Exhibit 10.96









EXHIBIT
10.96




LOAN
AND SECURITY AGREEMENT

 










Dated as
of February 9, 2005

 







Between

 







CNL
HOTEL DEL PARTNERS, LP,

as
Borrower

 







and

 







GERMAN
AMERICAN CAPITAL CORPORATION,

as
Lender

 




 



























TABLE
OF CONTENTS

 

                                  Page


	
       

      I.

       
	
       

      DEFINITIONS;
      PRINCIPLES OF CONSTRUCTION

       
	
       

      1

       

	
      Section
      1.1
	
      Definitions1
	
      1

	
      Section
      1.2
	
      Principles
      of Construction
	
      31

	
       

      II.

       
	
       

      GENERAL
      TERMS

       
	
       

      32

       

	
      Section
      2.1
	
      Loan;
      Disbursement to Mezzanine Borrower.
	
      32

	
      Section
      2.2
	
      Interest;
      Loan Payments; Late Payment Charge.
	
      32

	
      Section
      2.3
	
      Prepayments
	
      34

	
      Section
      2.4
	
      Regulatory
      Change; Taxes.
	
      37

	
      Section
      2.5
	
      Conditions
      Precedent to Closing
	
      39

	
       

      III.

       
	
       

      CASH
      MANAGEMENT

       
	
       

      43

       

	
      Section
      3.1
	
      Cash
      Management.
	
      43

	
       

      IV

       
	
       

      REPRESENTATIONS
      AND WARRANTIES

       
	
       

      54

       

	
      Section
      4.1
	
      Mezzanine
      Borrower Representations.
	
      54

	
       

      V.

       
	
       

      BORROWER
      COVENANTS

       
	
       

      65

       

	
      Section
      5.1
	
      Affirmative
      Covenants.
	
      65

	
      Section
      5.2
	
      Negative
      Covenants
	
      73

	
       

      VI.

       
	
       

      INSURANCE;
      CASUALTY; CONDEMNATION; RESTORATION

       
	
       

      76

       

	
      Section
      6.1
	
      Insurance
      Coverage Requirements.
	
      76





























	
      Section
      6.2
	
      Condemnation
      and Insurance Proceeds
	
      82

	
       

      VII.

       
	
       

      IMPOSITIONS,
      OTHER CHARGES, LIENS AND OTHER ITEMS

       
	
       

      86

       

	
      Section
      7.1
	
      Impositions
      and Other Charges
	
      86

	
      Section
      7.2
	
      No
      Liens
	
      86

	
      Section
      7.3
	
      Contest
	
      87

	
       

      VIII.

       
	
       

      TRANSFERS,
      INDEBTEDNESS AND SUBORDINATE LIENS

       
	
       

      87

       

	
      Section
      8.1
	
      Restrictions
      on Transfers and Indebtedness.
	
      87

	
      Section
      8.2
	
      Sale
      of Building Equipment 
	
      88

	
      Section
      8.3
	
      Immaterial
      Transfers and Easements
	
      88

	
      Section
      8.4
	
      Transfers
      of Interests in Borrower
	
      89

	
      Section
      8.5
	
      Loan
      Assumption
	
      90

	
      Section
      8.6
	
      Notice
      Required; Legal Opinions
	
      92

	
      Section
      8.7
	
      Leases.
	
      92

	
       

      IX.

       
	
       

      INTEREST
      RATE CAP AGREEMENT.

       
	
       

      95

       

	
      Section
      9.1
	
      Interest
      Rate Cap Agreement
	
      95

	
      Section
      9.2
	
      Pledge
      and Collateral Assignment
	
      95

	
      Section
      9.3
	
      Covenants.
	
      96

	
      Section
      9.4
	
      Representations
      and Warranties
	
      97

	
      Section
      9.5
	
      Payments
	
      98

	
      Section
      9.6
	
      Remedies
	
      98

	
      Section
      9.7
	
      Sales
      of Rate Cap Collateral (Intermediate Mezzanine)
	
      100

	
      Section
      9.8
	
      Public
      Sales Not Possible
	
      101





























	
      Section
      9.9
	
      Receipt
      of Sale Proceeds
	
      101

	
      Section
      9.10
	
      Extension
      Interest Rate Cap Agreement 
	
      101

	
       

      X.

       
	
       

      MAINTENANCE
      OF PROPERTY, ALTERATIONS

       
	
       

      101

       

	
      Section
      10.1
	
      Maintenance
      of Property
	
      102

	
      Section
      10.2
	
      Alterations
      and Expansions
	
      102

	
       

      XI.

       
	
       

      BOOKS
      AND RECORDS, FINANCIAL STATEMENTS, REPORTS AND OTHER
      INFORMATION

       
	
       

      105

       

	
      Section
      11.1
	
      Books
      and Records
	
      105

	
      Section
      11.2
	
      Financial
      Statements.
	
      105

	
       

      XII.

       
	
       

      ENVIRONMENTAL
      MATTERS.

       
	
       

      108

       

	
      Section
      12.1
	
      Representations
	
      108

	
      Section
      12.2
	
      Covenants.
	
      109

	
      Section
      12.3
	
      Environmental
      Reports
	
      109

	
      Section
      12.4
	
      Environmental
      Indemnification
	
      110

	
      Section
      12.5
	
      Recourse
      Nature of Certain Indemnifications
	
      110

	
       

      XIII.

       
	
       

      RESERVED

       
	
       

      110

       

	
       

      XIV.

       
	
       

      SECURITIZATION
      AND PARTICIAPTION

       
	
       

      110

       

	
      Section
      14.1
	
      Sale
      of Note and Securitization
	
      110

	
      Section
      14.2
	
      Cooperation
      with Rating Agencies
	
      112

	
      Section
      14.3
	
      Securitization
      Financial Statements
	
      112

	
      Section
      14.4
	
      Securitization
      Indemnification
	
      112

	
      Section
      14.5
	
      Retention
      of Servicer
	
      115

	
       

      XV.

       
	
       

      ASSIGNMENTS
      AND PARTICIPATIONS.

       
	
       

      115

       

	
      Section
      15.1
	
      Assignment
      and Acceptance
	
      115

	
      Section
      15.2
	
      Effect
      of Assignment and Acceptance
	
      115

	
      Section
      15.3
	
      Content
	
      116

	
      Section
      15.4
	
      Register
	
      116





























	
      Section
      15.5
	
      Substitute
      Notes
	
      116

	
      Section
      15.6
	
      Participations
	
      117

	
      Section
      15.7
	
      Disclosure
      of Information
	
      117

	
      Section
      15.8
	
      Security
      Interest in Favor of Federal Reserve Bank
	
      117

	
       

      XVI.

       
	
       

      RESERVED
      ACCOUNTS

       
	
       

      118

       

	
      Section
      16.1
	
      Tax
      Reserve Account
	
      118

	
      Section
      16.2
	
      Insurance
      Reserve Account
	
      118

	
      Section
      16.3
	
      Intentionally
      Omitted
	
      119

	
      Section
      16.4
	
      Low
      DSCR Reserve Account
	
      119

	
      Section
      16.5
	
      Intentionally
      Deleted
	
      120

	
      Section
      16.6
	
      Intentionally
      Deleted
	
      120

	
      Section
      16.7
	
      Franchise
      Fee Reserve Accounts
	
      120

	
      Section
      16.8
	
      Letter
      of Credit Provisions
	
      120

	
       

      XVII.

       
	
       

      DEFAULTS

       
	
       

      121

       

	
      Section
      17.1
	
      Event
      of Default.
	
      121

	
      Section
      17.2
	
      Remedies.
	
      124

	
      Section
      17.3
	
      Remedies
      Cumulative; Waivers
	
      126

	
      Section
      17.4
	
      Costs
      of Collection
	
      126

	
       

      XVIII.

       
	
       

      SPECIAL
      PROVISIONS

       
	
       

      126

       

	
      Section
      18.1
	
      Exculpation.
	
      126

	
       

      XIX.

       
	
       

      MISCELLANEOUS

       
	
       

      129

       

	
      Section
      19.1
	
      Survival
	
      129

	
      Section
      19.2
	
      Lender's
      Discretion
	
      129

	
      Section
      19.3
	
      Governing
      Law.
	
      130

	
      Section
      19.4
	
      Modification,
      Waiver in Writing
	
      131

	
      Section
      19.5
	
      Delay
      Not a Waiver
	
      131

	
      Section
      19.6
	
      Notices
	
      131

	
      Section
      19.7
	
      TRIAL
      BY JURY
	
      133





























	
      Section
      19.8
	
      Headings
	
      133

	
      Section
      19.9
	
      Severability
	
      133

	
      Section
      19.10
	
      Preferences
	
      134

	
      Section
      19.11
	
      Waiver
      of Notice
	
      134

	
      Section
      19.12
	
      Expenses;
      Indemnity.
	
      134

	
      Section
      19.13
	
      Exhibits
      and Schedules Incorporated
	
      136

	
      Section
      19.14
	
      Offsets,
      Counterclaims and Defenses
	
      136

	
      Section
      19.15
	
      Liability
      of Assignees of Mezzanine Lender
	
      137

	
      Section
      19.16
	
      No
      Joint Venture or Partnership; No Third Party
Beneficiaries.
	
      137

	
      Section
      19.17
	
      Publicity
	
      137

	
      Section
      19.18
	
      Waiver
      of Marshalling of Assets
	
      137

	
      Section
      19.19
	
      Waiver
      of Counterclaim and other Actions
	
      138

	
      Section
      19.20
	
      Conflict;
      Construction of Documents; Reliance
	
      138

	
      Section
      19.21
	
      Prior
      Agreements
	
      138

	
      Section
      19.22
	
      Counterparts
	
      139

	
      Section
      19.23
	
      Disclosure
	
      139







 




 

























EXHIBITS
AND SCHEDULES

 


	
      EXHIBIT
      A
	
      TITLE
      INSURANCE REQUIREMENTS

	
      EXHIBIT
      B
	
      SURVEY
      REQUIREMENTS

	
      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
	
      FORM
      OF SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
  AGREEMENT

	
      EXHIBIT
      L
	
      INTENTIONALLY
      DELETED

	
      EXHIBIT
      M
	
      COUNTERPARTY
      ACKNOWLEDGMENT

	
      EXHIBIT
      N
	
      INTENTIONALLY
      DELETED

	
      EXHIBIT
      O
	
      FORM
      OF INDEPENDENT DIRECTOR CERTIFICATE

	
      EXHIBIT
      P
	
      INTENTIONALLY
      OMITTED

	
      EXHIBIT
      Q
	
      FORM
      OF TRADEMARK SECURITY AGREEMENT

	
      EXHIBIT
      R
	
      ARTICLE
      8 OPT IN LANGUAGE

	 	 
	
      SCHEDULE
      I
	
      LABOR
      SCHEDULE

	
      SCHEDULE
      II
	
      INTENTIONALLY
      DELETED

	
      SCHEDULE
      III
	
      PRE-APPROVED
      TRANSFEREES

	
      SCHEDULE
      IV
	
      PRE-APPROVED
      MANAGERS

	
      SCHEDULE
      V
	
      OUTPARCELS

	
      SCHEDULE
      VI
	
      NORTH
      BEACH PROPERTY

	
      SCHEDULE
      VII
	
      REVIEW
      LETTER

	
      SCHEDULE
      VIII
	
      SCOPE
      AND LOCATION OF SPA RENOVATION

































LOAN
AND SECURITY AGREEMENT

 

THIS LOAN
AND SECURITY AGREEMENT dated as of February __, 2005 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
Agreement),
between CNL HOTEL DEL PARTNERS, LP, a Delaware limited partnership (Borrower) having
an office at 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,
Lender).

