Exhibit 10.95









EXHIBIT
10.95










MEZZANINE
LOAN AND SECURITY AGREEMENT

(Intermediate
Mezzanine)




 




 




 

Dated as
of February 9, 2005

 




 




 

Between

 




 




 

CNL
HOTEL DEL INTERMEDIATE MEZZ PARTNERS, LP

as
Mezzanine Borrower




 




 

and

 




 




 




 

GERMAN
AMERICAN CAPITAL CORPORATION,

 

as
Mezzanine Lender

 























 




TABLE
OF CONTENTS

 

Page

 


	
       

      I.

       
	
       

      DEFINITIONS;
      PRINCIPLES OF CONSTRUCTION

       
	
       

      1

       

	
      Section
      1.1
	
      Definitions1
	 
	
      Section
      1.2
	
      Principles
      of Construction
	
      23

	
       

      II.

       
	
       

      GENERAL
      TERMS

       
	
       

      23

       

	
      Section
      2.1
	
      Loan;
      Disbursement to Mezzanine Borrower.
	
      23

	
      Section
      2.2
	
      Interest;
      Loan Payments; Late Payment Charge.
	
      24

	
      Section
      2.3
	
      Prepayments
	
      26

	
      Section
      2.4
	
      Regulatory
      Change; Taxes.
	
      27

	
      Section
      2.5
	
      Conditions
      Precedent to Closing
	
      29

	
       

      III.

       
	
       

      CASH
      MANAGEMENT

       
	
       

      34

       

	
      Section
      3.1
	
      Cash
      Management.
	
      34

	
       

      IV

       
	
       

      REPRESENTATIONS
      AND WARRANTIES

       
	
       

      44

       

	
      Section
      4.1
	
      Mezzanine
      Borrower Representations.
	
      44

	
      Section
      4.2
	
      Survival
      of Representations
	
      53

	
       

      V.

       
	
       

      MEZZANINE
      BORROWER COVENANTS

       
	
       

      54

       

	
      Section
      5.1
	
      Affirmative
      Covenants.
	
      54

	
      Section
      5.2
	
      Negative
      Covenants
	
      65

	
       

      VI.

       
	
       

      INSURANCE;
      CASUALTY; CONDEMNATION; RESTORATION

       
	
       

      70

       

	
      Section
      6.1
	
      Insurance
      Coverage Requirements.
	
      70




























 


	
      Section
      6.2
	
      Condemnation
      and Insurance Proceeds
	
      71

	
      Section
      6.3
	
      Certificates
	
      71

	
       

      VII.

       
	
       

      INTENTIONALLY
      OMITTED

       
	
       

      72

       

	
       

      VIII.

       
	
       

      TRANSFERS,
      INDEBTEDNESS AND SUBORDINATE LIENS

       
	
       

      72

       

	
      Section
      8.1
	
      Restrictions
      on Transfers and Indebtedness.
	
      72

	
      Section
      8.2
	
      Sale
      of Building Equipment and Immaterial Transfers and Easements by Mortgage
      Borrower
	
      73

	
      Section
      8.3
	
      Intentionally
      Omitted.
	
      73

	
      Section
      8.4
	
      Transfers
      of Interests in Mezzanine Borrower
	
      73

	
      Section
      8.5
	
      Loan
      Assumption
	
      74

	
      Section
      8.6
	
      Notice
      Required; Legal Opinions
	
      76

	
      Section
      8.7
	
      Leases.
	
      77

	
       

      IX.

       
	
       

      INTEREST
      RATE CAP AGREEMENT.

       
	
       

      79

       

	
      Section
      9.1
	
      Interest
      Rate Cap Agreement
	
      79

	
      Section
      9.2
	
      Pledge
      and Collateral Assignment
	
      79

	
      Section
      9.3
	
      Covenants.
	
      80

	
      Section
      9.4
	
      Representations
      and Warranties
	
      81

	
      Section
      9.5
	
      Payments
	
      82

	
      Section
      9.6
	
      Remedies
	
      82

	
      Section
      9.7
	
      Sales
      of Rate Cap Collateral (Intermediate Mezzanine)
	
      85

	
      Section
      9.8
	
      Public
      Sales Not Possible
	
      85




























 


	
      Section
      9.9
	
      Receipt
      of Sale Proceeds
	
      86

	
      Section
      9.10
	
      Extension
      Interest Rate Cap Agreement (Intermediate Mezzanine)
	
      86

	
       

      X.

       
	
       

      RESERVED

       
	
       

      87

       

	
       

      XI.

       
	
       

      BOOKS
      AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER
      INFORMATION

       
	
       

      87

       

	
      Section
      11.1
	
      Books
      and Records
	
      87

	
      Section
      11.2
	
      Financial
      Statements.
	
      87

	
       

      XII.

       
	
       

      ENVIRONMENTAL
      MATTERS.

       
	
       

      88

       

	
      Section
      12.1
	
      Representations
	
      88

	
      Section
      12.2
	
      Covenants.
	
      89

	
      Section
      12.3
	
      Environmental
      Reports
	
      89

	
      Section
      12.4
	
      Environmental
      Indemnification
	
      90

	
      Section
      12.5
	
      Recourse
      Nature of Certain Indemnifications
	
      90

	
       

      XIII.

       
	
       

      RESERVED

       
	
       

      91

       

	
       

      XIV.

       
	
       

      RESERVED

       
	
       

      91

       

	
       

      XV.

       
	
       

      ASSIGNMENTS
      AND PARTICIPATIONS.

       
	
       

      91

       

	
      Section
      15.1
	
      Assignment
      and Acceptance
	
      91

	
      Section
      15.2
	
      Effect
      of Assignment and Acceptance
	
      91

	
      Section
      15.3
	
      Content
	
      91

	
      Section
      15.4
	
      Register
	
      92




























 


	
      Section
      15.5
	
      Substitute
      Notes
	
      92

	
      Section
      15.6
	
      Participations
	
      93

	
      Section
      15.7
	
      Disclosure
      of Information
	
      93

	
      Section
      15.8
	
      Security
      Interest in Favor of Federal Reserve Bank
	
      94

	
       

      XVI.

       
	
       

      RESERVED

       
	
       

      94

       

	
       

      XVII.

       
	
       

      DEFAULTS

       
	
       

      94

       

	
      Section
      17.1
	
      Event
      of Default.
	
      94

	
      Section
      17.2
	
      Remedies.
	
      98

	
      Section
      17.3
	
      Remedies
      Cumulative; Waivers
	
      100

	
      Section
      17.4
	
      Costs
      of Collection
	
      100

	
      Section
      17.5
	
      Distribution
      of Collateral Proceeds
	
      101

	
       

      XVIII.

       
	
       

      SPECIAL
      PROVISIONS

       
	
       

      101

       

	
      Section
      18.1
	
      Exculpation.
	
      101

	
       

      XIX.

       
	
       

      MISCELLANEOUS

       
	
       

      104

       

	
      Section
      19.1
	
      Survival
	
      104

	
      Section
      19.2
	
      Mezzanine
      Lender's Discretion
	
      104

	
      Section
      19.3
	
      Governing
      Law.
	
      104

	
      Section
      19.4
	
      Modification,
      Waiver in Writing
	
      106

	
      Section
      19.5
	
      Delay
      Not a Waiver
	
      106

	
      Section
      19.6
	
      Notices
	
      106

	
      Section
      19.7
	
      TRIAL
      BY JURY
	
      108




























 


	
      Section
      19.8
	
      Headings
	
      108

	
      Section
      19.9
	
      Severability
	
      109

	
      Section
      19.10
	
      Preferences
	
      109

	
      Section
      19.11
	
      Waiver
      of Notice
	
      109

	
      Section
      19.12
	
      Expenses;
      Indemnity.
	
      109

	
      Section
      19.13
	
      Exhibits
      and Schedules Incorporated
	
      112

	
      Section
      19.14
	
      Offsets,
      Counterclaims and Defenses
	
      112

	
      Section
      19.15
	
      Liability
      of Assignees of Mezzanine Lender
	
      112

	
      Section
      19.16
	
      No
      Joint Venture or Partnership; No Third Party
Beneficiaries.
	
      112

	
      Section
      19.17
	
      Publicity
	
      113

	
      Section
      19.18
	
      Waiver
      of Marshalling of Assets
	
      113

	
      Section
      19.19
	
      Waiver
      of Counterclaim and other Actions
	
      113

	
      Section
      19.20
	
      Conflict;
      Construction of Documents; Reliance
	
      114

	
      Section
      19.21
	
      Prior
      Agreements
	
      114

	
      Section
      19.22
	
      Counterparts
	
      114

	
      Section
      19.23
	
      Disclosure
	
      115










 




 






















EXHIBITS
AND SCHEDULES

 


	
      EXHIBIT
      A
	
      INTENTIONALLY
      OMITTED

	
      EXHIBIT
      B
	
      FORM
      OF PLEDGE ACKNOWLEDGEMENT

	
      EXHIBIT
      C
	
      SINGLE
      PURPOSE ENTITY PROVISIONS

	
      EXHIBIT
      D
	
      ENFORCEABILITY
      OPINION REQUIREMENTS

	
      EXHIBIT
      E
	
      NON-CONSOLIDATION
      OPINION REQUIREMENTS

	
      EXHIBIT
      F
	
      COUNTERPARTY
      OPINION REQUIREMENTS

	
      EXHIBIT
      G
	
      FORM
      OF TENANT ESTOPPEL LETTER

	
      EXHIBIT
      H
	
      BORROWER
      ORGANIZATIONAL STRUCTURE

	
      EXHIBIT
      I
	
      INTEREST
      RATE CAP AGREEMENT REQUIREMENTS

	
      EXHIBIT
      J
	
      FORM
      OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

	
      EXHIBIT
      K
	
      INTENTIONALLY
      OMITTED

	
      EXHIBIT
      L
	
      INTENTIONALLY
      OMITTED

	
      EXHIBIT
      M
	
      COUNTERPARTY
      ACKNOWLEDGMENT

	
      EXHIBIT
      N
	
      INTENTIONALLY
      OMITTED

	
      EXHIBIT
      O
	
      FORM
      OF INDEPENDENT DIRECTOR CERTIFICATE

	
      EXHIBIT
      P
	
      INTENTIONALLY
      OMITTED

	
      EXHIBIT
      Q
	
      INTENTIONALLY
      OMITTED

	
      EXHIBIT
      R
	
      ARTICLE
      8 OPT IN LANGUAGE

	 	 
	
      SCHEDULE
      I
	
      LITIGATION
      SCHEDULE

	
      SCHEDULE
      II
	
      INTENTIONALLY
      DELETED

	
      SCHEDULE
      III
	
      PRE-APPROVED
      TRANSFEREES

	
      SCHEDULE
      IV
	
      PRE-APPROVED
      MANAGERS







 




 



























MEZZANINE
LOAN AND SECURITY AGREEMENT

 

(Intermediate
Mezzanine)

 




 

THIS
MEZZANINE LOAN AND SECURITY AGREEMENT (Intermediate Mezzanine), dated as of
February 9, 2005 (as amended, restated, replaced, supplemented or otherwise
modified from time to time, this Agreement),
between CNL HOTEL DEL INTERMEDIATE MEZZ PARTNERS, LP, a Delaware limited
partnership (Mezzanine
Borrower) having
an office c/o CNL Hotels & Resorts, Inc., Center at City Commons, 450 South
Orange Avenue, Orlando, Florida 32801 and GERMAN AMERICAN CAPITAL CORPORATION, a
Maryland corporation, having an address at 60 Wall Street, 10th Floor, New York,
New York 10005 (together with its successors and assigns, Mezzanine
Lender).

 

W
I T N E S S E T H:

 

WHEREAS,
Mezzanine Borrower desires to obtain the Loan (as hereinafter defined) from
Mezzanine Lender;

 

WHEREAS,
Mezzanine Lender is willing to make the Loan to Mezzanine Borrower, subject to
and in accordance with the terms of this Agreement and the other Loan Documents
(Intermediate Mezzanine) (as hereinafter defined).

 

NOW,
THEREFORE, in consideration of the making of the Loan by Mezzanine Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:

 


	I.  	
      DEFINITIONS;
      PRINCIPLES OF CONSTRUCTION




 

Section
1.1  Definitions.

 

For all
purposes of this Agreement, except as otherwise expressly required or unless the
context clearly indicates a contrary intent:

 

Acceptable
Counterparty shall
mean a bank or other financial institution which has a long-term unsecured debt
or counterparty rating of "A+" or higher by S&P and its equivalent by
Moody's and, if the counterparty is rated by Fitch, by Fitch.

 

Acceptable
Management Agreement shall
mean, with respect to the Property, a new or amended management agreement with
the Manager which agreement shall be upon terms and conditions no less favorable
in all material respects to the Mezzanine Borrower, Operating Lessee, and
Mezzanine Lender than those contained in the Management Agreement or any new or
amended management agreement entered into by Mortgage Borrower, Operating
Lessee, and/or Manager with respect to the Property in accordance with the terms
of Section 5.2.14
hereof.

 

























 

Acceptable
Manager shall
mean (i) the current Manager as of the Closing Date or any wholly owned
Affiliate (whether direct or indirect) of KSL DC Operating, LLC, or a member of
KSL DC Operating LLC, or KSL II Management Operations, LLC, (ii) at any time
after the Closing Date, any Pre-approved Manager listed on Schedule
IV hereto,
provided each such property manager continues to be Controlled by substantially
the same Persons Controlling such property manager 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), (iii) any other hotel management
company that manages a system of at least six (6) hotels or resorts of a class
and quality at least as comparable to the Property (as reasonably determined by
Manager and Operating Lessee; provided, however Operating Lessee shall obtain
Mortgage Lender’s prior approval of such determination, not to be unreasonably
withheld), and containing not fewer than 1,500 hotel rooms in the aggregate
(including condominium units under management) in the aggregate, (iv) any Close
Affiliate of any of the foregoing Persons or (v) any other reputable and
experienced professional hotel management company (A) whose competence,
qualifications, and experience in managing properties of a quality equal to or
exceeding the quality of the Property are comparable to, or greater than that of
the current Manager as of the Closing Date, or a Close Affiliate thereof and (B)
with respect to which Mezzanine Lender has consented to in writing.


 

Account
Agreement (Intermediate Mezzanine) shall
mean the Account and Control Agreement (Intermediate Mezzanine), dated the date
hereof, among Mezzanine Lender, Mezzanine Borrower and Cash Management Bank
(Intermediate Mezzanine).

 

Account
Agreement (Mortgage) shall
mean the Account and Control Agreement, dated as of the date hereof, among
Mortgage Lender, Mortgage Borrower and Cash Management Bank
(Mortgage).

 

Account
Collateral (Intermediate Mezzanine) shall
have the meaning set forth in Section
3.1.2.

 

Acknowledgment shall
mean the Acknowledgment, dated on or about the date hereof made by Counterparty,
or as applicable, Acceptable Counterparty in the form of Exhibit
M.

 

Additional
Non-Consolidation Opinion shall
have the meaning set forth in Section
4.1.20(b).

 

Affiliate shall
mean, with respect to any specified Person, any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with, or any general partner or managing member in, such specified
Person. 

 

Agreement shall
mean this Agreement, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 








2













Approved
Bank shall
have the meaning set forth in the Account Agreement (Intermediate Mezzanine).


 

Assignment
and Acceptance shall
mean an assignment and acceptance entered into by Mezzanine Lender and an
assignee, and accepted by Mezzanine Lender in accordance with Article
XV and in
substantially the form of Exhibit
J or such
other form customarily used by Mezzanine Lender in connection with the
participation or syndication of mortgage or mezzanine loans at the time of such
assignment. 

 

Assignment
of Management Agreement (Intermediate Mezzanine) shall
mean that certain Manager's Consent, Subordination of Management Agreement, and
Non-disturbance Agreement (Intermediate Mezzanine), dated the date hereof, among
Mezzanine Lender, Mezzanine Borrower, Operating Lessee, and Manager, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

 

Assignment
of Management Agreement (Mortgage) shall
mean that certain Manager's Consent, Subordination of Management Agreement, and
Non-disturbance Agreement, dated the date hereof, among Mortgage Lender,
Mortgage Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

Bankruptcy
Code shall
mean Title 11, U.S.C.A., as amended from time to time and any successor statute
thereto.

 

Beneficial when
used in the context of beneficial ownership has the analogous meaning to that
specified in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended.

 

Best
of Mezzanine Borrower's Knowledge, shall
mean the actual (as opposed to imputed or constructive) present knowledge of:
Eric Resnick, Peter McDermott, John Brady, and Barry Bloom, after due inquiry,
and without creating any personal liability on the part of any said individuals.
In the case where the term "Best of Mezzanine Borrower's Knowledge" is used in
the context of representations or warranties of Borrower to be made after the
date hereof, the term shall include the Person or Persons, as applicable, that
occupy the capacities of said individuals on the date such representation or
warranty is made to the extent that one or more of such individuals no longer
occupy their current capacities.

 

Budget shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Building
Equipment shall
have the meaning set forth in the Security Instrument.

 

Business
Day shall
mean any day other than a Saturday, Sunday or any other day on which national
banks in New York, California or in the state in which Servicer is located are
not open for business. When used with respect to an Interest Determination Date,


 








3













Business
Day shall mean any day on which dealings in deposits in U.S. Dollars are
transacted in the London interbank market.

 

Capital
Expenditures shall
mean any amount incurred in respect of capital items which in accordance with
GAAP would not be included in Mortgage Borrower’s annual financial statements
for an applicable period as an operating expense of the Property.

 

Cash
Management Bank (Intermediate Mezzanine) shall
mean LaSalle Bank National Association or any successor Approved Bank acting as
Cash Management Bank (Intermediate Mezzanine) under the Account Agreement
(Intermediate Mezzanine) or other financial institution approved by the
Mezzanine Lender. 

 

Cash
Management Bank (Mortgage) shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Clearing
Bank shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

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.

 

Closing
Date shall
mean the date of this Agreement set forth in the first paragraph
hereof.

 

Closing
Date NOI shall
mean $37,883,902.

 

Code shall
mean the Internal Revenue Code of 1986, as amended, as it may be further amended
from time to time, and any successor statutes thereto, and applicable U.S.
Department of Treasury regulations issued pursuant thereto in temporary or final
form.

 

Collateral shall
mean collectively (i) all of the Pledged Collateral and all proceeds thereof,
(ii) all Receipts, (iii) any stock certificates or other certificates,
membership interest certificates or instruments evidencing any of the foregoing
property described in clauses (i) and (ii) above, (iv) the Rate Cap Collateral
(Intermediate Mezzanine), (v) the Account Collateral (Intermediate Mezzanine)
and (vi) all other rights appurtenant to the property described in clauses (i)
through (v) above.

 

Collateral
Accounts shall
have the meaning set forth in the Loan Agreement (Mortgage).

 








4













Collateral
Accounts (Intermediate Mezzanine) shall
have the meaning set forth in Section
3.1.1.

 

Control
shall
mean (i) the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise and (ii) the ownership,
direct or indirect, of no less than 51% of the voting securities of such Person,
and the terms Controlled, Controlling and Common Control shall have correlative
meanings.

 

Counterparty shall
mean the counterparty to the Interest Rate Cap Agreement (Intermediate
Mezzanine) and any counterparty under a Replacement Interest Rate Cap Agreement
(Intermediate Mezzanine) or Extension Interest Rate Cap Agreement and, if
applicable, any credit support provider identified in the Interest Rate Cap
Agreement, Replacement Interest Rate Cap Agreement (Intermediate Mezzanine) or
Extension Interest Rate Cap Agreement.

 

Counterparty
Opinion shall
have the meaning set forth in Section
9.3(f).

 

Debt shall
mean, with respect to any Person at any time, (a) indebtedness or liability of
such Person for borrowed money whether or not evidenced by bonds, debentures,
notes or other instruments, or for the deferred purchase price of property or
services; (b) obligations of such Person as lessee under leases which should
have been or should be, in accordance with GAAP, recorded as capital leases; (c)
current liabilities of such Person in respect of unfunded vested benefits under
plans covered by Title IV of ERISA; (d) obligations issued for, or liabilities
incurred on the account of, such Person; (e) obligations or liabilities of such
Person arising under letters of credit, credit facilities or other acceptance
facilities; (f) obligations of such Person under any guarantees or other
agreement to become secondarily liable for any obligation of any other Person,
endorsements (other than for collection or deposit in the ordinary course of
business) and other contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person or otherwise to assure a
creditor against loss; (g) obligations of such Person secured by any Lien on any
property of such Person, whether or not the obligations have been assumed by
such Person; or (h) obligations of such Person under any interest rate or
currency exchange agreement. 

 

Debt
Service (Intermediate Mezzanine) shall
mean, with respect to any particular period of time, scheduled interest payments
under the Mezzanine Note.

 

Default shall
mean the occurrence of any event hereunder or under any other Loan Document
(Intermediate Mezzanine) which, but for the giving of notice or passage of time,
or both, would be an Event of Default.

 

Default
Rate shall
have the meaning set forth in the Note.

 

Disqualified
Transferee shall
mean any Person or its Close Affiliate that, (i) has (within the past five (5)
years) defaulted, or is now in default, beyond any applicable cure period, of
its material obligations, under any material written agreement with Mezzanine


 








5













Lender,
any Affiliate of Mezzanine Lender, or, unless approved by the Mezzanine Lender,
any other financial institution or other person providing or arranging
financing; (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 Mezzanine Lender 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 (which was not subsequently dismissed within one hundred
twenty (120) days) 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; or (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.

 

Downgrade shall
have the meaning as set forth in Section
9.3(c)
hereof.

 

Eligibility
Requirements means,
with respect to any Person, that such Person (i) has total assets (in name or
under management) in excess of $600,000,000 and (except with respect to a
pension advisory firm or similar fiduciary) capital/statutory surplus or
shareholder's equity of $250,000,000 and (ii) is regularly engaged in the
business of making or owning commercial real estate loans or operating
commercial properties.

 

Eligible
Account has the
meaning set forth in the Account Agreement (Intermediate Mezzanine).


 

Environmental
Certificate shall
have the meaning set forth in Section
12.2.1.

 

Environmental
Claim shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Environmental
Event shall
have the meaning set forth in Section
12.2.1.

 

Environmental
Indemnity (Intermediate Mezzanine) shall
mean the Environmental Indemnity, dated the date hereof, made by Guarantor in
favor of Mezzanine Lender.

 

Environmental
Law shall
have the meaning provided in the Environmental Indemnity (Intermediate
Mezzanine).

 

Environmental
Reports shall
have the meaning set forth in Section
12.1.

 








6













ERISA shall
mean the United States Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.

 

ERISA
Affiliate shall
have the meaning set forth in Section
4.1.9.

 

Event
of Default shall
have the meaning set forth in Section
17.1(a).

 

Excess
Cash Flow shall
mean " Excess Cash Flow" as defined in the Loan Agreement
(Mortgage).

 

Exculpated
Parties shall
have the meaning set forth in Section
18.1.1.

 

Excusable
Delay shall
mean a delay due to acts of god, governmental restrictions, stays, judgments,
orders, decrees, enemy actions, civil commotion, fire, casualty, strikes, work
stoppages, shortages of labor or materials or other causes beyond the reasonable
control of Mezzanine Borrower or Mortgage Borrower, but Mezzanine Borrower's or
Mortgage Borrower's lack of funds in and of itself shall not be deemed a cause
beyond the control of Mezzanine Borrower or Mortgage Borrower, as
applicable.

 

Extension
Interest Rate Cap Agreement shall
mean, following the Mezzanine Borrower's exercise of its option to extend the
Maturity Date pursuant to Section 5 of the Mezzanine Note, an Interest Rate Cap
Agreement or Agreements (together with the confirmations and schedules relating
thereto), each from an Acceptable Counterparty and satisfying the requirements
set forth on Exhibit
I hereto;
provided that, to the extent any such interest rate cap agreement does not meet
the foregoing requirements, an "Extension Interest Rate Cap Agreement" shall be
such interest rate cap agreement as may be approved by each of the Mezzanine
Lender in its sole discretion). 

 

Fiscal
Year shall
mean the period commencing on the Closing Date and ending on and including
December 31 of the calendar year in which the Closing Date occurs and thereafter
each twelve month period commencing on January 1 and ending on December 31 until
the Debt is repaid in full, or such other common fiscal year of Borrower as
Borrower may select from time to time with the prior consent of Lender, such
consent not to be unreasonably withheld.

 

GAAP shall
mean the generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the accounting profession), or in such other
statements by such entity as may be in general use by significant segments of
the U.S. accounting profession, to the extent such principles are applicable to
the facts and circumstances on the date of determination, as appropriately
modified by the Uniform System, and as further modified for purposes of
calculating Net Membership Cash Flow.

 








7













General
Partner shall
mean CNL Hotel Del Intermediate Mezz Partners GP, LLC, a Delaware limited
liability company.

 

Governmental
Authority shall
mean any court, board, agency, commission, office or other authority of any
nature whatsoever for any governmental unit (federal, state, county, district,
municipal, city or otherwise) whether now or hereafter in
existence.

 

Guarantor shall
mean, collectively, CNL Hospitality Partners, LP, a Delaware limited
partnership, and KSL DC Operating, LLC, a Delaware limited liability
company.

 

Hazardous
Materials shall
have the meaning provided in the Environmental Indemnity (Intermediate
Mezzanine).

 

Holding
Account shall
mean the "Holding Account" and various sub-accounts to the Holding Account
established pursuant to the Loan Agreement (Mortgage) as in effect on the date
hereof.

 

Impositions shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Increased
Costs shall
have the meaning set forth in Section
2.4.1.

 

Indebtedness shall
mean, at any given time, the Principal Amount, together with all accrued and
unpaid interest thereon and all other obligations and liabilities due or to
become due to Mezzanine Lender pursuant hereto, under the Mezzanine Note or in
accordance with the other Loan Documents (Intermediate Mezzanine) and all other
amounts, sums and expenses paid by or payable to Mezzanine Lender hereunder or
pursuant to the Mezzanine Note or the other Loan Documents (Intermediate
Mezzanine).

 

Indemnified
Parties shall
have the meaning set forth in Section
19.12(b).

 

Independent shall
mean, when used with respect to any Person, a Person who: (i) does not have any
direct financial interest or any material indirect financial interest in
Mortgage Borrower, Mezzanine Borrower, Senior Mezzanine Borrower, Junior
Mezzanine Borrower or in any of their Affiliates, (ii) is not connected with
Mortgage Borrower, Mezzanine Borrower, Senior Mezzanine Borrower, Junior
Mezzanine Borrower or any of their Affiliates, as an officer, employee,
promoter, underwriter, trustee, partner, member, manager, creditor, director,
supplier, customer or person performing similar functions and (iii) is not a
member of the immediate family of a Person defined in (i) or (ii)
above.

 

Independent
Architect shall
mean an architect, engineer or construction consultant selected by Mezzanine
Borrower or Mortgage Borrower, as applicable, which is Independent, licensed to
practice in the State and has at least five (5) years of architectural
experience and which is reasonably acceptable to Mezzanine Lender.

 








8













Independent
Director,
Independent
Manager,
or Independent
Member shall
mean a Person who is not and will not be while serving and has never been (i) a
member (other than an Independent Member), manager (other than an Independent
Manager), director, (other than an Independent Director), employee, attorney, or
counsel of Mezzanine Borrower, Senior Mezzanine Borrower, Junior Mezzanine
Borrower, or their Affiliates (provided that Mortgage Borrower, Mezzanine
Borrower, Senior Mezzanine Borrower, Junior Mezzanine Borrower, and each of
their respective general partners, may not have the same Independent Directors,
Independent Managers or Independent Members), (ii) in the seven (7) years prior
to the Closing Date, a customer, supplier or other Person who derives more than
1% of its purchases or revenues from its activities with Mezzanine Borrower,
Mortgage Borrower, Intermediate or their Affiliates, (iii) a direct or indirect
legal or beneficial owner in such entity or any of its Affiliates, (iv) a member
of the immediate family of any member, manager, employee, attorney, customer,
supplier or other Person referred to above, or (v) a person Controlling or under
the common Control of anyone listed in (i) through (iv) above. A Person that
otherwise satisfies the foregoing shall not be disqualified from serving as an
Independent Director or Independent Manager or Independent Member if such
individual is at the time of initial appointment, or at any time while serving
as such, is an Independent Director or Independent Manager or Independent
Member, as applicable, of a Single Purpose Entity affiliated with Mezzanine
Borrower, other than the Mortgage Borrower, Mezzanine Borrower, Senior Mezzanine
Borrower, Junior Mezzanine Borrower, or each of their respective general
partners.

 

Initial
LIBOR Cap Strike Rate shall
mean 4%.

 

Insurance
Requirements shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Interest
Determination Date shall
have the meaning set forth in the Mezzanine Note.

 

Interest
Period shall
have the meaning set forth in the Mezzanine Note.

 

Interest
Rate Cap Agreement (Intermediate Mezzanine) shall
mean an Interest Rate Agreement or Agreements (together with the confirmation
and schedules relating thereto), or, with Mezzanine Lender's prior written
consent (which shall not be unreasonably withheld or delayed), a swap or other
interest rate hedging instrument, each between a Counterparty and Mezzanine
Borrower obtained by Mezzanine Borrower and collaterally assigned to Mezzanine
Lender pursuant to this Agreement, and each satisfying the requirements set
forth in Exhibit
I and, in
the case of a swap or other interest rate hedging agreement consented to by
Mezzanine Lender, any additional requirements of the Rating Agencies).


 

Intermediate
Mezzanine Account shall
mean account number 722386.1 at LaSalle Bank National Association.

 








9













Junior
Mezzanine Account shall
mean an account to be established at LaSalle Bank National Association in the
event the Junior Mezzanine Account is funded.

 

Junior
Mezzanine Borrower shall
mean CNL Hotel Del Junior Mezz Partners, LP, a Delaware limited
partnership.

 

Junior
Mezzanine Lender shall
mean German American Capital Corporation, a Maryland corporation, its successors
and assigns.

 

Junior
Mezzanine Loan shall
mean the $60,000,000 mezzanine loan from Junior Mezzanine Lender to the Junior
Mezzanine Borrower, to be funded on or after the date hereof, that will be
evidenced and secured by the Junior Mezzanine Loan Documents.

 

Junior
Mezzanine Loan Agreement shall
mean that certain Mezzanine Loan and Security Agreement (Junior Mezzanine), to
be funded on or after the date hereof, be-tween Junior Mezzanine Borrower, as
borrower, and Junior Mezzanine Lender, as lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to
time.

 

Junior
Mezzanine Loan Default Notice shall
mean a notice from Junior Mezzanine Lender (upon which Lender may conclusively
rely without any inquiry into the validity thereof) that an "Event of Default"
has occurred and is continuing under any of the Intermediate Junior Loan
Documents.

 

Junior
Mezzanine Loan Default Revocation Notice shall
shall have the meaning set forth in Section
3.1.6(f).

 

Late
Payment Charge shall
have the meaning set forth in Section
2.2.3.

 

Lease shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Legal
Requirements shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

LIBOR shall
have the meaning set forth in the Mezzanine Note.

 

LIBOR
Margin shall
have the meaning set forth in the Mezzanine Note.

 

LIBOR
Rate shall
have the meaning set forth in the Mezzanine Note.

 

Lien shall
mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment,
security interest, or any other encumbrance or charge on or affecting Mortgage
Borrower, Mezzanine Borrower, the Collateral, the Property, any portion thereof
or any interest therein, including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and the filing of mechanic's, materialmen's and other similar liens
and encumbrances.

 








10













Loan shall
mean the loan in the amount of $20,000,000 made by Mezzanine Lender to Mezzanine
Borrower pursuant to this Agreement.

 

Loan
(Mortgage) or Mortgage Loan shall
mean the loan in the amount of $230,000,000 made by Mortgage Lender to Mortgage
Borrower pursuant to the Loan Agreement (Mortgage).

 

Loan
Agreement (Mortgage) shall
mean the Loan and Security Agreement, dated as of the date hereof, between
Mortgage Borrower, as borrower, and Mortgage Lender, as lender.

 

Loan
Documents (Intermediate Mezzanine) shall
mean, collectively, this Agreement, the Mezzanine Note, the Account Agreement
(Intermediate Mezzanine), the Recourse Guaranty (Intermediate Mezzanine), the
Environmental Indemnity (Intermediate Mezzanine) and the Pledge and any and all
other agreements, instruments or documents executed by Mezzanine Borrower (or
another Person) evidencing, securing or delivered in connection with the Loan
and the transactions contemplated thereby, including, without limitation, any
certificates or representations delivered by or on behalf of Mezzanine Borrower,
any Affiliate of Mezzanine Borrower, Manager, or any Affiliate of Manager
(including, without limitation, any certificates in connection with any legal
opinions delivered on the date hereof).

 

Loan
Documents (Mortgage) shall
mean, collectively, the Loan Agreement (Mortgage), the Mortgage Note, the
Security Instrument, the Assignment of Leases, the Trademark Security Agreement
(Mortgage), the Environmental Indemnity (Mortgage), the Assignment of Management
Agreement (Mortgage), the Account Agreement (Mortgage), the Recourse Guaranty
(Mortgage) and all other documents executed and/or delivered by Mortgage
Borrower in connection with the Loan (Mortgage) including any certifications or
representations delivered by or on behalf of Mortgage Borrower, any Affiliate of
Mortgage Borrower, Manager, or any Affiliate of the Manager (including, without
limitation, any certificates in connection with any legal opinions delivered on
the date hereof), together with all of the Accommodation Security Documents
executed by the Operating Lessee. 

 

Low
DSCR Period shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Management
Agreement shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Management
Control shall
mean, with respect to any direct or indirect interest in the Mortgage Borrower
or the Property (not including Manager under an Approved Management Agreement),
the power and authority to make and implement or cause to be made and
implemented all material decisions with respect to the operation, management,
financing and disposition of the specified interest.

 








11













Management
Fee shall
mean an amount equal to the monthly property management fees payable to the
Manager pursuant to the terms of the Management Agreement for management
services, the Group Services Fee (including, but not limited to, the Sales and
Marketing Group Services Expense payable monthly to Manager equal to up to one
percent (1%) of Hotel Revenues), incentive management fees and any other fees
described in the Management Agreement, and any allocated franchise
fees.

 

Manager
shall
mean KSL DC Management LLC, or any replacement "Manager" appointed in accordance
with Section
5.2.14
hereof.

 

Manager
Accounts shall
mean the "Bank Accounts" (as defined in the Management Agreement) maintained by
Manager in the name of Mortgage Borrower or Operating Lessee with respect to the
Property and in accordance with the terms of each Management
Agreement.

 

Material
Adverse Effect shall
mean any event or condition that has a material adverse effect on (i) the
Property taken as a whole, (ii) the use, operation, or value of the Property,
(iii) the business, profits, operations or financial condition of Mortgage
Borrower or Mezzanine Borrower, (iv) the ability of Mezzanine Borrower to repay
the principal and interest of the Loan as it becomes due or to satisfy any of
Mezzanine Borrower's obligations under the Loan Documents (Intermediate
Mezzanine), (v) the ability of Mortgage Borrower to repay the principal and
interest of the Loan (Mortgage) as it becomes due or to satisfy any of Mortgage
Borrower's obligations under the Loan Documents (Mortgage), (vi) the ability of
Senior Mezzanine Borrower to repay the principal and interest of the Senior
Mezzanine Loan as it becomes due or to satisfy any of Senior Mezzanine
Borrower's obligations under the Senior Mezzanine Loan Documents, (vii) the
Collateral taken as a whole or (viii) the priority of the Liens in favor of
Mezzanine Lender.

 

Material
Lease shall
mean any Lease (a) demising a premises within the Property that is more than
10,000 net rentable square feet or (b) that is for a term equal to or greater
than sixty (60) months.

 

Maturity
Date shall
have the meaning set forth in the Mezzanine Note.

 

Maturity
Date Payment shall
have the meaning set forth in the Mezzanine Note.

 

Maximum
Legal Rate shall
mean the maximum non-usurious interest rate, if any, that at any time or from
time to time may be contracted for, taken, reserved, charged or received on the
indebtedness evidenced by the Mezzanine Note and as provided for herein or the
other Loan Documents (Intermediate Mezzanine), under the laws of such state or
states whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.

 

Maximum
Pay Rate shall
mean, (A) the Initial LIBOR Cap Strike Rate through the Initial Maturity Date
and (B) during the term of each Extension Option (as 

 








12













defined
in the Mezzanine Note), the lesser of (i) the product of (x) 6% and (y) a
fraction, the numerator of which is trailing twelve month Net Operating Income
as of the end of the Initial Maturity Date (or First Extended Maturity Date) and
the denominator of which is Closing Date NOI and (ii) the rate, which when added
to the average of the LIBOR Margin (Mortgage) and the LIBOR Margin applicable to
each of the Mezzanine Loans (such average weighted to reflect the size of the
associated Loan or Mezzanine Loan, as applicable, as a percentage of the total
combined outstanding principal balance of the Loan and Mezzanine Loans), equals
10.50%.

 

Mezzanine
Borrower has the
meaning set forth in the first paragraph of this Agreement.

 

Mezzanine
Borrower's Account shall
mean following account, or such other account with any Person subsequently
identified in a written notice from Mezzanine Borrower to Mezzanine Lender,
which Mezzanine Borrower's Account shall be under the sole dominion and control
of Mezzanine Borrower:

 

                    Bank: Bank of
America, Los Angeles, CA

                    ABA#:
121000358

                    Attention: Haik
Melkonyan

                    Account Name:
Concentration Account 

                    Account Number:
12355-57180

 

Mezzanine
Debt Service Reserve Account shall
have the meaning set forth in Section
3.1.1.

 

Mezzanine
Lender shall
have the meaning set forth in the first paragraph of this
Agreement.

 

Mezzanine
Lender Monthly Debt Service Notice Letter shall
have the meaning set forth in Section
3.1.6(e).

