinary course of business, such as carriers’, warehousemen’s,
landlord’s, mechanic’s, materialmen’s, repairmen’s and other similar liens
arising in the ordinary course of business, and liens for workers’ compensation,
unemployment insurance and similar programs, in each case arising in the
ordinary course of business which are either not yet due and payable or being
diligently contested in good faith in accordance with Section of the Mortgage
[the terms and conditions of the Mortgage applicable to good faith contest of
Impositions]. In addition, Borrower shall be allowed to enter into guarantees or
provide similar assurances or undertakings in favor of the Manager with respect
to the obligations of the Operating Lessee under the Management Agreement
provided that such obligations shall not be secured by any mortgage or other
lien on the Property except as may be permitted in this Loan Application.

38. Permitted Liens. Borrower and Operating Lessee shall be allowed to create,
suffer to exist or otherwise permit the following encumbrances or other liens
with respect to the Property subject to the terms of the Loan Documents as to
priority thereof: (i) the liens and security interests created by the Loan
Documents, (ii) those property specific exceptions to title recorded in the real
estate records of the County and contained in Schedule B-i of the title
insurance policy or policies which have been approved

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

by MetLife (“Permitted Exceptions”) (iii) liens, if any, for Impositions not yet
due and payable or delinquent or which are being diligently contested in good
faith in accordance with the terms and conditions of Section 2.04 of the
Mortgage, (iv) liens in respect of property or assets imposed by law which were
incurred in the ordinary course of business, such as carriers’, warehousemen’s,
landlord’s, mechanic’s, materialmen’s, repairmen’s and other similar liens
arising in the ordinary course of business, and liens for workers’ compensation,
unemployment insurance and similar programs, in each case arising in the
ordinary course of business which are either not yet due and payable or being
diligently contested in good faith in accordance with Section of the Mortgage
[the terms and conditions of the Mortgage applicable to good faith contest of
Impositions], (v) Leases and the Management Agreement, (vi) easements, rights of
way, or restrictions incurred or entered into by Borrower in the ordinary course
of business, which in each case could not be reasonably expected to have a
material adverse effect, do not diminish in any material respect the value of
the Property or affect in any material respect the validity, enforceability or
priority of the liens created by the Transaction Documents, (vii) liens securing
indebtedness permitted under clause (iii) of the definition of Permitted Debt in
Provision 37, so long as such lien is only in respect of the specific property
relating to such obligation and, notwithstanding the introductory clause in this
Paragraph 38 to the contrary, is not secured by the Property, (viii) deposits
securing or in lieu of surety, appeal or custom bonds in processing to which
Borrower is a party, (ix) any judgment lien provided that the judgment it
secures shall have been discharged of record or the execution thereof stayed
pending appeal within thirty (30) days after entry thereof or within thirty
(30) days after the expiration of any stay, as applicable in either case
provided there is no imminent risk of forfeiture during such thirty (30) day
period, and (x) such other title and survey exceptions as MetLife has approved
or may approve in writing.

39. Conditions Precedent to Subsequent Funding. Following the Closing, the
balance of the Loan proceeds shall be disbursed to Borrower in not more than two
additional disbursements. Borrower shall deliver to MetLife not more than
fifteen (15) business days prior to each Subsequent Funding Date written notice
of the amount of the disbursement. In no event shall a Subsequent Funding or a
Subsequent Funding Date occur after the Subsequent Funding Expiration Date. Each
Subsequent Funding shall be further subject to the following additional
conditions precedent, any and all of which may be waived by MetLife in its sole
discretion:

a. Performance; No Default. Borrower and Operating Lessee shall have performed
and complied with all terms and conditions in the Loan Documents required to be
performed or complied with by them at or prior to each Subsequent Funding Date,
and on each Subsequent Funding Date there shall exist no Event of Default.

b. No Adverse Change. There shall not have occurred any change, event or
condition which has or is reasonably likely to cause, an Adverse Change within
the meaning of Provision 20 of the Closing Requirements.

c. Mortgage. The Loan Documents shall be in full force and effect. The Mortgage
shall constitute a valid first priority lien upon the Property, free and clear
of all liens and encumbrances except such liens and encumbrances as are
permitted under Provision 38 and subject to any releases previously obtained.

d. Representations and Warranties. The representations and warranties made by
Borrower in the Loan Documents shall have been true and correct in all material
respects on the date on which made and shall also be true and correct in all
material respects with respect to the Borrower, the Operating Lessee and the
Property on the each Subsequent Funding Date as if made on and as of such date
which representations and warranties shall be deemed remade as of each
Subsequent Funding Date as if made on and as of such date.