 

W
I T N E S S E T H:

 

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

 

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

 

NOW,
THEREFORE, in consideration of the making of the Loan by 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 (as applicable) shall be upon terms and conditions
no less favorable in all material respects to the Borrower, Operating Lessee and
Lender than those contained in the applicable Management Agreement or any new or
amended management agreement entered into by 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 of at least as comparable to the Property (as reasonably determined
by Manager and Operating Lessee; provided, however, Operating Lessee shall
obtain 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 a Rating Agency Confirmation has been obtained.


 

Accommodation
Security Documents shall
mean the Security Instrument, the Assignment of Leases and UCC-1 Financing
Statements which have been executed by Borrower and Operating Lessee in favor of
Lender to secure Borrower's obligations under the Loan Documents.

 

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

 

Account
Collateral 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
4.1.29(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.

 

ALTA shall
mean American Land Title Association, or any successor thereto.

 

Alteration shall
mean any demolition, alteration, installation, improvement or decoration of or
to the Property or any part thereof or the Improvements (including FF&E)
thereon.

 






















Approved
Bank shall
have the meaning set forth in the Account Agreement. 

 

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

 

Assignment
of Leases shall
mean that certain first priority Assignment of Leases, Rents, Hotel Revenue and
Security Deposits, dated as of the date hereof, from Borrower and Operating
Lessee, as assignor, to Lender, as assignee, assigning to Lender all of
Borrower's and Operating Lessee's interest in and to the Leases, Rents, Hotel
Revenue and Security Deposits as security for the Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

Assignment
of Management Agreement shall
mean that certain Manager's Consent, Subordination of Management Agreement and
Non-disturbance Agreement, dated the date hereof, among Lender, Borrower,
Operating Lessee, 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 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 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 to
the extent that one or more of such individuals no longer occupy their current
capacities.

 

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

 

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

 






















Bank:
Bank of America, Los Angeles, CA 

 

ABA#:
121000358

 

Attention:
Haik Melkonyan

 

Account
Name: Concentration Account

 

Account
Number: 12355-57180

 

Budget shall
mean the operating budget for the Property prepared by Manager on Borrower's
behalf, pursuant to the Management Agreement, for the applicable Fiscal Year or
other period setting forth, in reasonable detail, Manager's estimates,
consistent with the Management Agreement, of the anticipated results of
operations of the Property, including revenues from all sources, all Operating
Expenses, Management Fees and Capital Expenditures.

 

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,
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 Borrower’s annual financial statements for an
applicable period as an operating expense of the Property.

 

Cash shall
mean the legal tender of the United States of America.

 

Cash
and Cash Equivalents shall
mean any one or a combination of the following: (i) Cash, and (ii) U.S.
Government Obligations.

 

Cash
Management Bank shall
mean LaSalle Bank National Association or any successor Approved Bank acting as
Cash Management Bank under the Account Agreement or other financial institution
approved by the Lender and, if a Securitization has occurred, the Rating
Agencies. 

 

Casualty shall
mean a fire, explosion, flood, collapse, earthquake or other casualty affecting
the Property.

 

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
Accounts shall
have the meaning set forth in Section
3.1.1.

 

Collection
Account shall
have the meaning set forth in Section
3.1.1.

 

Condemnation shall
mean a taking or voluntary conveyance during the term hereof of all or any part
of the Property or any interest therein or right accruing thereto or use
thereof, as the result of, or in settlement of, any condemnation or other
eminent domain proceeding by any Governmental Authority, whether or not the same
shall have actually been commenced.

 

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 and any counterparty
under a Replacement Interest Rate Cap Agreement 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 or
Extension Interest Rate Cap Agreement.

 

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

 

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

 

DBS shall
have the meaning set forth in Section
14.4.2(b).

 

DBS
Group shall
have the meaning set forth in Section
14.4.2(b).

 

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 shall
mean, with respect to any particular period of time, scheduled interest payments
under the Note.

 

Default shall
mean the occurrence of any event hereunder or under any other Loan Document
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.

 

Disclosure
Documents shall
have the meaning set forth in Section
14.4.1.


 

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 Lender, any
Affiliate of Lender, or, unless approved by the Rating Agencies, 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
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.

 






















DSCR shall
mean, with respect to a particular period, the ratio of Net Operating Income to
Debt Service (including Senior Mezzanine Loan Debt Service, Intermediate
Mezzanine Loan Debt Service, and Junior Mezzanine Loan Debt Service) in respect
of such period, as computed by Lender from time to time pursuant to the terms
hereof, using in all cases, an assumed loan constant (instead of actual debt
service payable under such loan) per annum equal to the sum of (a) the lesser of
the Initial LIBOR Cap Strike Rate and the Maximum Pay Rate, in either case then
applicable to the Loan and Mezzanine Loans from time to time, and (b) 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) (which
constant shall be calculated at all times using a 30/360 accrual convention). If
no such period is specified, then the period shall be deemed to be the
immediately preceding four (4) Fiscal Quarters.

 

DSCR
Test shall
mean the test performed by Lender on a trailing four (4) Fiscal Quarter basis
pursuant to the terms of Section
16.4 hereof
following the end of each Fiscal Quarter to determine whether a Low DSCR Period
has occurred and is continuing.

 

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. 

 

Eligible
Collateral shall
mean U.S. Government Obligations, Letters of Credit or Cash and Cash
Equivalents, or any combination thereof.

 

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

 

Environmental
Claim shall
mean any claim, action, cause of action, investigation or written notice by any
Person alleging potential liability (including potential liability for
investigatory costs, cleanup costs, natural resource damages, property damages,
personal injuries or penalties) arising out of, based upon or resulting from (a)
the presence, threatened presence, release or threatened release into the
environment of any Hazardous Materials from or at the Property, or (b) the
violation, or alleged violation, of any Environmental Law relating to the
Property.

 

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

 

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

 






















Environmental
Law shall
have the meaning provided in the Environmental Indemnity.

 

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

 

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.

 

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

 

Excess
Cash Flow shall
have the meaning set forth in Section
3.1.5.

 

Exchange
Act shall
have the meaning set forth in Section
14.4.1

 

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 Borrower, but Borrower's lack of funds in and of itself shall not be
deemed a cause beyond the control of Borrower.

 

Expansion shall
mean any expansion or reduction of the Property or any portion thereof or the
Improvements thereon.

 

Extension
Interest Rate Cap Agreement shall
mean, following the Borrower's exercise of its option to extend the Maturity
Date pursuant to Section 5 of the 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 Rating
Agencies (such approval to be evidenced by the receipt of a Rating Agency
Confirmation).

 

FF&E shall
mean furniture, fixtures and equipment of the type customarily utilized in hotel
properties in California similar to the Property.

 

FF&E
Reserve Account shall
mean the "Reserve Fund" as defined in the Management Agreement.

 

Final
Completion shall
mean, with respect to any specified work, the final completion of all such work,
including the performance of all "punch list" items, as confirmed by an
Officer's Certificate and, with respect to any Material Alteration or Material
Expansion, a certificate of the Independent Architect, if
applicable.

 






















Fiscal
Quarter shall
mean each quarter within a Fiscal Year in accordance with GAAP.

 

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.

 

Fitch shall
mean Fitch Ratings Inc.

 

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.

 

General
Partner shall
mean CNL Hotel Del Partners GP, LLC, the general partner of
Borrower.

 

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.

 

Group
Services Fee shall
mean the "Group Services Expense" as defined in the Management Agreement, which
as of the date hereof consists of the "Sales and Marketing and Group Services
Expense" as defined in the Management Agreement, as may be adjusted pursuant to
Section
5.2.14.

 

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

 

Hazardous
Materials shall
have the meaning provided in the Environmental Indemnity.

 

Holding
Account shall
have the meaning set forth in Section
3.1.1.

 

Hotel
Revenue shall
mean all revenues, income, Rents, issues, profits, termination or surrender
fees, penalties and other amounts arising from the use or enjoyment of all or
any portion of the Property, including, without limitation, the rental or
surrender of any office space, retail space, parking space, halls, stores, and
offices of 

 






















every
kind, the rental or licensing of signs, sign space or advertising space and all
membership fees and dues, rentals, revenues, receipts, income, accounts,
accounts receivable, cancellation fees, penalties, credit card receipts and
other receivables relating to or arising from rentals, rent equivalent income,
income and profits from guest rooms, meeting rooms, conference and banquet
rooms, food and beverage facilities, health clubs, spas, vending machines,
parking facilities, telecommunication and television systems, guest laundry, the
provision or sale of other goods and services, and any other items of revenue,
receipts or other income as identified in the Uniform System; plus Net
Membership Cash Flow and business interruption insurance Proceeds.

 

Impositions shall
mean all taxes (including all ad
valorem, sales
(including those imposed on lease rentals), use, single business, gross
receipts, value added, intangible transaction, privilege or license or similar
taxes), governmental assessments (including all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not commenced or completed within the term of this
Agreement), water, sewer or other rents and charges, excises, levies, fees
(including license, permit, inspection, authorization and similar fees), and all
other governmental charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in respect of the
Property and/or any Rents and Hotel Revenue (including all interest and
penalties thereon), which at any time prior to, during or in respect of the term
hereof may be assessed or imposed on or in respect of or be a Lien upon (a)
Borrower (including all income, franchise, single business or other taxes
imposed on Borrower for the privilege of doing business in the jurisdiction in
which the Property is located), (b) the Property, or any other collateral
delivered or pledged to Lender in connection with the Loan, or any part thereof,
or any Rents or Hotel Revenue therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of, or sales from,
or activity conducted on, or in connection with the Property or the leasing or
use of all or any part thereof. Nothing contained in this Agreement shall be
construed to require Borrower to pay any tax, assessment, levy or charge imposed
on (i) any tenant occupying any portion of the Property, (ii) any manager of the
Property, including any Manager, or (iii) Servicer, Lender or any other third
party in the nature of a capital levy, estate, inheritance, succession, income
or net revenue tax.

 

Improvements shall
have the meaning set forth in the Security Instrument.

 

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 Lender pursuant hereto, under the Note or in accordance with the
other Loan Documents and all other amounts, sums and expenses paid by or payable
to Lender hereunder or pursuant to the Note or the other Loan
Documents.

 

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 any
Borrower or in any Affiliate of any Borrower, (ii) is not connected with
Borrower or any Affiliate of Borrower 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 Borrower
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
Lender.

 

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 Borrower or its Affiliates (provided that Borrower and each Mezzanine
Borrower 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 Borrower or its 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
Borrower, other than each Mezzanine Borrower. 

 

Initial
LIBOR Cap Strike Rate shall
mean 4%.

 

Insurance
Requirements shall
mean, collectively, (i) all material terms of any insurance policy required
pursuant to this Agreement and (ii) all material regulations and then-current
standards applicable to or affecting the Property or any part thereof or any use
or condition thereof, which may, at any time, be recommended by the Board of
Fire Underwriters, if any, having jurisdiction over the Property, or such other
body exercising similar functions.

 

Insurance
Reserve Account shall
have the meaning set forth in Section
3.1.1(b).

 

Insurance
Reserve Amount shall
have the meaning set forth in Section
16.2.

 






















Insurance
Reserve Trigger shall
mean Borrower's failure to deliver to Lender not less than five Business Days
prior to each Payment Date, evidence that all insurance premiums for the
insurance required to be maintained pursuant to the terms of this Agreement have
been paid in full.

 

Intangible shall
have the meaning set forth in the Security Instrument.

 

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

 

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

 

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

 

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

 

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

 

Intermediate
Mezzanine Lender Monthly Debt Service Notice Letter shall
mean the written notice required to be delivered by Intermediate Mezzanine
Lender pursuant to Section
3.1.6(e) of the
Intermediate Mezzanine Loan Agreement to Lender at least five (5) Business Days
prior to each Payment Date setting forth (i) the Intermediate Mezzanine Loan
Debt Service payable by Intermediate 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 Intermediate
Mezzanine Loan Documents.