 

Mezzanine
Note shall
mean that certain Mezzanine Note (Intermediate Mezzanine), dated as of the date
hereof in the principal amount of TWENTY MILLION DOLLARS ($20,000,000), made by
Mezzanine Borrower in favor of Mezzanine Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to
time.

 

Mortgage
Borrower shall
mean CNL Hotel Del Partners, LP, a Delaware limited partnership.

 

Mortgage
Borrower General Partner shall
mean CNL Hotel Del Partners GP, LLC, a Delaware limited liability company, the
general partner of Mortgage Borrower.

 

Mortgage
Default shall
have the meaning ascribed to "Default" in the Loan Agreement
(Mortgage).

 








13













Mortgage
Event of Default shall
have the meaning ascribed to "Event of Default" in the Loan Agreement
(Mortgage). 

 

Mortgage
Lender shall
mean German American Capital Corporation, its successors and
assigns.

 

Mortgage
Loan shall
mean the loan in the amount of $230,000,000 made by Mortgage Lender to Mortgage
Borrower pursuant to the Loan Agreement (Mortgage).

 

Mortgage
Note shall
have the meaning ascribed to "Note" in the Loan Agreement
(Mortgage).

 

Net
Excess Cash Flow shall
have the meaning set forth in Section
3.1.6(a).

 

Net
Excess Cash Flow Commencement Date shall
have the meaning set forth in Section
3.1.6(a).

 

Net
Membership Cash Flow shall
mean the net cash flow (whether positive or negative) consisting of the
following, to the extent not otherwise accounted for in Hotel Revenue or
Operating Expenses in accordance with GAAP: (a) cash received from sales of new
club memberships and conversions of existing club memberships to new club
memberships (including deposits and ongoing dues relating thereto), plus (b)
cash principal payments received on membership notes evidencing the financing of
the purchase of new club memberships or the conversion of existing club
memberships, less (c) cash paid to cancel or recall existing club memberships
and refunds of new club membership sales. 

 

Net
Operating Income shall
mean, for any specified period, the excess of Operating Income over Operating
Expenses for the trailing twelve (12) month period.

 

Non-Consolidation
Opinion shall
have the meaning provided in Section
2.5.5.

 

OFAC
List means
the list of specially designated nationals and blocked persons subject to
financial sanctions that is maintained by the U.S. Treasury Department, Office
of Foreign Assets Control and accessible through the internet website
www.treas.gov/ofac/t11sdn.pdf.

 

Notes shall
mean, collectively, the Mortgage Note and the Mezzanine Note.

 

Obligations shall
mean, collectively, the Obligations (Intermediate Mezzanine), Obligations
(Senior Mezzanine), Obligations (Junior Mezzanine), and the Obligations
(Mortgage).

 

Obligations
(Intermediate Mezzanine) shall
mean all indebtedness, obligations and liabilities of Mezzanine Borrower,
Guarantor and General Partner to Mezzanine Lender, under this Agreement or any
of the other Loan Documents (Intermediate Mezzanine) or in respect of the Loan
or the Mezzanine Note, or other instrument at any time 

 








14













evidencing
any of the foregoing, whether existing on the date of this Agreement or arising
or incurred hereafter, direct or indirect, joint or several, absolute or
continent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise.

 

Obligations
(Junior Mezzanine) shall
have the meaning set forth in the Junior Mezzanine Loan Agreement.

 

Obligations
(Mortgage) shall
have the meaning ascribed to "Obligations" in the Loan Agreement
(Mortgage).

 

Obligations
(Senior Mezzanine) shall
have the meaning set forth in the Senior Mezzanine Loan Agreement.

 

Officer's
Certificate shall
mean a certificate executed by an authorized signatory of Mezzanine Borrower
that is familiar with the financial condition of Mezzanine Borrower, the
Mortgage Borrower and the operation of the Property or the particular matter
which is the subject of such Officer's Certificate.

 

Operating
Expenses shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Operating
Income shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Operating
Lessee shall
mean Hotel Del Coronado, LP, a Delaware limited partnership.

 

Opinion
of Counsel shall
mean opinions of counsel of law firm(s) licensed to practice in California, New
York, and Delaware selected by Mezzanine Borrower and reasonably acceptable to
Mezzanine Lender.

 

Other
Charges shall
mean maintenance charges, impositions other than Impositions, and any other
charges, including, without limitation, vault charges and license fees for the
use of vaults, chutes and similar areas adjoining the Property, now or hereafter
levied or assessed or imposed against the Property or any part thereof by any
Governmental Authority, other than those required to be paid by a Tenant
pursuant to its respective Lease.

 

Other
Taxes shall
have the meaning set forth in Section
2.4.3.

 

Payment
Date shall
have the meaning set forth in the Mezzanine Note.

 

Permitted
Borrower Transferee shall
mean any entity (i) that is experienced in owning and operating (including
acting as asset manager of) properties similar to the Property, (ii) that either
(a) has a net worth together with its Close Affiliates, as of a date no more
than six (6) months prior to the date of the transfer of at least $300 Million
(exclusive of the Property) and, immediately prior to such transfer, controls,
together with its Close 

 








15













Affiliates
real estate equity assets of at least $1 Billion or (b) together with its Close
Affiliates owns or has under management or acts as the exclusive fund manager or
investment advisor, at the time of the transfer, not fewer than 6 luxury resort
hotels (excluding the Property) containing not fewer than 3,000 hotel rooms in
the aggregate and (iii) that is not a Disqualified Transferee.

 

Permitted
Debt shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Permitted
Debt (Intermediate Mezzanine) shall
mean the Mezzanine Note and other obligations, indebtedness and liabilities
specifically provided for in any Loan Document (Intermediate Mezzanine) and
secured by this Agreement and the Pledge and the other Loan Documents
(Intermediate Mezzanine).

 

Permitted
Encumbrances shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Permitted
Fund Manager means
any Person that on the date of determination is (i) a nationally-recognized
manager of investment funds investing in debt or equity interests relating to
commercial real estate, (ii) investing through a fund with committed capital of
at least $250,000,000 and (iii) not subject to a bankruptcy
proceeding.

 

Permitted
Investments shall
have the meaning set forth in the Account Agreement (Intermediate
Mezzanine).

 

Permitted
Loan Amendment shall
have the meaning set forth in Section
5.1.18(b).

 

Permitted
Mezzanine Transfer shall
mean (a) a pledge of direct or indirect equity interests in Mezzanine Borrower
or Junior Mezzanine Borrower to secure the Junior Mezzanine Loan or Revolving
Credit Loan, and (b) any foreclosure (or transfer in lieu thereof) in respect of
the Junior Mezzanine Loan or Revolving Credit Loan, provided that the
acquirer at foreclosure (or transfer in lieu thereof) (i) shall be a Qualified
Transferee or (ii) shall have received Mezzanine Lender's prior written consent
prior to such foreclosure (or such transfer in lieu of foreclosure), subject in
the case of each of clauses (i) and (ii) to the requirement that the Junior
Mezzanine Borrower and Revolving Credit Borrower deliver to Mezzanine Lender,
the Mortgage Lender and the Rating Agencies a nonconsolidation opinion
satisfactory to the Rating Agencies with respect to any Person having more than
a 49% direct or indirect equity interest (either individually or together with
any interests held by an affiliate of such Person) in Borrower.

 

Person shall
mean any individual, corporation, partnership, joint venture, limited liability
company, estate, trust, unincorporated association, any federal, state, county
or municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the
foregoing.

 








16













Physical
Conditions Report shall
mean with respect to the Property, collectively, the (i) seismic report and (ii)
structural engineering report (prepared by an Independent Architect), both of
which have been (a) addressed to Mezzanine Lender, (b) prepared based on a scope
of work determined by Mortgage Lender in Mortgage Lender’s reasonable
discretion, and (c) in form and content acceptable to Mortgage Lender in
Mortgage Lender’s reasonable discretion, together with any amendments or
supplements thereto.

 

Plan shall
have the meaning set forth in Section
4.1.9(a).

 

Pledge shall
mean that certain Pledge and Security Agreement (Intermediate Mezzanine), dated
as of the date hereof, from Mezzanine Borrower to Mezzanine Lender pledging (i)
Mezzanine Borrower's 99.5% direct partnership interests in Mortgage Borrower and
(ii) Mezzanine Borrower's 100% direct membership interest in Mortgage Borrower
General Partner.

 

Pledged
Collateral shall
have the meaning set forth in the Pledge.

 

Pre-approved
Manager shall
mean any entity set forth on Schedule
IV hereof
(which schedule is identical to the schedule of "Qualified Managers" contained
in the Management Agreement).

 

Pre-approved
Transferee shall
mean any of the entities set forth on Schedule
III hereof,
or any Close Affiliates thereof, provided any of the foregoing entities or their
Close Affiliates shall only be a "Pre-approved Transferee" if (i) such entity
continues to be Controlled by substantially the same Persons Controlling such
entity as of the Closing Date or if such Pre-approved Transferee is a publicly
traded company, such Pre-approved Transferee continues to be publicly traded on
an established securities market, (ii) there has been no material adverse change
in the financial condition or results of operations of such entity since the
Closing Date, (iii) such entity is not a Disqualified Transferee and (iv) if
such entity as of the Closing Date is rated (a) "Investment Grade," there has
been no deterioration in such entity's long-term or short-term credit rating (if
any) since the Closing Date below "BBB-" or (b) below "Investment Grade," there
has been no deterioration in such entity's long-term or short-term credit rating
(if any) since the Closing Date.

 

Prepayment
Fee shall
have the meaning set forth in the Mezzanine Note.

 

Principal
Amount shall
have the meaning set forth in the Mezzanine Note.

 

Proceeds shall
have the meaning set forth in the Loan Agreement (Mortgage)

 

Prohibited
Loan Amendment shall
have the meaning specified in Section
5.1.18(b).

 

Prohibited
Person means
any Person identified on the OFAC List or any other Person with whom a U.S.
Person may not conduct business or transactions by 

 








17













prohibition
of Federal law or Executive Order of the President of the United States of
America.

 

Property shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Qualified
Transferee shall
mean one or more of the following:

 

(i) a real
estate investment trust, bank, saving and loan association, investment bank,
insurance company, trust company, commercial credit corporation, pension plan,
pension fund or pension advisory firm, mutual fund, government entity or plan
that satisfies the Eligibility Requirements;

 

(ii) an
investment company, money management firm or "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, as amended, or
an institutional "accredited investor" within the meaning of Regulation D under
the Securities Act of 1933, as amended, that satisfies the Eligibility
Requirements;

 

(iii) an
institution substantially similar to any of the foregoing entities described in
clauses (i) or (ii) that satisfies the Eligibility Requirements;

 

(iv) any
entity Controlled (and only so long as such entity continues at all times to be
Controlled) by any of the entities described in clauses (i) or (iii)
above;

 

(v) an
investment fund, limited liability company, limited partnership or general
partnership where a Permitted Fund Manager or an entity that is otherwise a
Qualified Transferee under clauses (i), (ii), (iii) or (iv) of this definition
acts as the general partner, managing member or fund manager and at least 50% of
the equity interests in such investment vehicle are owned, directly or
indirectly, by one or more entities that are otherwise Qualified Transferees
under clauses (i), (ii), (iii) or (iv) of this definition.

 

Rate
Cap Collateral (Intermediate Mezzanine) shall
have the meaning set forth in Section
9.2.


 

Rating
Agencies shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Rating
Agency Confirmation shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Recourse
Guaranty (Mortgage) shall
mean that certain Guaranty of Recourse Obligations, dated as of the date hereof,
by Guarantor in favor of Mortgage Lender, as the same may be amended,
supplemented, restated or otherwise modified from time to time.

 

Recourse
Guaranty (Intermediate Mezzanine) shall
mean that certain Guaranty of Recourse Obligations of Mezzanine Borrower, dated
as of the date hereof, by 

 








18













Guarantor
in favor of Mezzanine Lender, as the same may be amended, supplemented, restated
or otherwise modified from time to time.

 

Register shall
have the meaning set forth in Section
15.4.

 

Regulatory
Change shall
mean any change after the date of this Agreement in federal, state or foreign
laws or regulations or the adoption or the making, after such date, of any
interpretations, directives or requests applying to Mezzanine Lender, or any
Person Controlling Mezzanine Lender or to a class of banks or companies
Controlling banks of or under any federal, state or foreign laws or regulations
(whether or not having the force of law) by any court or Governmental Authority
or monetary authority charged with the interpretation or administration
thereof.

 

Replacement
Interest Rate Cap Agreement (Intermediate Mezzanine) shall
mean, in connection with a replacement of an Interest Rate Cap Agreement
following a Downgrade of the Counterparty thereto, an interest rate cap
agreement (together with the confirmation and schedules relating thereto) from
an Acceptable Counterparty and satisfying the requirements set forth on
Exhibit
I hereto;
provided that to the extent any such interest rate cap agreement does not meet
the foregoing requirements a "Replacement Interest Cap Agreement (Intermediate
Mezzanine)" shall be such interest rate cap agreement approved in writing by
Mezzanine Lender.

 

Revolving
Credit Borrower shall
mean CNL KSL Partners, LP, a Delaware limited partnership.

 

Revolving
Credit Lender shall
mean Deutsche Bank Trust Company Americas, its successors and
assigns.

 

Revolving
Credit Loan shall
mean the $10,000,000 revolving credit loan from Revolving Credit Lender to the
Revolving Credit Borrower that is evidenced and secured by the Revolving Credit
Loan Documents.

 

Revolving
Credit Loan Documents shall
mean, collectively, the Revolving Credit Agreement, the Revolving Credit Note
and any and all other agreements, instruments or documents executed by Revolving
Credit Borrower evidencing, securing or delivered in connection with the
Revolving Credit Loan and the transactions contemplated thereby, including,
without limitation, officer's certificates.

 

Revolving
Credit Note shall
mean that certain Note, dated the date hereof, made by Revolving Credit
Borrower, as maker, in favor of Revolving Credit Lender, as payee, in the
principal amount of $10,000,000.

 

S&P shall
mean Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc.

 








19













Securitization shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Senior
Mezzanine Account shall
mean account number 722385.1 at LaSalle Bank National Association.

 

Senior
Mezzanine Borrower shall
mean CNL Hotel Del Senior Mezz Partners, LP, a Delaware limited
partnership.

 

Senior
Mezzanine Lender shall
mean German American Capital Corporation, a Maryland corporation, its successors
and assigns.

 

Senior
Mezzanine Loan shall
mean the $90,000,000 mezzanine loan from Senior Mezzanine Lender to the Senior
Mezzanine Borrower that is evidenced and secured by the Senior Mezzanine Loan
Documents.

 

Senior
Mezzanine Loan Agreement shall
mean the Mezzanine Loan and Security Agreement, dated as of the date hereof,
between Senior Mezzanine Borrower, as borrower and Senior Mezzanine Lender, as
lender.

 

Senior
Mezzanine Loan Agreement shall
mean that certain Mezzanine Loan and Security Agreement (Senior Mezzanine),
dated as of the date hereof, between Senior Mezzanine Borrower, as borrower, and
Senior Mezzanine Lender, as lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

 

Senior
Mezzanine Loan Default Notice shall
mean a notice from Senior Mezzanine Lender (upon which Lender may conclusively
rely without any inquiry into the validity thereof) that an "Event of Default"
has occurred and is continuing under any of the Senior Mezzanine Loan
Documents.

 

Senior
Mezzanine Loan Default Revocation Notice shall
shall have the meaning set forth in Section
3.1.6(f).

 

Senior
Mezzanine Loan Documents shall
mean, collectively, the Senior Mezzanine Loan Agreement, the Senior Mezzanine
Note, the Senior Mezzanine Pledge and any and all other agreements, instruments
or documents executed by Senior Mezzanine Borrower evidencing, securing or
delivered in connection with the Senior Mezzanine Loan and the transactions
contemplated thereby, including, without limitation, officer's
certificates.

 

Senior
Mezzanine Note shall
mean that certain Mezzanine Note (Senior Mezzanine), dated the date hereof, made
by Senior Mezzanine Borrower, as maker, in favor of Senior Mezzanine Lender, as
payee, in the principal amount of $90,000,000.

 

Senior
Mezzanine Pledge shall
mean that certain Pledge and Security Agreement (Senior Mezzanine), dated as of
the date hereof, from Senior Mezzanine Borrower to Senior Mezzanine
Lender.

 








20













Servicer shall
mean such Person designated in writing with an address for such Person by
Mezzanine Lender, in its sole discretion, to act as Mezzanine Lender's agent
hereunder with such powers as are specifically delegated to the Servicer by
Mezzanine Lender, whether pursuant to the terms of this Agreement, the Account
Agreement (Intermediate Mezzanine) or otherwise, together with such other powers
as are reasonably incidental thereto.

 

Single
Purpose Entity shall
mean a Person, other than an individual, which (i) is formed or organized solely
for the purpose of owning, holding, developing, using, operating and financing
the Property, (ii) does not engage in any business unrelated to the Property and
the ownership, development, use, operation and financing thereof, (iii) does not
have any assets other than those related to its interest in the Property or the
operation, management and financing thereof or any indebtedness other than the
Permitted Debt, (iv) maintains its own separate books and records and its own
accounts, in each case which are separate and apart from the books and records
and accounts of any other Person, (v) holds itself out as being a Person,
separate and apart from any other Person, (vi) does not and will not commingle
its funds or assets with those of any other Person, (vii) conducts its own
business in its own name; (viii) maintains separate financial statements, (ix)
pays its own liabilities out of its own funds, (x) observes all partnership,
corporate or limited liability company formalities, as applicable, (xi) pays the
salaries of its own employees, if any, and maintains a sufficient number of
employees, if any, in light of its contemplated business operations, (xii) does
not guarantee or otherwise obligate itself with respect to the debts of any
other Person or hold out its credit as being available to satisfy the
obligations of any other Person, (xiii) does not acquire obligations or
securities of its partners, members or shareholders, (xiv) allocates fairly and
reasonably shared expenses, including, without limitation, any overhead for
shared office space, if any, (xv) uses separate stationary, invoices, and
checks, (xvi) maintains an arms-length relationship with its Affiliates, (xvii)
does not pledge its assets for the benefit of any other Person (other than as
permitted under clauses (a) and (d) of the definition of Permitted Encumbrances)
or make any cash loans or advances to any other Person, (xviii) uses
commercially reasonable efforts to correct any known misunderstanding regarding
its separate identity, and (xix) maintains adequate capital in light of its
contemplated business operations. In addition, if such Person is a partnership,
(1) all general partners of such Person shall be Single Purpose Entities; and
(2) if such Person has more than one general partner, then the organizational
documents shall provide that such Person shall continue (and not dissolve) for
so long as a solvent general partner exists. In addition, if such Person is a
corporation, then, at all times: (a) such Person shall have at least two (2)
Independent Directors and (b) the board of directors of such Person may not take
any action requiring the unanimous affirmative vote of 100% of the members of
the board of directors unless all of the directors, including the Independent
Directors, shall have participated in such vote. In addition, if such Person is
a limited liability company, (a) such Person shall have at least two (2)
Independent Managers or Independent Members, (b) if such Person is managed by a
board of managers, the board of managers of such Person may not take any action
requiring the unanimous affirmative vote of 100% of the members of the board of
managers unless all of the managers, including the Independent Managers, shall
have participated in such vote, (c) if such Person is not managed by a board of
managers, the 

 








21













members
of such Person may not take any action requiring the affirmative vote of 100% of
the members of such Person unless all of the members, including the Independent
Members, shall have participated in such vote, (d) each managing member shall be
a Single Purpose Entity and (e) its articles of organization, certificate of
formation and/or operating agreement, as applicable, shall provide that until
all of the Indebtedness and Obligations are paid in full such entity will not
dissolve. In addition, the organizational documents of such Person shall provide
that such Person (1) without the unanimous consent of all of the partners,
directors or members, as applicable, shall not with respect to itself or to any
other Person in which it has a direct or indirect legal or beneficial interest
(a) seek or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian or other similar official for the benefit of
the creditors of such Person or all or any portion of such Person's properties,
or (b) take any action that might cause such Person to become insolvent,
petition or otherwise institute insolvency proceedings or otherwise seek any
relief under any laws relating to the relief from debts or the protection of
debtors generally, (2) will maintain its books, records, resolutions and
agreements as official records, (3) will hold its assets in its own name, (4)
will maintain its financial statements, accounting records and other
organizational documents, books and records separate and apart from any other
Person, (5) will not identify its partners, members or shareholders, or any
Affiliates of any of them as a division or part of it, (6) will maintain an
arms-length relationship with its Affiliates, and (7) will not enter into or be
a party to any transaction with its partners, members, shareholders, or its
Affiliates except in the ordinary course of business and on terms which are
intrinsically fair and are no less favorable to it than would be obtained in a
comparable arms-length transaction with a third party. Notwithstanding the
foregoing, Mezzanine Lender hereby consents to General Partner, CNL Hotel Del
Senior Mezz Partners GP, LLC, and CNL Hotel Del Junior Mezz Partners GP, LLC,
having only one (1) Independent Director on its board of directors, and CNL KSL
Partners GP, LLC having no Independent Directors on its board of
directors.

 

SPE
Entity shall
mean Mezzanine Borrower, General Partner, Mortgage Borrower, Senior Mezzanine
Borrower, Junior Mezzanine Borrower, Revolving Credit Borrower, Mortgage
Borrower General Partner, CNL Hotel Del Senior Mezz Partners GP, LLC, CNL Hotel
Del Junior Mezz Partners GP, LLC, CNL Hotel Del Tenant Corp., and Operating
Lessee which are each required to be a Single Purpose Entity.

 

Special
Taxes shall
mean any and all present or future taxes, levies, imposts, deductions, charges
or withholdings, or any liabilities with respect thereto, including those
arising after the date hereof as result of the adoption of or any change in law,
treaty, rule, regulation, guideline or determination of a Governmental Authority
or any change in the interpretation or application thereof by a Governmental
Authority but excluding, in the case of Mezzanine Lender, such taxes (including
income taxes, franchise taxes and branch profit taxes) as are imposed on or
measured by Mezzanine Lender's net income by the United States of America or any
Governmental Authority of the jurisdiction under the laws under which Mezzanine
Lender is organized or maintains a lending office.

 

State shall
mean the State in which the Property or any part thereof is
located.

 

Sub-Account(s) shall
have the meaning set forth in Section
3.1.1.

 








22













Taking shall
have the meaning set forth in Loan Agreement (Mortgage).

 

Tenant shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Title
Company shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Title
Policy (Mortgage) shall
have the meaning ascribed to "Title Policy" in the Loan Agreement
(Mortgage).

 

Transfer shall
mean to, directly or indirectly, sell, assign, convey, mortgage, transfer,
pledge, hypothecate, encumber, grant a security interest in, exchange or
otherwise dispose of any beneficial interest or grant any option or warrant with
respect to, or where used as a noun, a direct or indirect sale, assignment,
conveyance, transfer, pledge or other disposition of any beneficial interest by
any means whatsoever whether voluntary, involuntary, by operation of law or
otherwise.

 

UCC or
Uniform
Commercial Code shall
mean the Uniform Commercial Code as in effect in the State.

 

Uniform
System shall
have the meaning set forth in the Loan Agreement (Mortgage).

 

Section
1.2  Principles
of Construction

 

All
references to sections and schedules are to sections and schedules in or to this
Agreement unless otherwise specified. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP as modified by the
Uniform System. When used herein, the term "financial statements" shall include
the notes and schedules thereto. Unless otherwise specified herein or therein,
all terms defined in this Agreement shall have the definitions given them in
this Agreement when used in any other Loan Document (Intermediate Mezzanine) or
in any certificate or other document made or delivered pursuant thereto. All
uses of the word "including" shall mean including, without limitation unless the
context shall indicate otherwise. Unless otherwise specified, the words hereof,
herein and hereunder and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise specified, all meanings attributed to defined
terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined.

 


	II.  	
      GENERAL
      TERMS




 

Section
2.1  Loan;
Disbursement to Mezzanine Borrower.

 

2.1.1  The
Loan

 








23













Subject
to and upon the terms and conditions set forth herein, Mezzanine Lender hereby
agrees to make and Mezzanine Borrower hereby agrees to accept the Loan on the
Closing Date.

 

2.1.2  Disbursement
to Borrower

 

Mezzanine
Borrower may request and receive only one borrowing hereunder in respect of the
Loan and any amount borrowed and repaid hereunder in respect of the Loan may not
be reborrowed. Mezzanine Borrower acknowledges and agrees that the full proceeds
of the Loan have been disbursed by Mezzanine Lender to Mezzanine Borrower on the
Closing Date.

 

2.1.3  The
Mezzanine Note, Pledge and Loan Documents

 

. The
Loan shall be evidenced by the Mezzanine Note and secured by the Pledge, this
Agreement and the other Loan Documents (Intermediate Mezzanine).

 

2.1.4  Use
of Proceeds

 

Mezzanine
Borrower shall use the proceeds of the Loan to repay the existing mezzanine
loans and as an equity contribution to Senior Mezzanine Borrower, to be used as
an equity contribution to Mortgage Borrower, to be used by Mortgage Borrower
solely to repay and discharge any existing mezzanine loans and mortgage loans
secured by the Property, to make cash distributions to its partners and as
otherwise set forth on the Loan closing statement executed by Mortgage Borrower,
Mezzanine Borrower, Senior Mezzanine Borrower, and Junior Mezzanine Borrower at
closing.

 

Section
2.2  Interest;
Loan Payments; Late Payment Charge.

 

2.2.1  Payment
of Principal and Interest.

 

(i)  Except as
set forth in Section
2.2.1(ii),
interest shall accrue on the Principal Amount as set forth in the Mezzanine
Note.

 

(ii)  Upon the
occurrence and during the continuance of an Event of Default and from and after
the Maturity Date if the entire Principal Amount is not repaid on the Maturity
Date, interest on the outstanding principal balance of the Loan and, to the
extent permitted by law, overdue interest and other amounts due in respect of
the Loan shall accrue at the Default Rate calculated from the date such payment
was due without regard to any grace or cure periods contained herein. Interest
at the Default Rate shall be computed from the occurrence of the Event of
Default until the actual receipt and collection of the Indebtedness (or that
portion thereof that is then due). To the extent permitted by applicable law,
interest at the Default Rate shall be added to the Indebtedness, shall itself
accrue interest at the same rate as the Loan and shall be secured by this
Agreement and the Pledge. This paragraph shall not be construed as an agreement
or privilege to extend the date of the payment of the Indebtedness, nor as a
waiver of any other right or remedy accruing to 

 








24













Mezzanine
Lender by reason of the occurrence of any Event of Default, and Mezzanine Lender
retains its rights under the Mezzanine Note to accelerate and to continue to
demand payment of the Indebtedness upon the happening of any Event of Default.


 

2.2.2  Method
and Place of Payment.


 

(a)  On each
Payment Date, Mezzanine Borrower shall pay or cause to be paid to Mezzanine
Lender interest accruing pursuant to the Mezzanine Note for the entire Interest
Period during which said Payment Date shall occur.

 

(b)  All
amounts advanced by Mezzanine Lender pursuant to the applicable provisions of
the Loan Documents (Intermediate Mezzanine), other than the Principal Amount,
together with any interest at the Default Rate or other charges as provided
therein, shall be due and payable hereunder as provided in the Loan Documents
(Intermediate Mezzanine). In the event any such advance or charge is not so
repaid by Mezzanine Borrower, Mezzanine Lender may, at its option and upon
notice to Mezzanine Borrower, first apply any payments received under the
Mezzanine Note to repay such advances, together with any interest thereon, or
other charges as provided in the Loan Documents (Intermediate Mezzanine), and
the balance, if any, shall be applied in payment of any installment of interest
or principal then due and payable.

 

(c)  The
Maturity Date Payment shall be due and payable in full on the Maturity Date.


 

2.2.3  Late
Payment Charge

 

If any
interest payment due under the Loan Documents (Intermediate Mezzanine) is not
paid by Mezzanine Borrower within five (5) days after the date on which it is
due (or, if such fifth (5th) day is
not a Business Day, then the Business Day immediately preceding such day) on or
prior to the date on which it is due, Mezzanine Borrower shall pay to Mezzanine
Lender upon demand an amount equal to the lesser of three percent (3%) of such
unpaid sum or the Maximum Legal Rate (the Late
Payment Charge) in
order to defray the expense incurred by Mezzanine Lender in handling and
processing such delinquent payment and to compensate Mezzanine Lender for the
loss of the use of such delinquent payment. Any such amount shall be secured by
this Agreement, the Pledge and the other Loan Documents (Intermediate Mezzanine)
to the extent permitted by applicable law. Mezzanine Borrower acknowledges and
agrees that the five day grace period with respect to the applicability of the
Late Payment Charge (i) shall only apply to Mezzanine Borrower's first failure
to make a monthly interest payment in any calendar year and (ii) shall not
constitute a payment grace period and shall in no way limit Mezzanine Lender's
rights under Article
XVII.

 

2.2.4  Usury
Savings

 

This
Agreement and the Mezzanine Note are subject to the express condition that at no
time shall Mezzanine Borrower be obligated or required to pay interest


 








25













on the
Principal Amount of the Loan at a rate which could subject Mezzanine Lender to
either civil or criminal liability as a result of being in excess of the Maximum
Legal Rate. If, by the terms of this Agreement or the other Loan Documents
(Intermediate Mezzanine), Mezzanine Borrower is at any time required or
obligated to pay interest on the Principal Amount due under the Mezzanine Note
at a rate in excess of the Maximum Legal Rate, then the LIBOR Rate or the
Default Rate, as the case may be, shall be deemed to be immediately reduced to
the Maximum Legal Rate and all previous payments in excess of the Maximum Legal
Rate shall be deemed to have been payments in reduction of principal and not on
account of the interest due under the Mezzanine Note. All sums paid or agreed to
be paid to Mezzanine Lender for the use, forbearance, or detention of the sums
due under the Loan, shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Loan until payment in full so that the rate or amount of interest on account
of the Loan does not exceed the Maximum Legal Rate of interest from time to time
in effect and applicable to the Loan for so long as the Loan is
outstanding.

 

Section
2.3  Prepayments

 

No
prepayments of the Indebtedness shall be permitted except as set forth in
Section
2.3.1 hereof
and Section
4 of the
Mezzanine Note.

 

2.3.1  Mandatory
Prepayment.

 

(a)  Except as
described in Section
2.3.1(b) below
and subject to Article
VIII,
Mezzanine Borrower shall repay the Mezzanine Note, in full, together with the
Prepayment Fee (if applicable), in accordance with Section
4(b) and
Section
4(d) (if
applicable) of the Mezzanine Note upon the occurrence of any of the following
events:

 

(i)   if the
Property is Transferred;

 

(ii)  if all or
any portion of the Mortgage Borrower’s interest in the Property is
Transferred;

 

(iii)  if all or
any portion of the Mezzanine Borrower’s interest in the Mortgage Borrower is
Transferred;

 

(iv)  if a
Transfer or series of Transfers of any direct or indirect ownership interests in
the Mezzanine Borrower or any SPE Entity shall occur which either individually
or in the aggregate with all such Transfers violates the requirements of
Article
VIII;
or

 

(v)  if the
Loan (Mortgage) is repaid or refinanced.

 

(b)  If there
shall occur a casualty or Taking in respect of the Property and as a result
thereof the Loan (Mortgage) is prepaid in whole or in part, then, to the extent
that there shall be excess proceeds or awards available following the
application of the proceeds or awards to reconstruct or repair the Property or
to the payment of all or any portion of the 

 








26













Loan
(Mortgage) pursuant to the terms of the Loan Documents (Mortgage) and Senior
Mezzanine Loan pursuant to the terms of the Senior Mezzanine Loan Documents
(collectively, Excess
Proceeds),
Mezzanine Borrower shall repay the Mezzanine Note, or a portion thereof, in the
amount of such available Excess Proceeds. All Excess Proceeds shall be deposited
directly into the Intermediate Mezzanine Account. 

 

2.3.2  Prepayments
After Event of Default

 

If,
following an Event of Default, Mezzanine Lender shall accelerate the
Indebtedness and Mezzanine Borrower thereafter tenders payment of all or any
part of the Indebtedness, or if all or any portion of the Indebtedness is
recovered by Mezzanine Lender after such Event of Default, (a) such payment may
be made only on the next occurring Payment Date together with all unpaid
interest thereon as calculated through the end of the Interest Period during
which such Payment Date occurs (even if such period extends beyond such Payment
Date and calculated as if such payment had not been made on such Payment Date),
and all other fees and sums payable hereunder or under the Loan Documents
(Intermediate Mezzanine), including without limitation, interest that has
accrued at the Default Rate and any Late Payment Charges), (b) such payment
shall be deemed a voluntary prepayment by Mezzanine Borrower, and (c) Mezzanine
Borrower shall pay, in addition to the Indebtedness, an amount equal to the
Prepayment Fee, if applicable.

 

2.3.3  Release
of Collateral

 

Mezzanine
Lender shall, upon the written request and at the reasonable expense of
Mezzanine Borrower, upon payment in full of the Principal Amount and interest on
the Loan and all other amounts due and payable under the Loan Documents
(Intermediate Mezzanine) in accordance with the terms and provisions of the
Mezzanine Note and this Agreement, release the Lien of (i) this Agreement upon
the Account Collateral (Intermediate Mezzanine) and the Rate Cap Collateral
(Intermediate Mezzanine) and (ii) the Pledge on the Collateral or assign it, in
whole or in part, to a new lender. In such event, Mezzanine Borrower shall
submit to Mezzanine Lender, on a date prior to the date of such release or
assignment sufficient to provide a reasonable period for review thereof, a
release of lien or assignment of lien, as applicable, for such Collateral for
execution by Lender. Such release or assignment, as applicable, shall be in a
form satisfactory to Mezzanine Lender in its reasonable discretion. In addition,
Mezzanine Borrower shall provide all other documentation Mezzanine Lender
reasonably requires to be delivered by Mezzanine Borrower in connection with
such release or assignment, as applicable.

 

Section
2.4  Regulatory
Change; Taxes.

 

2.4.1  Increased
Costs

 

If, as a
result of any Regulatory Change or compliance of Mezzanine Lender therewith, the
basis of taxation of payments to Mezzanine Lender or any company Controlling
Mezzanine Lender of the principal of or interest on the Loan is changed or
Mezzanine Lender or the company Controlling Mezzanine Lender shall be subject to
(i) any 

 








27













tax,
duty, charge or withholding of any kind with respect to this Agreement
(excluding federal taxation of the overall net income of Mezzanine Lender or the
company Controlling Mezzanine Lender); or (ii) any reserve, special deposit or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities, of Mezzanine Lender or any company
Controlling Mezzanine Lender is imposed, modified or deemed applicable; or (iii)
any other condition affecting loans to borrowers subject to LIBOR-based interest
rates is imposed on Mezzanine Lender or any company Controlling Mezzanine Lender
and Mezzanine Lender determines that, by reason thereof, the cost to Mezzanine
Lender or any company Controlling Mezzanine Lender of making, maintaining or
extending the Loan to Mezzanine Borrower is increased, or any amount receivable
by Mezzanine Lender or any company Controlling Mezzanine Lender hereunder in
respect of any portion of the Loan to Mezzanine Borrower is reduced, in each
case by an amount deemed by Mezzanine Lender in good faith to be material (such
increases in cost and reductions in amounts receivable being herein called
Increased
Costs), then
Mezzanine Lender shall provide notice thereof to Mezzanine Borrower and
Mezzanine Borrower agrees that it will pay to Mezzanine Lender upon Mezzanine
Lender's written request such additional amount or amounts as will compensate
Mezzanine Lender or any company Controlling Mezzanine Lender for such Increased
Costs to the extent Mezzanine Lender determines that such Increased Costs are
allocable to the Loan and provided that Mezzanine Lender is generally exercising
rights similar to those set forth in this Section
2.4.1 against
other borrowers similarly situated to Mezzanine Borrower. Mezzanine Lender will
notify Mezzanine Borrower of any event occurring after the date hereof which
will entitle Mezzanine Lender to compensation pursuant to this Section
2.4.1 as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation; provided,
however, that,
if Mezzanine Lender fails to deliver a notice within 90 days after the date on
which an officer of Mezzanine Lender responsible for overseeing this Agreement
knows or has reason to know of its right to additional compensation under this
Section
2.4.1,
Mezzanine Lender shall only be entitled to additional compensation for any such
Increased Costs incurred from and after the date that is 90 days prior to the
date Mezzanine Borrower received such notice. If Mezzanine Lender requests
compensation under this Section
2.4.1,
Mezzanine Borrower may, by notice to Mezzanine Lender, require that Mezzanine
Lender furnish to Mezzanine Borrower a statement setting forth the basis for
requesting such compensation and the method for determining the amount thereof,
and a description as to why Section
2.4.1 is not
applicable.

 

2.4.2  Special
Taxes

 

Mezzanine
Borrower shall make all payments hereunder free and clear of and without
deduction for Special Taxes. If Mezzanine Borrower shall be required by law to
deduct any Special Taxes from or in respect of any sum payable hereunder or
under any other Loan Document (Intermediate Mezzanine) to Mezzanine Lender, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section
2.4.2)
Mezzanine Lender receives an amount equal to the sum it would have received had
no such deductions been made, (ii) Mezzanine Borrower shall make such
deductions, and (iii) 

 








28













Mezzanine
Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

 

2.4.3  Other
Taxes

 

In
addition, Mezzanine Borrower agrees to pay any present or future stamp or
documentary taxes or other excise or property taxes, charges, or similar levies
which arise from any payment made hereunder, or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement, the other Loan
Documents (Intermediate Mezzanine), or the Loan (hereinafter referred to as
Other
Taxes).

 

2.4.4  Indemnity

 

Mezzanine
Borrower shall indemnify Mezzanine Lender for the full amount of Special Taxes
and Other Taxes (including any Special Taxes or Other Taxes imposed by any
Governmental Authority on amounts payable under this Section
2.4.4) paid by
Mezzanine Lender and any liability (including penalties, interest, and expenses)
arising therefrom or with respect thereto, whether or not such Special Taxes or
Other Taxes were correctly or legally asserted. This indemnification shall be
made within thirty (30) days after the date Mezzanine Lender makes written
demand therefor.