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

e. No Damage. There shall not have occurred any casualty or damage to any part
of the Property, nor shall any part of the Property have been taken in
condemnation or other similar proceeding or transferred in lieu of condemnation,
nor shall Borrower or Operating Lessee have received notice of any proposed
condemnation or other similar proceeding affecting the Property, unless (i) the
cost to repair or restore the Property to the Restoration Standard (defined in
Provision 41(a)(ii) below), as Approved by MetLife in its sole discretion, does
not exceed $15,000,000, (ii) the repair or restoration of the Property to the
Restoration Standard can be completed within 365 days from the date of the
occurrence, and (iii) subject to clause (i) above, the estimated cost to restore
the Property does not exceed the amount of the Net Insurance Proceeds available
for restoration and other amounts, if any, committed to the costs of the
restoration by Liable Party or any Affiliate, evidenced by documents
satisfactory to MetLife, and with respect to which MetLife has been granted a
security interest as evidenced by such documents required by MetLife
satisfactory in form and content to MetLife.

f. Endorsement to Title Policy. A “date down” endorsement to the Title Policy
described in Provision 19 of the Closing Conditions in a form acceptable to
MetLife on behalf of MetLife, dated as of the Subsequent Funding Date, which
shall state, among other things, (i) that there are no new or additional
exceptions to title since the date of the prior funding of the Loan, and
(ii) that there are no additional survey exceptions, except as previously
approved by the MetLife in accordance with the terms of the Loan Documents.

g. Payments by Borrower. Borrower shall have paid all Expenses pursuant to
Provision 11.

h. Interest Rate Cap Agreement. Borrower shall have delivered to MetLife written
evidence satisfactory to MetLife that the Interest Rate Cap Agreement required
to be maintained by Borrower in accordance with Provision 32 hereof has been
purchased.

i. Subsequent Funding Amounts. Each Subsequent Funding shall be in an amount
that is not less than $100,000,000 and which together with all prior amounts
disbursed to Borrower hereunder does not exceed the Loan Amount determined in
accordance with Provision 35 hereof.

40. [Reserved]

41. Material Casualty or Material Condemnation.

a. Notwithstanding any provision of the Mortgage or any other Loan Document, in
the event of a Material Casualty or Material Condemnation, if the Management
Agreement provides that the Operating Lessee or Borrower is required to use the
proceeds to restore the Property and such Operating Lessee or Borrower does not
have the right to terminate the Management Agreement pursuant to the terms of
the Management Agreement as a result of such casualty or condemnation or
otherwise, then MetLife shall make such proceeds available to Borrower for the
restoration of the Property provided that: (i) an Event of Default does not then
currently exist, (ii) the repair, restoration and rebuilding of any portion of
the Property that has been damaged or destroyed or which remains after a
Material Condemnation, can be accomplished in full compliance with all laws,
ordinances, orders, covenants, conditions and restrictions and other
requirements relating to land and building design and construction, use and
maintenance, that pertain to or affect the Property or any part of the Property
to the same condition, character and general utility as nearly as possible to
that existing prior to the casualty and at least equal in value as that existing
prior to the casualty (the repair, restoration and rebuilding to the condition
described in this clause (ii) is referred to herein as the “Restoration
Standard”), (iii) the casualty or damage or condemnation occurs more than one
year prior to the Maturity Date, as it may be extended; and (iii) restoration of
the Property in accordance with the terms herein is estimated to require

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

not more than one year to complete from the date of the occurrence of the
casualty or condemnation; and (iv) the estimated cost to restore the Property in
accordance with the terms herein, as Approved by MetLife in its sole discretion,
does not exceed the amount of the Net Insurance Proceeds available for
restoration and other amounts, if any, committed to the costs of the restoration
by Liable Party or any Affiliate, evidenced by documents satisfactory to
MetLife, and with respect to which MetLife has been granted a security interest
as evidenced by such documents required by MetLife satisfactory in form and
content to MetLife.

b. For purposes of this Provision 41, the following terms have the following
meanings:

“Material Casualty” shall mean a Casualty where the loss (i) is in an aggregate
amount equal to or in excess of thirty percent (30%) of the outstanding
principal amount of the Loan or (ii) has caused thirty percent (30%) or more of
the hotel rooms or common areas (including banquet and conference facilities) in
the Property to be unavailable for its applicable use.

“Material Condemnation” shall mean a Condemnation where the loss (i) is in an
aggregate amount equal to or in excess of thirty percent (30%) of the
outstanding principal amount of the Loan or (ii) has caused thirty percent
(30%) or more of the hotel rooms or common areas (including banquet and
conference facilities) in the applicable Property to be unavailable for its
applicable use.