 

Intermediate
Mezzanine Loan shall
mean the $20,000,000 mezzanine loan from Intermediate Mezzanine Lender to the
Intermediate Mezzanine Borrower that is evidenced and secured by the
Intermediate Mezzanine Loan Documents.

 

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

 

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

 

Intermediate
Mezzanine Loan Default Notice shall
mean a notice from Intermediate 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
Mezzanine Loan Documents.

 






















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

 

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

 

Intermediate
Mezzanine Note shall
mean that certain Mezzanine Note (Intermediate Mezzanine), dated the date
hereof, made by Intermediate Mezzanine Borrower, as maker, in favor of
Intermediate Mezzanine Lender, as payee, in the principal amount of
$20,000,000.

 

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

 

Interest
Rate Cap Agreement shall
mean an Interest Rate Agreement or Agreements (together with the confirmation
and schedules relating thereto), or, with 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 Borrower obtained by
Borrower and collaterally assigned to 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 Lender, any
additional requirements of the Rating Agencies). 

 

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 Lender Monthly Debt Service Notice Letter shall
mean the written notice required to be delivered by Junior Mezzanine Lender
pursuant to Section
3.1.6(e) of the
Junior Mezzanine Loan Agreement to Lender at least five (5) Business Days prior
to each Payment Date setting forth (i) the Junior Mezzanine Loan Debt Service
payable by Junior 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 Junior Mezzanine Loan
Documents.

 

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

 

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 Junior Mezzanine Loan
Documents.

 

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

 

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

 

Junior
Mezzanine Note shall
mean that certain Mezzanine Note (Junior Mezzanine), to be funded on or after
the date hereof, made by Junior Mezzanine Borrower, as maker, in favor of Junior
Mezzanine Lender, as payee, in the principal amount of $60,000,000.

 

Junior
Mezzanine Pledge shall
mean that certain Pledge and Security Agreement (Junior Mezzanine), to be funded
on or after the date hereof, from Mezzanine Borrower to Junior Mezzanine
Lender.

 

Land shall
have the meaning set forth in the Security Instrument.

 

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

 

Lease shall
mean any lease, sublease or subsublease, letting, license, concession, or other
agreement (whether written or oral and whether now or hereafter in effect)
(excluding club membership programs now or hereafter in effect entitling Persons
to preferential access to the Property) pursuant to which any Person is granted
by the Borrower or Operating Lessee a possessory interest in, or right to use or
occupy all or any portion of any space in the Property or any facilities at the
Property (other than typical short-term occupancy rights of hotel guests which
are not the subject of a written agreement), and every modification, amendment
or other agreement relating to such lease, 

 






















sublease,
subsublease, or other agreement entered into in connection with such lease,
sublease, subsublease, or other agreement and every guarantee of the performance
and observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto.

 

Lease
Modification shall
have the meaning set forth in Section
8.8.1.

 

Legal
Requirements shall
mean all present and future laws, statutes, codes, ordinances, orders,
judgments, decrees, injunctions, rules, regulations and requirements, and
irrespective of the nature of the work to be done, of every Governmental
Authority including, without limitation, Environmental Laws and all covenants,
restrictions and conditions now or hereafter of record which may be applicable
to Borrower or to the Property and the Improvements and the Building Equipment
thereon, or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration, repair or reconstruction of the Property and the
Improvements and the Building Equipment thereon including, without limitation,
building and zoning codes and ordinances and laws relating to handicapped
accessibility.

 

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

 

Letter
of Credit shall
mean an irrevocable, unconditional, transferable (without the imposition of any
fee except any fees which are expressly payable by the Borrower), clean sight
draft letter of credit (either an evergreen letter of credit or one which does
not expire until at least sixty (60) days after the Maturity Date (the
LC
Expiration Date), in
favor of Lender and entitling Lender to draw thereon in New York, New York,
based solely on a statement executed by an officer or authorized signatory of
Lender and issued by an Approved Bank. If at any time (a) the institution
issuing any such Letter of Credit shall cease to be an Approved Bank or (b) the
Letter of Credit is due to expire prior to the LC Expiration Date, Lender shall
have the right immediately to draw down the same in full and hold the proceeds
thereof in accordance with the provisions of this Agreement, unless Borrower
shall deliver a replacement Letter of Credit from an Approved Bank within (i) as
to (a) above, twenty (20) days after Lender delivers written notice to Borrower
that the institution issuing the Letter of Credit has ceased to be an Approved
Bank or (ii) as to (b) above, at least twenty (20) days prior to the expiration
date of said Letter of Credit.

 

Liabilities shall
have the meaning set forth in Section
14.4.2(b).

 

LIBOR shall
have the meaning set forth in the Note.

 

LIBOR
Margin (Mortgage) shall
mean "LIBOR Margin" as defined in the Note.

 

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

 

License shall
have the meaning set forth in Section
4.1.23.

 






















Lien shall
mean any mortgage, deed of trust, lien, pledge, hypothecation, assignment,
security interest, or any other encumbrance or charge on or affecting Borrower,
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.

 

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

 

Loan
Documents shall
mean, collectively, this Agreement, the Note, the Security Instrument, the
Assignment of Leases, the Trademark Security Agreement, the Environmental
Indemnity, the Assignment of Management Agreement, the Account Agreement, the
Recourse Guaranty and all other documents executed and/or delivered by Borrower
in connection with the Loan including any certifications or representations
delivered by or on behalf of Borrower, any Affiliate of Borrower, the 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 means
any period (i) commencing on the Payment Date following the conclusion of any
two (2) consecutive Fiscal Quarter DSCR Tests for which the DSCR for the
Property is less than 1.05:1.00, and (ii) ending on the day immediately
preceding the Payment Date following the conclusion of any two (2) consecutive
Fiscal Quarter DSCR Tests for which the DSCR exceeds 1.05:1.00.

 

Low
DSCR Reserve Account shall
have the meaning set forth in Section
3.1.1(j).

 

Management
Agreement shall
mean that certain Management Agreement, dated December 18, 2003 between Manager
and Operating Lessee, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.

 

Management
Control shall
mean, with respect to any direct or indirect interest in the 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.

 

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 Borrower or Operating Lessee with respect to the Property
and in accordance with the terms of the 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 the Borrower
or such Person, as applicable, or (iv) the ability of Borrower to repay the
principal and interest of the Loan as it becomes due or to satisfy any of
Borrower's obligations under the Loan Documents.

 

Material
Alteration shall
mean any Alteration to be performed by or on behalf of Borrower at the Property,
the total cost of which (including, without limitation, construction costs and
costs of architects, engineers and other professionals), as reasonably estimated
by an Independent Architect, exceeds the Threshold Amount. The Spa Renovation
shall in no event be deemed to be a Material Alteration.

 

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

 

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

 

Material
Expansion shall
mean any Expansion to be performed by or on behalf of the Borrower at the
Property, the total cost of which, as reasonably estimated by an Independent
Architect, exceeds the Threshold Amount. The Spa Renovation shall in no event be
deemed to be a Material Expansion.

 

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 Note.

 

Maturity
Date Payment shall
have the meaning set forth in the 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 Note and as provided for herein
or the other Loan Documents, 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 defined in the 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 shall
mean any of Senior Mezzanine Borrower, Intermediate Mezzanine Borrower or Junior
Mezzanine Borrower, as the context may require, and Mezzanine
Borrowers shall
mean each such borrower, collectively, as the context may require.

 

Mezzanine
Lender shall
mean any of Senior Mezzanine Lender, Intermediate Mezzanine Lender or Junior
Mezzanine Lender, as the context may require, and Mezzanine
Lenders shall
mean each such lender, collectively, as the context may require.

 

Mezzanine
Lender Monthly Debt Service Notice Letter shall
mean any of the Senior Mezzanine Lender Monthly Debt Service Notice Letter,
Intermediate Mezzanine Lender Monthly Debt Service Notice Letter or Junior
Mezzanine Lender Monthly Debt Service Notice Letter.

 

Mezzanine
Loan shall
mean any of Senior Mezzanine Loan, Intermediate Mezzanine Loan or Junior
Mezzanine Loan (if funded) and Mezzanine
Loans shall
mean each such loan, collectively.

 

Mezzanine
Note shall
mean any of Senior Mezzanine Note, Intermediate Mezzanine Note or Junior
Mezzanine Note and Mezzanine
Notes shall
mean each such note, collectively.

 

Monetary
Default shall
mean a Default (i) that can be cured with the payment of money or (ii) arising
pursuant to Section
17.1(a)(vi) or
(vii).

 

Monthly
Insurance Reserve Amount shall
have the meaning set forth in Section
16.2.

 

Monthly
Tax Reserve Amount shall
have the meaning set forth in Section
16.1.

 

Moody's shall
mean Moody's Investors Service, Inc.

 






















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.

 

New
Lease shall
have the meaning set forth in Section
8.8.1.

 

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

 

Non-Disturbance
Agreement shall
have the meaning set forth in Section
8.8.9.

 

North
Beach Property shall
mean the parcels of the Property identified as the North Beach Parcel on
attached Schedule
VI
hereof.

 

Note shall
mean that certain Note in the principal amount of Two Hundred Thirty Million
Dollars ($230,000,000), made by Borrower in favor of Lender as of the date
hereof, as the same may be amended, restated, replaced, substituted (including
any components or subcomponents) or supplemented or otherwise modified from time
to time.

 

Obligations shall
have meaning set forth in the recitals of the Security Instrument.

 

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
Foreign Assets Control and accessible through the internet website
www.treas.gov/ofac/t11sdn.pdf.

 

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

 

Operating
Asset shall
have the meaning set forth in the Security Instrument.

 

Operating
Expenses shall
mean, for any specified period, without duplication, all expenses actually paid
or payable by or on behalf of Borrower or Operating Lessee (or by Manager for
the account of Borrower or Operating Lessee) 

 






















during
such period in connection with the ownership or operation of the Property,
including costs (including labor) of providing services including rooms, food
and beverage, telecommunications, garage and parking and other operating
departments, as well as real estate and other business taxes, rental expenses,
insurance premiums, utilities costs, administrative and general costs, repairs
and maintenance costs, Third-Party Franchise Fees, Management Fees actually paid
under the Management Agreement, other costs and expenses relating to the
Property, required FF&E reserves, and legal expenses incurred in connection
with the operation of the Property, determined, in each case on an accrual
basis, in accordance with GAAP. "Operating Expenses" shall not include (i)
depreciation or amortization or other noncash items, (ii) the principal of and
interest on the Note, (iii) income taxes or other taxes in the nature of income
taxes, (iv) any expenses (including legal, accounting and other professional
fees, expenses and disbursements) incurred in connection with and allocable to
the issuance of the Note, (v) distributions to the shareholders of the Borrower
or (vi) costs incurred in connection with the sale and marketing of club
memberships (excluding amounts deducted in the calculation of the Net Membership
Cash Flow). Expenses that are accrued as Operating Expenses during any period
shall not be included in Operating Expenses when paid during any subsequent
period.

 

Operating
Lease means
that certain Lease Agreement dated as of December 18, 2003 between Borrower and
Operating Lessee.

 

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

 

Operating
Lessee GP means
CNL Hotel Del Tenant Corp., a Delaware corporation.

 

Operating
Income shall
mean for any specified period, all income received by Borrower or Operating
Lessee (or by Manager for the account of Borrower or Operating Lessee) from any
Person during such period in connection with the ownership or operation of the
Property, determined on an accrual basis of accounting determined in accordance
with GAAP (with the exception of Net Membership Cash Flow included in Hotel
Revenue), including the following: 

 

(i) all
amounts payable to Borrower or to Manager for the account of Borrower by any
Person as Rent and/or Hotel Revenue;

 

(ii) all
amounts payable to Borrower (or to Manager for the account of Borrower) pursuant
to any reciprocal easement and/or operating agreements, covenants, conditions
and restrictions, condominium documents and similar agreements affecting the
Property and binding upon and/or benefiting Borrower and other third parties,
but specifically excluding the Management Agreement;

 

(iii) condemnation
awards to the extent that such awards are compensation for lost rent allocable
to such specified period; 

 






















(iv) business
interruption and loss of "rental value" insurance proceeds to the extent such
proceeds are allocable to such specified period; and

 

(v) all
investment income with respect to the Collateral Accounts.