 

2.4.5  Change
of Office

 

To the
extent that changing the jurisdiction of Mezzanine Lender's applicable office
would have the effect of minimizing Special Taxes, Other Taxes or Increased
Costs, Mezzanine Lender shall use reasonable efforts to make such a change,
provided that same would not otherwise be disadvantageous to Mezzanine
Lender.

 

2.4.6  Survival

 

Without
prejudice to the survival of any other agreement of Mezzanine Borrower
hereunder, the agreements and obligations of Mezzanine Borrower contained in
this Section
2.4 shall
survive the payment in full of principal and interest hereunder, and the
termination of this Agreement.

 

Section
2.5  Conditions
Precedent to Closing

 

The
obligation of Mezzanine Lender to make the Loan hereunder is subject to the
fulfillment by, or on behalf of, Mezzanine Borrower or waiver by Mezzanine
Lender of the following conditions precedent no later than the Closing Date;
provided, however, that unless a condition precedent shall expressly survive the
Closing Date pursuant to a separate agreement, by funding the Loan, Mezzanine
Lender shall be deemed to have waived any such conditions not theretofore
fulfilled or satisfied:

 

2.5.1  Representations
and Warranties; Compliance with Conditions.


 








29
















 

(a)  The
representations and warranties of Mezzanine Borrower contained in this Agreement
and the other Loan Documents (Intermediate Mezzanine) shall be true and correct
in all material respects on and as of the Closing Date with the same effect as
if made on and as of such date, and no Default or Event of Default shall have
occurred and be continuing; and Mezzanine Borrower shall be in compliance in all
material respects with all terms and conditions set forth in this Agreement and
in each other Loan Document (Intermediate Mezzanine) on its part to be observed
or performed; and 

 

(b)  The
representations and warranties of (i) Mortgage Borrower contained in the Loan
Agreement (Mortgage) and the other Loan Documents (Mortgage), and (ii) Senior
Mezzanine Borrower contained in the Senior Mezzanine Loan Agreement, shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as if made on and as of such date, and no Default or Event of
Default shall have occurred and be continuing under the Mortgage Loan or Senior
Mezzanine Loan, as applicable; and Mortgage Borrower, Senior Mezzanine Borrower,
and Guarantor shall be in compliance in all material respects with all terms and
conditions set forth in the Loan Agreement (Mortgage), Senior Mezzanine Loan
Agreement, and in each other Loan Document (Mortgage) and Loan Document (Senior
Mezzanine) on its part to be observed or performed, as applicable.

 

2.5.2  Delivery
of Loan Documents (Intermediate Mezzanine); Title Policy; Reports;
Leases.

 

(a)  Loan
Documents (Intermediate Mezzanine).
Mezzanine Lender shall have received an original copy of this Agreement, the
Mezzanine Note and all of the other Loan Documents (Intermediate Mezzanine), in
each case, duly executed (and to the extent required, acknowledged) and
delivered on behalf of Mezzanine Borrower and any other parties
thereto.

 

(b)  Certificates.
Mezzanine Lender shall have received originals of the Certificates together with
a partnership and membership power (as applicable) endorsed in
blank.

 

(c)  UCC
Financing Statements.
Mezzanine Lender shall have received evidence that the UCC financing statements
relating to the Pledge and this Agreement have been delivered for filing in the
applicable jurisdictions.

 

(d)  Interest
Rate Cap Agreement (Intermediate Mezzanine).
Mezzanine Lender shall have received the original Interest Rate Cap Agreement
(Intermediate Mezzanine) which shall be in form and substance satisfactory to
Mezzanine Lender and a counterpart of the Acknowledgment executed and delivered
by the Counterparty.

 








30
















 

(e)  Account
Agreement (Intermediate Mezzanine).
Mezzanine Lender shall have received the original of the Account Agreement
(Intermediate Mezzanine) executed by each of Cash Management Bank (Intermediate
Mezzanine) and Mezzanine Borrower.

 

(f)  Title
Insurance.

 

(i)  Mezzanine
Lender shall have received a copy of the Title Policy (Mortgage) or a marked-up
and signed commitment having the force and effect of a title policy, marked
"paid" by an authorized representatives of the Title Company) issued by the
Title Company with respect to the Loan (Mortgage) and dated as of the Closing
Date, together with a copy of the mezzanine loan endorsement to the owner's
title insurance policy obtained by Mortgage Borrower, in favor of Mezzanine
Lender, its successors and assigns, dated as of the Closing Date and reinsurance
and direct access agreements in form and substance acceptable to Mezzanine
Lender. Mezzanine Lender shall also have received evidence that all premiums in
respect of the Title Policy (Mortgage) have been paid; and

 

(ii)  Mezzanine
Lender shall have received an "Eagle 9" title policy in favor of Mezzanine
Lender, its successors and assigns, dated as of the Closing Date. Mezzanine
Lender also shall have received evidence that all premiums in respect of the
"Eagle 9" title policy have been paid.

 

(g)  Survey.
Mezzanine Lender shall have received a current Survey for the Property,
containing the survey certification required by the Loan Agreement
(Mortgage).

 

(h)  Insurance. 
Mezzanine Lender shall have received valid certificates of insurance for the
policies of insurance required by the Loan Agreement (Mortgage) naming Mezzanine
Lender as an additional insured and containing a cross liability/severability
endorsement, satisfactory to Mezzanine Lender in its reasonable discretion, and
evidence of the payment of all insurance premiums currently due and payable for
the existing policy period.

 

(i)  Environmental
Reports.
Mezzanine Lender shall have received an Environmental Report in respect of the
Property satisfactory to Mezzanine Lender.

 

(j)  Zoning. 
Mezzanine Lender shall have received an ALTA 3.1 zoning endorsement for the
Title Policy (Mortgage).

 

(k)  Certificate
of Occupancy.
Mezzanine Lender shall have received a copy of the valid certificates of
occupancy for the Property or evidence acceptable to Mezzanine Lender that a
certificate of occupancy is not required by applicable law.

 

(l)  Encumbrances.
Mezzanine Borrower shall have taken or caused to be taken such actions in such a
manner so that Mezzanine Lender has a valid and perfected 

 








31













first
Lien as of the Closing Date on the Collateral and Mezzanine Lender shall have
received satisfactory evidence thereof.

 

(m)  Intentionally
Omitted. 

 

(n)  Assignment
of Management Agreement. 
Mezzanine Lender shall have received the original of the Assignment of
Management Agreement (Intermediate Mezzanine) executed by each of Mezzanine
Borrower and Manager; 

 

(o)  Pledgor
Acknowledgments. 
Mezzanine Lender shall have received an original of the Acknowledgment in the
form of Exhibit
B executed
by each of Mezzanine Borrower, Senior Mezzanine Borrower, and CNL Hotel Del
Senior Mezz Partners GP, LLC, and dated as of the Closing Date.

 

2.5.3  Related
Documents

 

Each
additional document not specifically referenced herein, but relating to the
transactions contemplated herein, shall have been duly authorized, executed and
delivered by all parties thereto and Mezzanine Lender shall have received and
approved certified copies thereof.

 

2.5.4  Delivery
of Organizational Documents

 

On or
before the Closing Date, Mezzanine Borrower shall deliver, or cause to be
delivered, to Mezzanine Lender copies certified by an Officer's Certificate, of
all organizational documentation related to Mortgage Borrower, Operating Lessee,
Mezzanine Borrower, Guarantor, General Partner, each SPE Entity, Manager and
certain of its Affiliates as have been requested by Mezzanine Lender and/or the
formation, structure, existence, good standing and/or qualification to do
business of Mortgage Borrower, Operating Lessee, Mezzanine Borrower, Guarantor,
General Partner, each SPE Entity and such Affiliates, as Mezzanine Lender may
request in its sole discretion, including, without limitation, good standing
certificates, qualifications to do business in the appropriate jurisdictions,
resolutions authorizing the entering into of the Loan and incumbency
certificates as may be requested by Mezzanine Lender. Each of the organizational
documents of any SPE Entity shall contain provisions having a substantive effect
materially similar to that of the language set forth in Exhibit
C or such
other language as approved by Lender. Mezzanine Lender hereby approves the
organizational documents delivered to Mezzanine Borrower pursuant to this
Section 2.5.4.

 

2.5.5  Opinions
of Mezzanine Borrower's Counsel. 

 

(a)  Mezzanine
Lender shall have received a Non-Consolidation Opinion substantially in
compliance with the requirements set forth in Exhibit
E or in
such other form approved by the Mezzanine Lender (the Non-Consolidation
Opinion).

 








32
















 

(b)  Mezzanine
Lender shall have received the Opinion of Counsel substantially in compliance
with the requirements set forth in Exhibit
D or in
such other form approved by the Mezzanine Lender.

 

(c)  Mezzanine
Lender shall have received from Counterparty the Counterparty Opinion
substantially in compliance with the requirements set forth in Exhibit
F or in
such other form approved by the Mezzanine Lender.

 

2.5.6  Budgets

 

Mezzanine
Borrower shall have delivered the Budget for the current Fiscal Year, which
Budget shall be certified by an Officer's Certificate.

 

2.5.7  Completion
of Proceedings

 

All
corporate and other proceedings taken or to be taken in connection with the
transactions contemplated by this Agreement and other Loan Documents
(Intermediate Mezzanine) and all documents incidental thereto shall be
satisfactory in form and substance to Mezzanine Lender, and Mezzanine Lender
shall have received all such counterpart originals or certified copies of such
documents as Mezzanine Lender may reasonably request.

 

2.5.8  Independent
Director Certificate

 

Mezzanine
Lender shall have received an executed Independent Director certificate
substantially in the form attached as Exhibit
O.

 

2.5.9  Material
Adverse Effect

 

No event
or condition shall have occurred since the date of Mortgage Borrower's and
Mezzanine Borrower's most recent financial statements previously delivered to
Mezzanine Lender which has or could reasonably be expected to have a Material
Adverse Effect. The Operating Income and Operating Expenses of the Property, and
all other features of the transaction shall be as represented to Mezzanine
Lender without material adverse change. None of Mezzanine Borrower, Senior
Mezzanine Borrower, Junior Mezzanine Borrower, Mortgage Borrower, Guarantor nor
any of their constituent Persons shall be the subject of any bankruptcy,
reorganization, or insolvency proceeding.

 

2.5.10  Leases
and Rent Roll

 

Mezzanine
Lender shall have received copies of all Leases, certified as requested by
Mezzanine Lender. Mezzanine Lender shall have received a certified rent roll of
the Property dated within thirty (30) days prior to the Closing
Date.

 

2.5.11  Reserved.

 








33
















 

2.5.12  Tax
Lot

 

Mezzanine
Lender shall have received evidence that the Property constitutes one (1) or
more separate tax lots, which evidence shall be reasonably satisfactory in form
and substance to Mezzanine Lender.

 

2.5.13  Physical
Conditions Report

 

Mezzanine
Lender shall have received a Physical Conditions Report (or re certified
Physical Conditions Report) with respect to the Property, which report shall be
satisfactory in form and substance to Mezzanine Lender.

 

2.5.14  Management
Agreement

 

Mezzanine
Lender shall have received a certified copy of the Management Agreement which
shall be satisfactory in form and substance to Mezzanine Lender.

 

2.5.15  Appraisal

 

.
Mezzanine Lender shall have received an appraisal of the Property, which shall
be satisfactory in form and substance to Mezzanine Lender.

 

2.5.16  Financial
Statements

 

Mezzanine
Lender shall have received certified copies of financial statements with respect
to the Property for the three most recent Fiscal Years, each in form and
substance satisfactory to Mezzanine Lender.

 

2.5.17  Transaction
Costs

 

Mezzanine
Borrower shall have paid or reimbursed Mezzanine Lender for all title insurance
(or "Eagle 9") premiums, filing fees, costs of reports, appraisals, reasonable
fees and costs of Mezzanine Lender's counsel, and all other third party
out-of-pocket expenses incurred in connection with the origination of the
Loan.

 

2.5.18  Further
Documents

 

Mezzanine
Lender or its counsel shall have received such other and further approvals,
opinions, documents and information as Mezzanine Lender or its counsel may have
reasonably requested including the Loan Documents (Intermediate Mezzanine) in
form and substance satisfactory to Mezzanine Lender and its
counsel.

 

Section
2.6  Filing
of Financing Statements Authorized

 








34













Mezzanine
Borrower hereby authorizes the filing of a form UCC-1 financing statement naming
the Mezzanine Borrower as debtor and the Mezzanine Lender as secured party in
any office (including the office of the Secretary of State of the State of
Delaware) covering all property of the Mezzanine Borrower (including, but not
limited to, the Account Collateral (Intermediate Mezzanine) and the Rate Cap
Collateral (Intermediate Mezzanine)).

 


	III.  	
      CASH
      MANAGEMENT




 

Section
3.1  Cash
Management. 

 

3.1.1  Establishment
of Account

 

Mezzanine
Borrower hereby confirms that, simultaneously with the execution of this
Agreement, pursuant to the Account Agreement (Intermediate Mezzanine), it has
established with Cash Management Bank (Intermediate Mezzanine), in the name of
Mezzanine Borrower for the benefit of Mezzanine Lender, as secured party, one
(1) segregated account (the Intermediate
Mezzanine Account), which
has been established as a securities account. The Intermediate Mezzanine Account
and the funds deposited therein and securities and other assets credited thereto
shall serve as additional security for the Loan. Pursuant to the Account
Agreement (Intermediate Mezzanine), Mezzanine Borrower shall irrevocably
instruct and authorize Cash Management Bank (Intermediate Mezzanine) to
disregard any and all orders for withdrawal from the Intermediate Mezzanine
Account made by, or at the direction of, Mezzanine Borrower. Mezzanine Borrower
agrees that, prior to the payment in full of the Indebtedness, the terms and
conditions of the Account Agreement (Intermediate Mezzanine) shall not be
amended or modified without the prior written consent of Mezzanine Lender (which
consent Mezzanine Lender may grant or withhold in its sole discretion). In
recognition of Mezzanine Lender's security interest in the funds deposited into
the Intermediate Mezzanine Account, Mezzanine Borrower shall identify the
Intermediate Mezzanine Account with the name of Mezzanine Lender, as secured
party. The Intermediate Mezzanine Account shall be named as follows: "CNL Hotel
Del Intermediate Mezz Partners, LP f/b/o German American Capital Corporation, as
secured party, Intermediate Mezzanine Account" (Account Number 722386.1).
Mezzanine Borrower confirms that it has established with Cash Management Bank
(Intermediate Mezzanine) a sub-account for the retention of Account Collateral
(Intermediate Mezzanine) in respect of Debt Service (Intermediate Mezzanine) on
the Loan with the account number 722386.1-1 (the Intermediate
Mezzanine Debt Service Reserve Account) (the
Sub-Account
and,
together with the Intermediate Mezzanine Account, the Collateral
Accounts (Intermediate Mezzanine)), which
(i) may be a ledger or book entry sub-account and need not be an actual
sub-account, (ii) shall be linked to the Intermediate Mezzanine Account, (iii)
shall be a "Securities Account" pursuant to Article 8 of the UCC, and (iv) shall
be an Eligible Account to which certain funds shall be allocated and from which
disbursements shall be made pursuant to the terms of this
Agreement.

 

3.1.2  Pledge
of Account Collateral (Intermediate Mezzanine)

 








35













To secure
the full and punctual payment and performance of the Obligations (Intermediate
Mezzanine), Mezzanine Borrower hereby collaterally assigns, grants a security
interest in and pledges to Mezzanine Lender, to the extent not prohibited by
applicable law, a first priority continuing security interest in and to the
following property of Mezzanine Borrower, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all of the same,
collectively, the Account
Collateral (Intermediate Mezzanine)):

 

(a)  any and
all Excess Cash Flow from time to time available in the Senior Mezzanine Account
and required, by the terms of the Senior Mezzanine Loan Agreement as now in
effect or amended with the consent of Mezzanine Lender, to be deposited by the
Senior Mezzanine Lender or the Cash Management Bank (Senior Mezzanine) into the
Intermediate Mezzanine Account;

 

(b)  the
Collateral Accounts (Intermediate Mezzanine) and all cash, checks, drafts,
securities entitlements, certificates, instruments and other property,
including, without limitation, all deposits and/or wire transfers from time to
time deposited or held in, credited to or made to Collateral Accounts
(Intermediate Mezzanine); 

 

(c)  any and
all amounts invested in Permitted Investments;

 

(d)  all
interest, dividends, cash, instruments, securities entitlements and other
property from time to time received, receivable or otherwise payable in respect
of, or in exchange for, any or all of the foregoing or purchased with funds from
the Collateral Accounts (Intermediate Mezzanine); and

 

(e)  to the
extent not covered by clauses (a), (b), (c) or (d) above, all proceeds (as
defined under the UCC) of any or all of the foregoing.

 

In
addition to the rights and remedies herein set forth, Mezzanine Lender shall
have all of the rights and remedies with respect to the Account Collateral
(Intermediate Mezzanine) available to a secured party at law or in equity,
including, without limitation, the rights of a secured party under the UCC, as
if such rights and remedies were fully set forth herein.

 

This
Agreement shall constitute a security agreement for purposes of the Uniform
Commercial Code and other applicable law. 

 

3.1.3  Maintenance
of Collateral Accounts

 

Mezzanine
Borrower agrees that the Intermediate Mezzanine Account and the Sub-Accounts are
and shall each be maintained (i) as a "securities account" (as such term is
defined in Section 8-501(a) of the UCC), (ii) in such a manner that Mezzanine
Lender shall have control (within the meaning of Section 8-106(d)(2) of the UCC)
over the Intermediate Mezzanine Account and any Sub-Account thereof, (iii) such
that Mezzanine Borrower and Manager shall have no right of withdrawal from the
Intermediate 

 








36













Mezzanine
Account or the Sub-Accounts and, except as provided herein, no Account
Collateral (Intermediate Mezzanine) shall be released to Mezzanine Borrower or
Manager from the Intermediate Mezzanine Account or the Sub-Accounts. Without
limiting the Mezzanine Borrower's obligations under the immediately preceding
sentence, Mezzanine Borrower shall only establish and maintain the Intermediate
Mezzanine Account with a financial institution that has executed an agreement
substantially in the form of the Account Agreement (Intermediate Mezzanine) or
in such other form acceptable to Mezzanine Lender in its sole
discretion.

 

3.1.4  Eligible
Accounts

 

The
Collateral Accounts shall be Eligible Accounts. The Collateral Accounts
(Intermediate Mezzanine) shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other banking or governmental authority, as may now or hereafter be
in effect. Income and interest accruing on the Collateral Accounts (Intermediate
Mezzanine) or any investments held in such accounts shall be periodically added
to the principal amount of such account and shall be held, disbursed and applied
in accordance with the provisions of this Agreement and the Account Agreement
(Intermediate Mezzanine). Mezzanine Borrower shall be the beneficial owner of
the Collateral Accounts (Intermediate Mezzanine) for federal income tax purposes
and shall report all income on the Collateral Accounts (Intermediate Mezzanine).


 

3.1.5  Deposits
into Sub-Accounts

 

On the
date hereof, Mezzanine Borrower has deposited the following amounts into the
Sub-Accounts:

 

(i)  $0.00
into the Mezzanine Debt Service Reserve Account.

 

3.1.6  Monthly
Funding.


 

(a)  Mezzanine
Borrower hereby instructs Mezzanine Lender to transfer (and pursuant to the
Account Agreement (Intermediate Mezzanine) shall irrevocably authorize Cash
Management Bank (Intermediate Mezzanine) to execute any corresponding
instructions of Mezzanine Lender), and Mezzanine Lender shall transfer (or cause
Cash Management Bank to transfer pursuant to disbursement instructions from
Mezzanine Lender) to the Mezzanine Debt Service Reserve Account, from the
Intermediate Mezzanine Account by 11:00 am New York time on the first (1st)
calendar day of each calendar month (and if such day is not a Business Day then
on the immediately preceding Business Day) or as soon thereafter as there shall
be sufficient collected funds on deposit in the Intermediate Mezzanine Account,
and from time to time (but no less frequently than weekly thereafter) funds in
an amount equal to the sum of any Protective Advances which may have been
advanced by (and not previously reimbursed to) the Mezzanine Lender pursuant to
the terms of the Loan Documents (Intermediate Mezzanine) to cure any Default or
Event of Default, any Mortgage Default or Mortgage Event of Default, or to
protect the Collateral together with any interest payable on such amounts
pursuant to the Loan Documents (Intermediate 

 








37













Mezzanine),
plus (x) the unpaid Debt Service (Intermediate Mezzanine) for the next occurring
Payment Date, plus (y) an amount equal to such payments for any prior month(s),
to the extent not previously paid, plus (z) an amount equal to the amount, if
any, deducted from the Intermediate Mezzanine Account in any preceding month to
pay any other amounts then due under the Loan Documents (Intermediate Mezzanine)
(other than any Debt Service (Intermediate Mezzanine)). Mezzanine Borrower
acknowledges that Mezzanine Lender shall not be required to make such withdrawal
and deposit until such time as Mezzanine Lender is able to calculate the amount
of the Debt Service (Intermediate Mezzanine) for the next occurring Payment
Date. As used herein, the term Net
Excess Cash Flow means
the amount available in the Intermediate Mezzanine Account after the transfers
to the Intermediate Mezzanine Debt Service Reserve Account required under this
Section
3.1.6 have
been made and the term Net
Excess Cash Flow Commencement Date shall
mean the date such amounts have been fully funded or reserved within the
Intermediate Mezzanine Account in any given calendar month.

 

(b)  If for
any reason there will be insufficient amounts in the Mezzanine Debt Service
Reserve Account on any Payment Date to pay the Debt Service (Intermediate
Mezzanine) due on such Payment Date, Mezzanine Borrower shall immediately
deposit into the Intermediate Mezzanine Account an amount equal to the shortfall
of available funds in the Mezzanine Debt Service Reserve Account. Any failure by
Mezzanine Borrower to deposit the full amount required by the preceding sentence
shall constitute an Event of Default hereunder. If Mezzanine Lender shall
reasonably determine that there will be insufficient amounts in the Intermediate
Mezzanine Account to pay any Protective Advances as and when the same are due
and payable, Mezzanine Lender shall provide written notice of same to Mezzanine
Borrower setting forth the basis for such determination. Within five (5)
Business Days of receipt of said notice, Mezzanine Borrower shall deposit into
the Intermediate Mezzanine Account an amount equal to the shortfall of available
funds in the Intermediate Mezzanine Account. Any failure by Mezzanine Borrower
to deposit the full amount required by the preceding sentence within said five
(5) Business Day period shall constitute an Event of Default
hereunder.

 

(c)  Provided
that (i) no Event of Default shall have occurred and be continuing hereunder or
under any of the other Loan Documents (Intermediate Mezzanine), (ii) no Mortgage
Event of Default shall have occurred and be continuing, (iii) no Event of
Default shall have occurred and be continuing under the Senior Mezzanine Loan or
the Senior Mezzanine Loan Documents, (iv) Mezzanine Borrower shall have
delivered to Mezzanine Lender an Officer's Certificate (which Mezzanine Borrower
shall not be obligated to deliver more frequently than once per calendar month)
certifying that the signatories know of no Event of Default that has occurred
and is then outstanding under the Loan, the Mortgage Loan or Senior Mezzanine
Loan, and (v) Mezzanine Borrower shall have deposited into the Intermediate
Mezzanine Account all funds then required to have been so deposited, then
Mezzanine Lender shall transfer the Net Excess Cash Flow from the Intermediate
Mezzanine Account to (A) the Junior Mezzanine Account, or (B) following the
repayment of the Junior Mezzanine Loan, to the Mezzanine Borrower's
Account.

 








38
















 

(d)  In the
event that an Event of Default shall have occurred and is then continuing, then,
without notice from Mezzanine Lender, all Net Excess Cash Flow shall be applied
to reduce the outstanding Principal Amount of the Mezzanine Note. At such time
that the Event of Default shall no longer be continuing and provided none of the
events set forth in subsection (c)(i) through (iii) above shall have occurred
and is then continuing, then all Net Excess Cash Flow shall be distributed in
accordance with the provision of subsection (c) above.

 

(e)  Mezzanine
Lender (so long as Mezzanine Lender is not the same entity as Mortgage Lender)
agrees to deliver to Mortgage Lender a monthly notice letter (the Mezzanine
Lender Monthly Debt Service Notice Letter) at
least five (5) Business Days prior to each Payment Date setting forth (i) the
Debt Service (Intermediate Mezzanine) payable by Mezzanine Borrower on the first
Payment Date occurring after the date such notice is delivered, and (ii) whether
or not an Event of Default has then occurred and is continuing under the
Mezzanine Loan Documents.

 

(f)  Mezzanine
Borrower hereby acknowledges that, pursuant to Section 3.1.5 of the Loan
Agreement (Mortgage), (i) to the extent the Mortgage Lender has received notice
from Mezzanine Lender than an Event of Default has occurred and is continuing
under the Loan Documents (Intermediate Mezzanine) (a Mezzanine
Loan Default Notice) and
until such time as Mortgage Lender receives a notice from Mezzanine Lender that
such Event of Default is no longer continuing a Mezzanine
Loan Default Revocation Notice), the
Mortgage Borrower has irrevocably directed that Excess Cash Flow is to be
deposited directly into the Mezzanine Account for application as provided in
this Agreement (in lieu of transferring such funds to such accounts of the
Mortgage Borrower as the Mortgage Borrower may have so directed if the Mortgage
Lender had not received such notice from Mezzanine Lender), (ii) to the extent
Mortgage Lender has not received a Mezzanine Loan Default Notice but has
received a Senior Mezzanine Loan Default Notice and until such time as Mortgage
Lender receives a Senior Mezzanine Loan Default Revocation Notice, Mortgage
Borrower has irrevocably directed that all Excess Cash Flow be deposited
directly into the Senior Mezzanine Account for application as provided in the
Senior Mezzanine Loan Agree-ment (in lieu of transferring such funds to such
accounts of Mortgage Borrower as Mortgage Borrower may have so directed if
Mortgage Lender had not received such notice from Senior Mezzanine Lender) and
(iii) to the extent Mortgage Lender has not received a Mezzanine Loan Default
Notice but has received a Junior Mezzanine Loan Default Notice and until such
time as Mortgage Lender receives a Junior Mezzanine Loan Default Revocation
Notice, Mortgage Borrower has irrevocably directed that all Excess Cash Flow be
deposited directly into the Junior Mezzanine Account for application as provided
in the Junior Mezzanine Loan Agreement (in lieu of transferring such funds to
such accounts of Mortgage Borrower as Mortgage Borrower may have so directed if
Mortgage Lender had not received such notice from Junior Mezzanine Lender) and
(iv) the directions described in the preceding clauses (i), (ii) or (iii) shall
not be changed or terminated without the written consent of the Mezzanine
Lender. Notwithstanding any provision herein to the contrary, provided no Event
of Default has occurred or is continuing, there shall be disbursed to Mezzanine
Borrower the Proceeds 

 








39













of a
Condemnation or Casualty remaining after payment of all amounts to which
Mortgage Lender, Intermediate Mezzanine Lender and Mezzanine Lender are
entitled. Mezzanine Borrower agrees that Mezzanine Lender shall not be required
to deliver to Mortgage Lender a Mezzanine Loan Default Notice prior to the
deposit of Proceeds into the Mezzanine Account.

 

3.1.7  Cash
Management Bank.


 

(a)  For the
purposes of this Agreement, the Cash Management Bank (Intermediate Mezzanine)
named herein shall be deemed to be an Approved Bank; provided,
however, that
the term "Approved Bank" shall be applicable for all other purposes and shall be
applicable to any successor or assign of Cash Management Bank (Intermediate
Mezzanine). Mezzanine Lender shall have the right at Mezzanine Borrower's sold
cost and expense to replace the Cash Management Bank (Intermediate Mezzanine)
with a financial institution reasonably satisfactory to Mezzanine Borrower in
the event that (i) the Cash Management Bank (Intermediate Mezzanine) fails, in
any material respect, to comply with the Account Agreement (Intermediate
Mezzanine), (ii) the Cash Management Bank (Intermediate Mezzanine) named herein
is no longer the Cash Management Bank (Intermediate Mezzanine) or (iii) the Cash
Management Bank (Intermediate Mezzanine) is no longer an Approved Bank.


 

(b)  During
the term of the Loan, so long as no Event of Default shall have occurred and is
continuing, Mezzanine Borrower, at its sole cost and expense, shall have the
right to replace the Cash Management Bank (Intermediate Mezzanine) with a
financial institution that is an Approved Bank provided such institution shall
execute and deliver to Mezzanine Lender (with a copy to Mortgage Lender) the
Account Agreement (Intermediate Mezzanine) (and Mezzanine Lender shall
reasonably cooperate with Mezzanine Borrower in connection with such transfer).
Upon the occurrence and during the continuance of an Event of Default, Mezzanine
Lender shall have the right at Mezzanine Borrower's sole cost and expense to
replace Cash Management Bank at any time, without notice to Mezzanine Borrower.
Mezzanine Borrower shall cooperate with Mezzanine Lender in connection with the
appointment of any replacement Cash Management Bank and the execution by the
Cash Management Bank and the Mezzanine Borrower of an Account Agreement and
delivery of same to Mezzanine Lender.

 

(c)  So long
as no Event of Default shall have occurred and be continuing, Mezzanine Borrower
shall have the right at its sole cost and expense to replace the Cash Management
Bank (Intermediate Mezzanine) with a financial institution that is an Approved
Bank provided that such financial institution and Mezzanine Borrower shall
execute and deliver to Mezzanine Lender an Account Agreement substantially
similar to the Account Agreement (Intermediate Mezzanine) executed as of the
Closing Date. 

 

3.1.8  
Mezzanine Borrower's Account Representations, Warranties and
Covenants

 

Mezzanine
Borrower represents, warrants and covenants that:

 








40
















 

(a)  Pursuant
to the Loan Agreement (Mortgage), Mortgage Borrower has directed that, after
Mortgage Lender receives notice of a Default hereunder (and provided no Mortgage
Event of Default exists), all Excess Cash Flow is to be deposited into the
Intermediate Mezzanine Account;

 

(b)  Neither
Senior Mezzanine Borrower, Mezzanine Borrower, nor any other Person will have
any right, title or interest in or to any Excess Cash Flow from and after the
time at which the Senior Mezzanine Lender becomes obligated under the Senior
Mezzanine Loan Agreement to transfer such Excess Cash Flow to the Intermediate
Mezzanine Account, except any rights Mezzanine Borrower shall have to
allocations of such funds following the disbursement to Mezzanine Borrower of
any Net Excess Cash Flow as provided in Section
3.1.6(a);

 

(c)  There are
no accounts other than the Collateral Accounts and Collateral Accounts
(Intermediate Mezzanine) maintained by Mortgage Borrower, Mezzanine Borrower or
any other Person with respect to the collection of rents, revenues, proceeds or
other income from the Property or for the collection of Receipts, except for the
Collection Account (as defined in the Loan Agreement (Mortgage)), the Holding
Account (as defined in the Loan Agreement (Mortgage)) the Manager Accounts, and
the Mezzanine Account and any accounts held by Mezzanine Borrower in which it is
permitted to receive transfers of Net Excess Cash Flow as provided in
Section
3.1.6(c);

 

(d)  Mezzanine
Borrower shall cause Mortgage Borrower to deposit or cause to be deposited all
Distributions into the Mezzanine Account as required by the Pledge and this
Agreement or any other Loan Document (Intermediate Mezzanine); and 

 

(e)  so long
as the Loan shall be outstanding, neither Mortgage Borrower, Operating Lessee,
Manager, Mezzanine Borrower, nor any of their Affiliates shall open any other
operating accounts with respect to the collection of rents, revenues, proceeds
or other income from the Property or for the collection of Receipts.


 

3.1.9  Account
Collateral (Intermediate Mezzanine) and Remedies.


 

(a)  Upon the
occurrence and during the continuance of an Event of Default, without additional
notice from Mezzanine Lender to Mezzanine Borrower, (i) Mezzanine Lender may, in
addition to and not in limitation of Mezzanine Lender's other rights, make any
and all withdrawals from, and transfers between and among, the Collateral
Accounts (Intermediate Mezzanine) as Mezzanine Lender shall determine in its
sole and absolute discretion to pay any Obligations (Intermediate Mezzanine),
Operating Expenses and/or Capital Expenditures for the Property; (ii) all Excess
Cash Flow shall be retained in the Mezzanine Account or applicable Sub-Accounts,
(iii) all payments to the Mezzanine Borrower's Account pursuant to Section
3.1.6 shall
immediately cease and (iv) Mezzanine Lender may liquidate and transfer any
amounts then invested in Permitted Investments to the 

 








41













Collateral
Accounts (Intermediate Mezzanine) to which they relate or reinvest such amounts
in other Permitted Investments as Mezzanine Lender may reasonably determine is
necessary to perfect or protect any security interest granted or purported to be
granted hereby or to enable Mezzanine Lender to exercise and enforce Mezzanine
Lender's rights and remedies hereunder with respect to any Account Collateral
(Intermediate Mezzanine) or to preserve the value of the Account Collateral
(Intermediate Mezzanine).

 

(b)  Upon the
occurrence and during the continuance of an Event of Default, Mezzanine Borrower
hereby irrevocably constitutes and appoints Mezzanine Lender as Mezzanine
Borrower's true and lawful attorney-in-fact, with full power of substitution, to
execute, acknowledge and deliver any instruments and to exercise and enforce
every right, power, remedy, option and privilege of Mezzanine Borrower with
respect to the Account Collateral (Intermediate Mezzanine), and do in the name,
place and stead of Mezzanine Borrower, all such acts, things and deeds for and
on behalf of and in the name of Mezzanine Borrower, which Mezzanine Borrower
could or might do or which Mezzanine Lender may deem necessary or desirable to
more fully vest in Mezzanine Lender the rights and remedies provided for herein
and to accomplish the purposes of this Agreement. The foregoing powers of
attorney are irrevocable and coupled with an interest. Upon the occurrence and
during the continuance of an Event of Default, Mezzanine Lender may perform or
cause performance of any such agreement, and any reasonable expenses of
Mezzanine Lender incurred in connection therewith shall be paid by Mezzanine
Borrower as provided in Section
5.1.12.

 

(c)  Mezzanine
Borrower hereby expressly waives, to the fullest extent permitted by law,
presentment, demand, protest or any notice of any kind (except as expressly
required under the Loan Documents (Intermediate Mezzanine)) in connection with
this Agreement or the Account Collateral (Intermediate Mezzanine). Mezzanine
Borrower acknowledges and agrees that ten (10) Business Days' prior written
notice of the time and place of any public sale of the Account Collateral
(Intermediate Mezzanine) or any other intended disposition thereof shall be
reasonable and sufficient notice to Mezzanine Borrower within the meaning of the
UCC.

 

3.1.10  Transfers
and Other Liens

 

Mezzanine
Borrower agrees that it will not (i) sell or otherwise dispose of any of the
Account Collateral (Intermediate Mezzanine) except as may be expressly permitted
under the Loan Documents (Intermediate Mezzanine), or (ii) create or permit to
exist any Lien upon or with respect to all or any of the Account Collateral
(Intermediate Mezzanine), except for the Lien granted to Mezzanine Lender under
this Agreement.

 

3.1.11  Reasonable
Care

 

Beyond
the exercise of reasonable care in the custody thereof, Mezzanine Lender shall
have no duty as to any Account Collateral (Intermediate Mezzanine) in its
possession or control as agent therefor or bailee thereof or any income thereon
or the 

 








42













preservation
of rights against any person or otherwise with respect thereto. Mezzanine Lender
shall be deemed to have exercised reasonable care in the custody and
preservation of the Account Collateral (Intermediate Mezzanine) in its
possession if the Account Collateral (Intermediate Mezzanine) is accorded
treatment substantially equal to that which Mezzanine Lender accords its own
property, it being understood that Mezzanine Lender shall not be liable or
responsible for any loss or damage to any of the Account Collateral
(Intermediate Mezzanine), or for any diminution in value thereof, by reason of
the act or omission of Mezzanine Lender, its Affiliates, agents, employees or
bailees, except to the extent that such loss or damage results from Mezzanine
Lender's gross negligence or willful misconduct. In no event shall Mezzanine
Lender be liable either directly or indirectly for losses or delays resulting
from any event which may be the basis of an Excusable Delay, computer
malfunctions, interruption of communication facilities, labor difficulties or
other causes beyond Mezzanine Lender's reasonable control or for indirect,
special or consequential damages except to the extent of Mezzanine Lender's
gross negligence or willful misconduct. Notwithstanding the foregoing, Mezzanine
Borrower acknowledges and agrees that (i) Mezzanine Lender does not have custody
of the Account Collateral (Intermediate Mezzanine), (ii) Cash Management Bank
(Intermediate Mezzanine) custody of the Account Collateral (Intermediate
Mezzanine), (iii) the initial Cash Management Bank (Intermediate Mezzanine) was
chosen by Mezzanine Borrower and (iv) Mezzanine Lender has no obligation or duty
to supervise Cash Management Bank (Intermediate Mezzanine) or to see to the safe
custody of the Account Collateral (Intermediate Mezzanine).

 

3.1.12  Mezzanine
Lender's Liability.


 

(a)  Mezzanine
Lender shall be responsible for the performance only of such duties with respect
to the Account Collateral (Intermediate Mezzanine) as are specifically set forth
in this Section
3.1 or
elsewhere in the Loan Documents (Intermediate Mezzanine), and no other duty
shall be implied from any provision hereof. Mezzanine Lender shall not be under
any obligation or duty to perform any act with respect to the Account Collateral
(Intermediate Mezzanine) which would cause it to incur any expense or liability
or to institute or defend any suit in respect hereof, or to advance any of its
own monies. Mezzanine Borrower shall indemnify and hold Mezzanine Lender, its
employees and officers harmless from and against any loss, cost or damage
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred by Mezzanine Lender in connection with the transactions contemplated
hereby with respect to the Account Collateral (Intermediate Mezzanine)
(excluding losses on Permitted Investments) except as such may be caused by the
gross negligence or willful misconduct of Mezzanine Lender, its employees,
officers or agents. 