“Net Insurance Proceeds” shall mean all insurance proceeds payable to Borrower
or Operating Lessee in connection with the Property less the cost, if any, to
MetLife of recovering the insurance proceeds including, without limitation,
reasonable attorneys’ fees and expenses, and adjusters’ fees.

42. Modifications to Closing Requirements.

a. Borrower and Operating Lessee shall exercise best efforts to obtain tenant
estoppels as contemplated by Provision 16 of the Closing Requirements, but
MetLife aggress that the only tenant required to be delivered pursuant to such
Provision 16 shall be an estoppel from Victoria’s Secret.

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

SCHEDULE A*

PRE-APPROVED MANAGERS

KSL or any Affiliate

One & Only / Kerzner

Gaylord Entertainment

Loews Hotels

Hilton Hotels Corporation

Hilton Group, PLC Fairmont Hotels & Resorts

Millennium and Copthorne Hotels, PLC

Marriott International, Inc.

Four Seasons Hotels, Inc.

Six Continents

Orient Express

Mandarin

Peninsula

Raffles

Shangri-La

Hyatt

Omni

Boca Resorts

Destination Resorts Lowe Hospitality

Montage Hotels

Intercontinental Hotel Group

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

SCHEDULE B*

PRE-APPROVED TRANSFEREES

Strategic Hotel Funding, Inc.

Bass PLC

CNL Hotels & Resorts, Inc.

KSL II Management Operations, LLC/KSL Recreation Corp.

Kohlberg Kravis Roberts & Co.

Hilton Hotels Corporation

FelCor Lodging Trust, Inc.

Rosewood Hotels & Resorts

Whitehall Street Real Estate Limited Partnership Funds

Host Marriott Corporation

Hilton Group, PLC

Fairmont Hotels & Resorts

Four Seasons Hotel Inc.

The Blackstone Group, LP

Millennium and Copthorne Hotels, PLC

MeriStar Hotels

LaSalle Hotel Properties

Marriott International, Inc.

Starwood Hotels and Resorts Worldwide, Inc.

Government of Singapore Investment Corporation

Maritz Wolf LLC (subject to rating agency approval)

HRH Prince Alwaleed Bin Talal Bin Abdulaziz Al Saud

Six Continents

Morgan Stanley Real Estate Fund (MSREF)

Walton Street Real Estate Fund

The Carlyle Group Real Estate Fund

Lehman Brothers Real Estate Fund

The Equitable Life Assurance and Annuity Association

Teachers Insurance and Annuity Association

Orient Express

Accor

Benchmark Hospitality

NH Hotels

Mandarin

Peninsula

Raffles

Shangrila

Hyatt

Strategic Hotel Capital

Boca Resorts

Vail Resorts

Destination Resorts

Westbrook Real Estate Fund

Lowe Hospitality

State of Ohio Pension Fund

Highland Hospitality

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

FORM OF

ASSIGNMENT SUBORDINATION OF MANAGEMENT AGREEMENT

AND CONSENT OF MANAGER

[Attached]

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

ST. FRANCIS

 

Property Program:

All Risk

   $350,000,000 Replacement Cost, Agreed Amount Endorsement

All Risk Deductible

Loss of Rents/Business

Income

  

Not to exceed $500,000

18 Months (Amount of BI to be specified on Loan application as “included”,
Closing Conditions to specify as 18mths term of coverage)

Extended Period of Indemnity (“EPI”)

Boiler & Machinery

Ordinance and Law

  

12 months

$50,000,000

$50,000,000

Sub Limits (as applicable):

Windstorm

Flood

  

Full Replacement Cost plus loss of rents and EPI as above

Replacement Cost or FEMA max

Liability Program:

General Liability

Auto Liability

  

$50,000,000 total coverage

$1,000,000 owned/hired/non-owned

Workers Compensation:    Statutory

Terrorism:

Limit

Deductible

  

$100,000,000

Not to exceed $500,000

Earthquake:

Primary

Excess

  

$80,000,000 as follows

$15,000,000 Shared with our other California properties

$65,000,000 Dedicated to the St. Francis

($5,000,000 expires 6/29/07, $60,000,000 expires 9/15/06)

Deductible    5% maximum on full coverage of $80 million Premiums    Not to
exceed $2,500,000 annually on $60,000,000 excess coverage Carrier Rating:    An
AM Best Rating of A- VIII or better, exceptions subject to approval not to be
unreasonably withheld (delete BBB rating requirement and delete sentence 12B
concerning rating on Securities) Mortgagee Designation:   

Metropolitan Life Insurance Company,

its affiliates and/or successors and assigns

10 Park Avenue

Morristown, New Jersey 07962

Attention: Insurance Manager