 

Notwithstanding
the foregoing clauses (i) through (v), Operating Income shall not include (A)
any Proceeds (other than of the types described in clauses (iii) and (iv)
above), (B) any proceeds resulting from the sale, exchange, transfer, financing
or refinancing of all or any part of the Property (other than of the types
described in clause (i) and (iii) above), (C) any repayments received from
Tenants of principal loaned or advanced to Tenants by Borrower, (D) any type of
income that would otherwise be considered Operating Income pursuant to the
provisions above but is paid directly by any Tenant to a Person other than
Borrower or Manager or its agent and (E) other than Net Membership Cash Flow,
any fees or other amounts payable by a Tenant or another Person to Borrower that
are reimbursable to Tenant or such other Person.

 

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

 

Outparcels shall
mean collectively, (i) the North Beach Property and (ii) the parcels of the
Property set forth on attached Schedule
V
hereof.

 

Outside
Completion Date shall
have the meaning set forth in Section
2.3.4(d).

 

Payment
Date shall
have the meaning set forth in the 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 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
mean collectively, (a) the Note and the other obligations, indebtedness and
liabilities specifically provided for in any Loan Document and secured by this
Agreement, the Security Instrument and the other Loan Documents, (b) the
Mezzanine Notes and the other obligations, indebtedness and liabilities
specifically permitted under the Mezzanine Loan Documents (solely as obligations
of the applicable Mezzanine Borrowers), (c) trade payables and other liabilities
incurred in the ordinary course of Borrower's business and payable by or on
behalf of Borrower in respect of the operation of the Property, not secured by
Liens on the Property (other than liens being properly contested in accordance
with the provisions of this Agreement or the Security Instrument), such payables
and liabilities (which shall not include taxes, accrued payroll and benefits,
customer, membership and security deposits and deferred income), not to exceed
at any one time outstanding three percent (3%) of the outstanding Principal
Amount, provided that (but subject to the remaining terms of this definition)
each such amount shall be paid within sixty (60) days following the date on
which each such amount is incurred, (d) purchase money indebtedness and capital
lease obligations incurred in the ordinary course of Borrower's business, having
scheduled annual debt service not to exceed $1,000,000, (e) contingent
obligations to repay customer, membership and security deposits held in the
ordinary course of Borrower's business and (f) obligations incurred in the
ordinary course of Borrower's business for the financing of any applicable
portfolio insurance premiums. Nothing contained herein shall be deemed to
require Borrower to pay any amount, so long as Borrower is in good faith, and by
proper legal proceedings, diligently contesting the validity, amount or
application thereof, provided that in each case, at the time of the commencement
of any such action or proceeding, and during the pendency of such action or
proceeding (i) no Event of Default shall exist and be continuing hereunder, (ii)
adequate reserves with respect thereto are maintained on the books of Borrower
in accordance with GAAP, and (iii) such contest operates to suspend collection
or enforcement, as the case may be, of the contested amount and such contest is
maintained and prosecuted continuously and with diligence. Notwithstanding
anything set forth herein, in no event shall Borrower be permitted under this
provision to enter into a note (other than the Note and the other Loan
Documents) or other instrument for borrowed money other than permitted purchase
money indebtedness as described in this definition.

 

Permitted
Encumbrances shall
mean collectively, (a) the Liens and security interests created or permitted by
the Loan Documents, (b) all Liens, encumbrances and other matters disclosed in
the Title Policy, (c) Liens, if any, for Impositions imposed by any Governmental
Authority not yet due or delinquent (other than any such Lien imposed pursuant
to Section 401(a)(29) of the Code or by ERISA), and (d) Liens on personal
property items that are the subject of clause (c) of the definition of Permitted
Debt.

 

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.

 

Permitted
Mezzanine Transfer shall
mean (a) a pledge of direct or indirect equity interests in Borrower to secure
the Mezzanine Loans or Revolving Credit Loan, and (b) any foreclosure (or
transfer in lieu thereof) in respect of any Mezzanine Loan and/or Revolving
Credit Loan, provided that the
secured party or the acquirer at foreclosure (or transfer in lieu thereof), as
applicable, (i) shall be a Qualified Transferee or (ii) shall have received a
Rating Confirmation 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 Borrower deliver to 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.

 

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 Lender (b) prepared based on a scope of work
determined by Lender in Lender’s reasonable discretion, and (c) in form and
content acceptable to Lender in Lender’s reasonable discretion, together with
any amendments or supplements thereto.

 

Plan shall
have the meaning set forth in Section
4.1.10.

 

Pre-approved
Manager shall
mean any entity set forth on Schedule
IV.

 

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 Note.

 

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

 






















Proceeds shall
mean amounts, awards or payments payable to Borrower (including, without
limitation, amounts payable under any title insurance policies covering
Borrower's ownership interest in the Property) or Lender in respect of all or
any part of the Property in connection with a Casualty or Condemnation thereof
(after the deduction therefrom and payment to Borrower and Lender, respectively,
of any and all reasonable expenses incurred by Borrower and Lender in the
recovery thereof, including all attorneys' fees and disbursements, the fees of
insurance experts and adjusters and the costs incurred in any litigation or
arbitration with respect to such Casualty or Condemnation).

 

Proceeds
Reserve Account shall
have the meaning set forth in Section
3.1.1.

 

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 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 Security Instrument.

 

Provided
Information shall
have the meaning set forth in Section
14.1.1.

 

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), (ii) 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 shall
have the meaning set forth in Section
9.2.


 

Rating
Agencies shall
mean (a) prior to a Securitization, each of S&P, Moody's and Fitch and any
other nationally-recognized statistical rating agency which has been approved by
Lender and (b) after a Securitization has occurred, each such Rating Agency
which has rated the Securities in the Securitization.

 

Rating
Agency Confirmation shall
mean, collectively, a written affirmation from each of the Rating Agencies that
the credit rating of the Securities given by such Rating Agency immediately
prior to the occurrence of the event with respect to which such Rating Agency
Confirmation is sought will not be qualified, downgraded or withdrawn as a
result of the occurrence of such event, which affirmation may be granted or
withheld in such Rating Agency's sole and absolute discretion. In the event
that, at any given time, no such Securities shall have been issued and are then
outstanding, then the term Rating Agency Confirmation shall be deemed instead to
require the written approval of Lender based on its good faith determination of
whether the Rating Agencies would issue a Rating Agency Confirmation if any such
Securities were outstanding.

 

Real
Property shall
mean, collectively, the Land, the Improvements and the Appurtenances (as defined
in the Security Instrument).

 

Recourse
Guaranty shall
mean that certain Guaranty of Recourse Obligations of Borrower, dated as of the
date hereof, by Guarantor in favor of 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 Lender, or any Person
Controlling 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.

 

Relevant
Portions shall
have the meaning set forth in Section
14.4.2(a).

 

Remaining
Property shall
have the meaning set forth in Section
2.3.4(a).

 

Rental
Management Program shall
have the meaning set forth in Section
2.3.4(d).

 

Rents shall
mean all rents, rent equivalents, moneys payable as damages or in lieu of rent
or rent equivalents, royalties (including, without limitation, all oil and gas
or other mineral royalties and bonuses), income, receivables, receipts,
revenues, deposits (including, without limitation, security, utility and other
deposits), accounts, cash, issues, profits, charges for services rendered, and
other consideration of whatever 

 






















form or
nature received by or paid to or for the account of or benefit of Borrower
and/or Operating Lessee from any and all sources arising from or attributable to
the Property and Proceeds, if any, from business interruption or other loss of
income insurance.

 

Restoration shall
have the meaning provided in Section
6.2.2.

 

Replacement
Interest Rate Cap Agreement 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" shall be such
interest rate cap agreement approved by each of the Rating Agencies, such
approval to be evidenced by the receipt of a Rating Agency
Confirmation.

 

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

 

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.

 

Securities shall
have the meaning set forth in Section
14.1.

 

Securities
Act shall
have the meaning set forth in Section
14.4.1.

 

Securitization shall
have the meaning set forth in Section
14.1.

 






















Security
Instrument shall
mean that certain first priority Mortgage, Security Agreement, Financing
Statement, Fixture Filing and Assignment of Leases, Rents, Hotel Revenue and
Security Deposits, dated the date hereof, executed and delivered by Borrower and
certain of its affiliates to Lender and encumbering the Property, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

 

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 Lender Monthly Debt Service Notice Letter shall
mean the written notice required to be delivered by Senior Mezzanine Lender
pursuant to Section
3.1.5(e) of the
Senior Mezzanine Loan Agreement to Lender at least five (5) Business Days prior
to each Payment Date setting forth (i) the Senior Mezzanine Loan Debt Service
payable by Senior 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 Senior Mezzanine Loan
Documents.

 

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

 

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
3.1.5(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 Mezzanine Borrower to Senior Mezzanine
Lender.

 

Servicer shall
mean such Person designated in writing with an address for such Person by
Lender, in its sole discretion, to act as Lender's agent hereunder with such
powers as are specifically delegated to the Servicer by Lender, whether pursuant
to the terms of this Agreement, the Account Agreement 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 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.

 

Spa
Renovation shall
mean the spa renovation as more particularly described on attached Schedule
VIII.

 

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 Lender, such taxes (including income
taxes, franchise taxes and branch profit taxes) as are imposed on or measured by
Lender's net income by the United 

 






















States of
America or any Governmental Authority of the jurisdiction under the laws under
which 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.

 

Survey shall
mean a survey of the Property prepared by a surveyor licensed in the State and
satisfactory to Lender and the company or companies issuing the Title Policy,
and containing a certification of such surveyor satisfactory to
Lender.

 

Tax
Reserve Account shall
have the meaning set forth in Section
3.1.1.

 

Tax
Reserve Amount shall
have the meaning set forth in Section
16.1.

 

Tenant shall
mean any Person leasing, subleasing or otherwise occupying any portion of the
Property or permitted to use any portion of the facilities at the Property,
other than the Manager and its employees, agents and assigns.

 

Third-Party
Franchise Fee shall
mean the monthly franchise fee, if any, payable to the Manager under the
Management Agreement or any separate franchise agreement (provided such
Management Agreement or franchise agreement is with a third-party manager that
is not an Affiliate of Borrower and has been approved by Lender). As of the
Closing Date, no Third-Party Franchise Fee is payable.

 

Threshold
Amount shall
mean an amount equal to $5,340,000; provided, however, that the Threshold Amount
shall not apply to the Spa Renovation which Lender has pre-approved so long as
(i) the Spa Renovation could not result in a Material Adverse Effect, (ii) the
Spa Renovation is commenced within 18 months from the date hereof and completed
in accordance with all Legal Requirements by no later than 24 months from the
date hereof (with delivery to Lender of a valid certificate of occupancy
covering such renovation by such date) and (iii) the scope and location of the
Spa Renovation is consistent in all material respects with the scope and
location set forth on attached Schedule
VIII.

 

Title
Company shall
mean, collectively, First American Title Insurance Company, Lawyers Title
Insurance Company and National Land Tenure.

 

Title
Policy shall
mean an ALTA mortgagee title insurance policy in a form acceptable to Lender
(or, if the Property is in a State which does not permit the issuance of such
ALTA policy, such form as shall be permitted in such State and acceptable to
Lender) issued by the Title Company with respect to the Property and insuring
the lien of the Security Instrument.

 

Trademark
Security Agreement shall
have the meaning provided in Section
2.5.14.

 






















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.