 

(b)  Mezzanine
Lender shall be protected in acting upon any notice, resolution, request,
consent, order, certificate, report, opinion, bond or other paper, document or
signature believed by it in good faith to be genuine, and, in so acting, it may
be assumed that any person purporting to give any of the foregoing in connection
with the provisions hereof has been duly authorized to do so. Mezzanine Lender
may consult with counsel, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or suffered
by it hereunder and in good faith in accordance therewith.

 








43
















 

3.1.13  Continuing
Security Interest

 

This
Agreement shall create a continuing security interest in the Account Collateral
(Intermediate Mezzanine) and shall remain in full force and effect until payment
in full of the Indebtedness; provided, however, such security interest shall
automatically terminate with respect to funds which were duly deposited into
Mezzanine Borrower's Account in accordance with the terms hereof. Upon payment
in full of the Indebtedness, this security interest shall automatically
terminate without further notice from any party and Mezzanine Borrower shall be
entitled to the return, upon its request, of such of the Account Collateral
(Intermediate Mezzanine) as shall not have been sold or otherwise applied
pursuant to the terms hereof and Mezzanine Lender shall execute such instruments
and documents as may be reasonably requested by Mezzanine Borrower to evidence
such termination and the release of the Account Collateral (Intermediate
Mezzanine).

 


	IV.  	
      REPRESENTATIONS
      AND WARRANTIES




 

Section
4.1  Mezzanine
Borrower Representations.

 

Mezzanine
Borrower represents and warrants as of the Closing Date that:

 

4.1.1  Organization

 

Each of
Mezzanine Borrower, Senior Mezzanine Borrower, and CNL Hospitality Partners, LP
is a limited partnership that has been duly organized and is validly existing
and in good standing pursuant to the laws of the State of Delaware with
requisite power and authority to own its properties and to transact the
businesses in which it is now engaged. Each of KSL DC Operating LLC, Operating
Lessee, and Manager is a limited liability company that has been duly organized
and is validly existing and in good standing pursuant to the laws of the State
of Delaware with requisite power and authority to own its properties and to
transact the businesses in which it is now engaged. Each of Mezzanine Borrower,
Mortgage Borrower, Senior Mezzanine Borrower, Guarantor, Operating Lessee, and
Manager has duly qualified to do business and is in good standing in each
jurisdiction where it is required to be so qualified in connection with its
properties, businesses and operations. Each of Mezzanine Borrower, Mortgage
Borrower, Senior Mezzanine Borrower, Guarantor, Operating Lessee, and Manager
possesses all rights, licenses, permits and authorizations, governmental or
otherwise, necessary to entitle it to own its properties and to transact the
businesses in which it is now engaged, (provided, however, with respect to
Guarantor only, those rights, licenses, permits and authorizations that would
cause a Material Adverse Effect), and the sole business of Mezzanine Borrower is
the ownership of the Property. The organizational structure of Mortgage
Borrower, Mezzanine Borrower, and their Affiliates is accurately depicted by the
schematic diagram attached hereto as Exhibit
H.
Mezzanine Borrower shall not itself, and shall not permit Mortgage Borrower or
any SPE Entity or Manager to, change its name, identity, corporate structure or
jurisdiction of organization unless it shall have given Mezzanine Lender thirty
(30) days 

 








44













prior
written notice of any such change and shall have taken all steps reasonably
requested by Mezzanine Lender to grant, perfect, protect and/or preserve the
security interest granted hereunder to Mezzanine Lender.

 

4.1.2  Proceedings

 

Each of
Mezzanine Borrower, Guarantor, Operating Lessee, and Manager has full power to
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents (Intermediate
Mezzanine). This Agreement and the other Loan Documents (Intermediate Mezzanine)
have been duly executed and delivered by, or on behalf of, Mezzanine Borrower,
Guarantor, Operating Lessee, and Manager, as applicable, and constitute legal,
valid and binding obligations of Mezzanine Borrower, Guarantor, Operating
Lessee, and Manager, as applicable, enforceable against Mezzanine Borrower,
Guarantor, Operating Lessee, and Manager, as applicable, in accordance with
their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

4.1.3  No
Conflicts

 

The
execution, delivery and performance of this Agreement and the other Loan
Documents (Intermediate Mezzanine) by Mezzanine Borrower, Guarantor, Operating
Lessee, and Manager, as applicable, will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance (other than
pursuant to the Loan Documents (Intermediate Mezzanine)) upon any of the
property or assets of Mezzanine Borrower, Guarantor, Operating Lessee, and
Manager pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, partnership agreement or other agreement or instrument to which
Mezzanine Borrower, Guarantor, Operating Lessee, and Manager is a party or by
which any of Mezzanine Borrower's, Guarantor's, Operating Lessee's, and
Manager's property or assets is subject (unless consents from all applicable
parties thereto have been obtained), nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any Governmental Authority, and any consent, approval, authorization, order,
registration or qualification of or with any Governmental Authority required for
the execution, delivery and performance by Mezzanine Borrower, Guarantor,
Operating Lessee, and Manager of this Agreement or any other Loan Documents
(Intermediate Mezzanine) has been obtained and is in full force and
effect.

 

4.1.4  Litigation

 

There are
no lawsuits, administrative proceedings, arbitration proceedings, or other such
legal proceedings that have been filed and served upon Borrower (or with respect
to which Borrower has otherwise received proper notice) or, to the Best of
Mezzanine Borrower's Knowledge, otherwise pending or threatened against or
affecting Mortgage Borrower, Mezzanine Borrower, Operating Lessee, Manager, or
the Property 

 








45













whose
outcome, if determined against Mortgage Borrower, Mezzanine Borrower, Manager,
Operating Lessee, or the Property, would have a Material Adverse Effect. To the
Best of Mezzanine Borrower's Knowledge, Schedule
I includes
each pending action against Mortgage Borrower, Mezzanine Borrower, Operating
Lessee, Manager or otherwise affecting the Property that involves a claim or
claims for either (a) monetary damages exceeding $25,000, or (b) injunctive
relief or other equitable remedy that could have a Material Adverse Effect,
excluding: (i) actions for monetary damages only that have been tendered to, and
accepted without reservation of rights by, the liability insurance carrier for
the Property, (ii) worker's compensation claims, and (iii) any proceedings by
employees working at the Property where the amount claimed in such proceeding is
less than $25,000; to the Best of Mezzanine Borrower's Knowledge, the aggregate
amount of such claims described in subclause (iii) of this sentence is less than
$200,000. There are no arbitration proceedings, governmental investigations,
actions, suits or proceedings at law or in equity by or before any Governmental
Authority now pending or, to the Best of Mezzanine Borrower's Knowledge,
threatened against or affecting Guarantor which, if determined against Guarantor
would have a Material Adverse Effect.

 

4.1.5  Agreements

 

Mezzanine
Borrower is not a party to any agreement or instrument or subject to any
restriction which is reasonably likely to have a Material Adverse Effect.
Mezzanine Borrower is not in default in any respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party or by which
Mezzanine Borrower or the Property is bound, which default is reasonably likely
to have a Material Adverse Effect. Mezzanine Borrower has no material financial
obligation (contingent or otherwise) under any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which Mezzanine
Borrower is a party or by which Mezzanine Borrower or the Property is otherwise
bound, other than (a) obligations incurred in the ordinary course of the
operation of the Property, including membership programs disclosed in writing to
Mezzanine Lender on or prior to the date hereof, and (b) obligations under the
Loan Documents (Intermediate Mezzanine).

 

4.1.6  Title

 

Mezzanine
Borrower owns all of the assets reflected in the proforma balance sheet of
Mezzanine Borrower as of the date of such proforma balance sheet, subject to no
rights of others, including any mortgages, leases, conditional sales agreements,
title retention agreements, liens or other encumbrances, except for the
Permitted Encumbrances.

 

4.1.7  No
Bankruptcy Filing

 

None of
Mezzanine Borrower, Senior Mezzanine Borrower, Junior Mezzanine Borrower,
Guarantor, Mortgage Borrower, General Partner, any SPE Entity, Operating Lessee,
or Manager is contemplating either the filing of a petition by it under any
state or federal bankruptcy or insolvency laws or the liquidation of all or a
major portion of such entity's assets or property, and Mezzanine Borrower has no
knowledge of any Person 

 








46













contemplating
the filing of any such petition against it or against Mezzanine Borrower, Senior
Mezzanine Borrower, Junior Mezzanine Borrower, Guarantor, Mortgage Borrower,
General Partner, any SPE Entity, Operating Lessee, or Manager.

 

4.1.8  Full
and Accurate Disclosure

 

To the
Best of Mezzanine Borrower's Knowledge, no statement of fact made by Mezzanine
Borrower in this Agreement or in any of the other Loan Documents (Intermediate
Mezzanine) contains any untrue statement of a material fact or omits to state
any material fact necessary to make statements contained herein or therein not
misleading. There is no fact presently known to Mezzanine Borrower which has not
been disclosed which has a Material Adverse Effect, or to the Best of Mezzanine
Borrower's Knowledge could reasonably be expected to have a Material Adverse
Effect.

 

4.1.9  ERISA.


 

(a)  Mezzanine
Borrower does not maintain or contribute to and is not required to contribute
to, an "employee benefit plan" as defined by Section 3(3) of ERISA, which is
subject to Title IV of ERISA (other than a "multiemployer plan" as defined by
Section 3(37) of ERISA), and Mezzanine Borrower (i) has no knowledge of any
material liability which has been incurred or is expected to be incurred by
Mezzanine Borrower which is reasonably likely to result in a Material Adverse
Effect and is or remains unsatisfied for any taxes or penalties or unfunded
contributions with respect to any "employee benefit plan" or any "plan," within
the meaning of Section 4975(e)(1) of the Internal Revenue Code or any other
benefit plan (other than a "multiemployer plan") maintained, contributed to, or
required to be contributed to by Mezzanine Borrower or by any entity that is
under common control with Mezzanine Borrower within the meaning Section
4001(a)(14) of ERISA (each, an ERISA
Affiliate) (each,
a Plan) or any
plan that would be a Plan but for the fact that it is a multiemployer plan
within the meaning of ERISA Section 3(37); and (ii) has made and shall continue
to make when due all required contributions to all such Plans (other than Plans
relating to ERISA Affiliates), if any, where the failure to so contribute is
reasonably likely to result in a Material Adverse Effect. Each such Plan (other
than Plans relating to ERISA Affiliates), if any, has been and will be
administered in material compliance with its terms and the applicable provisions
of ERISA, the Internal Revenue Code, and any other applicable federal or state
law; and no action shall be taken or fail to be taken that would result in the
disqualification or loss of tax-exempt status of any such Plan intended to be
qualified and/or tax exempt; and

 

(b)  With
respect to any "multiemployer plan," (i) Mezzanine Borrower has not, since
September 26, 1980, made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203 and 4205 of
ERISA, (ii) Mezzanine Borrower has made and shall continue to make when due all
required contributions to all such "multiemployer plans" and (iii) no ERISA
Affiliate has, since September 26, 1980, made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively defined in
Sections 4203 and 4205 of ERISA which withdrawal is reasonably expected to have
a Material Adverse Effect. 

 








47
















 

(c)  Mezzanine
Borrower is not an employee benefit plan, as defined in Section 3(3) of ERISA,
whether or not subject to Title I of ERISA, none of the assets of Mezzanine
Borrower, Guarantor or Mortgage Borrower constitutes or will constitute plan
assets of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101 and transactions by or with any of Mezzanine Borrower, Guarantor or
Mortgage Borrower are not subject to similar laws regulating investment of, and
fiduciary obligations with respect to, plans similar to the provisions of
Section 406 of ERISA or Section 4975 of the Code currently in effect which
prohibit or otherwise restrict the transactions contemplated by this
Agreement.

 

4.1.10  Compliance

 

Mezzanine
Borrower, Guarantor, Mortgage Borrower, General Partner and the Property and the
use thereof comply in all material respects with all applicable Legal
Requirements, including, without limitation, building and zoning ordinances and
codes except where the failure to so comply is not reasonably expected to result
in a Material Adverse Effect. To the Best of Mezzanine Borrower's Knowledge,
none of Mezzanine Borrower, Guarantor, Mortgage Borrower, and General Partner is
in default or in violation of any order, writ, injunction, decree or demand of
any Governmental Authority. To the Best of Mezzanine Borrower's Knowledge, there
has not been committed by Mezzanine Borrower, Guarantor, Mortgage Borrower or
General Partner any act or omission affording the federal government or any
other Governmental Authority the right of forfeiture as against the Property,
the Collateral or any part thereof or any monies paid in performance of
Mezzanine Borrower's obligations under any of the Loan Documents (Intermediate
Mezzanine).

 

4.1.11  Financial
Information

 

To the
Best of Mezzanine Borrower's Knowledge, all financial data of Mezzanine
Borrower, Guarantor and Mortgage Borrower, including, without limitation, the
statements of cash flow and income and operating expense, that have been
delivered by or on behalf of Mezzanine Borrower or Mortgage Borrower to
Mezzanine Lender in respect of the Property (i) are true, complete and correct
in all material respects, (ii) fairly represent the financial condition of the
Property, the Mezzanine Borrower, Guarantor and Mortgage Borrower as of the date
of such reports, and (iii) to the extent prepared or audited by an independent
certified public accounting firm, have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein. None of Mezzanine
Borrower, Guarantor, Mortgage Borrower, or General Partner has any material
contingent liabilities, liabilities for delinquent taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Mezzanine Borrower and could reasonably be
expected to have a Material Adverse Effect, except as referred to or reflected
in said financial statements and operating statements. Since the date of such
financial statements, there has been no material adverse change in the financial


 








48













condition,
operations or business of Mezzanine Borrower, Guarantor, Mortgage Borrower, or
General Partner from that set forth in said financial statements.

 

4.1.12  Absence
of UCC Financing Statements, Etc.

 

Except
with respect to the Permitted Encumbrances, the Loan Documents (Mortgage), the
Senior Mezzanine Loan Documents, the Junior Mezzanine Loan Documents, the
Revolving Credit Loan Documents and the Loan Documents (Intermediate Mezzanine),
there is no financing statement, security agreement, chattel mortgage, real
estate mortgage or other document filed or recorded with any filing records,
registry, or other public office, that purports to cover, affect or give notice
of any present or possible future lien on, or security interest or security
title in the interest in the Property or any of the Collateral.

 

4.1.13  Federal
Reserve Regulations

 

None of
the proceeds of the Loan will be used for the purpose of purchasing or carrying
any "margin stock" as defined in Regulation U, Regulation X or Regulation T or
for the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry "margin stock" or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of
Regulation U or Regulation X. As of the Closing Date, Mezzanine Borrower does
not own any "margin stock."

 

4.1.14  Setoff,
Etc.

 

The
Collateral and the rights of Mezzanine Lender with respect to the Collateral are
not subject to any setoff, claims, withholdings or other defenses. 

 

4.1.15  Not
a Foreign Person

 

None of
Mezzanine Borrower, Guarantor or Mortgage Borrower is a foreign person within
the meaning of § 1445(f)(3) of the Code.

 

4.1.16  Enforceability

 

The Loan
Documents (Intermediate Mezzanine) are not subject to any existing right of
rescission, set-off, counterclaim or defense by Mezzanine Borrower or Guarantor,
as applicable, including the defense of usury, nor would the operation of any of
the terms of the Loan Documents (Intermediate Mezzanine), or the exercise of any
right thereunder, render the Loan Documents (Intermediate Mezzanine)
unenforceable (subject to applicable bankruptcy, insolvency and similar laws
affecting rights of creditors generally, and subject as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law)), and neither Mezzanine Borrower nor Mortgage
Borrower has asserted any right of rescission, set-off, counterclaim or defense
with respect thereto.

 








49
















 

4.1.17  Insurance

 

Mezzanine
Borrower has obtained and has delivered to Mezzanine Lender certified copies or
original certificates of all insurance policies required under this Agreement,
reflecting the insurance coverages, amounts and other requirements set forth in
this Agreement. Mezzanine Borrower has not, and to the Best of Mezzanine
Borrower's Knowledge no Person has, done by act or omission anything which would
impair the coverage of any such policy.

 

4.1.18  Physical
Condition

 

To the
Best of Mezzanine Borrower's Knowledge and except as expressly disclosed in the
Physical Conditions Report, the Property, including, without limitation, all
buildings, Improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects; to the Best of Mezzanine Borrower's
Knowledge and except as disclosed in the Physical Conditions Report, there
exists no structural or other material defects or damages in or to the Property,
whether latent or otherwise, and Mezzanine Borrower has not received any written
notice from any insurance company or bonding company of any defects or
inadequacies in the Property, or any part thereof, which would adversely affect
the insurability of the same or cause the imposition of extraordinary premiums
or charges thereon or of any termination or threatened termination of any policy
of insurance or bond.

 

4.1.19  Leases

 

The
Property is not subject to any Leases other than the Leases described in the
certified rent roll delivered in connection with the origination of the Loan.
Such certified rent roll is true, complete and correct in all material respects
as of the date set forth therein. No Person has any possessory interest in the
Property or right to occupy the same (other than typical short-term occupancy
rights of hotel guests which are not the subject of a written agreement) except
under and pursuant to the provisions of the Leases. The current Leases are in
full force and effect and to the Best of Mezzanine Borrower's Knowledge, there
are no material defaults thereunder by either party (other than as expressly
disclosed on the certified rent roll delivered to Mezzanine Lender or the Tenant
estoppel certificates delivered to Mezzanine Lender in connection with the
closing of the Loan) and there are no conditions that, with the passage of time
or the giving of notice, or both, would constitute material defaults thereunder.
No Rent has been paid more than one (1) month in advance of its due date, except
as disclosed in the Tenant estoppel certificates delivered to Mezzanine Lender
in connection with the closing of the Loan. There has been no prior sale,
transfer or assignment, hypothecation or pledge by Mortgage Borrower of Mortgage
Borrower's interest in any Lease or of the Rents received therein, which will be
outstanding following the funding of the Loan, other than those being assigned
to Mortgage Lender 

 








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concurrently
herewith. No Tenant under any Lease has a right or option pursuant to such Lease
or otherwise to purchase all or any part of the property of which the leased
premises are a part. 

 

4.1.20  Single
Purpose Entity/Separateness.

 

(a)  Mezzanine
Borrower hereby represents, warrants and covenants that each of Mezzanine
Borrower, Mortgage Borrower and each SPE Entity is, and has been since the date
of its respective formation, a Single Purpose Entity, except that (i) other than
the general partners of Mortgage Borrower and Operating Lessee (which have two
Independent Directors) and (ii) other than CNL KSL Partners GP, LLC (which does
not have an Independent Director), each of Mezzanine Borrower GP, CNL Hotel Del
Senior Mezz Partners GP, LLC, CNL Hotel Del Junior Mezz Partners GP, LLC, and
Revolving Credit Borrower has a single Independent Director.

 

(b)  All of
the assumptions made in the Non-Consolidation Opinion, including, but not
limited to, any exhibits attached thereto and any certificates delivered by
Mezzanine Borrower in connection with the issuance of the Non-Consolidation
Opinion, are true and correct in all respects and any assumptions made in any
subsequent non-consolidation opinion delivered in connection with the Loan
Documents (Intermediate Mezzanine) (an Additional
Non-Consolidation Opinion),
including, but not limited to, any exhibits attached thereto, are true and
correct in all material respects. Mezzanine Borrower, Mortgage Borrower and each
SPE Entity have complied with all of the assumptions made with respect to it in
the Non-Consolidation Opinion. To the Best of Mezzanine Borrower's Knowledge,
each entity other than Mezzanine Borrower with respect to which an assumption
shall be made in any Additional Non-Consolidation Opinion will have complied and
will comply with all of the assumptions made with respect to it in any
Additional Non-Consolidation Opinion.

 

4.1.21  Management
Agreement

 

The
Management Agreement is in full force and effect and there is no default
thereunder by any party thereto and no event has occurred that, with the passage
of time and/or the giving of notice would constitute a default thereunder. The
Manager is not an Affiliate of Borrower.

 

4.1.22  Compliance
with Anti-Terrorism, Embargo and Anti-Money Laundering
Laws

 

(i) None
of Mezzanine Borrower, Guarantor or any Person who owns any equity interest in
or Controls Mezzanine Borrower or, to the Best of Borrower's Knowledge,
Guarantor, currently is identified on the OFAC List or otherwise qualifies as a
Prohibited Person, and Mezzanine Borrower has implemented procedures to ensure
that no Person who now or hereafter owns any equity interest in Mezzanine
Borrower or Guarantor is a Prohibited Person or Controlled by a Prohibited
Person, and (ii) none of Mezzanine Borrower or Guarantor is in violation of any
Legal Requirements relating to anti-money 

 








51













laundering
or anti-terrorism, including, without limitation, Legal Requirements related to
transacting business with Prohibited Persons or the requirements of the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the related
regulations issued thereunder, including temporary regulations, all as amended
from time to time. 

 

4.1.23  Tax
Filings

 

Mezzanine
Borrower has filed (or has obtained effective extensions for filing) all
federal, state and local tax returns required to be filed and has paid or made
adequate provision for the payment of all federal, state and local taxes,
charges and assessments payable by Mezzanine Borrower.

 

4.1.24  Solvency/Fraudulent
Conveyance

 

Mezzanine
Borrower (a) has not entered into the transaction contemplated by this Agreement
or any Loan Document (Intermediate Mezzanine) with the actual intent to hinder,
delay, or defraud any creditor and (b) has received reasonably equivalent value
in exchange for its obligations under the Loan Documents (Intermediate
Mezzanine). After giving effect to the Loan, the fair saleable value of
Mezzanine Borrower's assets exceeds and will, immediately following the making
of the Loan, exceed Mezzanine Borrower's total liabilities, including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities. The
fair saleable value of Mezzanine Borrower's assets is and will, immediately
following the making of the Loan, be greater than Mezzanine Borrower's probable
liabilities, including the maximum amount of its contingent liabilities on its
Debts as such Debts become absolute and matured. Mezzanine Borrower's assets do
not and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. Mezzanine Borrower does not intend to, and does not believe
that it will, incur Debt and liabilities (including contingent liabilities and
other commitments) beyond its ability to pay such Debt and liabilities as they
mature (taking into account the timing and amounts of cash to be received by
Mezzanine Borrower and the amounts to be payable on or in respect of obligations
of Mezzanine Borrower).

 

4.1.25  Investment
Company Act

 

Mezzanine
Borrower is not (a) an investment company or a company Controlled by an
investment company, within the meaning of the Investment Company Act of 1940, as
amended, (b) a holding company or a subsidiary company of a holding company or
an affiliate of either a holding company or a subsidiary company within the mean
of the Public Utility Holding Company Act of 1935, as amended or (c) subject to
any other federal or state law or regulation which purports to restrict or
regulate its ability to borrow money.

 

4.1.26  Interest
Rate Cap Agreement

 








52













The
Interest Rate Cap Agreement is in full force and effect and enforceable against
Mezzanine Borrower in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws generally affecting the enforcement of
creditors' rights and subject as to enforceability to general principles of
equity (regardless of whether enforcement is sought in a proceeding in equity or
at law).

 

4.1.27  Brokers

 

Neither
Mezzanine Borrower nor, to the Best of Mezzanine Borrower's Knowledge, Mezzanine
Lender has dealt with any broker or finder with respect to the transactions
contemplated by the Loan Documents (Intermediate Mezzanine) and neither party
has done any acts, had any negotiations or conversations, or made any agreements
or promises which will in any way create or give rise to any obligation or
liability for the payment by either party of any brokerage fee, charge,
commission or other compensation to any Person with respect to the transactions
contemplated by the Loan Documents (Intermediate Mezzanine). Mezzanine Borrower
covenants and agrees that it shall pay as and when due any and all brokerage
fees, charges, commissions or other compensation or reimbursement due to any
broker of Mezzanine Borrower with respect to the transactions contemplated by
the Loan Documents (Intermediate Mezzanine). Mezzanine Borrower and Mezzanine
Lender shall each indemnify and hold harmless the other from and against any
loss, liability, cost or expense, including any judgments, attorneys' fees, or
costs of appeal, incurred by the other party and arising out of or relating to
any claim for brokerage commissions or finder's fees alleged to be due as a
result of the indemnifying party's agreements or actions. The provisions of this
Section
4.1.27 shall
survive the expiration and termination of this Agreement and the payment of the
Indebtedness.

 

4.1.28  No
Other Debt

 

Neither
Mezzanine Borrower nor General Partner has borrowed or received debt financing
that has not been heretofore repaid in full, other than the Permitted
Debt.

 

4.1.29  Taxpayer
Identification Number

 

Mezzanine
Borrower's Federal taxpayer identification number is 20-0493850.

 

4.1.30  Knowledge
Qualifications

 

Mezzanine
Borrower represents that Eric Resnick, Peter McDermott, John Barry and/or Barry
Bloom are in a position to have meaningful knowledge with respect to the matters
set forth in the Loan Documents (Intermediate Mezzanine) which have been
qualified to the knowledge of such Persons.

 

4.1.31  Representations
and Warranties

 








53













Mezzanine
Borrower represents and warrants that each of the representations and warranties
contained in the Loan Documents (Mortgage), and Senior Mezzanine Loan Documents
(which are hereby incorporated by reference as if fully set forth herein) is
true and correct in all material respects, as of the Closing Date and to the
best of its knowledge, after reasonable inquiry, there is no Event of Default
under the Mortgage Loan or Senior Mezzanine Loan.

 

Section
4.2  Survival
of Representations

 

Mezzanine
Borrower agrees that all of the representations and warranties of Mezzanine
Borrower set forth in Section
4.1 and
elsewhere in this Agreement and in the other Loan Documents (Intermediate
Mezzanine) shall be deemed given and made as of the date of the funding of the
Loan and survive for so long as any amount remains owing to Mezzanine Lender
under this Agreement or any of the other Loan Documents (Intermediate Mezzanine)
by Mezzanine Borrower or Guarantor unless a longer survival period is expressly
stated in a Loan Document (Intermediate Mezzanine) with respect to a specific
representation or warranty, in which case, for such longer period. All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents (Intermediate Mezzanine) by Mezzanine Borrower shall
be deemed to have been relied upon by Mezzanine Lender notwithstanding any
investigation heretofore or hereafter made by Mezzanine Lender or on its
behalf.

 


	V.  	
      MEZZANINE
      BORROWER COVENANTS




 

Section
5.1  Affirmative
Covenants.

 

From the
Closing Date and until payment and performance in full of all obligations of
Mezzanine Borrower under the Loan Documents (Intermediate Mezzanine), Mezzanine
Borrower hereby covenants and agrees with Mezzanine Lender that:

 

5.1.1  Performance
by Mezzanine Borrower.


 

(a)  Mezzanine
Borrower shall in a timely manner observe, perform and fulfill each and every
covenant, term and provision of each Loan Document (Intermediate Mezzanine)
executed and delivered by, or applicable to, Mezzanine Borrower and shall not
enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document (Intermediate Mezzanine)
executed and delivered by, or applicable to, Mezzanine Borrower without the
prior written consent of Mezzanine Lender.

 

(b)  Mezzanine
Borrower shall cause Senior Mezzanine Borrower and Mortgage Borrower in a timely
manner to observe, perform and fulfill each and every covenant, term and
provision of each Loan Document (Senior Mezzanine) and Loan Document (Mortgage)
executed and delivered by, or applicable to, Mortgage Borrower. 

 








54
















 

5.1.2  Existence;
Compliance with Legal Requirements; Insurance

 

Subject
to Mortgage Borrower's right of contest pursuant to Section
7.3, of the
Loan Agreement (Mortgage), Mezzanine Borrower shall comply and cause the
Mortgage Borrower, any SPE Entity and the Property to be in compliance with all
Legal Requirements applicable to the Mezzanine Borrower, Mortgage Borrower, any
SPE Entity and Manager and the Property and the uses permitted upon the
Property. Mezzanine Borrower shall do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises necessary to comply with all Legal Requirements
applicable to it and the Property. There shall never be committed by Mezzanine
Borrower, and Mezzanine Borrower shall not knowingly permit Mortgage Borrower or
any other Person in occupancy of or involved with the operation or use of the
Property to commit, any act or omission affording the federal government or any
state or local government the right of forfeiture as against the Property or any
part thereof or any monies paid in performance of Mezzanine Borrower's
obligations under any of the Loan Documents (Intermediate Mezzanine). Mezzanine
Borrower hereby covenants and agrees not to commit, knowingly permit or suffer
to exist any act or omission affording such right of forfeiture. Mezzanine
Borrower shall at all times maintain, preserve and protect (and shall cause
Mortgage Borrower to at all times maintain, preserve and protect) all franchises
and trade names and preserve all the remainder of its property used in the
conduct of its business and shall keep the Property in good working order and
repair, and from time to time make, or cause to be made, all reasonably
necessary repairs, renewals, replacements, betterments and improvements thereto,
as required by the Loan Agreement (Mortgage). Mezzanine Borrower shall keep or
shall cause Mortgage Borrower to keep the Property insured at all times to such
extent and against such risks, and maintain liability and such other insurance,
as is more fully set forth in this Agreement and the Loan Agreement
(Mortgage).

 

5.1.3  Litigation

 

Mezzanine
Borrower shall give prompt written notice to Mezzanine Lender of any litigation
or governmental proceedings pending or threatened in writing against Mezzanine
Borrower, Mortgage Borrower, the Collateral or the Property which, if determined
adversely to Mezzanine Borrower, Mortgage Borrower, the Collateral or the
Property would have a Material Adverse Effect.

 

5.1.4  Single
Purpose Entity.


 

(a)  Each of
Mezzanine Borrower, General Partner, Mortgage Borrower, and each SPE Entity has
been since the date of its respective formation and shall remain a Single
Purpose Entity.

 

(b)  Each of
Mezzanine Borrower, Mortgage Borrower and each SPE Entity shall continue to
maintain its own account or accounts, separate from those of any 

 








55













Affiliate,
with commercial banking institutions. None of the funds of Mezzanine Borrower,
will be commingled with the funds of any other Affiliate.

 

(c)  To the
extent that Mezzanine Borrower, Mortgage Borrower or any SPE Entity shares the
same officers or other employees as any of their Affiliates, the salaries of and
the expenses related to providing benefits to such officers and other employees
shall be fairly allocated among such entities, and each such entity shall bear
its fair share of the salary and benefit costs associated with all such common
officers and employees.

 

(d)  To the
extent that Mezzanine Borrower, Mortgage Borrower or any SPE Entity jointly
contracts with any of Mezzanine Borrower, Mortgage Borrower, any SPE Entity or
any of their Affiliates, as applicable, to do business with vendors or service
providers or to share overhead expenses, the costs incurred in so doing shall be
allocated fairly among such entities, and each such entity shall bear its fair
share of such costs. To the extent that Mezzanine Borrower, Mortgage Borrower or
any SPE Entity contracts or does business with vendors or service providers
where the goods and services provided are partially for the benefit of any other
Person, the costs incurred in so doing shall be fairly allocated to or among
such entities for whose benefit the goods and services are provided, and each
such entity shall bear its fair share of such costs. All material transactions
between (or among) Mezzanine Borrower, Mortgage Borrower or each SPE Entity and
any of their respective Affiliates shall be conducted on substantially the same
terms (or on more favorable terms for Mezzanine Borrower, Mortgage Borrower or
any SPE Entity, as applicable) as would be conducted with third
parties.

 

(e)  To the
extent that Mezzanine Borrower, Mortgage Borrower, any SPE Entity or any of
their Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses.

 

(f)  Mezzanine
Borrower, Mortgage Borrower and each SPE Entity shall conduct its affairs
strictly in accordance with its organizational documents, and observe all
necessary, appropriate and customary corporate, limited liability company or
partnership formalities, as applicable, including, but not limited to, obtaining
any and all members' consents necessary to authorize actions taken or to be
taken, and maintaining accurate and separate books, records and accounts,
including, without limitation, payroll and intercompany transaction
accounts.

 

(g)  In
addition, Mezzanine Borrower, Mortgage Borrower and each SPE Entity shall each:
(i) maintain books and records separate from those of any other Person; (ii)
maintain its assets in such a manner that it is not more costly or difficult to
segregate, identify or ascertain such assets; (iii) hold regular meetings of its
board of directors, shareholders, partners or members, as the case may be, and
observe all other corporate, partnership or limited liability company, as the
case may be, formalities; (iv) hold itself out to creditors and the public as a
legal entity separate and distinct from any other entity; (v) prepare separate
tax returns and financial statements, or if part of a consolidated group, then
it will be shown as a separate member of such group; (vi) transact all business
with its Affiliates on an arm's-

 








56













length
basis and pursuant to enforceable agreements; (vii) conduct business in its name
and use separate stationery, invoices and checks; (viii) not commingle its
assets or funds with those of any other Person; and (ix) not assume, guarantee
or pay the debts or obligations of any other Person.

 

5.1.5  Consents

 

If
Mezzanine Borrower, Mortgage Borrower or any SPE Entity is a corporation, the
board of directors of such Person may not take any action requiring the
unanimous affirmative vote of 100% of the members of the board of directors
unless all of the directors, including the Independent Directors, shall have
participated in such vote. If Mezzanine Borrower, Mortgage Borrower or any SPE
Entity is a limited liability company, (a) if such Person is managed by a board
of managers, the board of managers of such Person may not take any action
requiring the unanimous affirmative vote of 100% of the members of the board of
managers unless all of the managers, including the Independent Managers, shall
have participated in such vote, (b) if such Person is not managed by a board of
managers, the members of such Person may not take any action requiring the
affirmative vote of 100% of the members of such Person unless all of the
members, including the Independent Members, shall have participated in such
vote. An affirmative vote of 100% of the directors, board of managers or
members, as applicable, of Mezzanine Borrower, Mortgage Borrower and any SPE
Entity shall be required to (i) file a bankruptcy or insolvency petition or
otherwise institute insolvency proceedings or to authorize Mezzanine Borrower,
Mortgage Borrower or any SPE Entity to do so or (ii) file an involuntary
bankruptcy petition against any Close Affiliate, Manager, or any Close Affiliate
of Manager. Furthermore, Mezzanine Borrower's, Mortgage Borrower's or each SPE
Entity's formation documents shall expressly state that for so long as the Loan
is outstanding, none of Mezzanine Borrower, Mortgage Borrower nor any SPE Entity
shall be permitted to (i) dissolve, liquidate, consolidate, merge or sell all or
substantially all of Mezzanine Borrower's, Mortgage Borrower's or any SPE
Entity's assets other than in connection with the repayment of the Loan or (ii)
engage in any other business activity and such restrictions shall not be
modified or violated for so long as the Loan is outstanding.

 

5.1.6  Notice
of Default

 

Mezzanine
Borrower shall promptly advise Mezzanine Lender (a) of any event or condition
that has or is likely to have a Material Adverse Effect and (b) of the
occurrence of any Default or Event of Default arising under the Loan Documents
(Intermediate Mezzanine), or Default or Event of Default arising under the
Mortgage Loan or Senior Mezzanine Loan to which Mezzanine Borrower has
knowledge.

 

5.1.7  Cooperate
in Legal Proceedings

 

Mezzanine
Borrower shall cooperate (and shall cause Mortgage Borrower to cooperate) fully
with Mezzanine Lender with respect to any proceedings before any court, board or
other Governmental Authority which would reasonably be expected to affect in any
material adverse way the rights of Mezzanine Lender hereunder or under any of


 








57













the other
Loan Documents (Intermediate Mezzanine) and, in connection therewith, permit
Mezzanine Lender, at its election, to participate in any such proceedings which
may have a Material Adverse Effect.

 

5.1.8  Perform
Loan Documents (Intermediate Mezzanine)

 

Mezzanine
Borrower shall observe, perform and satisfy all the terms, provisions, covenants
and conditions of, and shall pay when due all costs, fees and expenses to the
extent required, under the Loan Documents (Intermediate Mezzanine) executed and
delivered by, or applicable to, Mezzanine Borrower.

 

5.1.9  Further
Assurances; Separate Notes.

 

(a)  Mezzanine
Borrower shall execute and acknowledge (or cause to be executed and
acknowledged) and deliver to Mezzanine Lender all documents, and take all
actions, reasonably required by Mezzanine Lender from time to time to confirm
the rights created or now or hereafter intended to be created under this
Agreement and the other Loan Documents (Intermediate Mezzanine) and any security
interest created or purported to be created thereunder, to protect and further
the validity, priority and enforceability of this Agreement and the other Loan
Documents (Intermediate Mezzanine), to subject to the Loan Documents
(Intermediate Mezzanine) any property of Mezzanine Borrower intended by the
terms of any one or more of the Loan Documents (Intermediate Mezzanine) to be
encumbered by the Loan Documents (Intermediate Mezzanine), or otherwise carry
out the purposes of the Loan Documents (Intermediate Mezzanine) and the
transactions contemplated thereunder. Mezzanine Borrower agrees that it shall,
upon request, reasonably cooperate with Mezzanine Lender in connection with any
request by Mezzanine Lender to sever the Mezzanine Note into two (2) or more
separate substitute or component notes in an aggregate principal amount equal to
the Principal Amount and to reapportion the Loan among such separate substitute
notes, including, without limitation, by executing and delivering to Mezzanine
Lender new substitute or component notes to replace the Mezzanine Note,
amendments to or replacements of existing Loan Documents (Intermediate
Mezzanine) to reflect such severance and/or Opinions of Counsel with respect to
such substitute or component notes, amendments and/or replacements, provided
that Mezzanine Borrower shall bear no costs or expenses in connection therewith
(other than administrative costs and expenses of Mezzanine Borrower), and the
holders of such substitute or component notes shall designate a lead lender or
agent for such holders to whom Mezzanine Borrower may direct all communications
with respect to the Loan. Any such substitute or component notes may have
varying principal amounts and economic terms, provided, however, that (i) the
maturity date of any such substitute or component note shall be the same as the
scheduled Maturity Date of the Mezzanine Note immediately prior to the issuance
of such substitute notes, (ii) the substitute notes shall provide for
amortization of the Principal Amount on a weighted average basis over a period
not less than the amortization period provided under the Mezzanine Note, if any,
immediately prior to the issuance of the substitute notes, (iii) the weighted
average LIBOR Margin for the term of the substitute notes shall not exceed the
LIBOR Margin under the Mezzanine Note immediately prior to the issuance of such
substitute notes; and (iv) the economics of the Loan, taken as a whole, shall
not change in a 

 








58













manner
which is adverse to Mezzanine Borrower. Upon the occurrence and during the
continuance of an Event of Default, Mezzanine Lender may apply payment of all
sums due under such substitute notes in such order and priority as Mezzanine
Lender shall elect in its sole and absolute discretion.