 

Underwriter
Group shall
have the meaning set forth in Section
14.4.2(b).

 

Uniform
System shall
mean the Uniform System of Accounts for Hotels, 9th Edition, International
Association of Hospitality Accountants (1996), as from time to time
amended.

 

U.S.
Government Obligations shall
mean any direct obligations of, or obligations guaranteed as to principal and
interest by, the United States Government or any agency or instrumentality
thereof, provided that such obligations are backed by the full faith and credit
of the United States. Any such obligation must be limited to instruments that
have a predetermined fixed dollar amount of principal due at maturity that
cannot vary or change. If any such obligation is rated by S&P, it shall not
have an "r" highlighter affixed to its rating. Interest must be fixed or tied to
a single interest rate index plus a single fixed spread (if any), and move
proportionately with said index. U.S. Government Obligations include, but are
not limited to: U.S. Treasury direct or fully guaranteed obligations, Farmers
Home Administration certificates of beneficial ownership, General Services
Administration participation certificates, U.S. Maritime Administration
guaranteed Title XI financing, Small Business Administration guaranteed
participation certificates or guaranteed pool certificates, U.S. Department of
Housing and Urban Development local authority bonds, and Washington Metropolitan
Area Transit Authority guaranteed transit bonds. In no event shall any such
obligation have a maturity in excess of 365 days.

 


	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 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 Borrower




 

.

 

2.1.1  The
Loan

 

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

 

2.1.2  Disbursement
to Borrower

 

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. Borrower acknowledges and agrees that the full proceeds of the Loan
have been disbursed by Lender to Borrower on the Closing Date.

 

2.1.3  The
Note, Security Instrument and Loan Documents

 

The Loan
shall be evidenced by the Note and secured by the Security Instrument, the
Assignment of Leases, this Agreement and the other Loan Documents.

 

2.1.4  Use
of Proceeds

 

Borrower
shall use the proceeds of the Loan to repay and discharge any existing mortgage
loans secured by the Property, to make cash distributions to its partners, and
as may be otherwise set forth on the Loan closing statement executed by 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
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 the
Security Instrument. 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 Lender by reason of the occurrence of
any Event of Default, and Lender retains its rights under the 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, Borrower shall pay or cause to be paid to Lender interest accruing
pursuant to the Note for the entire Interest Period during which said Payment
Date shall occur.

 

(b)  All
amounts advanced by Lender pursuant to the applicable provisions of the Loan
Documents, 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. In the event any such advance or
charge is not so repaid by Borrower, Lender may, at its option and upon notice
to Borrower, first apply any payments received under the Note to repay such
advances, together with any interest thereon, or other charges as provided in
the Loan Documents, 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 is not paid by Borrower within
five (5) days after to 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, Borrower shall pay to 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 Lender in handling and processing such
delinquent payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by 

 






















this
Agreement, the Security Instrument and the other Loan Documents to the extent
permitted by applicable law. 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 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 Lender's rights under Article
XVII.

 

2.2.4  Usury
Savings

 

This
Agreement and the Note are subject to the express condition that at no time
shall Borrower be obligated or required to pay interest on the Principal Amount
of the Loan at a rate which could subject 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, Borrower is at any time
required or obligated to pay interest on the Principal Amount due under the 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 Note. All sums paid or agreed to be paid
to 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




 

.

 

2.3.1  Prepayments

 

No
prepayments of the Indebtedness shall be permitted except as set forth in
Section
4 of the
Note. Borrower agrees and acknowledges after the closing of the Loan that prior
to a material Event of Default (as determined by Lender in its sole and absolute
discretion) (x) in the case of prepayments of the Loan in connection with a
Casualty or Condemnation, principal will be applied (to the extent not used for
restoration pursuant to the terms hereof) to the Note and any substitute or
component notes (as applicable) sequentially starting with the most senior
securitized tranche and (y) in the case of all other prepayments of the Loan,
such prepayments will be applied to the Note and any substitute or component
notes (as applicable) pro-rata (on the basis of their respective principal
balances) among the securitized and any non-securitized portions of the Loan
(and pro-rata within the securitized portions of the Loan). Notwithstanding the
foregoing, upon the occurrence and during the continuance of a material Event of
Default (as determined by Lender in its sole and absolute discretion), Borrower
agrees and acknowledges that any principal prepayments of the Loan will be
applied to the Note and any substitute or component notes (as applicable)
sequentially, starting with the most 

 






















senior
securitized tranche (it being acknowledged that during the continuance of a
material Event of Default all securitized portions of the Loan shall be paid in
full prior to the payment of any non-securitized portions of the
Loan).

 

2.3.2  Prepayments
After Event of Default

 

If,
following an Event of Default, Lender shall accelerate the Indebtedness and
Borrower thereafter tenders payment of all or any part of the Indebtedness, or
if all or any portion of the Indebtedness is recovered by 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, 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 Borrower, and (c) Borrower
shall pay, in addition to the Indebtedness, an amount equal to the Prepayment
Fee, if applicable.

 

2.3.3  Release
of Property

 

Lender
shall, at the reasonable expense of 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 in accordance with the terms and provisions of the Note
and this Agreement, release the Lien of (i) this Agreement upon the Account
Collateral and the Rate Cap Collateral and (ii) the Security Instrument on the
Property or assign it, in whole or in part, to a new lender. In such event,
Borrower shall submit to 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 property for
execution by Lender. Such release or assignment, as applicable, shall be in a
form appropriate in each jurisdiction in which the Property is located and
satisfactory to Lender in its reasonable discretion. In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such release or assignment, as
applicable.

 

2.3.4  Release
of Certain Outparcels

 

(a)
General
Release Conditions:
Provided no Event of Default has occurred and is continuing, Borrower may
request that Lender release one or more of the Outparcels in accordance with the
terms of this Section
2.3.4. Prior
to releasing any Outparcel from the Lien of the Security Instrument pursuant to
this Section
2.3.4, in
addition to satisfying the additional conditions set forth below in Section
2.3.4(b),
Borrower shall have satisfied the following conditions, as determined by Lender
(such determination not to be unreasonably withheld or delayed): (1) the
released Outparcel shall constitute a separate conveyable legal parcel in
accordance with the subdivision map act or the equivalent thereof in the
jurisdiction of the applicable Property or other relevant granted government
approvals in such jurisdiction; (2) to the extent any 

 






















easements
benefiting or burdening such released Outparcel are necessary or appropriate for
the use or operation of such parcel or the remaining portions of the applicable
Property (such remaining portion of an applicable Property, the Remaining
Property), such
easements shall have been granted or reserved prior to or at the time of the
release or reconveyance of such released parcel and shall have been approved by
Lender, which approval shall not be unreasonably withheld or delayed; (3) the
Remaining Property shall remain a legal parcel (or parcels) in compliance in all
material respects with all Legal Requirements, zoning, subdivision, land use and
other applicable laws and regulations; (4) at the time of, but not prior to, any
release or reconveyance, each released Outparcel shall be transferred to a
person or entity that does not result in a breach of Borrower's obligation to be
a Single Purpose Entity; (5) Lender shall have received satisfactory evidence
that any tax, bond or assessment that constitutes a lien against the applicable
Property has (i) prior to such release, been properly allocated between the
released Outparcel and the Remaining Property and (ii) after such release, will
be properly assessed against the released Outparcel and the Remaining Property
separately; (6) Lender shall have received such endorsements to the Title Policy
(or substantially equivalent assurance) for the applicable Property as Lender
may reasonably require confirming continuing title insurance and that (A) the
Security Instrument constitutes a first priority lien (subject to Permitted
Encumbrances) on the Remaining Property after the release, (B) the Remaining
Property constitutes a separate tax lot or tax lots and (C) such release shall
not result in the Remaining Property ceasing to comply in all material respects
with all applicable Legal Requirements, zoning, land use and subdivision laws;
(7) Borrower shall have executed and delivered such documents (including
amendments to the Loan Documents) as Lender may reasonably require to reflect
such release; (8) Lender shall have determined (such determination not to be
unreasonably withheld or delayed) that the proposed uses and structures to be
developed on the released Outparcel are materially consistent and/or
complementary with the existing uses of the applicable Property and could not
materially and adversely affect the Remaining Property; (9) Borrower shall pay
to Lender all reasonable out-of-pocket 

 






















costs and
expenses incurred by Lender (including, without limitation, attorneys fees and
any applicable costs and expenses of the Rating Agencies) in connection with
each such release; (10) Borrower shall have provided Lender at least thirty (30)
days prior written notice of such requested release; (11) if any portion of any
Property is released to an Affiliate of Borrower, Borrower shall deliver to
Lender a new non-consolidation opinion in form acceptable to Lender and (12)
Borrower shall submit to Lender not less than fifteen (15) days prior to the
date of such proposed release (which must be on a Business Day), a release of
Liens (and related Loan Documents) for each applicable release Outparcel (for
execution by Lender) in a form appropriate in the applicable state and otherwise
satisfactory to Lender in its reasonable discretion and all other documentation
Lender reasonably requires to be delivered by Borrower in connection with such
release (collectively, Outparcel
Release Instruments) (for
execution by Lender) together with an Officer's Certificate certifying that (i)
the Outparcel Release Instruments are in compliance with all Legal Requirements,
(ii) the release to be effected will not violate the terms of this Agreement and
(iii) the release to be effected will not impair or otherwise adversely affect
the Liens, security interests and other rights of Lender under the Loan
Documents not being released (or as to the parties to the Loan Documents and
Properties subject to the Loan Documents not being released). The Release
Conditions described in this paragraph are hereinafter collectively referred to
as the General
Release Conditions.

 

(b)  Additional
Outparcel Release Conditions: Prior
to releasing any Outparcel from the Loan, Borrower shall have satisfied the
General Release Conditions and additionally, Borrower shall (i) in the case of
each Outparcel (or portion thereof) that is transferred to an affiliate of
Borrower, cause such parcel (or portion thereof) to be developed (if at all)
with uses and structures materially consistent and/or complementary with the
existing uses at the Property, and (ii) in the case of each Outparcel (or
portion thereof) that is transferred to any person or entity that is not an
affiliate of Borrower, impose deed restrictions (which run with the land) or
obtain such transferee's covenant (which, in either case, shall be enforceable
by the owner of the applicable Remaining Property and its successors and
assigns) to be developed as provided in clause (i) above. Borrower shall further
covenant and agree to enforce, consistent with Borrower's reasonable judgment,
such transferee's deed restrictions and covenants. Lender's approval (which
shall not be unreasonably withheld or delayed) of the deed restrictions or
covenants provided for in clause (ii) above shall be an additional condition to
the release or reconveyance of any Outparcel or portion thereof. The foregoing
covenants of Borrower shall survive the release of any such
Outparcel.

 

(c)  Development
Of Outparcels Other Than The North Beach Property:
Borrower shall have the right to develop one or more of the Outparcels (subject
to the terms of Section
2.3.4(d) below)
following release of such Outparcels (provided such release is subject to
compliance with the terms of Section
2.3.4(a) and
(b) above)
without obtaining Lender's prior consent to such development provided such
development will not impair or otherwise adversely affect the Liens, security
interests and other rights of Lender under the Loan Documents.