 

(b)  Mezzanine
Borrower further agrees that if, in connection with the Securitization, it is
determined by the Rating Agencies that a portion of the Securitization would not
receive an "investment grade" rating unless the principal amount of the Mortgage
Loan were to be decreased and, as a result, the principal amount of the Mortgage
Loan is decreased, then (i) the Mezzanine Borrower shall take all actions as are
necessary to effect the "resizing" of the Loan and the Mortgage Loan, (ii) the
Mezzanine Borrower shall cause the Mortgage Borrower to comply with its
agreements to effect a "resizing", and (iii) Mezzanine Lender shall on the date
of the "resizing" of the Loan lend to the Mezzanine Borrower (by way of a
reallocation of the principal amount of the Mortgage Loan and the Loan) such
additional amount equal to the amount of the principal reduction of the Loan
provided that Mortgage Borrower and Mezzanine Borrower execute and deliver any
and all necessary amendments or modifications to the Loan Documents (Mortgage)
and the Loan Documents (Intermediate Mezzanine). In addition, Mezzanine Borrower
and Mezzanine Lender agree that if, in connection with the Securitization, it is
determined by the Rating Agencies that, if the principal amount of the Loan were
to be decreased and, as a result the principal amount of the Mortgage Loan were
increased, more "investment grade" rated securities could be issued, then (i) if
"resizing" to increase the size of the Mortgage Loan and decrease the size of
the Loan is provided for in the Loan Documents (Mortgage), each of them shall
take all actions provided for in the documentation for the Loan as are necessary
to effect the "resizing" of the Loan and the Mortgage Loan, (ii) Mezzanine
Borrower shall cause the Mortgage Borrower to comply with its agreements to
effect a "resizing" and (iii) Mortgage Lender shall on the date of the
"resizing" of the Loan lend to the Mortgage Borrower (by way of a reallocation
of the principal amount of the Mortgage Loan and the Loan) an additional amount
equal to the amount of principal reduction of the Loan, provided that Mortgage
Borrower and Mezzanine Borrower execute and deliver any and all necessary
modifications to the Loan Documents (Mortgage) and Loan Documents (Intermediate
Mezzanine). In connection with the foregoing, Mezzanine Borrower agrees, at
Mezzanine Borrower's sole cost and expense, to execute and deliver such
documents and other agreements reasonably required by Mortgage Lender and/or
Mezzanine Lender to "re-size" the Loan and the Mortgage Loan, including, without
limitation, an amendment to this Agreement, the Mezzanine Note, the Pledge and
the other Loan Documents (Mortgage) and, if the principal amount of the Mortgage
Loan is increased, an endorsement to the Title Policy reflecting an increase in
the insured amount thereunder. Mezzanine Borrower agrees to reimburse Mezzanine
Lender for all costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred by Mezzanine Lender in connection with
any "resizing" of the Loan and to pay for any additional "Eagle 9" or other UCC
insurance coverage reasonably required by Mezzanine Lender in connection with
any increase in the principal amount of any Mezzanine Loan, and shall deliver
opinions of counsel similar to those delivered on the date hereof with respect
to Mezzanine Borrower and the Mezzanine Loans. Notwithstanding the foregoing,
Mezzanine Lender agrees that any "resizing" of the 

 








59













Mortgage
Loan and the Loan shall not change the economics of the Mortgage Loan, Senior
Mezzanine Loan, Junior Mezzanine Loan, and the Mezzanine Loan taken as a whole
in a manner which is adverse to Mezzanine Borrower.

 

(c)  In
addition, Mezzanine Borrower shall, at Mezzanine Borrower's sole cost and
expense:

 

(i)  furnish
to Mezzanine Lender, to the extent not otherwise already furnished to Mezzanine
Lender and reasonably acceptable to Mezzanine Lender, all instruments,
documents, boundary surveys, footing or foundation surveys, certificates, plans
and specifications, appraisals, title and other insurance reports and
agreements, and each and every other document, certificate, agreement and
instrument required to be furnished by Mortgage Borrower pursuant to the terms
of the Loan Documents (Mortgage); 

 

(ii)  execute
and deliver, from time to time, such further instruments (including, without
limitation, delivery of any financing statements under the UCC) as may be
reasonably requested by Mezzanine Lender to confirm the lien of the Pledge and
this Agreement or any Collateral;

 

(iii)  execute
and deliver to Mezzanine Lender such documents, instruments, certificates,
assignments and other writings, and do such other acts necessary to evidence,
preserve and/or protect the collateral at any time securing or intended to
secure the obligations of Mezzanine Borrower under the Loan Documents
(Intermediate Mezzanine), as Mezzanine Lender may reasonably require;


 

(iv)  do and
execute all and such further lawful and reasonable acts, conveyances and
assurances for the carrying out of the terms and conditions of this Agreement
and the other Loan Documents (Intermediate Mezzanine), as Mezzanine Lender shall
reasonably require from time to time; and

 

(v)  cause its
New York counsel to re-issue the New York opinion delivered on the date hereof
(in identical form and without updating) in favor of any purchaser of the Loan
or an interest therein.

 

5.1.10  Business
and Operations

 

Mortgage
Borrower, Mezzanine Borrower, and Operating Lessee shall continue to engage in
the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Property and the Collateral, as applicable. Mezzanine Borrower shall and shall
cause Mortgage Borrower to, qualify to do business and shall remain in good
standing under the laws of all applicable jurisdictions and to the extent
required for the ownership, maintenance, management and operation of the
Property and, as applicable, the ownership of the Collateral.

 

5.1.11  Title
to the Collateral

 








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Mezzanine
Borrower shall warrant and defend (a) its title to the Collateral and every part
thereof, subject only to Liens permitted hereunder (including Permitted
Encumbrances) and (b) the validity and priority of the Lien of the Pledge and
this Agreement on the Collateral, subject only to Liens permitted hereunder
(including Permitted Encumbrances), in each case against the claims of all
Persons whomsoever. Mezzanine Borrower shall reimburse Mezzanine Lender for any
losses, costs, damages or expenses (including reasonable attorneys' fees and
court costs) incurred by Mezzanine Lender if an interest in the Collateral,
other than as permitted hereunder, is claimed by another Person.

 

5.1.12  Costs
of Enforcement

 

In the
event (a) that this Agreement or the Pledge is foreclosed upon in whole or in
part or that this Agreement or the Pledge is put into the hands of an attorney
for collection, suit, action or foreclosure, (b) of the foreclosure of any
security agreement prior to or subsequent to this Agreement or the Pledge in
which proceeding Mezzanine Lender is made a party, or a Pledge prior to or
subsequent to the Pledge in which proceeding Mezzanine Lender is made a party,
or (c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding
in respect of Mezzanine Borrower or any of its constituent Persons or an
assignment by Mezzanine Borrower or any of its constituent Persons for the
benefit of its creditors, Mezzanine Borrower, its successors or assigns, shall
be chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys' fees and costs, incurred by Mezzanine Lender or
Mezzanine Borrower in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required
service or use taxes.

 

5.1.13  Estoppel
Statement.

 

(a)  Mezzanine
Borrower shall, from time to time, upon thirty (30) days' prior written request
from Mezzanine Lender, execute, acknowledge and deliver to the Mezzanine Lender
(and shall cause Mortgage Borrower and Senior Mezzanine Borrower to execute,
acknowledge and deliver to Mezzanine Lender), an Officer's Certificate, stating
that this Agreement and the other Loan Documents (Intermediate Mezzanine) (or as
applicable, the Loan Documents (Mortgage) or Loan Documents Senior Mezzanine)
are unmodified and in full force and effect (or, if there have been
modifications, that this Agreement and the other Loan Documents (Intermediate
Mezzanine) or, as applicable, Loan Documents (Mortgage) or Senior Mezzanine Loan
Documents are in full force and effect as modified and setting forth such
modifications), stating the amount of accrued and unpaid interest and the
outstanding principal amount of the Mezzanine Note (or, as applicable, the
Mortgage Note or Senior Mezzanine Note) and containing such other information,
qualified to the Best of Mezzanine Borrower's Knowledge, with respect to the
Mezzanine Borrower, Guarantor, Mortgage Borrower, Senior Mezzanine Borrower, the
Property, the Loan, the Mortgage Loan, and the Senior Mezzanine Loan, as
Mezzanine Lender shall reasonably request. `The estoppel certificate shall also
state either that no Event of Default or Mortgage Event of Default exists
hereunder or thereunder or, if any Event of Default or Mortgage Event of Default
shall exist hereunder or thereunder, specify such Event of Default or Mortgage
Event 

 








61













of
Default and the steps being taken to cure such Event of Default or Mortgage
Event of Default.

 

(b)  Mezzanine
Borrower shall use commercially reasonable efforts to deliver to Mezzanine
Lender, within thirty (30) days of Mezzanine Lender's request, tenant estoppel
certificates from each Tenant under Leases entered into after the Closing Date
in substantially the form and substance of the estoppel certificate set forth in
Exhibit
G provided
that Mezzanine Borrower shall not be required to deliver such certificates more
frequently than one time in any calendar year; provided, however, that there
shall be no limit on the number of times Mezzanine Borrower may be required to
obtain such certificates if a Default hereunder or under any of the Loan
Documents (Intermediate Mezzanine) has occurred and is continuing.

 

5.1.14  Loan
Proceeds

 

Mezzanine
Borrower shall use the proceeds of the Loan received by it on the Closing Date
only for the purposes set forth in Section
2.1.4.

 

5.1.15  No
Joint Assessment

 

Mezzanine
Borrower shall not suffer, permit or initiate the joint assessment of the
Property (a) with any other real property constituting a tax lot separate from
the Property and (b) which constitutes real property with any portion of the
Property which may be deemed to constitute personal property, or any other
procedure whereby the lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such real property
portion of the Property.

 

5.1.16  No
Further Encumbrances

 

Mezzanine
Borrower shall do, or cause to be done, all things necessary to keep and protect
the Property and the Collateral and all portions thereof unencumbered from any
Liens, easements or agreements granting rights in or restricting the use or
development of the Property, except for (a) with respect to the Property,
Permitted Encumbrances, (b) Liens permitted pursuant to the Loan Documents
(Intermediate Mezzanine), or the Loan Documents (Mortgage), (c) Liens for
Impositions prior to the imposition of any interest, charges or expenses for the
non-payment thereof and (d) any Liens permitted pursuant to Leases.

 

5.1.17  Leases
and REAs

 

Mezzanine
Borrower shall cause Mortgage Borrower, promptly after receipt thereof, to
deliver to Mezzanine Lender a copy of any notice received with respect to the
REAs and the Leases claiming that Mortgage Borrower is in default in the
performance or observance of any of the material terms, covenants or conditions
of any of the REAs or the Leases.

 








62
















 

5.1.18  Loan
(Mortgage) Covenants.


 

(a)  Mezzanine
Borrower hereby covenants that it shall cause Mortgage Borrower to fully keep,
perform and comply with (or cause to be kept, performed and complied with) each
of the covenants set forth in the Loan Agreement (Mortgage) and the Security
Instrument, which are hereby incorporated by reference as if fully set forth
herein, notwithstanding any waiver or future amendment of such covenants by
Mortgage Lender (other than a Permitted Mortgage Loan Amendment). Mezzanine
Borrower acknowledges that the obligation to comply with such covenants is
separate from, and may be enforced independently from, the obligations of the
Mortgage Borrower under the Loan Documents (Mortgage). 

 

(b)  Mezzanine
Borrower shall not, and shall cause Mortgage Borrower and Senior Mezzanine
Borrower not to, (i) amend or modify (by agreement on the part of the Mortgage
Borrower, Senior Mezzanine Borrower, or Mezzanine Borrower) or (ii)
affirmatively permit the modification or amendment of (by operation of law or
otherwise) the Loan Documents (Mortgage) or Senior Mezzanine Loan Documents in
effect as of the Closing Date that would be a Prohibited Loan Amendment (as
hereinafter defined) except for those amendments or modifications (Permitted
Mortgage Loan Amendments) that
are (i) required under the Loan Documents (Mortgage), or Senior Mezzanine Loan
Documents, as applicable, or that Mortgage Borrower or Senior Mezzanine Borrower
is required to consent to thereunder pursuant to the express terms of the Loan
Documents (Mortgage) or Senior Mezzanine Loan Documents, as applicable, (ii)
which do not constitute a Prohibited Loan Amendment, or (iii) are otherwise
consented to by Mezzanine Lender. As used herein, a Prohibited
Loan Amendment shall
mean an amendment or modification to the Loan Documents (Mortgage) or Senior
Mezzanine Loan Documents that (A) is reasonably likely to have a Material
Adverse Effect, or (B) which (1) increases the principal amount of the Loan
(Mortgage) or Senior Mezzanine Loan (exclusive of protective advances), (2)
increases the interest rate payable under the Loan (Mortgage) or Senior
Mezzanine Loan, (3) provides for the payment of any additional interest,
additional fees, increases the amount of or adds additional reserve payments or
increases the amount of or adds additional escrows, or otherwise increases the
amount payable under the Loan (Mortgage) or Senior Mezzanine Loan, (4) increases
the frequency or payment amount of the periodic principal installments under the
Loan (Mortgage) or Senior Mezzanine Loan, (5) modifies the recourse carveout
obligations under the Loan Documents (Mortgage) or Senior Mezzanine Loan in a
manner which increases or expands recourse liability, (6) modifies the
due-on-sale, due-on-encumbrance, or collateral release provisions of the Loan
Documents (Mortgage) or Senior Mezzanine Loan, (7) modifies the provisions
governing requirements with respect to the Independent Managers under the Loan
Documents (Mortgage) or Senior Mezzanine Loan in a manner materially adverse to
Mortgage Lender, (8) adds material additional obligations, liabilities or
indemnities on the part of Mortgage Borrower, Guarantor, General Partner, Senior
Mezzanine Borrower, or Mezzanine Borrower, (9) shortens any default cure periods
or adds any additional defaults under the Loan Documents (Mortgage) or Senior
Mezzanine Loan Documents, (10) extends the maturity date of the Loan (Mortgage)
or Senior 

 








63













Mezzanine
Loan beyond the initially scheduled maturity date (except in connection with any
work-out or other surrender, compromise, release, renewal, or indulgence
relating to the Loan (Mortgage) or Senior Mezzanine Loan, (11) modifies any
provisions related to the Management Agreement, (12) waives or modifies any
provisions related to the use of proceeds under the Loan Documents (Mortgage) or
Senior Mezzanine Loan Documents, (13) modifies any provisions of the Loan
Documents (Mortgage) or Senior Mezzanine Loan Documents related to the funding
of escrows or cash management or any provision of the Account Agreement
(Mortgage) or Account Agreement (Senior Mezzanine) or (14) decreases or
materially modifies any insurance requirements under the Loan Documents
(Mortgage). Any amendment or modification to the Loan Documents (Mortgage) or
Senior Mezzanine Loan Documents in violation of this Section shall be
ineffective as between Mezzanine Borrower and Mezzanine Lender, and, if not
cured by Mezzanine Borrower within thirty (30) days after written notice from
Mezzanine Lender shall constitute an Event of Default hereunder, unless
Mezzanine Lender consents thereto in writing in its sole discretion.


 

(c)  In the
event the Loan (Mortgage) shall at any time be repaid, or the Liens securing the
Loan (Mortgage) at any time be released in full, then unless and until the
Mezzanine Note shall have been repaid in full and all obligations of Mezzanine
Borrower to Mezzanine Lender hereunder and under the other Loan Documents
(Intermediate Mezzanine) shall have been satisfied, then Mezzanine Borrower and
Manager shall nevertheless comply or cause the Mortgage Borrower to comply with
each of the terms and provisions of the Loan Documents (Mortgage) (other than
payment of principal, interest and premium (if any)) and the Loan Documents
(Mortgage) shall nevertheless be deemed to remain in full force and effect as
between Mezzanine Borrower and Mezzanine Lender with Mezzanine Lender being
deemed in such context to possess exclusively all of the rights and remedies of
the Mortgage Lender thereunder including without limitation, all rights of
consent and approval, rights to receive and control the disposition of casualty
insurance proceeds and condemnation awards, and the right to collect rents
through a lockbox and make waterfall distributions (but expressly excluding any
rights and remedies relating to payment of the indebtedness under the Loan
Documents (Mortgage) and evidenced by the Mortgage Note and Mezzanine Borrower
shall nevertheless comply or cause the Mortgage Borrower to comply with each of
the terms and provisions of the Loan Documents (Mortgage) (and any Permitted
Loan Amendment or amendment or modification consented to in writing by Mezzanine
Lender) (other than the payment of principal, interest and premium, if any).
Mezzanine Borrower shall, and shall cause Mortgage Borrower to, execute any and
all documents reasonably requested by Mezzanine Lender for the implementation or
furtherance of the foregoing provided that the same shall be at Mezzanine
Lender’s sole cost and expense. Mezzanine Borrower shall deliver to Mezzanine
Lender copies of any and all modifications to the Loan Documents (Mortgage)
within five (5) Business Days after execution thereof.

 

(d)  Mezzanine
Borrower covenants and agrees to cause Mortgage Borrower to deliver any and all
financial information delivered or required to be delivered to Mortgage Lender
pursuant to the terms of the Loan Documents (Mortgage) to be delivered
simultaneously to Mezzanine Lender.

 








64

















5.1.19  Impositions

 

Mezzanine
Borrower shall cause Mortgage Borrower to pay all Impositions, to timely pay all
claims for labor, material or supplies that if unpaid or unbonded might by law
become a lien or charge upon any of its property (including the Property), and
to keep the Property free from any Lien (other than the lien of the Loan
Documents (Mortgage) and the Permitted Encumbrances), and shall in any event
cause the prompt, full and unconditional discharge of all Liens imposed upon the
Property or any portion thereof within thirty (30) days after receiving written
notice (whether from Mezzanine Lender, the lienholder or any other Person) of
the filing thereof; subject in each case to Mortgage Borrower's right to contest
the same as permitted in but subject to the conditions set forth in the Loan
Agreement (Mortgage) so long as no Event of Default has occurred. In the event
that Mortgage Borrower elects to commence any contest or similar proceeding with
respect to any such Imposition, Lien or other claim described herein, Mezzanine
Borrower shall provide prompt written notice thereof to Mezzanine Lender
together with such evidence as Mezzanine Lender may reasonably require showing
Mortgage Borrower’s satisfaction of the requirements set forth in Section 7.3 of
the Loan Agreement (Mortgage) to Mortgage Borrower conducting such contest.
Notwithstanding the foregoing, Mezzanine Borrower shall cause Mortgage Borrower
promptly to pay any contested Imposition, Lien or claim and the payment thereof
shall not be deferred, if Mezzanine Lender or Mortgage Borrower may be subject
to civil or criminal damages as a result thereof. If such action or proceeding
is terminated or discontinued adversely to Mortgage Borrower, then Mezzanine
Borrower shall cause Mortgage Borrower to deliver to Mezzanine Lender reasonable
evidence of payment of such contested Imposition or Lien.

 

5.1.20  Leases

 

Mezzanine
Borrower shall promptly after receipt thereof (or receipt by Mortgage Borrower)
deliver to Mezzanine Lender a copy of any notice received with respect to the
Leases claiming that Mortgage Borrower is in default in the performance or
observance of any of the material terms, covenants or conditions of any of the
Leases, if such default is reasonably likely to have a Material Adverse
Effect.

 

5.1.21  Membership
Programs

 

Mezzanine
Borrower shall receive Mezzanine Lender's prior written consent to make any
material modifications to (or permit Mortgage Borrower to make any material
modifications to) any existing membership program or similar program at the
Property or enter into any new membership or similar program at the Property to
the extent such modification or new program (i) would allow any member to redeem
a membership deposit prior to Mortgage Borrower obtaining at least one new
membership deposit in an amount at least equal to the existing deposit to be
redeemed (i.e., a 1:1 redemption program), or (ii) could adversely affect the
value of Mezzanine Lender's security for the Loan. Mezzanine Borrower shall
cause Mortgage Borrower to cause any membership deposits 

 








65













which are
not subject to a minimum of 1:1 redemption program to be held in a separate
interest bearing account and if requested by Lender, shall, at its sole cost and
expense promptly cause any such deposits to be held in an account under the
control of Lender. If Lender consents to any membership or similar program that
does not have a minimum 1:1 redemption method, Borrower agrees at its sole cost
and expense to promptly establish any reserves with Lender and make any
corresponding modifications to the Loan Documents as are requested by the Rating
Agencies.

 

5.1.22  Article
8 "Opt In" Language

 

Each
organizational document of Mezzanine Borrower, General Partner, each SPE Entity
and Mortgage Borrower shall be modified to include the language set forth on
Exhibit
R and such
language shall remain in each such organizational document for so long as the
Obligations are outstanding.

 

Section
5.2  Negative
Covenants

 

. From
the Closing Date until payment and performance in full of all Obligations of
Mezzanine Borrower under the Loan Documents (Intermediate Mezzanine) or the
earlier release of the Lien of this Agreement or the Pledge in accordance with
the terms of this Agreement and the other Loan Documents (Intermediate
Mezzanine), Mezzanine Borrower covenants and agrees with Mezzanine Lender that
it will not do (and will not permit Operating Lessee to do), or permit to be
done, directly or indirectly, any of the following (and in such connection,
references in this Article V to Mortgage Borrower shall alternatively mean
Operating Lessee, as the context may require):

 

5.2.1  Incur
Debt

 

Incur,
create or assume any Debt other than Permitted Debt (Intermediate Mezzanine) or
Transfer all or any part of the Collateral or any interest therein, except as
permitted in the Loan Documents (Intermediate Mezzanine);

 

5.2.2  Encumbrances

 

Other
than in connection with the Loan Documents (Intermediate Mezzanine), the Loan
Documents (Mortgage), the Loan Documents (Junior Mezzanine), and the Revolving
Credit Loan Documents, incur, create or assume or permit the incurrence,
creation or assumption of any Debt secured by an interest in Mortgage Borrower,
Mezzanine Borrower, Operating Lessee, CNL Hotel Del Tenant Corp., or Manager,
and shall not Transfer or permit the Transfer of any interest in Mortgage
Borrower, Mezzanine Borrower, Operating Lessee, or Manager, except as permitted
pursuant to Article
VIII;

 

5.2.3  Engage
in Different Business

 

Engage,
directly or indirectly, in any business other than that of entering into this
Agreement and the other Loan Documents (Intermediate Mezzanine) to 

 








66













which
Mezzanine Borrower is a party and ownership of interests in the Mortgage
Borrower and activities related thereto;

 

5.2.4  Make
Advances

 

Make
advances or make loans to any Person, or hold any investments, except as
expressly permitted pursuant to the terms of this Agreement or any other Loan
Document (Intermediate Mezzanine);

 

5.2.5  Partition

 

Permit
Mortgage Borrower to partition the Property;

 

5.2.6  Commingle

 

Commingle
its assets with the assets of any of its Affiliates;

 

5.2.7  Guarantee
Obligations

 

Guarantee
any obligations of any Person;

 

5.2.8  Transfer
Assets

 

Transfer
any asset other than in the ordinary course of business or Transfer any interest
in the Property except as may be permitted hereby or in the other Loan Documents
(Intermediate Mezzanine);

 

5.2.9  Amend
Organizational Documents

 

Amend or
modify any of its organizational documents without Mezzanine Lender's consent,
other than in connection with any Transfer permitted pursuant to Article
VIII or to
reflect any change in capital accounts, contributions, distributions,
allocations or other provisions that do not and could not reasonably be expected
to have a Material Adverse Effect and provided that Mezzanine Borrower and each
SPE Entity each remain a Single Purpose Entity;

 

5.2.10  Dissolve

 

Dissolve,
wind-up, terminate, liquidate, merge with or consolidate into another Person,
except following or simultaneously with a repayment of the Loan in full or as
expressly permitted pursuant to this Agreement;

 

5.2.11  Bankruptcy

 

(i) File
a bankruptcy or insolvency petition or otherwise institute insolvency
proceedings, (ii) dissolve, liquidate, consolidate, merge or sell all or
substantially all of Mezzanine Borrower's assets other than in connection with
the repayment of the Loan, 

 








67













(iii)
engage in any other business activity or (iv) file or solicit the filing of an
involuntary bankruptcy petition against Mezzanine Borrower, Mortgage Borrower,
Manager or any Close Affiliate of Mezzanine Borrower or Manager, without
obtaining the prior consent of all of the directors of Mezzanine Borrower,
including, without limitation, the Independent Directors;

 

5.2.12  ERISA

 

Engage in
any activity that would subject it to regulation under ERISA or qualify it as an
"employee benefit plan" (within the meaning of Section 3(3) of ERISA) to which
ERISA applies and Mezzanine Borrower's assets do not and will not constitute
plan assets within the meaning of 29 C.F.R. Section 2510.3-101;

 

5.2.13  Distributions

 

From and
after the occurrence and during the continuance of an Event of Default, make any
distributions to or for the benefit of any of its shareholders, partners or
members, as the case may be, or its or their Affiliates;

 

5.2.14  Manager.

 

(a)  Except as
provided in this Section
5.2.14,
Mezzanine Borrower shall not, without the prior written consent of Mezzanine
Lender, which consent shall not be unreasonably withheld or delayed, permit
Mortgage Borrower to: amend, modify, supplement, alter or waive any right under
the Management Agreement without Mezzanine Lender's prior written consent, not
to unreasonably withheld. Without the receipt of Mezzanine Lender's prior
written consent, Mezzanine Borrower may permit Mortgage Borrower to make any
nonmaterial modification, change, supplement, alteration or amendment to the
Management Agreement and to waive any nonmaterial rights thereunder, provided
that no such modification, change, supplement, alteration, amendment or waiver
shall affect the cash management procedures set forth in the Management
Agreement or the Loan Documents (Mortgage) or Loan Documents (Intermediate
Mezzanine), decrease the cash flow of the Property, adversely affect the
marketability of the Property or the Collateral, 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 such definitions, change
any definitions or provisions so as to reduce the payments due the Mortgage
Borrower thereunder, change the timing of remittances to the Mortgage Borrower
thereunder, increase or decrease reserve requirements, change the term of the
Management Agreement or increase any Management Fees payable under the
Management Agreement; provided, however, the Group Services Fee may include
amounts in addition to the existing Sales and Marketing Group Services Expense
if and to the extent such amounts are attributable to services that would
otherwise constitute an Operating Expense or fee and such services qualify under
the provisions of the Management Agreement;

 

(b)  Mezzanine
Borrower may permit Mortgage Borrower to enter into a new Management Agreement
with an Acceptable Manager upon receipt of a Rating Agency 

 








68













Confirmation
(or, if such manager is a Pre-approved Manager, upon receipt of Mezzanine
Lender's prior written consent) with respect to the Property Management
Agreement and delivery of an acceptable Non-Consolidation Opinion covering such
replacement Manager if such Person (i) is not covered by the Non-Consolidation
Opinion or an Additional Non-Consolidation Opinion, and (ii) is an Affiliate of
Mortgage Borrower;

 

(c)  Mezzanine
Borrower hereby agrees that, subject to the provisions of the Assignment of
Management Agreement (Intermediate Mezzanine), Mezzanine Lender shall have the
right to terminate the Manager subsequent to (i) an Event of Default under this
Agreement and (ii) an acceleration of the Loan.

 

5.2.15  Franchise
Fee and Management Fee

 

Mezzanine
Borrower may not, without the prior written consent of Mezzanine Lender (which
may be withheld in its sole and absolute discretion) take or permit Mortgage
Borrower to take any action that would increase the percentage amount of the
Management Fee, or add a new type of fee (other than a "Group Services Expense"
as permitted by Section
5.2.14 above)
payable to Manager relating to the Property, including, without limitation, the
Franchise Fee and Management Fee;

 

5.2.16  Reserved;

 

5.2.17  REAs

 

Without
the prior consent of Mezzanine Lender, which shall not be unreasonably withheld,
delayed or conditioned, Mezzanine Borrower shall not permit Mortgage Borrower to
execute modifications to the REAs;

 

5.2.18  Modify
Account Agreement (Intermediate Mezzanine)

 

Without
the prior consent of Mezzanine Lender, which shall not be unreasonably withheld,
delayed or conditioned, Mezzanine Borrower shall not execute any modification to
the Account Agreement (Intermediate Mezzanine);

 

5.2.19  Zoning
Reclassification

 

Except as
contemplated by Section
2.3.4 of the
Loan Agreement (Mortgage), without the prior written consent of Mezzanine
Lender, which consent shall not be unreasonably withheld, permit Mortgage
Borrower to (a) initiate or consent to any zoning reclassification of any
portion of the Property, (b) seek any variance under any existing zoning
ordinance that could result in the use of the Property becoming a non-conforming
use under any zoning ordinance or any other applicable land use law, rule or
regulation, or (c) allow any portion of the Property to be used in any manner
that could result in the use of the Property becoming a non-conforming use under
any zoning ordinance or any other applicable land use law, rule or
regulation;

 

5.2.20  Change
of Principal Place of Business

 








69













Change
its principal place of business and chief executive office set forth on the
first page of this Agreement without first giving Mezzanine Lender thirty (30)
days' prior written notice (but in any event, within the period required
pursuant to the UCC) and there shall have been taken such action, reasonably
satisfactory to Mezzanine Lender, as may be necessary to maintain fully the
effect, perfection and priority of the security interest of Mezzanine Lender
hereunder in the Account Collateral (Intermediate Mezzanine) and the Rate Cap
Collateral (Intermediate Mezzanine) at all times;

 

5.2.21  Reserved;

 

5.2.22  Debt
Cancellation

 

Cancel or
otherwise forgive or release any material claim or debt owed to it by any
Person, except for adequate consideration or in the ordinary course of its
business;

 

5.2.23  Misapplication
of Funds

 

Distribute
any revenue from the Property or any Proceeds in violation of the provisions of
this Agreement, fail to remit amounts to the Mezzanine Account, as required by
Section
3.1, or the
Pledge, misappropriate any security deposit or portion thereof or apply the
proceeds of the Loan in violation of Section
2.1.4;
or

 

5.2.24  Single-Purpose
Entity

 

Fail to
be a Single-Purpose Entity or take or suffer any action or inaction the result
of which would be to cause it or any SPE Entity to cease to be a Single-Purpose
Entity.

 


	VI.  	
      INSURANCE;
      CASUALTY; CONDEMNATION;
RESTORATION




 

Section
6.1  Insurance
Coverage Requirements. 

 

(a)  Mezzanine
Borrower will cause Mortgage Borrower, at its expense, to procure and maintain
the insurance policies required by the Loan Documents (Mortgage). Each
commercial general liability or umbrella liability policy with respect to the
Property shall name Mezzanine Lender as an additional insured and shall contain
a cross liability/severability endorsement in form and substance acceptable to
Mezzanine Lender. 

 

(b)  In the
event of any loss or damage to the Property, Mezzanine Borrower shall give
prompt written notice to the insurance carrier and Mezzanine Lender. Mezzanine
Lender acknowledges that Mortgage Borrower’s rights to any insurance proceeds
are subject to the terms of the Loan Agreement (Mortgage). Mezzanine Borrower
may not and shall not permit Mortgage Borrower to settle, adjust or compromise
any claim under such insurance policies without the prior written consent of
Mezzanine Lender which shall not be unreasonably withheld, delayed or denied;
provided, further, that Mortgage Borrower 

 








70













may make
proof of loss and adjust and compromise any claim under casualty insurance
policies which is of an amount less than $500,000 so long as no Event of Default
has occurred. Any proceeds of such claim which are not used to reconstruct or
repair the Property, or applied to the balance of the loan evidenced by the Loan
Documents (Mortgage), shall be deposited into the accounts established pursuant
to the Loan Agreement (Mortgage) to the extent required thereby, or if such
deposit is not required thereunder, then such proceeds shall be paid to
Mezzanine Lender and applied to the payment of the Obligations (Intermediate
Mezzanine) whether or not then due.

 

(c)  In the
event that Mortgage Borrower is permitted pursuant to the terms of the Loan
Agreement (Mortgage) to reconstruct, restore or repair the Property following a
casualty to any portion of the Property, Mezzanine Borrower shall cause Mortgage
Borrower to promptly and diligently repair and restore the Property in the
manner and within the time periods required by the Loan Agreement (Mortgage),
the Leases and any other agreements affecting the Property. In the event that
Mortgage Borrower is permitted pursuant to terms of the Loan Agreement
(Mortgage) to elect to not reconstruct, restore or repair the Property following
a casualty to any portion of the Property, Mezzanine Borrower shall not permit
Mortgage Borrower to elect not to reconstruct, restore or repair the Property
without the prior written consent of Mezzanine Lender.

 

(d)  Mezzanine
Borrower shall comply with all Insurance Requirements and shall not bring or
keep or permit to be brought or kept any article upon any of the Property or
cause or permit any condition to exist thereon which would be prohibited by any
Insurance Requirement, or would invalidate insurance coverage required to be
maintained by Mortgage Borrower on or with respect to any part of the Property
pursuant to Section
6.1 of the
Loan Agreement (Mortgage). 

 

Section
6.2  Condemnation
and Insurance Proceeds

 

In the
event that all or any portion of the Property shall be damaged or taken through
condemnation (which term shall include any damage or taking by any governmental
authority, quasi-governmental authority, any party having the power of
condemnation, or any transfer by private sale in lieu thereof), or any such
condemnation shall be threatened, Mezzanine Borrower shall give prompt written
notice to Mezzanine Lender. Mezzanine Lender acknowledges that Mortgage
Borrower’s rights to any condemnation award is subject to the terms of the Loan
Agreement (Mortgage). Mezzanine Borrower may not and shall not permit Mortgage
Borrower to settle or compromise any claim, action or proceeding relating to
such damage or condemnation without the prior written consent of Mezzanine
Lender, which shall not be unreasonably withheld, delayed or denied; provided,
further, that Mortgage Borrower may settle, adjust and compromise any such
claim, action or proceeding which is of an amount less than $5,000,000 so long
as no Default or Event of Default has occurred. Any Excess Proceeds shall be
paid to Mezzanine Lender and applied to the payment of the Obligations
(Intermediate Mezzanine) whether or not then due pursuant to Section
2.3.1(b). In the
event that Mortgage Borrower is permitted pursuant to the terms of the Loan
Agreement (Mortgage) to reconstruct, restore or repair the Property following a
condemnation of any portion of the Property, Mezzanine Borrower shall cause
Mortgage 

 








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Borrower
to promptly and diligently repair and restore the Property in the manner and
within the time periods required by the Loan Agreement (Mortgage), the Leases
and any other agreements affecting the Property. In the event that Mortgage
Borrower is permitted pursuant to the terms of the Loan Agreement (Mortgage) to
elect not to reconstruct, restore or repair the Property following a
condemnation of any portion of the Property, Mezzanine Borrower shall not permit
Mortgage Borrower to elect not to reconstruct, restore or repair the Property
without the prior written consent of Mezzanine Lender.

 

Section
6.3  Certificates

 

Mezzanine
Borrower shall deliver (or cause Mortgage Borrower to deliver) to Mezzanine
Lender annually, concurrently with the renewal of the insurance policies
required hereunder, a certificate from Mezzanine Borrower's and Mortgage
Borrower's insurance agent stating that the insurance policies required to be
delivered to Mezzanine Lender pursuant to Section
6.1 and
Section
2.5.2(h) are
maintained with insurers who comply with the terms of Section 6.1.9 of the Loan
Agreement (Mortgage), setting forth a schedule describing all premiums required
to be paid by Mezzanine Borrower or Mortgage Borrower, as applicable, to
maintain the policies of insurance required under Section
6.1 and
Section
2.5.2(h), and
stating that either Mezzanine Borrower or Mortgage Borrower, as applicable, has
paid such premiums. Certificates of insurance with respect to all replacement
policies shall be delivered to Mezzanine Lender not less than fifteen (15)
Business Days prior to the expiration date of any of the insurance policies
required to be maintained hereunder which certificates shall bear notations
evidencing payment of applicable premiums. Originals (or certified copies) of
such replacement insurance policies shall be delivered to Mezzanine Lender
promptly after Mezzanine Borrower's receipt thereof but in any case within
thirty (30) days after the effective date thereof (including the insurance
certificates delivered pursuant to Section
2.5.2(h)). If
Mezzanine Borrower fails to (i) maintain or to deliver to Mezzanine Lender the
certificates of insurance required by this Agreement or (ii) maintain and
deliver originals (or certificated copies) of such insurance policies within
thirty (30) days after the effective date thereof, upon five (5) Business Days'
prior notice to Mezzanine Borrower, Mezzanine Lender may procure such insurance,
and all costs thereof (and interest thereon at the Default Rate) shall be added
to the Indebtedness. Mezzanine Lender shall not, by the fact of approving,
disapproving, accepting, preventing, obtaining or failing to obtain any
insurance, incur any liability for or with respect to the amount of insurance
carried, the form or legal sufficiency of insurance contracts, solvency of
insurance companies, or payment or defense of lawsuits, and Mezzanine Borrower
hereby expressly assumes full responsibility therefor and all liability, if any,
with respect thereto. Mezzanine Borrower agrees that any replacement insurance
policy required hereunder shall not include any so called "terrorist exclusion"
or similar exclusion or exception to insurance coverage relating to the acts of
terrorist groups or individuals.

 


	VII.  	
      INTENTIONALLY
      OMITTED




 


	VIII.  	
      TRANSFERS,
      INDEBTEDNESS AND SUBORDINATE
LIENS




 

Section
8.1  Restrictions
on Transfers and Indebtedness. 

 








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(a)  Unless
such action is a Permitted Mezzanine Transfer, or is otherwise permitted by the
subsequent provisions of this Article
VIII,
Mezzanine Borrower shall not, and shall not permit Mortgage Borrower or any
other Person to, without Mezzanine Lender's prior written consent, (a) Transfer
legal, Beneficial or direct or indirect equitable interests in all or any part
of the Property, the Mezzanine Borrower, Senior Mezzanine Borrower, Mortgage
Borrower, Operating Lessee, Mezzanine Borrower, General Partner, or Mortgage
Borrower General Partner, (B) permit or suffer any owner, directly or
indirectly, of a legal, Beneficial, or equitable interest in the Property,
Mezzanine Borrower, Mortgage Borrower, Operating Lessee, Senior Mezzanine
Borrower, Junior Mezzanine Borrower, General Partner, or Mortgage Borrower
General Partner, to Transfer such interest, whether by Transfer of stock or
other legal, Beneficial or equitable interest in any entity or otherwise, (C)
mortgage, hypothecate or otherwise encumber or grant a security interest in all
or any part of the legal, Beneficial or equitable interests in all or any part
of the Collateral, the Property, the Mezzanine Borrower, Mortgage Borrower, the
Operating Lessee, Mezzanine Borrower, Senior Mezzanine Borrower, the General
Partner, or the Mortgage Borrower General Partner, or (D) file a declaration of
condominium with respect to the Property. 

 

Notwithstanding
any provision herein to the contrary, nothing contained herein shall be deemed
to restrict or otherwise interfere with the ability of the holders of direct or
indirect legal, Beneficial or equitable interests in CNL Hospitality Partners,
LP and/or KSL DC Operating, LLC to Transfer such interests, whether in
connection with an initial public offering of shares in CNL Hospitality
Partners, LP and/or KSL DC Operating, LLC or otherwise.

 

(b)  Mezzanine
Borrower shall not incur, create or assume any Debt or incur any liabilities
without the consent of Mezzanine Lender; provided,
however,
Mezzanine Borrower may, without the consent of Mezzanine Lender, incur, create
or assume Permitted Debt (Senior Mezzanine).

 

Section
8.2  Sale
of Building Equipment and Immaterial Transfers and Easements by Mortgage
Borrower

 

.
Mezzanine Borrower may permit Mortgage Borrower to effect any Transfer permitted
pursuant to Section 8.2 and 8.3 of the Loan Agreement (Mortgage) without
Mezzanine Lender's prior written consent. 

 

Section
8.3  Intentionally
Omitted.

 

Section
8.4  Transfers
of Interests in Mezzanine Borrower

 

Each
holder of any direct or indirect interest in Mezzanine Borrower shall have the
right to transfer (but not pledge, hypothecate or encumber) its equity interest
in the Mezzanine Borrower to any Person who is not a Disqualified Transferee
without Mezzanine 

 








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Lender's
consent or a Rating Agency Confirmation if Section
8.6 is
complied with and, after giving effect to such transfer:

 

(A) Mezzanine
Borrower and the Property will be directly owned by a Single Purpose Entity in
compliance with the representations, warranties and covenants in Section
4.1.20 hereof
(as if the Mezzanine Borrower shall have remade all of such representations,
warranties and covenants as of, and after giving effect to, the transfer), and
which shall have executed and delivered to Mezzanine Lender an assumption
agreement in form and substance acceptable to Mezzanine Lender, evidencing the
continuing agreement of the Mezzanine Borrower to abide and be bound by all the
terms, covenants and conditions set forth in this Agreement, the Mezzanine Note,
the Pledge and the other Senior Mezzanine Loan Documents and all other
outstanding obligations under the Loan, together with such legal opinions and
title insurance endorsements as may be reasonably requested by Mortgage Lender
and Mezzanine Lender;

 

(B) an
Acceptable Manager shall continue to act as Manager for the Property pursuant to
the existing Management Agreement or an Acceptable Management Agreement;


 

(C) KSL DC
Operating, LLC, CNL Hospitality Partners, LP or a Close Affiliate of either such
entity owns directly or indirectly at least fifty-one percent (51%) of the
equity interests in the Mezzanine Borrower and Mortgage Borrower and the Person
that is the proposed transferee is not a Disqualified Transferee; provided that,
after giving effect to any such transfer, in no event shall any Person other
than CNL Hospitality Partners, LP, KSL DC Operating, LLC or a Close Affiliate of
CNL Hospitality Partners, LP or KSL DC Operating, LLC exercise Management
Control over the Mezzanine Borrower and/or Mortgage Borrower. In the event that
Management Control shall be exercisable jointly by CNL Hospitality Partners, LP,
KSL DC Operating, LLC or a Close Affiliate of CNL Hospitality Partners, LP or
KSL DC Operating, LLC with any other Person or Persons, then CNL Hospitality
Partners, LP, KSL DC Operating, LLC or such Close Affiliate shall be deemed to
have Management Control only if CNL Hospitality Partners, LP, KSL DC Operating,
LLC or such Close Affiliate retains the ultimate right as between the CNL
Hospitality Partners, LP, KSL DC Operating, LLC or such Close Affiliate and the
transferee to unilaterally make all material decisions with respect to the
operation, management, financing and disposition of the Property; 

 

(D) if there
has been a Transfer of forty-nine percent (49%) or more of the direct membership
interests, stock or other direct equity ownership interests in Mezzanine
Borrower, Mortgage Borrower, General Partner, Mortgage Borrower General Partner,
Mezzanine Borrower shall have first delivered to Mezzanine Lender an Officer's
Certificate and legal opinion of the types described in Section
8.6 below;
and

 

(E) Mezzanine
Borrower shall cause the transferee, if Mezzanine Lender so requests and if such
transferee is required to be a Single Purpose Entity pursuant to this Agreement,
to deliver to Mezzanine Lender its organizational documents solely for the


 








74













purpose
of Mezzanine Lender confirming that such organizational documents comply with
the single purpose bankruptcy remote entity requirements set forth
herein.

 

Section
8.5  Loan
Assumption

 

Without
limiting the foregoing, Mezzanine Borrower and Operating Lessee shall have the
right to sell, assign, convey or transfer (but not mortgage, hypothecate or
otherwise encumber or grant a security interest in) legal or equitable title to
all (but not less than all) of the Collateral only if Mortgage Borrower and
Operating Lessee simultaneously exercise their right to transfer the Property
pursuant to Section
8.5 of the
Loan Agreement (Mortgage) and:

 

(A) after
giving effect to the proposed transaction:

 

(1) Mezzanine
Borrower will be owned by a Single Purpose Entity wholly owned (directly or
indirectly) by a Permitted Borrower Transferee, Pre-approved Transferee or such
other entity (specifically approved in writing by Mezzanine Lender) which will
be in compliance with the representations, warranties and covenants contained in
Section
4.1.20 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), and
which shall have executed and delivered to Mezzanine Lender an assumption
agreement and such other agreements as Mezzanine Lender may reasonably request
(collectively, the Assumption
Agreement) in form
and substance acceptable to Mezzanine Lender, evidencing the proposed
transferee's agreement to abide and be bound by all the terms, covenants and
conditions set forth in this Agreement, the Mezzanine Note and the other Loan
Documents (Senior Mezzanine) and all other outstanding obligations under the
Loan; the Permitted Borrower Transferee, Pre-Approved Transferee or such other
approved entity shall assume the obligations of Guarantor under the Loan
Documents (Mezzanine) (and such Single Purpose Entity and the applicable
Permitted Borrower Transferee, Pre-approved Transferee or other approved entity
shall thereafter be subject to the provisions of this Article VIII), and the
transferee shall cause to be delivered to Mezzanine Lender such legal opinions
and title insurance endorsements as may be reasonably requested by Mezzanine
Lender;

 

(2) an
Acceptable Manager shall continue to act as Manager for the Property pursuant to
the existing Management Agreement or an Acceptable Management
Agreement;

 

(3) no Event
of Default shall have occurred and be continuing; and

 

(4) Mezzanine
Borrower shall have caused (i) the transferee to execute and deliver to
Mezzanine Lender a fully executed counterpart to the Pledge, pledging all of
such transferee's direct equity interests in Mortgage Borrower to Mezzanine
Lender as additional collateral for the Loan and (ii) the ultimate parent(s) of
such transferee to execute and deliver to Mezzanine Lender a fully executed
counterpart to the Recourse Guaranty (Senior Mezzanine) and Environmental
Indemnity (Senior Mezzanine), together with a legal opinion from such
transferee's counsel reasonably satisfactory to Mezzanine Lender with


 








75













respect
to the due execution, delivery, authority, enforceability and perfection (solely
with respect to the Pledge) of the Pledge, Recourse Guaranty (Senior Mezzanine)
and Environmental Indemnity (Senior Mezzanine).

 

(B) the
Assumption Agreement shall state the applicable transferee's agreement to abide
by and be bound by the terms in the Mezzanine Note (or such other promissory
notes to be executed by the transferee, such other promissory note or notes to
be on the same terms as the Mezzanine Note), this Agreement (or such other loan
agreement to be executed by such transferee, which shall contain terms
substantially identical to the terms hereof) and such other Loan Documents
(Senior Mezzanine) (or other loan documents to be delivered by such transferee,
which shall contain terms substantially identical to the terms of the applicable
Loan Documents (Senior Mezzanine)) whenever arising, and Mezzanine Borrower,
and/or such transferee shall deliver such legal opinions and title insurance
endorsements as may reasonably be requested by Mezzanine Lender;

 

(C) following
execution of a contract for the sale of the Property and not less than thirty
(30) days prior to the expected date of such proposed sale, Mezzanine Borrower
shall submit notice of such sale to Mezzanine Lender. Mezzanine Borrower shall
submit to Mezzanine Lender, not less than ten (10) days prior to the expected
date of such sale, the Assumption Agreement for execution by Mezzanine Lender.
Such documents shall be in a form appropriate for the jurisdiction in which the
Collateral is located and shall be reasonably satisfactory to Mezzanine Lender.
In addition, Mezzanine Borrower shall provide all other documentation Mezzanine
Lender reasonably requires to be delivered by Mezzanine Borrower in connection
with such assumption, together with an Officer's Certificate certifying that (i)
the assumption to be effected will be effected in compliance with the terms of
this Agreement and (ii) will not impair or otherwise adversely affect the
validity or priority of the Lien of the Pledge (or replacement pledge
agreements, as applicable);

 

(D) prior to
any such transaction, the proposed transferee shall deliver to Mezzanine Lender
an Officer's Certificate stating that (x) such transferee is not an "employee
benefit plan" within the meaning of Section 3(3) of ERISA that is subject Title
I of ERISA or any other Similar Law and (y) the underlying assets of the
proposed transferee do not constitute assets of any such employee benefit plan
for purposes of ERISA or any Similar Law;

 

(E) if the
transfer is to (i) an entity other than a Pre-approved Transferee, such transfer
shall be subject to Mezzanine Lender's consent in its sole discretion, and (ii)
a Permitted Borrower Transferee, such transfer shall be subject to Mezzanine
Lender's prior written consent in its reasonable discretion;

 

(F) the terms
of Section
8.6 shall be
complied with and Mezzanine Borrower shall cause the transferee to deliver to
Mezzanine Lender its organizational documents solely for the purpose of
Mezzanine Lender confirming that such organizational documents comply with the
single purpose bankruptcy remote entity requirements set forth herein;
and

 








76
















 

(G) Mezzanine
Lender shall have received the payment of, or reimbursement for, all reasonable
costs and expenses incurred by Mezzanine Lender (and any Servicer) in connection
therewith (including, without limitation, reasonable attorneys' fees and
disbursements).

 

(H) The
Junior Mezzanine Borrower shall simultaneously exercise its right to transfer
the "Collateral" (as defined in the Junior Mezzanine Loan) pursuant to and in
accordance with Section
8.5 of the
Junior Mezzanine Loan Agreement).

 

Section
8.6  Notice
Required; Legal Opinions

 

Not less
than five (5) Business Days prior to the closing of any transaction permitted
under the provisions of Sections
8.2 through
8.5,
Mezzanine Borrower shall deliver or cause to be delivered to Mezzanine Lender
(A) an Officer's Certificate describing the proposed transaction and stating
that such transaction is permitted hereunder and under the other Loan Documents
(Senior Mezzanine), together with any documents upon which such Officer's
Certificate is based, and (B) a legal opinion of counsel to Mezzanine Borrower
or the transferee selected by either of them (to the extent approved by
Mezzanine Lender), in form and substance consistent with similar opinions then
being required by the Mezzanine Lender and acceptable to the Mezzanine Lender,
confirming, among other things, that the assets of the Mezzanine Borrower, and
of its managing general partner or managing member, as applicable, will not be
substantively consolidated with the assets of such owners or Controlling Persons
of the Mezzanine Borrower as Mezzanine Lender may specify, in the event of a
bankruptcy or similar proceeding involving such owners or Controlling
Persons.

 

Section
8.7  Leases.

 

8.7.1  New
Leases and Lease Modifications

 

Except as
otherwise provided in this Section
8.7,
Mezzanine Borrower shall not permit Operating Lessee to (x) enter into any Lease
on terms other than "market" and rental rates (in Mezzanine Borrower's or
Operating Lessee's good faith judgment), or enter into any Material Lease (a
New
Lease) or (y)
consent to the assignment of any Material Lease (unless required to do so by the
terms of such Material Lease) that releases the original Tenant from its
obligations under the Material Lease, or (z) modify any Material Lease
(including, without limitation, accept a surrender of any portion of the
Property subject to a Material Lease (unless otherwise permitted or required by
law), allow a reduction in the term of any Lease or a reduction in the Rent
payable under any Material Lease, change any renewal provisions of any Material
Lease, materially increase the obligations of the landlord or materially
decrease the obligations of any Tenant) or terminate any Material Lease (any
such action referred to in clauses (y) and (z) being referred to herein as a
Lease
Modification) without
the prior written consent of Mezzanine Lender which consent shall not be
unreasonably withheld or delayed. Any New Lease or Lease Modification that
requires Mezzanine Lender's consent shall be delivered to Mezzanine


 








77













Lender
for approval not less than ten (10) Business Days prior to the effective date of
such New Lease or Lease Modification. Lender agrees that non-material changes to
the Operating Lease (as determined by Mezzanine Lender in its sole but
reasonable discretion) may be permitted without requiring Mezzanine Lender's
consent.

 

8.7.2  Leasing
Conditions

 

Subject
to terms of this Section
8.7,
provided no Event of Default shall have occurred and be continuing, Mortgage
Borrower may enter into a New Lease or Lease Modification, without Mezzanine
Lender's prior written consent, that satisfies each of the following conditions
(as evidenced by an Officer's Certificate delivered to Mezzanine Lender prior to
Mortgage Borrower’s entry into such New Lease or Lease
Modification):

 

(a)  with
respect to a New Lease or Lease Modification, the premises demised thereunder is
not more than 10,000 net rentable square feet of the Property;

 

(b)  the term
of such New Lease or Lease Modification, as applicable, does not exceed 120
months, plus up to two (2) 60-month option terms (or equivalent combination of
renewals);

 

(c)  the New
Lease or Lease Modification provides for "market" rental rates other terms and
does not contain any terms which would adversely affect Mezzanine Lender's
rights under the Loan Documents (Intermediate Mezzanine) or that would have a
Material Adverse Effect;

 

(d)  the New
Lease or Lease Modification, as applicable, provides that the premises demised
thereby cannot be used for any of the following uses; any pornographic or
obscene purposes, any commercial sex establishment, any pornographic, obscene,
nude or semi-nude performances, modeling, materials, activities or sexual
conduct or any other use that has or could reasonably be expected to have a
Material Adverse Effect;

 

(e)  the
Tenant under such New Lease or Lease Modification, as applicable, is not an
Affiliate of Mortgage Borrower;

 

(f)  the New
Lease or Lease Modification, as applicable, does not prevent Proceeds from being
held and disbursed by Mezzanine Lender in accordance with the terms of the Loan
Documents (Mortgage) and does not entitle any Tenant to receive and retain
Proceeds except those that may be specifically awarded to it in condemnation
proceedings because of the Condemnation of its trade fixtures and its leasehold
improvements which have not become part of the Property and such business loss
as Tenant may specifically and separately establish; and

 

(g)  the New
Lease or Lease Modification, as applicable satisfies the requirements of
Section
8.7.7 and
Section
8.7.8.

 

8.7.3  Delivery
of New Lease or Lease Modification

 








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Upon the
execution of any New Lease or Lease Modification, as applicable, Mezzanine
Borrower shall cause Mortgage Borrower to deliver to Mezzanine Lender an
executed copy of the Lease.

 

8.7.4  Lease
Amendments

 

Mezzanine
Borrower shall cause Mortgage Borrower to agree that it shall not have the right
or power, as against Mezzanine Lender without its consent, to cancel, abridge,
amend or otherwise modify any Lease unless such modification complies with this
Section 8.7. 

 

8.7.5  Security
Deposits

 

All
security or other deposits of Tenants of the Property shall be treated as trust
funds and shall, if required by law or the applicable Lease, not be commingled
with any other funds of Mortgage Borrower, and such deposits shall be deposited,
upon receipt of the same by Mortgage Borrower in a separate trust account
maintained by Mortgage Borrower expressly for such purpose. Within ten (10)
Business Days after written request by Mezzanine Lender, Mezzanine Borrower
shall cause Mortgage Borrower to furnish to Mezzanine Lender reasonably
satisfactory evidence of compliance with this Section
8.7.5,
together with a statement of all lease securities deposited with Mortgage
Borrower by the Tenants and the location and account number of the account in
which such security deposits are held. 

 

8.7.6  No
Default Under Leases

 

Mezzanine
Borrower shall cause Mortgage Borrower to (i) promptly perform and observe all
of the material terms, covenants and conditions required to be performed and
observed by Mortgage Borrower under the Leases and the REAs, if the failure to
perform or observe the same would have a Material Adverse Effect; (ii) exercise,
within ten (10) Business Days after a written request by Mezzanine Lender, any
right to request from the Tenant under any Lease, or the party to any REAs, a
certificate with respect to the status thereof and (iii) not collect any of the
Rents, more than one (1) month in advance (except that Mortgage Borrower may
collect such security deposits and last month's Rents as are permitted by Legal
Requirements and are commercially reasonable in the prevailing market and
collect other charges in accordance with the terms of each Lease).

 


	IX.  	
      INTEREST
      RATE CAP AGREEMENT.




 

Section
9.1  Interest
Rate Cap Agreement

 

Mezzanine
Borrower shall maintain the Interest Rate Cap Agreement with an Acceptable
Counterparty in effect and having a term extending through the last day of the
accrual period in which the applicable Maturity Date occurs, and an initial
notional amount equal to the Loan Amount. The Interest Rate Cap Agreement shall
have a strike rate equal to the Maximum Pay Rate. The notional amount of the
Interest Rate Cap Agreement may be 

 








79













reduced
from time to time in amounts equal to any prepayment of the principal of the
Loan made in accordance with the Loan Documents (Intermediate Mezzanine),
provided that the strike rate shall be equal to the Maximum Pay Rate.


 

Section
9.2  Pledge
and Collateral Assignment

 

Mezzanine
Borrower hereby pledges, assigns, transfers, delivers and grants a continuing
first priority lien to Mezzanine Lender, as security for payment of all sums due
in respect of the Loan and the performance of all other terms, conditions and
covenants of this Agreement and any other Loan Documents (Intermediate
Mezzanine) on Mezzanine Borrower's part to be paid and performed, in, to and
under all of Mezzanine Borrower's right, title and interest whether now owned or
hereafter acquired and whether now existing or hereafter arising (collectively,
the Rate
Cap Collateral (Intermediate Mezzanine)): (i) in
the Interest Rate Cap Agreement (as soon as such agreement is effective or when
and if any replacement agreement becomes effective, any Replacement Interest
Rate Cap Agreement (Intermediate Mezzanine) or Extension Interest Rate Cap
Agreement); (ii) to receive any and all payments under the Interest Rate Cap
Agreement (or, when and if any such agreement becomes effective, any Replacement
Interest Rate Cap Agreement (Intermediate Mezzanine) or Extension Interest Rate
Cap Agreement), whether as contractual obligations, damages or otherwise; and
(iii) to all claims, rights, powers, privileges, authority, options, security
interests, liens and remedies, if any, under or arising out of the Interest Rate
Cap Agreement (as soon as such agreement is effective or when and if any such
agreement becomes effective, any Replacement Interest Rate Cap Agreement
(Intermediate Mezzanine) or Extension Interest Rate Cap Agreement), in each case
including all accessions and additions to, substitutions for and replacements,
products and proceeds of any of the foregoing. Mezzanine Borrower shall deliver
to Mezzanine Lender an executed counterpart of such Interest Rate Cap Agreement,
Replacement Interest Rate Cap Agreement (Intermediate Mezzanine) or Extension
Interest Rate Cap Agreement (Intermediate Mezzanine) (which shall, by its terms,
authorize the assignment to Mezzanine Lender and require that payments be made
directly to Mezzanine Lender) and notify the Counterparty of such assignment
(either in such Interest Rate Cap Agreement (Intermediate Mezzanine),
Replacement Interest Rate Cap Agreement (Intermediate Mezzanine) or Extension
Interest Rate Cap Agreement or by separate instrument). Mezzanine Borrower shall
not, without obtaining the prior written consent of Mezzanine Lender, further
pledge, transfer, deliver, assign or grant any security interest in the Interest
Rate Cap Agreement (Intermediate Mezzanine)(or, when and if any such agreement
becomes effective, any Replacement Interest Rate Cap Agreement (Intermediate
Mezzanine) or Extension Interest Rate Cap Agreement), or permit any Lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements or any other notice or instrument as may be required under
the UCC, as appropriate, except those naming Mezzanine Lender as the secured
party, to be filed with respect thereto.

 

Section
9.3  Covenants.

 

(a)  Mezzanine
Borrower shall comply with all of its obligations under the terms and provisions
of the Interest Rate Cap Agreement (Intermediate Mezzanine). All 

 








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amounts
paid by the Counterparty under the Interest Rate Cap Agreement to Mezzanine
Borrower or Mezzanine Lender shall be deposited immediately into the Mezzanine
Account pursuant to Section
3.1.
Mezzanine Borrower shall take all actions reasonably requested by Mezzanine
Lender to enforce Mezzanine Borrower's rights under the Interest Rate Cap
Agreement (Intermediate Mezzanine) in the event of a default by the Counterparty
thereunder and shall not waive, amend or otherwise modify any of its rights
thereunder.

 

(b)  Mezzanine
Borrower shall defend Mezzanine Lender's right, title and interest in and to the
Rate Cap Collateral (Intermediate Mezzanine) pledged by Mezzanine Borrower
pursuant hereto or in which it has granted a security interest pursuant hereto
against the claims and demands of all other Persons.

 

(c)  In the
event of (x) any downgrade, withdrawal or qualification (each, a Downgrade) of the
rating of the Counterparty such that, thereafter, the Counterparty shall cease
to be an Acceptable Counterparty and (y) the Counterparty shall fail to comply
with the requirements contained in the Interest Rate Cap Agreement (Intermediate
Mezzanine) which are described in Exhibit
I upon
such occurrence, the Mezzanine Borrower shall either (i) obtain Lender's prior
written consent to retain such Counterparty or (ii) replace the Interest Rate
Cap Agreement (Intermediate Mezzanine) with a Replacement Interest Cap
Agreement, (x) having a term extending through the end of the Interest Period in
which the Maturity Date occurs, (y) in a notional amount at least equal to the
Principal Amount of the Loan then outstanding, and (z) having a strike rate
equal to the Maximum Pay Rate.

 

(d)  In the
event that Mezzanine Borrower fails to purchase and deliver to Mezzanine Lender
the Interest Rate Cap Agreement (Intermediate Mezzanine) as and when required
hereunder, Mezzanine Lender may purchase the Interest Rate Cap Agreement
(Intermediate Mezzanine) and the cost incurred by Mezzanine Lender in purchasing
the Interest Rate Cap Agreement (Intermediate Mezzanine) shall be paid by
Mezzanine Borrower to Mezzanine Lender with interest thereon at the Default Rate
from the date such cost was incurred by Mezzanine Lender until such cost is paid
by Mezzanine Borrower to Mezzanine Lender.

 

(e)  Mezzanine
Borrower shall not (i) without the prior written consent of Mezzanine Lender,
modify, amend or supplement the terms of the Interest Rate Cap Agreement
(Intermediate Mezzanine), (ii) without the prior written consent of Mezzanine
Lender, except in accordance with the terms of the Interest Rate Cap Agreement
(Intermediate Mezzanine), cause the termination of the Interest Rate Cap
Agreement (Intermediate Mezzanine) prior to its stated maturity date, (iii)
without the prior written consent of Mezzanine Lender, except as aforesaid,
waive or release any obligation of the Counterparty (or any successor or
substitute party to the Interest Rate Cap Agreement (Intermediate Mezzanine))
under the Interest Rate Cap Agreement (Intermediate Mezzanine), (iv) without the
prior written consent of Mezzanine Lender, consent or agree to any act or
omission to act on the part of the Counterparty (or any successor or substitute
party to the Interest Rate Cap Agreement (Intermediate Mezzanine)) which,
without such consent or agreement, would constitute a default under the Interest
Rate Cap Agreement (Intermediate Mezzanine), (v) fail to exercise promptly and
diligently each and every material right which 

 








81













it may
have under the Interest Rate Cap Agreement (Intermediate Mezzanine), (vi) take
or intentionally omit to take any action or intentionally suffer or permit any
action to be omitted or taken, the taking or omission of which would result in
any right of offset against sums payable under the Interest Rate Cap Agreement
(Intermediate Mezzanine) or any defense by the Counterparty (or any successor or
substitute party to the Interest Rate Cap Agreement (Intermediate Mezzanine)) to
payment or (vii) fail to give prompt notice to Mezzanine Lender of any notice of
default given by or to Mezzanine Borrower under or with respect to the Interest
Rate Cap Agreement (Intermediate Mezzanine), together with a complete copy of
such notice. 

 

(f)  In
connection with an Interest Rate Cap Agreement (Intermediate Mezzanine),
Mezzanine Borrower shall obtain and deliver to Mezzanine Lender an Opinion of
Counsel from counsel (which counsel may be in-house counsel for the
Counterparty) for the Counterparty upon which Mezzanine Lender and its
successors and assigns may rely (the Counterparty
Opinion), under
New York law and, if the Counterparty is a non-U.S. entity, the applicable
foreign law, substantially in compliance with the requirements set forth in
Exhibit
F or in
such other form approved by the Mezzanine Lender.

 

Section
9.4  Representations
and Warranties

 

Mezzanine
Borrower hereby covenants with, and represents and warrants to, Mezzanine Lender
as follows:

 

(a)  The
Interest Rate Cap Agreement (Intermediate Mezzanine) constitutes the legal,
valid and binding obligation of Mezzanine Borrower, enforceable against
Mezzanine Borrower in accordance with its terms, subject only to applicable
bankruptcy, insolvency and similar laws affecting rights of creditors generally,
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at
law).

 

(b)  The Rate
Cap Collateral (Intermediate Mezzanine) is free and clear of all claims or
security interests of every nature whatsoever, except such as are created
pursuant to this Agreement and the other Loan Documents (Intermediate
Mezzanine), and Mezzanine Borrower has the right to pledge and grant a security
interest in the same as herein provided without the consent of any other Person
other than any such consent that has been obtained and is in full force and
effect.

 

(c)  The Rate
Cap Collateral (Intermediate Mezzanine) has been duly and validly pledged
hereunder. All consents and approvals required to be obtained by Mezzanine
Borrower for the consummation of the transactions contemplated by this Agreement
have been obtained.

 

(d)  Giving
effect to the aforesaid grant and assignment to Mezzanine Lender, Mezzanine
Lender has, as of the date of this Agreement, and as to Rate Cap Collateral
(Intermediate Mezzanine) acquired from time to time after such date, shall have,
a valid, and upon proper filing, perfected and continuing first priority lien
upon and security 

 








82













interest
in the Rate Cap Collateral (Intermediate Mezzanine); provided that no
representation or warranty is made with respect to the perfected status of the
security interest of Mezzanine Lender in the proceeds of Rate Cap Collateral
(Intermediate Mezzanine) consisting of "cash proceeds" or "non-cash proceeds" as
defined in the UCC except if, and to the extent, the provisions of Section 9-306
of the UCC shall be complied with.

 

(e)  Except
for financing statements filed or to be filed in favor of Mezzanine Lender as
secured party, there are no financing statements under the UCC covering any or
all of the Rate Cap Collateral (Intermediate Mezzanine) and Mezzanine Borrower
shall not, without the prior written consent of Mezzanine Lender, until payment
in full of all of the Obligations (Intermediate Mezzanine), execute and file in
any public office, any enforceable financing statement or statements covering
any or all of the Rate Cap Collateral (Intermediate Mezzanine), except financing
statements filed or to be filed in favor of Mezzanine Lender as secured
party.

 

Section
9.5  Payments

 

If
Mezzanine Borrower at any time shall be entitled to receive any payments with
respect to the Interest Rate Cap Agreement (Intermediate Mezzanine), such
amounts shall, immediately upon becoming payable to Mezzanine Borrower, be
deposited by Counterparty into the Mezzanine Account.

 

Section
9.6  Remedies

 

Subject
to the provisions of the Interest Rate Cap Agreement (Intermediate Mezzanine),
if an Event of Default shall occur and then be continuing:

 

(a)  Mezzanine
Lender, without obligation to resort to any other security, right or remedy
granted under any other agreement or instrument, shall have the right to, in
addition to all rights, powers and remedies of a secured party pursuant to the
UCC, at any time and from time to time, sell, resell, assign and deliver, in its
sole discretion, any or all of the Rate Cap Collateral (Intermediate Mezzanine)
(in one or more parcels and at the same or different times) and all right, title
and interest, claim and demand therein and right of redemption thereof, at
public or private sale, for cash, upon credit or for future delivery, and in
connection therewith Mezzanine Lender may grant options and may impose
reasonable conditions such as requiring any purchaser to represent that any
"securities" constituting any part of the Rate Cap Collateral (Intermediate
Mezzanine) are being purchased for investment only, Mezzanine Borrower hereby
waiving and releasing any and all equity or right of redemption to the fullest
extent permitted by the UCC or applicable law. If all or any of the Rate Cap
Collateral (Intermediate Mezzanine) is sold by Mezzanine Lender upon credit or
for future delivery, Mezzanine Lender shall not be liable for the failure of the
purchaser to purchase or pay for the same and, in the event of any such failure,
Mezzanine Lender may resell such Rate Cap Collateral (Intermediate Mezzanine).
It is expressly agreed that Mezzanine Lender may exercise its rights with
respect to less than all of the Rate Cap Collateral (Intermediate Mezzanine),
leaving unexercised its rights with respect to the remainder of the Rate Cap
Collateral (Intermediate Mezzanine), provided,
however, that
such 

 








83













partial
exercise shall in no way restrict or jeopardize Mezzanine Lender's right to
exercise its rights with respect to all or any other portion of the Rate Cap
Collateral (Intermediate Mezzanine) at a later time or times.

 

(b)  Mezzanine
Lender may exercise, either by itself or by its nominee or designee, in the name
of Mezzanine Borrower, all of Mezzanine Lender's rights, powers and remedies in
respect of the Rate Cap Collateral (Intermediate Mezzanine), hereunder and under
law.

 

(c)  Mezzanine
Borrower hereby irrevocably, in the name of Mezzanine Borrower or otherwise,
authorizes and empowers Mezzanine Lender and assigns and transfers unto
Mezzanine Lender, and constitutes and appoints Mezzanine Lender its true and
lawful attorney-in-fact, and as its agent, irrevocably, with full power of
substitution for Mezzanine Borrower and in the name of Mezzanine Borrower, upon
the occurrence and during the continuance of an Event of Default, (i) to
exercise and enforce every right, power, remedy, authority, option and privilege
of Mezzanine Borrower under the Interest Rate Cap Agreement (Intermediate
Mezzanine), including any power to subordinate or modify the Interest Rate Cap
Agreement (Intermediate Mezzanine) (but not, unless an Event of Default exists
and is continuing, the right to terminate or cancel the Interest Rate Cap
Agreement (Intermediate Mezzanine)), or to give any notices, or to take any
action resulting in such subordination, termination, cancellation or
modification and (ii) in order to more fully vest in Mezzanine Lender the rights
and remedies provided for herein, to exercise all of the rights, remedies and
powers granted to Mezzanine Lender in this Agreement, and Mezzanine Borrower
further authorizes and empowers Mezzanine Lender, as Mezzanine Borrower's
attorney-in-fact, and as its agent, irrevocably, with full power of substitution
for Mezzanine Borrower and in the name of Mezzanine Borrower, upon the
occurrence and during the continuance of an Event of Default, to give any
authorization, to furnish any information, to make any demands, to execute any
instruments and to take any and all other action on behalf of and in the name of
Mezzanine Borrower which in the opinion of Mezzanine Lender may be necessary or
appropriate to be given, furnished, made, exercised or taken under the Interest
Rate Cap Agreement (Intermediate Mezzanine), in order to comply therewith, to
perform the conditions thereof or to prevent or remedy any default by Mezzanine
Borrower thereunder or to enforce any of the rights of Mezzanine Borrower
thereunder. These powers-of-attorney are irrevocable and coupled with an
interest, and any similar or dissimilar powers heretofore given by Mezzanine
Borrower in respect of the Rate Cap Collateral (Intermediate Mezzanine) to any
other Person are hereby revoked.

 

(d)  Upon the
occurrence and during the continuance of an Event of Default, Mezzanine Lender
may, without notice to, or assent by, Mezzanine Borrower or any other Person (to
the extent permitted by law), but without affecting any of the Obligations
(Intermediate Mezzanine), in the name of Mezzanine Borrower or in the name of
Mezzanine Lender, notify the Counterparty, or if applicable, any other
counterparty to the Interest Rate Cap Agreement (Intermediate Mezzanine), to
make payment and performance directly to Mezzanine Lender; extend the time of
payment and performance of, compromise or settle for cash, credit or otherwise,
and upon any terms and conditions, any obligations owing to Mezzanine Borrower,
or claims of Mezzanine Borrower, under the Interest Rate Cap 

 








84













Agreement
(Intermediate Mezzanine); file any claims, commence, maintain or discontinue any
actions, suits or other proceedings deemed by Mezzanine Lender necessary or
advisable for the purpose of collecting upon or enforcing the Interest Rate Cap
Agreement (Intermediate Mezzanine); and execute any instrument and do all other
things deemed necessary and proper by Mezzanine Lender to protect and preserve
and realize upon the Rate Cap Collateral (Intermediate Mezzanine) and the other
rights contemplated hereby. 

 

(e)  Pursuant
to the powers-of-attorney provided for above, Mezzanine Lender may take any
action and exercise and execute any instrument which it may deem necessary or
advisable to accomplish the purposes hereof; provided, however, that Mezzanine
Lender shall not be permitted to take any action pursuant to said
power-of-attorney that would conflict with any limitation on Mezzanine Lender's
rights with respect to the Rate Cap Collateral (Intermediate Mezzanine). Without
limiting the generality of the foregoing, Mezzanine Lender, after the occurrence
of an Event of Default, shall have the right and power to receive, endorse and
collect all checks and other orders for the payment of money made payable to
Mezzanine Borrower representing: (i) any payment of obligations owed pursuant to
the Interest Rate Cap Agreement (Intermediate Mezzanine), (ii) interest accruing
on any of the Rate Cap Collateral (Intermediate Mezzanine) or (iii) any other
payment or distribution payable in respect of the Rate Cap Collateral
(Intermediate Mezzanine) or any part thereof, and for and in the name, place and
stead of Mezzanine Borrower, to execute endorsements, assignments or other
instruments of conveyance or transfer in respect of any property which is or may
become a part of the Rate Cap Collateral (Intermediate Mezzanine)
hereunder.

 

(f)  Mezzanine
Lender may exercise all of the rights and remedies of a secured party under the
UCC.

 

(g)  Without
limiting any other provision of this Agreement or any of Mezzanine Borrower's
rights hereunder, and without waiving or releasing Mezzanine Borrower from any
obligation or default hereunder, Mezzanine Lender shall have the right, but not
the obligation, to perform any act or take any appropriate action, as it, in its
reasonable judgment, may deem necessary to protect the security of this
Agreement, to cure such Event of Default or to cause any term, covenant,
condition or obligation required under this Agreement or the Interest Rate Cap
Agreement (Intermediate Mezzanine) to be performed or observed by Mezzanine
Borrower to be promptly performed or observed on behalf of Mezzanine Borrower.
All amounts advanced by, or on behalf of, Mezzanine Lender in exercising its
rights under this Section
9.7(g)
(including, but not limited to, reasonable legal expenses and disbursements
incurred in connection therewith), together with interest thereon at the Default
Rate from the date of each such advance, shall be payable by Mezzanine Borrower
to Mezzanine Lender upon demand and shall be secured by this
Agreement.