 

(d)  Development
Of The North Beach Property:
Borrower shall have the right to demolish up to nine (9) "keys" (comprising all
of the units) of the North 

 






















Beach
Property in order to allow new keys to be built without obtaining Lender's prior
consent to such development provided such development will not impair or
otherwise adversely affect the Liens, security interests and other rights of
Lender under the Loan Documents and the other conditions of this section are
complied with. Any development on the North Beach Property (irrespective of
whether or not the North Beach Property has been released from the Liens of the
Security Instrument before or after such development) must be managed by an
Affiliate of Borrower as part of a rental management program approved by Lender
in its reasonable discretion (the Rental
Management Program).
Borrower must complete within 24 months following any demolition of any "key" on
the North Beach Property, subject to an outside completion date of no later than
six (6) months prior to the Maturity Date, as the same may be extended in
accordance with the terms of the Note (the Outside
Completion Date), a new
hotel room or condominium complex on the North Beach Property with no fewer than
12 individual keys which complies in all material respects with all Legal
Requirements and the terms hereof (with delivery of a permanent certificate of
occupancy for such development delivered to Lender before the expiration of such
24 month period or, if no such permanent certificate of occupancy has been
issued, delivery to Lender of a temporary certificate of occupancy with no
material conditions remaining that are necessary to deliver a permanent
certificate of occupancy to Lender). After development of the North Beach
Property, at least 12 individual keys on such property must be part of the
Rental Management Program that is collaterally assigned to Lender. To the extent
Borrower fails to complete development of the North Beach Property in accordance
with the requirements hereof by the Outside Completion Date, Borrower will be
required to pay to Lender a $3,500,000 payment (to be applied to reduce the
Loan) within two (2) Business Days of the Outside Completion Date.
Notwithstanding the foregoing, this Section
2.3.4(d) shall be
inapplicable if, prior to Securitization, and prior to the commencement of any
demolition or construction work on the North Beach Property, Borrower subdivides
and conveys the North Beach Property in accordance with, and pursuant to,
Sections
2.3.4(a) and
Section
2.3.4(b).

 

(e)  Future
Cooperation: Lender
acknowledges that Borrower may seek Lender's consent to reconfigure the
boundaries of one or more of the Outparcels in the future, whether because of
changes made to the existing Master Plan in connection with obtaining any
related approval thereof by applicable governmental authorities or otherwise.
Lender agrees it will reasonably cooperate with Borrower (and will cause any
servicer of the Loan to reasonably cooperate) in amending the boundaries of such
Outparcel(s) to the extent such amendments do not, in Lender's reasonable
discretion, impair (except to a de minimus extent) the value of the Property
below its appraised value as of the date hereof. 

 


	Section
      2.4  	
      Regulatory
      Change; Taxes




 

.

 

























 

2.4.1  Increased
Costs

 

If, at
any time prior to the first Securitization of the Loan, as a result of any
Regulatory Change or compliance of Lender therewith, the basis of taxation of
payments to Lender of the principal of or interest on the Loan is changed or
Lender or the company Controlling Lender shall be subject to (i) any tax, duty,
charge or withholding of any kind with respect to this Agreement (excluding
federal taxation of the overall net income of 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 Lender or any
company Controlling 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 Lender or any company Controlling Lender and Lender
determines that, by reason thereof, the cost to Lender or any company
Controlling Lender of making, maintaining or extending the Loan to Borrower is
increased, or any amount receivable by Lender or any company Controlling Lender
hereunder in respect of any portion of the Loan to Borrower is reduced, in each
case by an amount deemed by Lender in good faith to be material (such increases
in cost and reductions in amounts receivable being herein called Increased
Costs), then
Lender shall provide notice thereof to Borrower and Borrower agrees that it will
pay to Lender upon Lender's written request such additional amount or amounts as
will compensate Lender or any company Controlling Lender for such Increased
Costs to the extent Lender determines that such Increased Costs are allocable to
the Loan and provided that Lender is generally exercising rights similar to
those set forth in this Section
2.4.1 against
other borrowers similarly situated to Borrower. Lender will notify Borrower of
any event occurring after the date hereof which will entitle 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 Lender fails to deliver a notice within 90 days after the date on which an
officer of Lender responsible for overseeing this Agreement knows or has reason
to know of its right to additional compensation under this Section
2.4.1, 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 Borrower
received such notice. If Lender requests compensation under this Section
2.4.1,
Borrower may, by notice to Lender, require that Lender furnish to 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
2.4.5 is not
applicable.

 

2.4.2  Special
Taxes

 

At all
times prior to the first Securitization of the Loan, Borrower shall make all
payments hereunder free and clear of and without deduction for Special Taxes.
If, at any time prior to the first Securitization of the Loan, 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 to 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) Lender


 






















receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable law.

 

2.4.3  Other
Taxes

 

In
addition, for all periods prior to the first Securitization of the Loan,
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, or the Loan
(hereinafter referred to as Other
Taxes).

 

2.4.4  Indemnity

 

Borrower
shall indemnify Lender for all periods prior to the first Securitization of the
Loan, 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
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 Lender makes written demand
therefore

 

2.4.5  Change
of Office

 

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

 

2.4.6  Survival

 

Without
prejudice to the survival of any other agreement of Borrower hereunder, the
agreements and obligations of 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 Lender to make the Loan hereunder is subject to the fulfillment
by, or on behalf of, Borrower or waiver by 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, Lender shall be deemed to have
waived any such conditions not theretofore fulfilled or satisfied:

 

2.5.1  Representations
and Warranties; Compliance with Conditions

 

The
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents 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
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 on its
part to be observed or performed.

 

2.5.2  Delivery
of Loan Documents; Title Policy; Reports; Leases

 

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

 

























 

(b)  Security
Instrument, Assignment of Leases. Lender
shall have received evidence that original counterparts of the Security
Instrument and Assignment of Leases, in proper form for recordation, have been
delivered to the Title Company for recording, so as effectively to create, in
the reasonable judgment of Lender, upon such recording valid and enforceable
first priority Liens upon the Property, in favor of Lender (or such other
trustee as may be required or desired under local law), subject only to the
Permitted Encumbrances and such other Liens as are permitted pursuant to the
Loan Documents.

 

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

 

(d)  Title
Insurance. Lender
shall have received a pro forma Title Policy or a Title Policy issued by the
Title Company and dated as of the Closing Date, with reinsurance and direct
access agreements acceptable to Lender. Such Title Policy shall (i) provide
coverage in the amount of the Loan, (ii) insure Lender that the Security
Instrument creates a valid, first priority Lien on the Property, free and clear
of all exceptions from coverage other than Permitted Encumbrances and standard
exceptions and exclusions from coverage (as modified by the terms of any
endorsements), (iii) contain the endorsements and affirmative coverages set
forth on Exhibit
A (or such
other endorsements and affirmative coverages approved by Lender) and such
additional endorsements and affirmative coverages as Lender may reasonably
request, and (iv) name Lender as the insured. The Title Policy shall be
assignable. Lender also shall have received evidence that all premiums in
respect of such Title Policy have been paid.

 

(e)  Survey. Lender
shall have received a current or rectified Survey for the Property, containing
the survey certification substantially in the form attached hereto as
Exhibit
B or such
other form as approved by Lender. Such Survey shall reflect the same legal
description contained in the Title Policy referred to in clause (d) above. The
surveyor's seal shall be affixed to the Survey and the surveyor shall provide a
certification for such Survey in form and substance acceptable to
Lender.

 

(f)  Insurance. Lender
shall have received valid certificates of insurance for the policies of
insurance required hereunder, satisfactory to Lender in its reasonable
discretion, and evidence of the payment of all insurance premiums currently due
and payable for the existing policy period.

 

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

 

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

 

























 

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

 

(j)  Encumbrances.
Borrower shall have taken or caused to be taken such actions in such a manner so
that Lender has a valid and perfected first Lien as of the Closing Date on the
Property, subject only to Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents, and Lender shall have received
satisfactory evidence thereof.

 

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 Lender shall have received and approved
certified copies thereof.

 

2.5.4  Delivery
of Organizational Documents

 

On or
before the Closing Date, Borrower shall deliver, or cause to be delivered, to
Lender copies certified by an Officer's Certificate, of all organizational
documentation related to Borrower, Operating Lessee, Guarantor and Manager and
certain of its Affiliates as have been requested by Lender and/or the formation,
structure, existence, good standing and/or qualification to do business of
Borrower, Operating Lessee, Guarantor, Manager and such Affiliates, as 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 Lender. Each of the organizational documents
of Borrower 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. Lender hereby approves the organizational
documents of Borrower delivered to Lender on the date hereof.

 

2.5.5  Opinions
of Borrower's Counsel

 

.

 

(a)  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 Lender (the Non-Consolidation
Opinion).

 

(b)  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 Lender.

 

























 

(c)  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 Lender.

 

2.5.6  Budgets

 

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 and all
documents incidental thereto shall be satisfactory in form and substance to
Lender, and Lender shall have received all such counterpart originals or
certified copies of such documents as Lender may reasonably
request.

 

2.5.8  Payments

 

All
payments, deposits or escrows, if any, required to be made or established by
Borrower under this Agreement, the Note and the other Loan Documents on or
before the Closing Date shall have been paid.

 

2.5.9  Interest
Rate Cap Agreement

 

Lender
shall have received the original Interest Rate Cap Agreement which shall be in
form and substance satisfactory to Lender and an original counterpart of the
Acknowledgment executed and delivered by the Counterparty.

 

2.5.10  Account
Agreement

 

Lender
shall have received the original of the Account Agreement executed by each of
Cash Management Bank, Operating Lessee and Borrower.

 

2.5.11  Assignment
of Management Agreement

 

Lender
shall have received the original of the Assignment of Management Agreement
executed by each of Operating Lessee, Borrower and Manager.

 

2.5.12  Subordination
of Operating Lease

 

Lender
shall have received the original of the Subordination of Operating Lease,
executed by Operating Lessee. 

 

2.5.13  Reserved

 

























 

2.5.14  Trademark
Security Agreement

 

Lender
shall have received the original of the Trademark Security Agreement in the form
of Exhibit
Q executed
by Borrower (the Trademark
Security Agreement).

 

2.5.15  Intentionally
Omitted

 

.

 

2.5.16  Independent
Director Certificate

 

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

 

2.5.17  Transaction
Costs

 

Borrower
shall have paid or reimbursed Lender for all title insurance premiums, recording
and filing fees, costs of Environmental Reports, Physical Conditions Reports,
appraisals and other reports, the reasonable fees and costs of Lender's counsel
and all other third party out-of-pocket expenses incurred in connection with the
origination of the Loan.

 

























 

2.5.18  Material
Adverse Effect

 

No event
or condition shall have occurred since the date of Borrower's most recent
financial statements previously delivered to 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 Lender without material adverse change. Neither
Borrower nor any of its constituent Persons shall be the subject of any
bankruptcy, reorganization, or insolvency proceeding.

 

2.5.19  Leases
and Rent Roll

 

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

 

2.5.20  Reserved

 

.

 

2.5.21  Tax
Lot

 

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 Lender.

 

2.5.22  Physical
Conditions Report

 

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 Lender.

 

2.5.23  Management
Agreement

 

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

 

2.5.24  Appraisal

 

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

 

2.5.25  Financial
Statements

 

. 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 Lender.

 

























 

2.5.26  Further
Documents

 

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

 


	III.  	
      CASH
      MANAGEMENT




 


	Section
      3.1  	
      Cash
      Management




 

.