 

Section
9.7  Sales
of Rate Cap Collateral (Intermediate Mezzanine)

 

No
demand, advertisement or notice, all of which are, to the fullest extent
permitted by law, hereby expressly waived by Mezzanine Borrower, shall be
required in 

 








85













connection
with any sale or other disposition of all or any part of the Rate Cap Collateral
(Intermediate Mezzanine), except that Mezzanine Lender shall give Mezzanine
Borrower at least thirty (30) Business Days' prior written notice of the time
and place of any public sale or of the time when and the place where any private
sale or other disposition is to be made, which notice Mezzanine Borrower hereby
agrees is reasonable, all other demands, advertisements and notices being hereby
waived. To the extent permitted by law, Mezzanine Lender shall not be obligated
to make any sale of the Rate Cap Collateral (Intermediate Mezzanine) if it shall
determine not to do so, regardless of the fact that notice of sale may have been
given, and Mezzanine Lender may without notice or publication adjourn any public
or private sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. Upon each private sale of the Rate
Cap Collateral (Intermediate Mezzanine) of a type customarily sold in a
recognized market and upon each public sale, unless prohibited by any applicable
statute which cannot be waived, Mezzanine Lender (or its nominee or designee)
may purchase any or all of the Rate Cap Collateral (Intermediate Mezzanine)
being sold, free and discharged from any trusts, claims, equity or right of
redemption of Mezzanine Borrower, all of which are hereby waived and released to
the extent permitted by law, and may make payment therefor by credit against any
of the Obligations (Intermediate Mezzanine) in lieu of cash or any other
obligations. In the case of all sales of the Rate Cap Collateral (Intermediate
Mezzanine), public or private, Mezzanine Borrower shall pay all reasonable costs
and expenses of every kind for sale or delivery, including brokers' and
attorneys' fees and disbursements and any tax imposed thereon. However, the
proceeds of sale of Rate Cap Collateral (Intermediate Mezzanine) shall be
available to cover such costs and expenses, and, after deducting such costs and
expenses from the proceeds of sale, Mezzanine Lender shall apply any residue to
the payment of the Obligations (Intermediate Mezzanine) in the order of priority
as set forth in Section
17.5.

 

Section
9.8  Public
Sales Not Possible

 

Mezzanine
Borrower acknowledges that the terms of the Interest Rate Cap Agreement
(Intermediate Mezzanine) may prohibit public sales, that the Rate Cap Collateral
(Intermediate Mezzanine) may not be of the type appropriately sold at public
sales, and that such sales may be prohibited by law. In light of these
considerations, Mezzanine Borrower agrees that private sales of the Rate Cap
Collateral (Intermediate Mezzanine) shall not be deemed to have been made in a
commercially unreasonably manner by mere virtue of having been made
privately.

 

Section
9.9  Receipt
of Sale Proceeds

 

Upon any
sale of the Rate Cap Collateral (Intermediate Mezzanine) by Mezzanine Lender
hereunder (whether by virtue of the power of sale herein granted, pursuant to
judicial process or otherwise), the receipt by Mezzanine Lender or the officer
making the sale or the proceeds of such sale shall be a sufficient discharge to
the purchaser or purchasers of the Rate Cap Collateral (Intermediate Mezzanine)
so sold, and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to Mezzanine Lender or
such officer or be answerable in any way for the misapplication or
non-application thereof.

 








86
















 

Section
9.10  Extension
Interest Rate Cap Agreement (Intermediate Mezzanine)

 

If
Mezzanine Borrower exercises any of its options to extend the Maturity Date
pursuant to Section 5 of the Note, then, on or prior to the Maturity Date being
extended, the Mezzanine Borrower shall obtain or have in place an Extension
Interest Rate Cap Agreement (i) having a term through the end of the Interest
Period in which the extended Maturity Date occurs, (ii) in a notional amount at
least equal to the Principal Amount of the Loan as of the Maturity Date being
extended, and (iii) having a strike rate equal to an amount such that the
maximum interest rate paid by the Mezzanine Borrower after giving effect to
payments made under such Extension Interest Rate Cap Agreement shall equal no
more than the Maximum LIBOR Pay Rate. 

 

Section
9.11  Filing
of Financing Statements Authorized

 

Mezzanine
Borrower hereby authorizes the filing of a form UCC-1 financing statement naming
Mezzanine Borrower as debtor and Mezzanine Lender as secured party in any office
(including the office of the Secretary of State of the State of Delaware)
covering all property of Mezzanine Borrower (including, but not limited to, the
Account Collateral (Intermediate Mezzanine) and the Rate Cap Collateral
(Intermediate Mezzanine), but excluding Net Excess Cash Flow).

 


	X.  	
      RESERVED




 


	XI.  	
      BOOKS
      AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER
      INFORMATION




 

Section
11.1  Books
and Records

 

Mezzanine
Borrower shall cause Mortgage Borrower to keep and maintain on a fiscal year
basis proper books and records separate from any other Person, in which accurate
and complete entries shall be made of all dealings or transactions of or in
relation to the Mortgage Note, the Mezzanine Note, the Property and the business
and affairs of Mortgage Borrower and Mezzanine Borrower relating to the Property
which shall reflect all items of income and expense in connection with the
operation on an individual basis of the Property and in connection with any
services, equipment or furnishings provided in connection with the operation of
the Property, in accordance with GAAP. Mezzanine Lender and its authorized
representatives shall have the right at reasonable times and upon reasonable
notice to examine the books and records of Mortgage Borrower and Mezzanine
Borrower relating to the operation of the Property and to make such copies or
extracts thereof as Mezzanine Lender may reasonably require. Mezzanine Borrower
shall simultaneously furnish (or cause Mortgage Borrower to furnish) to
Mezzanine Lender copies of all financial statements, reports and information
required to be submitted by Mortgage Borrower to Mortgage Lender pursuant to the
Loan Agreement (Mortgage).

 








87
















 

Section
11.2  Financial
Statements.

 

11.2.1  Budget.


 

(a)  Not later
than March 1st of each Fiscal Year hereafter, Mezzanine Borrower shall prepare
or cause to be prepared and deliver to Mezzanine Lender, for informational
purposes only, a Budget in respect of the Property for the Fiscal Year in which
such delivery date falls. If Mezzanine Borrower or Mortgage Borrower
subsequently amends the Budget, Mezzanine Borrower shall promptly deliver the
amended Budget to Mezzanine Lender.

 

(b)  Notwithstanding
the foregoing clause any Budgets submitted during a Low DSCR Period, and in each
case any material amendment therefrom, shall be subject to Mezzanine Lender's
prior written approval, which approval shall not be unreasonably withheld or
delayed.

 

(c)  Within
thirty (30) days after its receipt of notice of the commencement of any Low DSCR
Period, Mezzanine Borrower shall (unless the then current Budget has been
approved in writing by Mezzanine Lender) prepare or cause to be prepared and
deliver to Mezzanine Lender for Mezzanine Lender's approval (which shall not be
unreasonably withheld or delayed), a proposed Budget for the Fiscal Year in
which such Low DSCR Period commences. Mezzanine Borrower shall consult with
Mezzanine Lender and shall afford Mezzanine Lender a reasonable opportunity to
meet and confer with Mezzanine Borrower to discuss in reasonable detail such
proposed revised Budget and general hotel operations, and Borrower (as
distinguished from its constituent partners) shall use its best efforts to
obtain Manager's approval of the resulting budget revisions as requested by
Lender in its reasonable discretion.

 

11.2.2  Other
Information

 

Mezzanine
Borrower shall, promptly after written request by Mezzanine Lender, furnish or
cause to be furnished to Mezzanine Lender, in such manner and in such detail as
may be reasonably requested by Mezzanine Lender, such reasonable additional
information as may be reasonably requested with respect to the Property and/or
the Collateral. The information required to be furnished by Mezzanine Borrower
to Mezzanine Lender under this Section
11.2 shall be
provided in both hard copy format and electronic format; provided that
Mezzanine Borrower shall only be required to provide the information required
under this Section
11.2.2 in
electronic format if such information is so available in the ordinary course of
the operations of the Mezzanine Borrower and Manager and without significant
expense.

 


	XII.  	
      ENVIRONMENTAL
      MATTERS.




 

Section
12.1  Representations

 








88













Mezzanine
Borrower hereby represents and warrants that except as set forth in the
environmental reports and studies delivered to Mezzanine Lender (the
Environmental
Reports), (i)
neither Mezzanine Borrower nor Mortgage Borrower has engaged in or knowingly
permitted any operations or activities upon, or any use or occupancy of the
Property, or any portion thereof, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Materials on, under, in or about
the Property, or transported any Hazardous Materials to, from or across the
Property, except in all cases in material compliance with Environmental Laws and
only in the course of legitimate business operations at the Property; (ii) to
the Best of Mezzanine Borrower's Knowledge, no tenant, occupant or user of the
Property, or any other Person, has engaged in or permitted any operations or
activities upon, or any use or occupancy of the Property, or any portion
thereof, for the purpose of or in any material way involving the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of any Hazardous Materials on, in or about the Property, or
transported any Hazardous Materials to, from or across the Property, except in
all cases in material compliance with Environmental Laws and only in the course
of legitimate business operations at the Property; (iii) to the Best of
Mezzanine Borrower's Knowledge, no Hazardous Materials are presently
constructed, deposited, stored, or otherwise located on, under, in or about the
Property except in material compliance with Environmental Laws; (iv) to the Best
of Mezzanine Borrower's Knowledge, no Hazardous Materials have migrated from the
Property upon or beneath other properties which would reasonably be expected to
result in material liability for Mezzanine Borrower or Mortgage Borrower; and
(v) to the Best of Mezzanine Borrower's Knowledge, no Hazardous Materials have
migrated or threaten to migrate from other properties upon, about or beneath the
Property which would reasonably be expected to result in material liability for
Mezzanine Borrower or Mortgage Borrower.

 

Section
12.2  Covenants.

 

12.2.1  Compliance
with Environmental Laws

 

Subject
to Mortgage Borrower's right to contest under Section
7.3 of the
Loan Agreement (Mortgage), Mezzanine Borrower covenants and agrees with
Mezzanine Lender that it shall comply and shall cause Mortgage Borrower to
comply in all material respects with all Environmental Laws. If at any time
during the continuance of the Lien of the Security Instrument and/or Pledge, a
Governmental Authority having jurisdiction over the Property requires remedial
action to correct the presence of Hazardous Materials in, around, or under the
Property (an Environmental
Event),
Mezzanine Borrower shall deliver prompt notice of the occurrence of such
Environmental Event to Mezzanine Lender. Within thirty (30) days after Mezzanine
Borrower has knowledge of the occurrence of an Environmental Event, Mezzanine
Borrower shall deliver to Mezzanine Lender an Officer's Certificate (an
Environmental
Certificate)
explaining the Environmental Event in reasonable detail and setting forth the
proposed remedial action, if any. Mezzanine Borrower shall promptly provide
Mezzanine Lender with copies of all notices which allege or identify any actual
or potential violation or noncompliance received by or prepared by or for
Mezzanine Borrower in connection with any Environmental Law. For purposes of
this paragraph, the term 

 








89













"notice"
shall mean any summons, citation, directive, order, claim, pleading, letter,
application, filing, report, findings, declarations or other materials pertinent
to compliance of the Property and Mezzanine Borrower with such Environmental
Laws. 

 

12.2.2  Reserved.

 

Section
12.3  Environmental
Reports

 

Upon the
occurrence and during the continuance of an Environmental Event with respect to
the Property or an Event of Default, Mezzanine Lender shall have the right to
have its consultants perform a comprehensive environmental audit of the
Property. Such audit shall be conducted by an environmental consultant chosen by
Mezzanine Lender and may include a visual survey, a record review, an area
reconnaissance assessing the presence of hazardous or toxic waste or substances,
PCBs or storage tanks at the Property, an asbestos survey of the Property, which
may include random sampling of the Improvements and air quality testing, and
such further site assessments as Mezzanine Lender may reasonably require due to
the results obtained from the foregoing. Mezzanine Borrower grants (and shall
cause Mortgage Borrower to grant) to Mezzanine Lender, its agents, consultants
and contractors the right to enter the Property as reasonable or appropriate for
the circumstances for the purposes of performing such studies and the reasonable
cost of such studies shall be due and payable by Mezzanine Borrower to Mezzanine
Lender upon demand and shall be secured by the Lien of this Agreement and the
Pledge. Mezzanine Lender shall not unreasonably interfere with (and shall cause
Mortgage Borrower not to unreasonably interfere with), and Mezzanine Lender
shall direct the environmental consultant to use its commercially reasonable
efforts not to hinder, Mortgage Borrower's or any Tenant's, other occupant's or
Manager's operations upon the Property when conducting such audit, sampling or
inspections. By undertaking any of the measures identified in and pursuant to
this Section
12.3,
Mezzanine Lender shall not be deemed to be exercising any control over the
operations of Mezzanine Borrower or Mortgage Borrower or the handling of any
environmental matter or hazardous wastes or substances of Mezzanine Borrower or
Mortgage Borrower for purposes of incurring or being subject to liability
therefor.

 

Section
12.4  Environmental
Indemnification

 

Mezzanine
Borrower shall protect, indemnify, save, defend, and hold harmless the
Indemnified Parties from and against any and all liability, loss, damage,
actions, causes of action, costs or expenses whatsoever (including reasonable
attorneys' fees and expenses) and any and all claims, suits and judgments which
any Indemnified Party may suffer, as a result of or with respect to: (a) any
Environmental Claim relating to or arising from the Property; (b) the violation
of any Environmental Law in connection with the Property; (c) any release,
spill, or the presence of any Hazardous Materials affecting the Property; and
(d) the presence at, in, on or under, or the release, escape, seepage, leakage,
discharge or migration at or from, the Property of any Hazardous Materials,
whether or not such condition was known or unknown to Mezzanine Borrower;
provided that, in each case, Mezzanine Borrower shall be relieved of its
obligation under this subsection if any of the matters referred to in clauses
(a) through (d) above did not occur (but need not have been 

 








90













discovered)
prior to the foreclosure of the Pledge. If any such action or other proceeding
shall be brought against Mezzanine Lender, upon written notice from Mezzanine
Borrower to Mezzanine Lender (given reasonably promptly following Mezzanine
Lender's notice to Mezzanine Borrower of such action or proceeding), Mezzanine
Borrower shall be entitled to assume the defense thereof, at Mezzanine
Borrower's expense, with counsel reasonably acceptable to Mezzanine Lender;
provided,
however,
Mezzanine Lender may, at its own expense, retain separate counsel to participate
in such defense, but such participation shall not be deemed to give Mezzanine
Lender a right to control such defense, which right Mezzanine Borrower expressly
retains. Notwithstanding the foregoing, each Indemnified Party shall have the
right to employ separate counsel at Mezzanine Borrower's expense if, in the
reasonable opinion of legal counsel, a conflict or potential conflict exists
between the Indemnified Party and Mezzanine Borrower that would make such
separate representation advisable. Mezzanine Borrower shall have no obligation
to indemnify an Indemnified Party for damage or loss resulting from such
Indemnified Party's gross negligence or willful misconduct.

 

Section
12.5  Recourse
Nature of Certain Indemnifications

 

Notwithstanding
anything to the contrary provided in this Agreement or in any other Loan
Document (Intermediate Mezzanine), the indemnification provided in Section
12.4 shall be
fully recourse to Mezzanine Borrower and shall be independent of, and shall
survive, the discharge of the Indebtedness, the release of the Lien created by
the Pledge, and/or the conveyance of title to the Collateral to Mezzanine Lender
or any purchaser or designee in connection with a foreclosure of the Pledge or
conveyance in lieu of foreclosure.

 


	XIII.  	
      RESERVED




 


	XIV.  	
      RESERVED




 


	XV.  	
      ASSIGNMENTS
      AND PARTICIPATIONS.




 

Section
15.1  Assignment
and Acceptance

 

At no
incremental cost or liability to Mezzanine Borrower, Mezzanine Lender may assign
to one or more Persons all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (Intermediate Mezzanine) (including,
without limitation, all or a portion of the Mezzanine Note); provided that the
parties to each such assignment shall execute and deliver to Mezzanine Lender,
for its acceptance and recording in the Register (as hereinafter defined), an
Assignment and Acceptance. In addition, at no incremental cost to Mezzanine
Borrower, Mezzanine Lender may participate to one or more Persons all or any
portion of its rights and obligations under this Agreement and the other Loan
Documents (Intermediate Mezzanine) (including without limitation, all or a
portion of the Mezzanine Note) utilizing such documentation to evidence such
participation and the parties' respective rights thereunder as Mezzanine Lender,
in its sole discretion, shall elect.

 

Section
15.2  Effect
of Assignment and Acceptance

 








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Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in such Assignment and Acceptance, (i) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of Mezzanine Lender, as the case may be, hereunder and such
assignee shall be deemed to have assumed such rights and obligations, and (ii)
Mezzanine Lender shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement and the other
Loan Documents (Intermediate Mezzanine) (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of Mezzanine Lender's rights
and obligations under this Agreement and the other Loan Documents (Intermediate
Mezzanine), Mezzanine Lender shall cease to be a party hereto) accruing from and
after the effective date of the Assignment and Acceptance, except with respect
to (A) any payments made by Mezzanine Borrower to Mezzanine Lender pursuant to
the terms of the Loan Documents (Intermediate Mezzanine) after the effective
date of the Assignment and Acceptance and (B) any letter of credit, cash deposit
or other deposits or security (other than the Liens of this Agreement and the
Pledge and the other Loan Documents (Intermediate Mezzanine)) delivered to or
for the benefit of or deposited with German American Capital Corporation, as
Mezzanine Lender, for which German American Capital Corporation shall remain
responsible for the proper disposition thereof until such items are delivered to
a party who is qualified as an Approved Bank and agrees to hold the same in
accordance with the terms and provisions of the agreement pursuant to which such
items were deposited.

 

Section
15.3  Content

 

By
executing and delivering an Assignment and Acceptance, Mezzanine Lender and the
assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and Acceptance,
Mezzanine Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or any other Loan Documents
(Intermediate Mezzanine) or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien
or security interest created or purported to be created under or in connection
with, this Agreement or any other Loan Documents (Intermediate Mezzanine) or any
other instrument or document furnished pursuant hereto or thereto; (ii)
Mezzanine Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Mezzanine Borrower or
the performance or observance by Mezzanine Borrower of any of its obligations
under any Loan Documents (Intermediate Mezzanine) or any other instrument or
document furnished pursuant thereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon Mezzanine Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents (Intermediate Mezzanine); 

 








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(v) such
assignee appoints and authorizes Mezzanine Lender to take such action as agent
on its behalf and to exercise such powers and discretion under the Loan
Documents (Intermediate Mezzanine) as are delegated to Mezzanine Lender by the
terms hereof together with such powers and discretion as are reasonably
incidental thereto; and (vi) such assignee agrees that it will perform, in
accordance with their terms, all of the obligations which by the terms of this
Agreement and the other Loan Documents (Intermediate Mezzanine) are required to
be performed by Mezzanine Lender.

 

Section
15.4  Register

 

Mezzanine
Lender shall maintain a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
Mezzanine Lender and each assignee pursuant to this Article
XV and the
Principal Amount of the Loan owing to each such assignee from time to time (the
Register). The
entries in the Register shall, with respect to such assignees, be conclusive and
binding for all purposes, absent manifest error. The Register shall be available
for inspection by Mezzanine Borrower or any assignee pursuant to this
Article
XV at any
reasonable time and from time to time upon reasonable prior written
notice.

 

Section
15.5  Substitute
Notes

 

Upon its
receipt of an Assignment and Acceptance executed by an assignee, together with
any Mezzanine Note or Mezzanine Notes subject to such assignment, Mezzanine
Lender shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit
J hereto,
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt written notice thereof to
Mezzanine Borrower. Within five (5) Business Days after its receipt of such
notice, Mezzanine Borrower, at Mezzanine Lender's own expense, shall execute and
deliver to Mezzanine Lender in exchange and substitution for the surrendered
Mezzanine Note or Mezzanine Notes a new Mezzanine Note to the order of such
assignee in an amount equal to the portion of the Loan assigned to it and a new
Mezzanine Note to the order of Mezzanine Lender in an amount equal to the
portion of the Loan retained by it hereunder. Such new Mezzanine Note or
Mezzanine Notes shall be in an aggregate Principal Amount equal to the aggregate
then outstanding principal amount of such surrendered Mezzanine Note or
Mezzanine Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the Mezzanine
Note (modified, however, to the extent necessary so as not to impose duplicative
or increased obligations on Mezzanine Borrower and to delete obligations
previously satisfied by Mezzanine Borrower). Notwithstanding the provisions of
this Article
XV,
Mezzanine Borrower shall not be responsible or liable for any additional taxes,
reserves, adjustments or other costs and expenses that are related to, or arise
as a result of, any transfer of the Loan or any interest or participation
therein that arise solely and exclusively from the transfer of the Loan or any
interest or participation therein or from the execution of the new Mezzanine
Note contemplated by this Section
15.5,
including, without limitation, any mortgage tax. Mezzanine Lender and/or the
assignees, as the case may be, shall from time to time designate one agent
through which Mezzanine Borrower shall request all approvals and consents


 








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required
or contemplated by this Agreement and on whose statements Mezzanine Borrower may
rely.

 

Section
15.6  Participations

 

Each
assignee pursuant to this Article
XV may sell
participations to one or more Persons (other than Mezzanine Borrower or any of
its Affiliates) in or to all or a portion of its rights and obligations under
this Agreement and the other Loan Documents (Intermediate Mezzanine) (including,
without limitation, all or a portion of the Mezzanine Note held by it);
provided,
however, that
(i) such assignee's obligations under this Agreement and the other Loan
Documents (Intermediate Mezzanine) shall remain unchanged, (ii) such assignee
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such assignee shall remain the holder of any such
Mezzanine Note for all purposes of this Agreement and the other Loan Documents
(Intermediate Mezzanine), and (iv) Mezzanine Borrower, Mezzanine Lender and the
assignees pursuant to this Article
XV shall
continue to deal solely and directly with such assignee in connection with such
assignee's rights and obligations under this Agreement and the other Loan
Documents (Intermediate Mezzanine). In the event that more than one (1) party
comprises Mezzanine Lender, Mezzanine Lender shall designate one party to act on
the behalf of all parties comprising Mezzanine Lender in providing approvals and
all other necessary consents under the Loan Documents (Intermediate Mezzanine)
and on whose statements Mezzanine Borrower may rely. 

 

Section
15.7  Disclosure
of Information

 

Any
assignee pursuant to this Article
XV may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Article
XV,
disclose to the assignee or participant or proposed assignee or participant, any
information relating to Mezzanine Borrower furnished to such assignee by or on
behalf of Mezzanine Borrower; provided,
however, that,
prior to any such disclosure, the assignee or participant or proposed assignee
or participant shall agree in writing for the benefit of Mezzanine Borrower to
preserve the confidentiality of any confidential information received by
it.

 

Section
15.8  Security
Interest in Favor of Federal Reserve Bank

 

Notwithstanding
any other provision set forth in this Agreement or any other Loan Document
(Intermediate Mezzanine), any assignee pursuant to this Article
XV may at
any time create a security interest in all or any portion of its rights under
this Agreement or the other Loan Documents (Intermediate Mezzanine) (including,
without limitation, the amounts owing to it and the Mezzanine Note or Mezzanine
Notes held by it) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System.


 








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	XVI.  	
      RESERVED




 


	XVII.  	
      DEFAULTS




 

Section
17.1  Event
of Default.

 

(a)  Each of
the following events shall constitute an event of default hereunder (an
Event
of Default):

 

(i)  if (A)
the Indebtedness is not paid in full on the Maturity Date, (B) any Debt Service
is not paid in full on the applicable Payment Date, (C) any prepayment of
principal due under this Agreement or the Mezzanine Note is not paid when due,
(D) the Prepayment Fee is not paid when due, (E) any deposit to the Intermediate
Mezzanine Account or any of the other Collateral Accounts is not made on the
required deposit date therefor; or (F) except as to any amount included in (A),
(B), (C), (D), and/or (E) of this clause (i), any other amount payable pursuant
to this Agreement, the Mezzanine Note or any other Loan Document (Intermediate
Mezzanine) is not paid in full when due and payable in accordance with the
provisions of the applicable Loan Document (Intermediate Mezzanine), with such
failure as described in subclauses (A), (B), (C), (D), (E) and (F) continuing
for ten (10) Business Days after Mezzanine Lender delivers written notice
thereof to Mezzanine Borrower;

 

(ii)  subject
to Mortgage Borrower's right to contest as set forth in Section
7.3 of the
Loan Agreement (Mortgage), if any of the Impositions or Other Charges are not
paid prior to the imposition of any interest, penalty, charge or expense for the
non-payment thereof;

 

(iii)  if the
insurance policies required by Section
6.1 are not
kept in full force and effect, or if certificates of any of such insurance
policies are not delivered to Mezzanine Lender within ten (10) Business Days
following Mezzanine Lender's request therefor;

 

(iv)  if,
except as permitted pursuant to Article
VIII, (a) any
Transfer of any direct or indirect legal, beneficial or equitable interest in
all or any portion of the Collateral, (b) any Transfer of any direct or indirect
interest in Mortgage Borrower, Mezzanine Borrower, Guarantor, General Partner,
or other Person restricted by the terms of Article
VIII, (c) any
Lien or encumbrance on all or any portion of the Collateral, (d) any pledge,
hypothecation, creation of a security interest in or other encumbrance of any
direct or indirect interests in Mezzanine Borrower, Mortgage Borrower, General
Partner or other Person restricted by the terms of Article VIII, or (e) the
filing of a declaration of condominium with respect to the
Property;

 

(v)  if (i)
any representation or warranty made by Mezzanine Borrower in Section
4.1.23 shall
have been false or misleading in any material respect as of 

 








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the date
the representation or warranty was made which incorrect, false or misleading
statement is not cured within thirty (30) days after receipt by Mezzanine
Borrower of notice from Mezzanine Lender in writing of such breach or (ii) if
any other representation or warranty made by Mezzanine Borrower herein by
Mezzanine Borrower, Guarantor, General Partner or any Affiliate of Mezzanine
Borrower in any other Loan Document (Intermediate Mezzanine), or in any report,
certificate (including, but not limited to, any certificate by Mezzanine
Borrower delivered in connection with the issuance of the Non-Consolidation
Opinion), financial statement or other instrument, agreement or document
furnished to Mezzanine Lender shall have been false or misleading in any
material respect as of the date the representation or warranty was made;
provided,
however, that if
such representation or warranty which was false or misleading in any material
respect is, by its nature, curable and is not reasonably likely to have a
Material Adverse Effect, and such representation or warranty was not, to the
Best of Mezzanine Borrower's Knowledge, false or misleading in any material
respect which made, then same shall not constitute an Event of Default unless
Mezzanine Borrower has not cured same within five (5) Business Days after
receipt by Mezzanine Borrower of notice from Mezzanine Lender in writing of such
breach;

 

(vi)  if
Mezzanine Borrower, Mortgage Borrower, General Partner, any SPE Entity, or any
Guarantor shall make an assignment for the benefit of creditors;

 

(vii)  if a
receiver, liquidator or trustee shall be appointed for Mezzanine Borrower,
Mortgage Borrower, General Partner, any SPE Entity, or any Guarantor or if
Mezzanine Borrower, Mortgage Borrower, General Partner, any SPE Entity, or any
Guarantor shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Mezzanine Borrower, Mortgage Borrower, General Partner, any
SPE Entity, or any Guarantor, or if any proceeding for the dissolution or
liquidation of Mezzanine Borrower, Mortgage Borrower, General Partner, any SPE
Entity, or any Guarantor shall be instituted; provided,
however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mezzanine Borrower, Mortgage Borrower, General Partner, any SPE
Entity, or any Guarantor upon the same not being discharged, stayed or dismissed
within ninety (90) days;

 

(viii)  if
Mezzanine Borrower, General Partner, any SPE Entity, or any Guarantor, as
applicable, Transfers its rights under this Agreement or any of the other Loan
Documents (Intermediate Mezzanine) or any interest herein or therein in
contravention of the Loan Documents (Intermediate Mezzanine);

 

(ix)  the
occurrence of (i) a Mortgage Default or Mortgage Event of Default, or (ii) a
Default or Event of Default under the Senior Mezzanine Loan.

 

(x)  with
respect to any term, covenant or provision set forth herein (other than the
other subsections of this Section
17.l) which
specifically contains a notice requirement or grace period, if Mezzanine
Borrower, General Partner, any SPE Entity, or any Guarantor shall be in default
under such term, covenant or condition after the giving of such notice or the
expiration of such grace period;

 








96
















 

(xi)  if
Mezzanine Borrower, having notified Mezzanine Lender of its election to extend
the Maturity Date as set forth in Section
5 of the
Mezzanine Note, fails to deliver the Replacement Interest Rate Cap Agreement
(Intermediate Mezzanine) to Mezzanine Lender prior to the first day of the
extended term of the Loan and Mezzanine Borrower has not prepaid the Loan
pursuant to the terms of the Mezzanine Note prior to such first day of the
extended term;

 

(xii)  if
Mezzanine Borrower shall fail to comply with any covenants set forth in
Article
V or
Section
XI with
such failure continuing for ten (10) Business Days after Mezzanine Lender
delivers written notice thereof to Mezzanine Borrower; 

 

(xiii)  if
Mortgage Borrower shall fail to comply with any covenants set forth in
Section
4 or
Section
3(d) or
Section
8 of the
Security Instrument (Mortgage) with such failure continuing for ten (10)
Business Days after Mortgage Lender delivers written notice thereof to Mortgage
Borrower; 

 

(xiv)  Mezzanine
Borrower shall fail to deposit any sums required to be deposited in the
Mezzanine Account or any Sub-Account thereof pursuant to Article
III when
due;

 

(xv)  if this
Agreement or any other Loan Document (Intermediate Mezzanine) or any Lien
granted hereunder or thereunder, in whole or in part, shall terminate or shall
cease to be effective or shall cease to be a legally valid, binding and
enforceable obligation of Mezzanine Borrower or any Guarantor, or any Lien
securing the Indebtedness shall, in whole or in part, cease to be a perfected
first priority Lien, subject to the Permitted Encumbrances (except in any of the
foregoing cases in accordance with the terms hereof or under any other Loan
Document (Intermediate Mezzanine) or by reason of any affirmative act of
Mezzanine Lender);

 

(xvi)  Intentionally
Omitted;

 

(xvii)  Intentionally
Omitted;

 

(xviii)  Intentionally
Omitted;

 

(xix)  if
Mezzanine Borrower, General Partner, any SPE Entity or Guarantor shall continue
to be in Default under any of the other terms, covenants or conditions of this
Agreement or of any Loan Document (Intermediate Mezzanine) not specified in
subsections
(i) to (xvii) above,
for thirty (30) days after notice from Mezzanine Lender; provided,
however, that if
such Default is susceptible of cure but cannot reasonably be cured within such
thirty (30) day period and provided further that Mezzanine Borrower, General
Partner, any SPE Entity or Guarantor shall have commenced to cure such Default
within such thirty (30) day period and thereafter diligently proceeds to cure
the same, such thirty (30) day period shall be extended for such time as is
reasonably necessary for 

 








97













Mezzanine
Borrower in the exercise of due diligence to cure such Default, such additional
period not to exceed ninety (90) days.

 

(b)  Unless
waived in writing by Mezzanine Lender, upon the occurrence and during the
continuance of an Event of Default (other than an Event of Default described in
clauses (a)(vi), (vii) or (viii) above) Mezzanine Lender may, without notice or
demand, in addition to any other rights or remedies available to it pursuant to
this Agreement and the other Loan Documents (Intermediate Mezzanine) or at law
or in equity, take such action that Mezzanine Lender deems advisable to protect
and enforce its rights against Mezzanine Borrower and in the Collateral,
including, without limitation, (i) declaring immediately due and payable the
entire Principal Amount together with interest thereon and all other sums due by
Mezzanine Borrower under the Loan Documents (Intermediate Mezzanine), (ii)
collecting interest on the Principal Amount at the Default Rate whether or not
Mezzanine Lender elects to accelerate the Mezzanine Note and (iii) enforcing or
availing itself of any or all rights or remedies set forth in the Loan Documents
(Intermediate Mezzanine) against Mezzanine Borrower and the Collateral,
including, without limitation, all rights or remedies available at law or in
equity; and upon any Event of Default described in subsections
(a)(vi) or (a)(vii) above,
the Indebtedness and all other obligations of Mezzanine Borrower hereunder and
under the other Loan Documents (Intermediate Mezzanine) shall immediately and
automatically become due and payable, without notice or demand, and Mezzanine
Borrower hereby expressly waives any such notice or demand, anything contained
herein or in any other Loan Document (Intermediate Mezzanine) to the contrary
notwithstanding. The foregoing provisions shall not be construed as a waiver by
Mezzanine Lender of its right to pursue any other remedies available to it under
this Agreement, the Pledge or any other Loan Document (Intermediate Mezzanine).
Any payment hereunder may be enforced and recovered in whole or in part at such
time by one or more of the remedies provided to Mezzanine Lender in the Loan
Documents (Intermediate Mezzanine). 

 

(c)  Upon the
occurrence of an Event of Default pursuant to Section
17.1(a)(ix),
Mezzanine Borrower shall cause Mortgage Borrower or Senior Mezzanine Borrower,
as applicable, to deliver to Mezzanine Lender within five (5) Business Days
after the first to occur of (a) receipt by Mortgage Borrower or Senior Mezzanine
Borrower of notice of such Default or Event of Default from Mortgage Lender or
Senior Mezzanine Lender, or (b) the date Mortgage Borrower obtains actual
knowledge of the occurrence of such Default or Event of Default, a detailed
description of the actions to be taken by Mortgage Borrower or Senior Mezzanine
Borrower to cure such Default or Event of Default and the dates by which each
such action shall occur. Such schedule shall be subject to the approval of
Mezzanine Lender. Mezzanine Borrower shall cause Mortgage Borrower or Senior
Mezzanine Borrower, as applicable, to take all such actions as are necessary to
cure such Default or Event of Default by the date approved by Mezzanine Lender
and shall deliver to Mezzanine Lender not less frequently than weekly thereafter
written updates concerning the status of Mortgage Borrower's or Senior Mezzanine
Borrower's efforts to cure such Default or Event of Default. Mezzanine Lender
shall have the right, but not the obligation, to pay any sums or to take any
action which Mezzanine Lender deems necessary or advisable to cure any default
or alleged default under the Loan Documents (Mortgage) or 

 








98













Senior
Mezzanine Loan Documents (whether or not Mortgage Borrower or Senior Mezzanine
Borrower, as applicable, is undertaking efforts to cure such default), and such
payment or such action is hereby authorized by Mezzanine Borrower, and any sum
so paid and any expense incurred by Mezzanine Lender in taking any such action
shall be evidenced by this Agreement and secured by this Agreement and the
Pledge and shall be immediately due and payable by Mezzanine Borrower to
Mezzanine Lender with interest at the Default Rate until paid. Mezzanine
Borrower shall cause Mortgage Borrower, or Senior Mezzanine Borrower to permit
Mezzanine Lender to enter upon the Collateral for the purpose of curing any
default or alleged default under the Loan Documents (Mortgage), Senior or
Mezzanine Loan Documents. Mezzanine Borrower hereby transfers and assigns any
excess proceeds arising from any foreclosure or sale under power pursuant to the
Loan Documents (Mortgage) or Senior Mezzanine Loan Documents or any instrument
evidencing the indebtedness secured thereby, and Mezzanine Borrower hereby
authorizes and directs the holder or holders of the Loan Documents (Mortgage) or
Senior Mezzanine Loan Documents to pay such excess proceeds directly to
Mezzanine Lender up to the amount of the Obligations (Intermediate
Mezzanine).

 

Section
17.2  Remedies.

 

(a)  Unless
waived in writing by Mezzanine Lender, upon the occurrence and during the
continuance of an Event of Default, all or any one or more of the rights,
powers, privileges and other remedies available to Mezzanine Lender against
Mezzanine Borrower and Guarantor under this Agreement or any of the other Loan
Documents (Intermediate Mezzanine) executed and delivered by, or applicable to,
Mezzanine Borrower or at law or in equity may be exercised by Mezzanine Lender
at any time and from time to time, whether or not all or any of the Indebtedness
shall be declared due and payable, and whether or not Mezzanine Lender shall
have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents (Intermediate Mezzanine)
with respect to the Collateral. Any such actions taken by Mezzanine Lender shall
be cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Mezzanine
Lender may determine in its sole discretion, to the fullest extent permitted by
law, without impairing or otherwise affecting the other rights and remedies of
Mezzanine Lender permitted by law, equity or contract or as set forth herein or
in the other Loan Documents (Intermediate Mezzanine). Without limiting the
generality of the foregoing, Mezzanine Borrower agrees that if an Event of
Default is continuing (i) Mezzanine Lender shall not be subject to any one
action or election of remedies law or rule and (ii) all liens and other rights,
remedies or privileges provided to Mezzanine Lender shall remain in full force
and effect until Mezzanine Lender has exhausted all of its remedies against the
Collateral and this Agreement and the Pledge have been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Indebtedness or the Indebtedness
has been paid in full.

 

(b)  Upon the
occurrence of any Event of Default, Mezzanine Lender may, but without any
obligation to do so and without notice to or demand on Mezzanine Borrower and
without releasing Mezzanine Borrower from any obligation hereunder, take any
action to cure such Event of Default. Mezzanine Lender may appear in, defend, or
bring any action or 

 








99













proceeding
to protect its interests in the Collateral or to foreclose its security interest
under this Agreement and the Pledge or under any of the other Loan Documents
(Intermediate Mezzanine) or collect the Indebtedness.

 

(c)  Upon the
occurrence and during the continuance of an Event of Default, with respect to
the Account Collateral (Intermediate Mezzanine), the Mezzanine Lender
may:

 

(i)  without
notice to Mezzanine Borrower, except as required by law, and at any time or from
time to time, charge, set-off and otherwise apply all or any part of the Account
Collateral (Intermediate Mezzanine) against the Obligations (Intermediate
Mezzanine) or any part thereof;

 

(ii)  in
Mezzanine Lender's sole discretion, at any time and from time to time, exercise
any and all rights and remedies available to it under this Agreement, and/or as
a secured party under the UCC;

 

(iii)  demand,
collect, take possession of or receipt for, settle, compromise, adjust, sue for,
foreclose or realize upon the Account Collateral (Intermediate Mezzanine) (or
any portion thereof) as Mezzanine Lender may determine in its sole discretion;
and

 

(iv)  take all
other actions provided in, or contemplated by, this Agreement.