 

3.1.1  Establishment
of Accounts

 

.
Borrower hereby confirms that, simultaneously with the execution of this
Agreement, pursuant to the Account Agreement, Operating Lessee has established
with Cash Management Bank, in the name of Borrower for the benefit of Lender, as
secured party, a collection amount (the 

 

Collection
Account), which
has been established as an interest-bearing deposit account, and a holding
account (the Holding
Account), which
has been established as a securities account. Both the Collection and the
Holding Account and each sub-account of either such account and the funds
deposited therein and the securities and other assets credited thereto shall
serve as additional security for the Loan. Pursuant to the Account Agreement,
Borrower shall irrevocably instruct and authorize Cash Management Bank to
disregard any and all orders for withdrawal from the Collection Account or the
Holding Account made by, or at the direction of, Borrower or Operating Lessee
other than to transfer all amounts on deposit in the Collection Account on a
daily basis to the Holding Account. Borrower agrees that, prior to the payment
in full of the Indebtedness, the terms and conditions of the Account Agreement
shall not be amended or modified without the prior written consent of Lender
(which consent Lender may grant or withhold in its sole discretion), and if a
Securitization has occurred, the delivery by Borrower of a Rating Agency
Confirmation. In recognition of Lender's security interest in the funds
deposited into the Collection Account and the Holding Account, Borrower shall
identify both the Collection Account and the Holding Account with the name of
Lender, as secured party. The Collection Account shall be named as follows:
"Hotel del Coronado f/b/o German American Capital Corporation, as secured party
Collection Account," account number 722393.1. The Holding Account shall be named
as follows: "Hotel del Coronado f/b/o German American Capital Corporation, as
secured party Holding Account," account number 722384.1. Borrower confirms that
it has established with Cash Management Bank the following sub-accounts of the
Holding Account (each, a Sub-Account and,
collectively, the Sub-Accounts and
together with the Holding Account and the Collection Account, the Collateral
Accounts), which
(i) may be ledger or book entry sub-accounts and need not be actual
sub-accounts, (ii) shall each be linked to the Holding Account, (iii) shall each
be a "Securities Account" pursuant to Article 8 of 

 






















the UCC
and (iv) shall each 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:

 

(a)  a
sub-account for the retention of Account Collateral in respect of Impositions
and Other Charges for the Property with the account number 722384.1-1
(the Tax
Reserve Account);

 

(b)  a
sub-account for the retention of Account Collateral in respect of insurance
premiums for the Property with the account number 722384.1-2 (the Insurance
Reserve Account);

 

(c)  a
sub-account for the retention of Account Collateral in respect of current Debt
Service on the Loan with the account number 722384.1-3 (the Current
Debt Service Reserve Account);

 

(d)  a sub-
account for the retention of Account Collateral in respect of certain Proceeds
as more fully set forth in Section
6.2 with the
account number 722384.1-6 (the Proceeds
Reserve Account);

 

(e)  a
sub-account for the retention of Account Collateral in respect of Third-Party
Franchise Fees with the account number 722384.1-4 in the event that Third-Party
Franchise Fees become payable (the Franchise
Fee Reserve Account);

 

(f)  a
sub-account for the retention of Account Collateral in respect of reserves
relating to a Low DSCR Period with the account number 722384.1-5 (the
Low
DSCR Reserve Account).


 

3.1.2  Pledge
of Account Collateral

 

. To
secure the full and punctual payment and performance of the Obligations,
Borrower and Operating Lessee hereby collaterally assigns, grants a security
interest in and pledges to Lender, to the extent not prohibited by applicable
law (and shall cause Operating Lessee to execute the Acommodation Security
Documents with respect thereto), a first priority continuing security interest
in and to the following property of Borrower and/or Operating Lessee, as
applicable, whether now owned or existing or hereafter acquired or arising and
regardless of where located (all of the same, collectively, the Account
Collateral):

 

(a)  the
Collateral Accounts and Manager Accounts 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;


 

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

 

(c)  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; and

 

(d)  to the
extent not covered by clauses (a), (b) or (c) 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, Lender shall have all of
the rights and remedies with respect to the Account Collateral 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

 

.

 

(a)  Borrower
agrees that the Collection Account is and shall be maintained (i) as a "deposit
account" (as such term is defined in Section 9-102(a) of the UCC), (ii) in such
a manner that Lender shall have control (within the meaning of Section 9-104(a)
of the UCC) over the Collection Account and (iii) such that neither the
Borrower, Operating Lessee nor Manager shall have any right of withdrawal from
the Deposit Accounts and, except as provided herein, no Account Collateral shall
be released to the Borrower, Operating Lessee or Manager from the Collection
Account. Without limiting the Borrower's obligations under the immediately
preceding sentence, Borrower shall only establish and maintain the Collection
Account with a financial institution that has executed an agreement
substantially in the form of the Account Agreement or in such other form
acceptable to Lender in its sole discretion.

 

(b)  Borrower
agrees that each of the Holding Account and the Sub-Accounts is and shall 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 Lender shall have control
(within the meaning of Section 8-106(d)(2) of the UCC) over the Holding Account
and any Sub-Account, (iii) such that neither Borrower, Operating Lessee, nor
Manager shall have any right of withdrawal from the Holding Account or the
Sub-Accounts and, except as provided herein, no Account Collateral shall be
released to Borrower from the Holding Account or the Sub-Accounts, (iv) in such
a manner that the Cash Management Bank shall agree to treat all property
credited to the Holding Account or the Sub-Accounts as "financial assets" and
(v) such that all securities or other property underlying any financial assets
credited to the Accounts shall be registered in the name of Cash Management
Bank, indorsed to Cash Management Bank or in blank or credited to another
securities account maintained in the name of Cash Management Bank and in no case
will any financial asset credited to any of the Collateral Accounts be
registered in the name of Borrower, payable to the order of Borrower or
specially indorsed to Borrower except to the extent the foregoing have been
specially indorsed to Cash Management Bank or in blank. Without limiting
Borrower's obligations under the 

 






















immediately
preceding sentence, Borrower shall only establish and maintain the Holding
Account with a financial institution that has executed an agreement
substantially in the form of the Account Agreement or in such other form
acceptable to Lender in its sole discretion. 

 

(c)  The
Collateral Accounts shall be Eligible Accounts. The Collateral Accounts 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 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. Borrower shall be the beneficial owner of the Collateral
Accounts for federal income tax purposes and shall report all income on the
Collateral Accounts. 

 

3.1.4  Deposits
into Sub-Accounts

 

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

 

(i)  $0.00
into the Tax Reserve Account;

 


	(ii)  	
      $0.00
      into the Insurance Reserve Account;




 

(iii)  $0.00
into the Current Debt Service Reserve Account;

 

(iv)  $0.00
into the Proceeds Reserve Account;

 

(v)  $0.00
into the Franchise Fee Reserve Account; and

 

(vi)  $0.00
into the Low DSCR Reserve Account.

 

3.1.5  Monthly
Funding of Sub-Accounts

 

.


 

(a)  Borrower
hereby irrevocably authorizes Lender to transfer (and, pursuant to the Account
Agreement shall irrevocably authorize Cash Management Bank to execute any
corresponding instructions of Lender), and Lender shall transfer (or cause Cash
Management Bank to transfer pursuant to disbursement instructions from Lender),
from the Holding Account by 11:00 a.m. New York time on each Business Day, or as
soon thereafter as sufficient funds are in the Holding Account to make the
applicable transfers, funds in the following amounts and in the following order
of priority:

 

(i)  at any
such time that Manager does not reserve for and pay Impositions and Other
Charges directly, funds in an amount equal to the Monthly Tax Reserve Amount and
any other amounts required pursuant to Section
16.1 for the
month 

 






















in which
the Payment Date immediately following the date of the transfer from the Holding
Account occurs and transfer the same to the Tax Reserve Account; 

 

(ii)  prior to
such time as Borrower maintains blanket policies of insurance pursuant to
Section
6.1.16 and
Section
16.2, funds
in an amount equal to the Monthly Insurance Reserve Amount for the month in
which the Payment Date immediately following the date of the transfer from the
Holding Account occurs and transfer the same to the Insurance Reserve Account,
or following an Insurance Reserve Trigger, funds sufficient (calculated on a
monthly basis from the Insurance Reserve Trigger until the month in which the
premium is due) to permit Lender to pay insurance premiums for the insurance
required to be maintained pursuant to the terms of this Agreement and the
Security Instrument on the respective due dates therefor (up to a maximum amount
equal to the aggregate annual insurance premium required hereunder), and Lender
shall so pay such funds to the insurance company having the right to receive
such funds;

 

(iii)  funds in
an amount equal to the amount of Debt Service due on the Payment Date for the
month in which the Payment Date immediately following the date of the transfer
from the Holding Account occurs and transfer the same to the Current Debt
Service Reserve Account;

 

(iv)  funds in
an amount equal to the amount of any sums previously withdrawn from the Low DSCR
Reserve Account and deposited into the Current Debt Service Reserve Account due
to a shortfall therein, and transfer the same to the Low DSCR Reserve Account,
until such Collateral Accounts have been replenished;

 

(v)  funds in
an amount equal to the Third-Party Franchise Fees, if any, and transfer the same
into the Franchise Fee Reserve Account;

 

(vi)  provided
no Event of Default has occurred and is continuing and to the extent Lender
receives the Senior Mezzanine Lender Monthly Debt Service Notice Letter, funds
in an amount equal to the Senior Mezzanine Loan Debt Service for the month in
which the Payment Date immediately following the date of the transfer from the
Holding Account occurs and transfer the same to the Senior Mezzanine
Account;

 

(vii)  provided
(a) no Event of Default has occurred and is continuing hereunder, (b) Lender has
not received any written notice from Senior Mezzanine Lender of any Event of
Default that has then occurred and is continuing under the Senior Mezzanine Loan
Documents and (c) Lender receives the Intermediate Mezzanine Lender Monthly Debt
Service Notice Letter, funds in an amount equal to the Intermediate Mezzanine
Loan Debt Service for the month in which the Payment Date immediately following
the date of the transfer from the Holding account occurs and transfer the same
to the Intermediate Mezzanine Account. If no Event of Default has occurred and
is continuing hereunder and Lender receives written notice from Senior Mezzanine
Lender that an Event of Default has then occurred and is continuing under the
Senior Mezzanine Loan Documents, any amounts that would otherwise have been


 






















distributed
to the Intermediate Mezzanine Account absent such default shall instead be
distributed to the Senior Mezzanine Account for application in accordance with
the Senior Mezzanine Loan Documents;

 

(viii)  provided
(a) no Event of Default has occurred and is continuing hereunder, (b) Lender has
not received any written notice from Senior Mezzanine Lender of any Event of
Default that has occurred and is continuing under the Senior Mezzanine Loan
Documents, (c) Lender has not received any written notice from Intermediate
Mezzanine Lender of any Event of Default that has occurred and is continuing
under the Intermediate Mezzanine Loan Documents and (d) that the Junior
Mezzanine Loan has been funded and Lender receives the Junior Mezzanine Lender
Monthly Debt Service Notice Letter, funds in an amount equal to Junior Mezzanine
Loan Debt Service for the month in which the Payment Date immediately following
the date of the transfer from the Holding Account occurs and transfer the same
to the Junior Mezzanine Account. If no Event of Default has occurred and is
continuing hereunder and Lender receives written notice from Senior Mezzanine
Lender that an Event of Default has then occurred and is continuing under the
Senior Mezzanine Loan Documents, any amounts that would otherwise have been
distributed to the Junior Mezzanine Account absent such default shall instead be
distributed to the Senior Mezzanine Account for application in accordance with
the Senior Mezzanine Loan Documents (notwithstanding the occurrence or absence
of any Event of Default that has then occurred and is continuing under the
Intermediate Mezzanine Loan Documents). If no Event of Default has occurred and
is continuing hereunder, Lender has not received written notice from Senior
Mezzanine Lender that an Event of Default has then occurred and is continuing
under the Senior Mezzanine Loan Documents, and Lender receives written notice
from Intermediate Mezzanine Lender that an Event of Default has then occurred
and is continuing under the Intermediate Mezzanine Loan Documents, any amounts
that would otherwise have been distributed to the Junior Mezzanine Account
absent such default shall instead be distributed to the Intermediate Mezzanine
Account for application in accordance with the Intermediate Mezzanine Loan
Documents;

 

(ix)  during
any Low DSCR Period, funds in an amount equal to 75% of the balance (if any)
remaining or deposited into the Holding Account after the foregoing deposits set
forth in Sections
3.1.5(a)(i) through
(vii) and transfer the same to the Low DSCR Reserve Account; and

 

(x)  provided
no Event of Default shall have occurred and is then continuing, funds in an
amount equal to the balance (if any) remaining or deposited in the Holding
Account after the foregoing deposits (such remainder being hereinafter referred
to as Excess
Cash Flow) and
transfer the same to the Borrower's Account, free of any Lien or continuing
security interest.