 

(d)  With
respect to Mezzanine Borrower, the Account Collateral (Intermediate Mezzanine),
the Rate Cap Collateral (Intermediate Mezzanine) and the Collateral, nothing
contained herein or in any other Loan Document (Intermediate Mezzanine) shall be
construed as requiring Mezzanine Lender to resort to the Collateral for the
satisfaction of any of the Indebtedness, and Mezzanine Lender may seek
satisfaction out of the Collateral or any part thereof, in its absolute
discretion in respect of the Indebtedness. In addition, Mezzanine Lender shall
have the right from time to time to partially foreclose this Agreement and the
Pledge in any manner and for any amounts secured by this Agreement or the Pledge
then due and payable as determined by Mezzanine Lender in its sole discretion
including, without limitation, the following circumstances: (i) in the event
Mezzanine Borrower defaults beyond any applicable grace period in the payment of
one or more scheduled payments of principal or interest, Mezzanine Lender may
foreclose this Agreement and the Pledge to recover such delinquent payments, or
(ii) in the event Mezzanine Lender elects to accelerate less than the entire
outstanding principal balance of the Loan, Mezzanine Lender may foreclose this
Agreement and the Pledge to recover so much of the principal balance of the Loan
as Mezzanine Lender may accelerate and such other sums secured by this Agreement
or the Pledge as Mezzanine Lender may elect. Notwithstanding one or more partial
foreclosures, the Collateral shall remain subject to this Agreement and the
Pledge to secure payment of sums secured by this Agreement and the Pledge and
not previously recovered.

 








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Section
17.3  Remedies
Cumulative; Waivers

 

The
rights, powers and remedies of Mezzanine Lender under this Agreement and the
Loan Documents (Intermediate Mezzanine) shall be cumulative and not exclusive of
any other right, power or remedy which Mezzanine Lender may have against
Mezzanine Borrower pursuant to this Agreement or the other Loan Documents
(Intermediate Mezzanine), or existing at law or in equity or otherwise.
Mezzanine Lender's rights, powers and remedies may be pursued singly,
concurrently or otherwise, at such time and in such order as Mezzanine Lender
may determine in Mezzanine Lender's sole discretion. No delay or omission to
exercise any remedy, right or power accruing upon an Event of Default shall
impair any such remedy, right or power or shall be construed as a waiver
thereof, but any such remedy, right or power may be exercised from time to time
and as often as may be deemed expedient. A waiver of one Default or Event of
Default with respect to Mezzanine Borrower or any Guarantor shall not be
construed to be a waiver of any subsequent Default or Event of Default by
Mezzanine Borrower or any Guarantor or to impair any remedy, right or power
consequent thereon.

 

Section
17.4  Costs
of Collection

 

In the
event that after an Event of Default: (i) the Mezzanine Note or any of the Loan
Documents (Intermediate Mezzanine) is placed in the hands of an attorney for
collection or enforcement or is collected or enforced through any legal
proceeding; (ii) an attorney is retained to represent Mezzanine Lender in any
bankruptcy, reorganization, receivership, or other proceedings affecting
creditors' rights and involving a claim under this Agreement, the Mezzanine Note
or any of the Loan Documents (Intermediate Mezzanine); or (iii) an attorney is
retained to protect or enforce the lien or any of the terms of this Agreement,
the Pledge or any of the Loan Documents (Intermediate Mezzanine); then Mezzanine
Borrower shall pay to Mezzanine Lender all reasonable attorney's fees, costs and
expenses actually incurred in connection therewith, including costs of appeal,
together with interest on any judgment obtained by Mezzanine Lender at the
Default Rate.

 

Section
17.5  Distribution
of Collateral Proceeds

 

In the
event that, following the occurrence and during the continuance of any Event of
Default, any monies are received in connection with the enforcement of any of
the Loan Documents (Intermediate Mezzanine), or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:

 

(a)  First, to
the payment of, or (as the case may be) the reimbursement of, Mezzanine Lender
for or in respect of all reasonable costs, expenses, disbursements and losses
which shall have been incurred or sustained by Mezzanine Lender to protect or
preserve the Collateral or in connection with the collection of such monies by
Mezzanine Lender (including without limitation, enforcement costs), for the
exercise, protection or enforcement by Mezzanine Lender of all or any of the
rights, remedies, powers and 

 








101













privileges
of Mezzanine Lender under this Agreement or any of the other Loan Documents
(Intermediate Mezzanine) or in respect of the Collateral or in support of any
provision of adequate indemnity to Mezzanine Lender against any taxes or liens
which by law shall have, or may have, priority over the rights of Mezzanine
Lender to such monies;

 

(b)  Second,
to all other Obligations (Intermediate Mezzanine) in such order or preference as
Mezzanine Lender shall determine in its sole and absolute
discretion;

 

(c)  Third,
the excess, if any, shall be deposited in the Junior Mezzanine Account for
application under the Junior Mezzanine Loan Documents.

 


	XVIII.  	
       SPECIAL
      PROVISIONS




 

Section
18.1  Exculpation. 

 

18.1.1  Exculpated
Parties

 

Except as
set forth in this Section
18.1, the
Recourse Guaranty and the Environmental Indemnity, no personal liability shall
be asserted, sought or obtained by Mezzanine Lender or enforceable against (i)
Mezzanine Borrower, (ii) any Affiliate of Mezzanine Borrower, (iii) any Person
owning, directly or indirectly, any legal or beneficial interest in Mezzanine
Borrower or any Affiliate of Mezzanine Borrower or (iv) any direct or indirect
partner, member, principal, officer, Controlling Person, beneficiary, trustee,
advisor, shareholder, employee, agent, Affiliate or director of any Persons
described in clauses (i) through (iii) above (collectively, the Exculpated
Parties) and
none of the Exculpated Parties shall have any personal liability (whether by
suit, deficiency, judgment or otherwise) in respect of the Obligations
(Intermediate Mezzanine), this Agreement, the Pledge, the Mezzanine Note, the
Collateral or any other Loan Document (Intermediate Mezzanine), or the making,
issuance or transfer thereof, all such liability, if any, being expressly waived
by Mezzanine Lender. The foregoing limitation shall not in any way limit or
affect Mezzanine Lender's right to any of the following and Mezzanine Lender
shall not be deemed to have waived any of the following:

 

(a)  Foreclosure
of the lien of this Agreement and the Pledge in accordance with the terms and
provisions set forth herein and in the Pledge;

 

(b)  Action
against any other security at any time given to secure the payment of the
Mezzanine Note and the other Obligations (Intermediate Mezzanine);

 

(c)  Exercise
of any other remedy set forth in this Agreement or in any other Loan Document
(Intermediate Mezzanine) which is not inconsistent with the terms of this
Section
18.1;

 

(d)  Any right
which Mezzanine Lender may have under Sections 506(a), 506(b), 1111(b) or any
other provisions of the Bankruptcy Code to file a claim for the full amount of
the Indebtedness secured by this Agreement and the Pledge or to require that all


 








102













collateral
shall continue to secure all of the Indebtedness owing to Mezzanine Lender in
accordance with the Loan Documents (Intermediate Mezzanine); or

 

(e)  The
liability of any given Exculpated Party with respect to any separate written
guaranty or agreement given by any such Exculpated Party in connection with the
Loan (including, without limitation, the Recourse Guaranty and the Environmental
Indemnity).

 

18.1.2  Carveouts
From Non-Recourse Limitations

 

Notwithstanding
the foregoing or anything in this Agreement or any of the Loan Documents
(Intermediate Mezzanine) to the contrary, there shall at no time be any
limitation on Mezzanine Borrower's or any Guarantor's liability (except each
Guarantor's liability may be several in accordance with the terms of the
Recourse Guaranty) for the payment, in accordance with the terms of this
Agreement, the Mezzanine Note, the Pledge and the other Loan Documents
(Intermediate Mezzanine), to Mezzanine Lender of:

 

(a)  any loss,
damage, cost or expense incurred by or on behalf of Mezzanine Lender by reason
of the fraudulent acts of Mezzanine Borrower or intentional misrepresentations
by Mezzanine Borrower or any Affiliate of Mezzanine Borrower and/or (ii) the
failure of Mortgage Borrower and/or Operating Lessee (as applicable) to have a
valid and subsisting certificate of occupancy(s) for all or any portion of the
Property if and to the extent such certificate of occupancy(s) is required to
comply with all Legal Requirements;

 

(b)  Proceeds
which Mortgage Borrower, any Affiliate of Mortgage Borrower, Mezzanine Borrower
or any Affiliate of Mezzanine Borrower has received and to which Mezzanine
Lender is entitled pursuant to the terms of this Agreement or any of the Loan
Documents (Intermediate Mezzanine) to the extent the same have not been applied
toward payment of the Indebtedness, or used for the repair or replacement of the
Property in accordance with the Loan Agreement (Mortgage);

 

(c)  any
membership deposits and any security deposits and advance deposits which are not
delivered to Mortgage Lender upon a foreclosure of the Property or action in
lieu thereof, except to the extent any such deposits were applied or refunded in
accordance with the terms and conditions of any of the Leases or membership
agreement, as applicable, prior to the occurrence of the Event of Default that
gave rise to such foreclosure or action in lieu thereof;

 

(d)  any loss,
damage, cost or expense incurred by or on behalf of Mezzanine Lender by reason
of all or any part of the Collateral, the Account Collateral (Intermediate
Mezzanine) or the Rate Cap Collateral (Intermediate Mezzanine) being encumbered
by a Lien (other than this Agreement and the Pledge) in violation of the Loan
Documents (Intermediate Mezzanine);

 

(e)  after the
occurrence and during the continuance of an Event of Default, any Rents, issues,
profits and/or income collected by Mortgage Borrower, Mezzanine 

 








103













Borrower,
Operating Lessee, or any Affiliate of Mortgage Borrower, Mezzanine Borrower, or
Operating Lessee (other than Rents and credit card receivables sent to the
Collection Account pursuant to the Loan Agreement (Mortgage) or paid directly to
Mortgage Lender pursuant to any notice of direction delivered to tenants of the
Property or credit card companies) and not applied to payment of the Obligations
or used to pay normal and verifiable Operating Expenses of the Property or
otherwise applied in a manner permitted under the Loan Documents (Mortgage) and
Loan Documents (Intermediate Mezzanine);

 

(f)  any loss,
damage, cost or expense incurred by or on behalf of Mezzanine Lender by reason
of physical damage to the Property from intentional waste committed by Mortgage
Borrower, any Affiliate of Mortgage Borrower, Mezzanine Borrower or any
Affiliate of Mezzanine Borrower;

 

(g)  any loss,
damage, cost or expense incurred by or on behalf of Mezzanine Lender by reason
of the breach of any representation, warranty, covenant or indemnification
provision in the Environmental Indemnity (Intermediate Mezzanine) concerning
environmental laws, hazardous substances and asbestos and any indemnification of
Mezzanine Lender with respect thereto;

 

(h)  Intentionally
Omitted;

 

(i)  if
Mezzanine Borrower fails to obtain Mezzanine Lender's prior written consent to
any Transfer, as required by this Agreement or the Pledge; 

 

(j)  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 Mezzanine Lender, in
the event (and arising out of such circumstances) that (x) Mezzanine Borrower
should raise any defense, counterclaim and/or allegation in any foreclosure
action by Mezzanine Lender relative to the Property, the Account Collateral
(Intermediate Mezzanine) or the Rate Cap Collateral (Intermediate Mezzanine) or
any part thereof which is found by a court to have been raised by Mezzanine
Borrower in bad faith or to be without basis in fact or law, or (y) an
involuntary case is commenced against Mezzanine Borrower under the Bankruptcy
Code with the collusion of Mezzanine Borrower or any of its Affiliates or (z) an
order for relief is entered with respect to the Mezzanine Borrower under the
Bankruptcy Code through the actions of the Mezzanine Borrower or any of its
Affiliates at a time when the Mezzanine Borrower is able to pay its debts as
they become due unless Mezzanine Borrower and Guarantor shall have received an
opinion of independent counsel that the General Partner of Mezzanine Borrower
has a fiduciary duty to seek such an order for relief;

 

(k)  any loss,
damage, cost, or expense incurred by or on behalf of Lender by reason of
Mezzanine Borrower or General Partner failing to be since the date of its
formation, a Single Purpose Entity; and 

 








104
















 

(l)  reasonable
attorney's fees and expenses incurred by Mezzanine Lender in connection with any
successful suit filed on account of any of the foregoing clauses (a) through
(l).

 


	XIX.  	
      MISCELLANEOUS




 

Section
19.1  Survival

 

This
Agreement and all covenants, indemnifications, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by Mezzanine Lender of the Loan and the execution and
delivery to Mezzanine Lender of the Mezzanine Note, and shall continue in full
force and effect so long as all or any of the Indebtedness is outstanding and
unpaid unless a longer period is expressly set forth herein or in the other Loan
Documents (Intermediate Mezzanine). Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All covenants, promises and agreements in
this Agreement, by or on behalf of Mezzanine Borrower, shall inure to the
benefit of the successors and assigns of Mezzanine Lender. If Mezzanine Borrower
consists of more than one person, the obligations and liabilities of each such
person hereunder and under the other Loan Documents (Intermediate Mezzanine)
shall be joint and several.

 

Section
19.2  Mezzanine
Lender's Discretion

 

Whenever
pursuant to this Agreement, Mezzanine Lender exercises any right given to it to
approve or disapprove, or any arrangement or term is to be satisfactory to
Mezzanine Lender, the decision of Mezzanine Lender to approve or disapprove or
to decide whether arrangements or terms are satisfactory or not satisfactory
shall (except as is otherwise specifically herein provided) be in the sole
discretion of Mezzanine Lender and shall be final and conclusive.

 

Section
19.3  Governing
Law.

 

(A) THIS
AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, THE LOAN WAS MADE BY
MEZZANINE LENDER AND ACCEPTED BY MEZZANINE BORROWER IN THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND
TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS (INTERMEDIATE
MEZZANINE) ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA.


 








105













TO
THE FULLEST EXTENT PERMITTED BY LAW, MEZZANINE BORROWER HEREBY UNCONDITIONALLY
AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER
JURISDICTION GOVERNS THIS AGREEMENT AND THE MEZZANINE NOTE AND THE OTHER LOAN
DOCUMENTS (INTERMEDIATE MEZZANINE), AND THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

(B) ANY
LEGAL SUIT, ACTION OR PROCEEDING AGAINST MEZZANINE LENDER OR MEZZANINE BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY AT MEZZANINE LENDER'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND
MEZZANINE BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE
BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND MEZZANINE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. MEZZANINE
BORROWER DOES HEREBY DESIGNATE AND APPOINT:

 

CORPORATION
SERVICE COMPANY

 

80
STATE STREET

 

ALBANY,
NEW YORK 12207-2543

 

AS
ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND
ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY
FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS
UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR
DELIVERED TO MEZZANINE BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON MEZZANINE BORROWER IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. MEZZANINE BORROWER (I)
SHALL GIVE PROMPT NOTICE TO MEZZANINE LENDER OF ANY CHANGED ADDRESS OF ITS
AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE
A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR
SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS
AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED
WITHOUT LEAVING A SUCCESSOR.

 

Section
19.4  Modification,
Waiver in Writing

 








106













No
modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, or of the Mezzanine Note, or of any other Loan
Document (Intermediate Mezzanine), or consent to any departure therefrom, shall
in any event be effective unless the same shall be in a writing signed by the
party against whom enforcement is sought and then such waiver or consent shall
be effective only in the specific instance, and for the purpose, for which
given. Except as otherwise expressly provided herein, no notice to or demand on
Mezzanine Borrower shall entitle Mezzanine Borrower to any other or future
notice or demand in the same, similar or other circumstances.

 

Section
19.5  Delay
Not a Waiver

 

Neither
any failure nor any delay on the part of Mezzanine Lender in insisting upon
strict performance of any term, condition, covenant or agreement, or exercising
any right, power, remedy or privilege hereunder, or under the Mezzanine Note or
under any other Loan Document (Intermediate Mezzanine), or any other instrument
given as security therefor, shall operate as or constitute a waiver thereof, nor
shall a single or partial exercise thereof preclude any other future exercise,
or the exercise of any other right, power, remedy or privilege. In particular,
and not by way of limitation, by accepting payment after the due date of any
amount payable under this Agreement, the Mezzanine Note or any other Loan
Document (Intermediate Mezzanine), Mezzanine Lender shall not be deemed to have
waived any right either to require prompt payment when due of all other amounts
due under this Agreement, the Mezzanine Note or the other Loan Documents
(Intermediate Mezzanine), or to declare a default for failure to effect prompt
payment of any such other amount.

 








107
















 

Section
19.6  Notices

 

All
notices, consents, approvals and requests required or permitted hereunder or
under any other Loan Document (Intermediate Mezzanine) shall be given in writing
and shall be effective for all purposes if hand delivered or sent by (a)
certified or registered United States mail, postage prepaid, return receipt
requested, (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery or (c) telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the case
may be, in a written notice to the other parties hereto in the manner provided
for in this Section):

If to
Mezzanine Lender: 

 

German
American Capital Corporation

60 Wall
Street, 10th
Floor

New York
New York 10005

Attention:
Todd Sammann and General Counsel

Telecopy
No.: (212) 797-4489

Confirmation
No.: (212) 250-2748

 

With a
copy to: 

 

Midland
Loan Services, Inc.

10851
Mastin Suite 700

Overland
Park, Kansas 66210

Attention:
Jan Sternin

Telecopy
No.: (913) 253-9001

Confirmation
No.: (913) 253-9216

 

With a
copy to: 

 

Skadden,
Arps, Slate, Meagher & Flom LLP

Four
Times Square

New York,
New York 10036

Attention:
Harvey R. Uris, Esq.

Telecopy
No.: (917) 777-2212

Confirmation
No.: (212) 735-3000

 

If to
Mezzanine Borrower: 

 

c/o CNL
Hotels Resorts, Inc.

Center at
City Commons

450 South
Orange Avenue

Orlando,
Florida 32801

Attention
Senior Vice President

Telefax
No.: (407) 650-1085

 








108
















And
 

 

c/o KSL
Resorts

50-905
Avenida Bermudas

La
Quinta, California 92253

Attention:
Mr. Eric Resnick, Chief Financial Officer

Telefax
No.: (760) 564-8005

 

With a
copy to: 

 

Gibson
Dunn & Crutcher LLP

333 South
Grand Avenue

Los
Angeles, CA 90071-3197

Attention:
Michael F. Sfregola, Esq.

Telefax
No.: (213) 229-6558

 

and 

 

Lowndes
Drosdick Doster Kantor & Reed, P.A.

215 North
Eola Avenue

Orlando,
Florida 32801

Attention:
Richard J. Fildes, Esq.

Telefax
No.: (407) 843-4444

 




 

All
notices, elections, requests and demands under this Agreement shall be effective
and deemed received upon the earliest of (i) the actual receipt of the same by
personal delivery or otherwise, (ii) one (1) Business Day after being deposited
with a nationally recognized overnight courier service as required above, (iii)
three (3) Business Days after being deposited in the United States mail as
required above or (iv) on the day sent if sent by facsimile with confirmation on
or before 5:00 p.m. New York time on any Business Day or on the next Business
Day if so delivered after 5:00 p.m. New York time or on any day other than a
Business Day. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given as herein required shall
be deemed to be receipt of the notice, election, request, or demand
sent.

 

Section
19.7  TRIAL
BY JURY

 

MEZZANINE
BORROWER AND ALL PERSONS CLAIMING BY, THROUGH OR UNDER IT, HEREBY EXPRESSLY,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT,
THE PLEDGE, THE MEZZANINE NOTE OR ANY OTHER LOAN DOCUMENT (INTERMEDIATE
MEZZANINE), INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION
THEREOF OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT,
THE PLEDGE, THE MEZZANINE NOTE OR ANY OTHER LOAN DOCUMENT (INTERMEDIATE
MEZZANINE) (AS NOW OR HEREAFTER MODIFIED) OR ANY 

 








109













OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND MEZZANINE BORROWER HEREBY
AGREES AND CONSENTS THAT AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION MAY
BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT HERETO TO THE WAIVER
OF ANY RIGHT TO TRIAL BY JURY. MEZZANINE BORROWER ACKNOWLEDGES THAT IT HAS
CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND
ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR THE MAKING OF THE
LOAN. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE LOAN.

 

Section
19.8  Headings

 

The
Article and/or Section headings and the Table of Contents in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

 

Section
19.9  Severability

 

Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

 

Section
19.10  Preferences

 

To the
extent Mezzanine Borrower makes a payment or payments to Mezzanine Lender, which
payment or proceeds or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Mezzanine Lender.

 

Section
19.11  Waiver
of Notice

 

Mezzanine
Borrower shall not be entitled to any notices of any nature whatsoever from
Mezzanine Lender except with respect to matters for which this Agreement or the
other Loan Documents (Intermediate Mezzanine) specifically and expressly provide
for the giving of notice by Mezzanine Lender to Mezzanine Borrower and except
with respect to matters for which Mezzanine Borrower is not, pursuant to
applicable Legal 

 








110













Requirements,
permitted to waive the giving of notice. Mezzanine Borrower hereby expressly
waives the right to receive any notice from Mezzanine Lender with respect to any
matter for which this Agreement or the other Loan Documents (Intermediate
Mezzanine) do not specifically and expressly provide for the giving of notice by
Mezzanine Lender to Mezzanine Borrower.

 

Section
19.12  Expenses;
Indemnity.

 

(a)  Except as
may be otherwise expressly set forth in the Loan Documents (Intermediate
Mezzanine), Mezzanine Borrower covenants and agrees to pay or, if Mezzanine
Borrower fails to pay, to reimburse, Mezzanine Lender upon receipt of written
notice from Mezzanine Lender for all reasonable costs and expenses (including
reasonable attorneys' fees and disbursements) incurred by Mezzanine Lender in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents (Intermediate Mezzanine) and the
consummation of the transactions contemplated hereby and thereby and all the
costs of furnishing all opinions by counsel for Mezzanine Borrower (including
without limitation any opinions requested by Mezzanine Lender pursuant to this
Agreement); (ii) Mezzanine Lender's ongoing performance of and compliance with
all agreements and conditions contained in this Agreement and the other Loan
Documents (Intermediate Mezzanine) on its part to be performed or complied with
after the Closing Date; (iii) the negotiation, preparation, execution, delivery
and administration of any consents, amendments, waivers or other modifications
to this Agreement and the other Loan Documents (Intermediate Mezzanine) and any
other documents or matters as required herein or under the other Loan Documents
(Intermediate Mezzanine); (iv) securing Mezzanine Borrower's compliance with any
requests made pursuant to the provisions of this Agreement; (v) the filing and
recording fees and expenses, mortgage recording taxes, title insurance and
reasonable fees and expenses of counsel for providing to Mezzanine Lender all
required legal opinions, and other similar expenses incurred in creating and
perfecting the Lien in favor of Mezzanine Lender pursuant to this Agreement and
the other Loan Documents (Intermediate Mezzanine); (vi) enforcing or preserving
any rights, in response to third party claims or the prosecuting or defending of
any action or proceeding or other litigation, in each case against, under or
affecting Mezzanine Borrower, this Agreement, the other Loan Documents
(Intermediate Mezzanine), the Property, or any other security given for the
Loan; (vii) enforcing any obligations of or collecting any payments due from
Mezzanine Borrower under this Agreement, the other Loan Documents (Intermediate
Mezzanine) or with respect to the Collateral or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a work-out or of any insolvency or bankruptcy
proceedings and (viii) procuring insurance policies pursuant to Section
6.1.11;
provided,
however, that
Mezzanine Borrower shall not be liable for the payment of any such costs and
expenses to the extent the same arise (A) by reason of the gross negligence,
illegal acts, fraud or willful misconduct of Mezzanine Lender or (B) in
connection with any action taken under Article IV, other than the Mezzanine
Borrower's internal administrative costs. Any cost and expenses due and payable
to Mezzanine Lender may be paid from any amounts in the Mezzanine 

 








111













Account
if same are not paid by Mezzanine Borrower within ten (10) Business Days after
receipt of written notice from Mezzanine Lender.

 

(b)  Subject
to the non-recourse provisions of Section
18.1,
Mezzanine Borrower shall protect, indemnify and save harmless Mezzanine Lender,
and all officers, directors, stockholders, members, partners, employees, agents,
successors and assigns thereof (collectively, the Indemnified
Parties) from
and against all liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including all reasonable attorneys' fees and
expenses actually incurred) imposed upon or incurred by or asserted against the
Indemnified Parties, the Collateral or the Property or any part of its interest
therein, by reason of the occurrence or existence of any of the following (to
the extent Proceeds payable on account of the following shall be inadequate; it
being understood that in no event will the Indemnified Parties be required to
actually pay or incur any costs or expenses as a condition to the effectiveness
of the foregoing indemnity) prior to (i) the acceptance by Mezzanine Lender or
its designee of a deed-in-lieu of foreclosure with respect to the Collateral, or
(ii) an Indemnified Party or its designee taking possession or control of the
Collateral or (iii) the foreclosure of the Pledge, except to the extent caused
by the willful misconduct or gross negligence of the Indemnified Parties (other
than such willful misconduct or gross negligence imputed to the Indemnified
Parties because of their interest in the Property): (1) ownership of Mezzanine
Borrower's interest in the Property, or any interest therein, or receipt of any
Rents or other sum therefrom, (2) any accident, injury to or death of any
persons or loss of or damage to Property occurring on or about the Property or
any Appurtenances thereto, (3) any design, construction, operation, repair,
maintenance, use, non-use or condition of the Property or Appurtenances thereto,
including claims or penalties arising from violation of any Legal Requirement or
Insurance Requirement, as well as any claim based on any patent or latent
defect, whether or not discoverable by Mezzanine Lender, any claim the insurance
as to which is inadequate, and any Environmental Claim, (4) any Default under
this Agreement or any of the other Loan Documents (Intermediate Mezzanine) or
any failure on the part of Mezzanine Borrower to perform or comply or to cause
Mortgage Borrower to perform or comply with any of the terms of any Lease within
the applicable notice or grace periods, (5) any performance of any labor or
services or the furnishing of any materials or other Property in respect of the
Property or any part thereof, (6) any negligence or tortious act or omission on
the part of Mezzanine Borrower or any of its agents, contractors, servants,
employees, sublessees, licensees or invitees, (7) any contest referred to in
Section
7.3 of the
Loan Agreement (Mortgage), (8) any obligation or undertaking relating to the
performance or discharge of any of the terms, covenants and conditions of the
landlord contained in the Leases, or (9) except as may be expressly limited
herein, the presence at, in or under the Property or the Improvements of any
Hazardous Materials in violation of any Environmental Law. Any amounts the
Indemnified Parties are legally entitled to receive under this Section which
are not paid within fifteen (15) Business Days after written demand therefor by
the Indemnified Parties or Mezzanine Lender, setting forth in reasonable detail
the amount of such demand and the basis therefor, shall bear interest from the
date of demand at the Default Rate, and shall, together with such interest, be
part of the Indebtedness and secured by this Agreement and the Pledge. In case
any action, suit or proceeding is brought against the Indemnified Parties by
reason of any such occurrence, Mezzanine Borrower shall at 

 








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Mezzanine
Borrower's expense resist and defend such action, suit or proceeding or will
cause the same to be resisted and defended by counsel at Mezzanine Borrower's
reasonable expense for the insurer of the liability or by counsel designated by
Mezzanine Borrower (unless reasonably disapproved by Mezzanine Lender promptly
after Mezzanine Lender has been notified of such counsel); provided,
however, that
nothing herein shall compromise the right of Mezzanine Lender (or any
Indemnified Party) to appoint its own counsel at Mezzanine Borrower's expense
for its defense with respect to any action which in its reasonable opinion
presents a conflict or potential conflict between Mezzanine Lender and Mezzanine
Borrower that would make such separate representation advisable; provided
further that if Mezzanine Lender shall have appointed separate counsel pursuant
to the foregoing, Mezzanine Borrower shall not be responsible for the expense of
additional separate counsel of any Indemnified Party unless in the reasonable
opinion of Mezzanine Lender a conflict or potential conflict exists between such
Indemnified Party and Mezzanine Lender. So long as Mezzanine Borrower is
resisting and defending such action, suit or proceeding as provided above in a
prudent and commercially reasonable manner, Mezzanine Lender and the Indemnified
Parties shall not be entitled to settle such action, suit or proceeding without
Mezzanine Borrower's consent which shall not be unreasonably withheld or
delayed, and claim the benefit of this Section with
respect to such action, suit or proceeding and Mezzanine Lender agrees that it
will not settle any such action, suit or proceeding without the consent of
Mezzanine Borrower; provided,
however, that if
Mezzanine Borrower is not diligently defending such action, suit or proceeding
in a prudent and commercially reasonable manner as provided above, and Mezzanine
Lender has provided Mezzanine Borrower with thirty (30) days' prior written
notice, or shorter period if mandated by the requirements of applicable law, and
opportunity to correct such determination, Mezzanine Lender may settle such
action, suit or proceeding and claim the benefit of this Section
19.12 with
respect to settlement of such action, suit or proceeding. Any Indemnified Party
will give Mezzanine Borrower prompt notice after such Indemnified Party obtains
actual knowledge of any potential claim by such Indemnified Party for
indemnification hereunder. The Indemnified Parties shall not settle or
compromise any action, proceeding or claim as to which it is indemnified
hereunder without notice to Mezzanine Borrower.

 

Section
19.13  Exhibits
and Schedules Incorporated

 

The
Exhibits and Schedules annexed hereto are hereby incorporated herein as a part
of this Agreement with the same effect as if set forth in the body
hereof.

 

Section
19.14  Offsets,
Counterclaims and Defenses

 

Any
assignee of Mezzanine Lender's interest in and to this Agreement, the Mezzanine
Note and the other Loan Documents (Intermediate Mezzanine) shall take the same
free and clear of all offsets, counterclaims or defenses which are unrelated to
such documents which Mezzanine Borrower may otherwise have against any assignor
of such documents, and no such unrelated counterclaim or defense shall be
interposed or asserted by Mezzanine Borrower in any action or proceeding brought
by any such assignee upon such documents and any such right to interpose or
assert any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Mezzanine Borrower.

 

Section
19.15  Liability
of Assignees of Mezzanine Lender

 

No
assignee of Mezzanine Lender shall have any personal liability, directly or
indirectly, under or in connection with this Agreement or any other Loan
Document (Intermediate Mezzanine) or any amendment or amendments hereto made at
any time or times, heretofore or hereafter, any different than the liability of
Mezzanine Lender hereunder. In addition, no assignee shall have at any time or
times hereafter any personal liability, directly or indirectly, under or in
connection with or secured by any agreement, lease, instrument, encumbrance,
claim or right affecting or relating to the Property or to which the Property is
now or hereafter subject any different than the liability of Mezzanine Lender
hereunder. The limitation of liability provided in this Section 19.15 is (i) in
addition to, and not in limitation of, any limitation of liability applicable to
the assignee provided by law or by any other contract, agreement or instrument,
and (ii) shall not apply to any assignee's gross negligence or willful
misconduct.

 

Section
19.16  No
Joint Venture or Partnership; No Third Party
Beneficiaries.

 

(a)  Mezzanine
Borrower and Mezzanine Lender intend that the relationships created hereunder
and under the other Loan Documents (Intermediate Mezzanine) be solely that of
borrower and lender. Nothing herein or therein is intended to create a joint
venture, partnership, tenancy-in-common, or joint tenancy relationship between
Mezzanine Borrower and Mezzanine Lender nor to grant Mezzanine Lender any
interest in the Collateral other than that of Mezzanine Lender.

 

(b)  This
Agreement and the other Loan Documents (Intermediate Mezzanine) are solely for
the benefit of Mezzanine Lender and Mezzanine Borrower and nothing contained in
this Agreement or the other Loan Documents (Intermediate Mezzanine) shall be
deemed to confer upon anyone other than Mezzanine Lender and Mezzanine Borrower
any right to insist upon or to enforce the performance or observance of any of
the obligations contained herein or therein. All conditions to the obligations
of Mezzanine Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Mezzanine Lender and no other Person shall have
standing to require satisfaction of such conditions in accordance with their
terms or be entitled to assume that Mezzanine Lender will refuse to make the
Loan in the absence of strict compliance with any or all thereof and no other
Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Mezzanine Lender if, in Mezzanine Lender's sole discretion, Mezzanine Lender
deems it advisable or desirable to do so.

 

Section
19.17  Publicity

 








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All news
releases, publicity or advertising by Mezzanine Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan
Documents (Intermediate Mezzanine) or the financing evidenced by the Loan
Documents (Intermediate Mezzanine), to Mezzanine Lender, or any of its
Affiliates shall be subject to the prior written approval of Mezzanine Lender.


 

Section
19.18  Waiver
of Marshalling of Assets

 

To the
fullest extent permitted by law, Mezzanine Borrower, for itself and its
successors and assigns, waives all rights to a marshalling of the assets of
Mezzanine Borrower, Mezzanine Borrower's shareholders and others with interests
in Mezzanine Borrower and of the Collateral, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Mezzanine Lender under the Loan Documents (Intermediate Mezzanine) to a sale
of the Collateral for the collection of the Indebtedness without any prior or
different resort for collection or of the right of Mezzanine Lender to the
payment of the Indebtedness out of the net proceeds of the Collateral in
preference to every other claimant whatsoever.

 

Section
19.19  Waiver
of Counterclaim and other Actions

 

Mezzanine
Borrower hereby expressly and unconditionally waives, in connection with any
suit, action or proceeding brought by Mezzanine Lender on this Agreement, the
Mezzanine Note, the Pledge or any Loan Document (Intermediate Mezzanine), any
and every right it may have to (i) interpose any counterclaim therein (other
than a counterclaim which can only be asserted in the suit, action or proceeding
brought by Mezzanine Lender on this Agreement, the Mezzanine Note, the Pledge or
any Loan Document (Intermediate Mezzanine) and cannot be maintained in a
separate action) and (ii) have any such suit, action or proceeding consolidated
with any other or separate suit, action or proceeding.

 

Section
19.20  Conflict;
Construction of Documents; Reliance

 

In the
event of any conflict between the provisions of this Agreement and any of the
other Loan Documents (Intermediate Mezzanine), the provisions of this Agreement
shall control. The parties hereto acknowledge that they were represented by
competent counsel in connection with the negotiation, drafting and execution of
the Loan Documents (Intermediate Mezzanine) and that such Loan Documents
(Intermediate Mezzanine) shall not be subject to the principle of construing
their meaning against the party which drafted same. Mezzanine Borrower
acknowledges that, with respect to the Loan, Mezzanine Borrower shall rely
solely on its own judgment and advisors in entering into the Loan without
relying in any manner on any statements, representations or recommendations of
Mezzanine Lender or any parent, subsidiary or Affiliate of Mezzanine Lender.
Mezzanine Lender shall not be subject to any limitation whatsoever in the
exercise of any rights or remedies available to it under any of the Loan
Documents (Intermediate Mezzanine) or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or 

 








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any
parent, subsidiary or Affiliate of Mezzanine Lender of any equity interest any
of them may acquire in Mezzanine Borrower, and Mezzanine Borrower hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Mezzanine Lender's exercise of any such
rights or remedies. Mezzanine Borrower acknowledges that Mezzanine Lender
engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Mezzanine Borrower or its Affiliates.

 

Section
19.21  Prior
Agreements

 

This
Agreement and the other Loan Documents (Intermediate Mezzanine) contain the
entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, are superseded by the terms of
this Agreement and the other Loan Documents (Intermediate Mezzanine) and unless
specifically set forth in a writing contemporaneous herewith the terms,
conditions and provisions of any and all such prior agreements do not survive
execution of this Agreement.

 

Section
19.22  Counterparts

 

This
Agreement may be executed in multiple counterparts, each of which shall
constitute an original, but all of which shall constitute one
document.

 

Section
19.23  Disclosure

 

Notwithstanding
anything to the contrary contained in Sections
15.1 and
15.6, in
connection with the transactions contemplated by such Sections, in no event
shall Mezzanine Lender deliver financial information with respect to the
Collateral, the Property or the Guarantor to the Persons listed in Schedule
III, without
first obtaining Mezzanine Borrower's prior written consent; provided however,
Mezzanine Borrower's consent shall not be required with respect to Morgan
Stanley, Lehman Brothers, The Equitable Life Assurance Society of the United
States, Teachers Insurance and Annuity Association and the state of Ohio Pension
Fund if Mezzanine Lender delivers a confidentiality agreement from any of such
Persons reasonably acceptable to Mezzanine Borrower. 

 




 










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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.

 

MEZZANINE
BORROWER:

 

CNL HOTEL
DEL INTERMEDIATE MEZZ PARTNERS, LP, a Delaware limited partnership

 

By: CNL Hotel
Del Intermediate Mezz Partners

 

GP, LLC,
a Delaware limited liability company its
General Partner

 

 By:  /s/ John X. Brady, Jr.

 Name: 
John X. Brady, Jr.

                        
Title:    Vice President

                              

 




 

By
signing below, General Partner agrees that in consideration of the substantial
benefit that it will receive from Lender making the Loan to Borrower, General
Partner agrees to comply (or permit Mezzanine Borrower to take such action
necessary to comply) with all of the terms, conditions, obligations and
restrictions affecting General Partner set forth herein:

 

GENERAL
PARTNER:

 

CNL HOTEL
DEL INTERMEDIATE MEZZ PARTNERS GP, LLC, a Delaware limited liability
company

 




                            By:  /s/ John X.
Brady, Jr.

                            Name:  John X.
Brady, Jr.

                            Title:   
Vice President

 




 




 

[Mezzanine
Lender's signature appears on following page]

 




 

MEZZANINE
LENDER:

 

GERMAN
AMERICAN CAPITAL CORPORATION, a Maryland corporation

 




 

By: 
/s/ Todd O. Sammon

Name: 
Todd O. Sammon 

Title:    
Vice President




 

By: 
/s/ Eric M. Schwartz

Name: 
Eric M. Schwartz

Title:   
Vice President