 

(b)  If Lender
shall reasonably determine that there will be insufficient amounts in the
Holding Account to make the transfer pursuant to clause (a)(iii) of this
Section
3.1.5 on the
date required hereunder, Lender shall without notice to Borrower, transfer, to
the extent of available funds therein from the Low DSCR Reserve Account to the
Holding Account, an amount equal to such deficits and immediately transfer such


 






















funds
from the Holding Account into the Current Debt Service Reserve Account in order
to make the transfer pursuant to clause (iii) of Section
3.1.5(a). If
after such allocation, Lender shall reasonably determine that there are still
insufficient funds in the Holding Account to make any such transfer, or if
Lender shall reasonably determine that there will be insufficient amounts in the
Holding Account to make the of the other transfers pursuant to this Section
3.1.5 on the
date required hereunder, Lender shall provide notice to Borrower of such
insufficiency (except that in no event shall Lender be required to notify
Borrower of any deficiency in the Current Debt Service Reserve Account, such
deficiency on any Payment Date, after application of available funds from the
Low DSCR Reserve Accounts, being an Event of Default) and, within five (5)
Business Days after receipt of said notice Borrower shall deposit into the
Holding Account an amount equal to the shortfall of available funds in the
Holding Account taking into account any funds which accumulate in the Holding
Account during such five (5) day Business Day period. Upon the occurrence of an
Event of Default due to a deficiency in the Current Debt Service Reserve Account
on any Payment Date, Lender shall notify Borrower of said Event of Default
within five (5) Business Days thereafter; provided, however, Lender's failure to
notify Borrower shall not be deemed a waiver of said Event of Default.
Notwithstanding anything to the contrary contained in this Agreement or in the
other Loan Documents, Borrower shall not be deemed to be in Default hereunder or
thereunder (and no Default Rate or Late Payment Charge shall be applicable) in
the event funds sufficient for a required transfer are held in an appropriate
Sub-Account and Lender or Cash Management Bank fails to timely make any transfer
from such Sub-Account as contemplated by this Agreement.

 

(c)  Notwithstanding
anything to the contrary contained herein or in the Security Instrument, but
subject to Section
7.3, to the
extent that Borrower shall fail to pay any mortgage recording tax, costs,
expenses or other amounts pursuant to Section
19.12 of this
Agreement within the time period set forth therein, Lender shall have the right,
at any time, upon five (5) Business Days' notice to Borrower, to withdraw from
the Holding Account, an amount equal to such unpaid taxes, costs, expenses
and/or other amounts and pay such amounts to the Person(s) entitled
thereto.

 

(d)  In the
event of any prepayment of the Loan by the Borrower that is permitted or
required under this Agreement, Lender shall, provided no Event of Default has
occurred and is continuing, disburse to the Borrower funds from the Low DSCR
Reserve Account, representing the same proportion of the total amount deposited
in such accounts immediately prior to such disbursement as the amount of the
Loan prepaid by the Borrower bears to the total Debt outstanding immediately
prior to such Prepayment.

 

(e)  Lender
agrees to deliver each Mezzanine Lender Monthly Debt Service Notice Letter and
corresponding disbursement instructions to Cash Management Bank within two (2)
Business Days of Lender's receipt thereof to the extent any Mezzanine Lender is
entitled to a payment pursuant to the terms of Section
3.1.5
above.

 

(f)  Borrower
hereby irrevocably directs that all Excess Cash Flow shall (in lieu of
transferring such funds to the Borrower's Account as Borrower may have so
directed): (i) to the extent Lender has received a Senior Mezzanine Loan Default


 






















Notice
and until such time as Lender receives a Senior Mezzanine Loan Default
Revocation Notice, be deposited directly into the Senior Mezzanine Loan Deposit
Account for application as provided in the Senior Mezzanine Loan Agreement, (ii)
provided Lender has not received a Senior Mezzanine Loan Default Notice but has
received an Intermediate Mezzanine Loan Default Notice and until such time as
Lender receives an Intermediate Mezzanine Loan Default Revocation Notice, be
deposited directly in the Intermediate Mezzanine Loan Account, (iii) provided
Lender has not received a Senior Mezzanine Loan Default Notice, or a
Intermediate Mezzanine Loan Default Notice, but has received a Junior Mezzanine
Loan Default Notice and until such time as Lender receives a Junior Mezzanine
Loan Default Revocation Notice, be deposited directly in the Junior Mezzanine
Loan Account. The direction set forth in the immediately preceding sentence
shall not be changed or terminated without the written consent of each Mezzanine
Lender. Notwithstanding any provision herein to the contrary, no Mezzanine Loan
Default Notice shall be required for the deposit of Proceeds into the respective
Mezzanine Loan Deposit Account in accordance with the terms of Section
6.2.3
hereof.

 

3.1.6  Payments
from Sub-Accounts

 

.
Borrower irrevocably authorizes Lender to make and, provided no Event of Default
shall have occurred and be continuing, Lender hereby agrees to make, the
following payments from the Sub-Accounts to the extent of the monies on deposit
therefor:

 

(i)  if
notified (timely) by Borrower or otherwise determined by Lender in its
reasonable discretion that Manager will not pay Impositions or Other Charges,
funds from the Tax Reserve Account to Lender sufficient to permit Lender to pay
(or otherwise to Borrower to reimburse Borrower for) (A) Impositions and (B)
Other Charges, on the respective due dates therefor, and Lender shall so pay
such funds to the Governmental Authority having the right to receive such funds
(or shall reimburse Borrower or Operating Lessee upon confirmation of
payment);

 

(ii)  prior to
such time as Borrower maintains blanket policies of insurance pursuant to
Section
6.1.16 and
Section
16.2, and
otherwise following an Insurance Reserve Trigger, funds from the Insurance
Reserve Account to Lender sufficient to permit Lender to pay insurance premiums
for the insurance required to be maintained pursuant to the terms of this
Agreement and the Security Instrument, on the respective due dates therefor, and
Lender shall so pay such funds to the insurance company having the right to
receive such funds;

 

(iii)  funds
from the Current Debt Service Reserve Account to Lender sufficient to pay Debt
Service on each Payment Date, and Lender, on each Payment Date, shall apply such
funds to the payment of the Debt Service payable on such Payment
Date;

 

(iv)  no more
frequently than once in any calendar month, and provided Borrower shall have
complied with the procedures set forth in Section
16.7,


 






















funds
from the Franchise Fee Reserve Account (if applicable) to the Borrower's Account
to pay the Third-Party Franchise Fee (if applicable); and

 

(v)  funds
from the Low DSCR Reserve Account sufficient to pay any shortfalls in the
Current Debt Service Reserve Account for Debt Service due with respect to the
Loan on each Payment Date, and Lender, on each Payment Date, shall apply such
funds to the payment of the Debt Service shortfall payable on such Payment Date.


 

3.1.7  Cash
Management Bank

 

.


 

(a)  Lender
shall have the right to replace the Cash Management Bank with a financial
institution reasonably satisfactory to Borrower in the event that (i) the Cash
Management Bank fails, in any material respect, to comply with the Account
Agreement, (ii) the Cash Management Bank named herein is no longer the Cash
Management Bank or (iii) the Cash Management Bank is no longer an Approved Bank.
Upon the occurrence and during the continuance of an Event of Default, Lender
shall have the right at Borrower's sole cost and expense to replace Cash
Management Bank at any time, without notice to Borrower. Borrower shall
cooperate with Lender in connection with the appointment of any replacement Cash
Management Bank and the execution by the Cash Management Bank and the Borrower
of an Account Agreement and delivery of same to Lender (with a copy to each
Mezzanine Lender).

 

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

 

3.1.8  Borrower's
Account Representations, Warranties and Covenants

 

.
Borrower
represents, warrants and covenants that (i) as of the date hereof, Borrower has
caused Operating Lessee to direct all Tenants under the Leases to mail all
checks and wire all funds with respect to any payments due under such Leases
directly to Manager, (ii) Borrower shall cause Manager and Operating Lessee to
deposit all amounts payable to Borrower or Operating Lessee pursuant to the
Management Agreement directly into the Collection Account, (iii) Borrower and
Operating Lessee shall pay or cause to be paid all Rents, Cash and Cash
Equivalents or other items of Operating Income not otherwise collected by
Manager within two Business Days after receipt thereof by Borrower, Operating
Lessee or its Affiliates directly into the Collection Account and, until so
deposited, any such amounts held by Borrower, Operating Lessee or Manager shall
be deemed to be Account Collateral and shall be held in trust by it for the
benefit, and as the property, of Lender and shall not be commingled with any
other 

 






















funds or
property of Borrower, Operating Lessee or Manager, (iv) other than the Manager
Accounts, there are no accounts other than the Collateral Accounts maintained by
Borrower, Operating Lessee or Manager with respect to the Property or the
collection of Rents and credit card company receivables with respect to the
Property and (v) so long as the Loan shall be outstanding, neither
Borrower, Operating Lessee, Manager, nor any other Person shall open any other
operating accounts with respect to the Property or the collection of
Rents or credit
card company receivables with respect to the Property, except for the Collateral
Accounts and the Manager Accounts; provided
that,
Borrower and Manager shall not be prohibited from utilizing one or more separate
accounts for the disbursement or retention of funds that have been transferred
to the Borrower's Account pursuant to Section
3.1.5.

 

3.1.9  Account
Collateral and Remedies

 

.


 

(a)  Upon the
occurrence and during the continuance of an Event of Default, without additional
notice from Lender to Borrower, (i) Lender may, in addition to and not in
limitation of Lender's other rights, make any and all withdrawals from, and
transfers between and among, the Collateral Accounts as Lender shall determine
in its sole and absolute discretion to pay any Obligations; (ii) all Excess Cash
Flow shall be retained in the Holding Account or applicable Sub-Accounts, (iii)
all payments to any Mezzanine Lender pursuant to Section
3.1.5 shall
immediately cease and (iv) Lender may liquidate and transfer any amounts then
invested in Permitted Investments to the Collateral Accounts to which they
relate or reinvest such amounts in other Permitted Investments as Lender may
reasonably determine is necessary to perfect or protect any security interest
granted or purported to be granted hereby or to enable Lender to exercise and
enforce Lender's rights and remedies hereunder with respect to any Account
Collateral or to preserve the value of the Account Collateral.

 

(b)  Upon the
occurrence and during the continuance of an Event of Default, Borrower hereby
irrevocably constitutes and appoints Lender as 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 Borrower with respect to the Account Collateral, and do
in the name, place and stead of Borrower, all such acts, things and deeds for
and on behalf of and in the name of Borrower, which Borrower could or might do
or which Lender may deem necessary or desirable to more fully vest in 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,
Lender may perform or cause performance of any such agreement, and any
reasonable expenses of Lender incurred in connection therewith shall be paid by
Borrower as provided in Section
5.1.16.

 

(c)  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) in connection with this Agreement or the Account


 






















Collateral.
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 or any
other intended disposition thereof shall be reasonable and sufficient notice to
Borrower within the meaning of the UCC.

 

3.1.10  Transfers
and Other Liens

 

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

 

3.1.11  Reasonable
Care

 

. Beyond
the exercise of reasonable care in the custody thereof, Lender shall have no
duty as to any Account Collateral in its possession or control as agent therefor
or bailee thereof or any income thereon or the preservation of rights against
any person or otherwise with respect thereto. Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Account
Collateral in its possession if the Account Collateral is accorded treatment
substantially equal to that which Lender accords its own property, it being
understood that Lender shall not be liable or responsible for any loss or damage
to any of the Account Collateral, or for any diminution in value thereof, by
reason of the act or omission of Lender, its Affiliates, agents, employees or
bailees, except to the extent that such loss or damage results from Lender's
gross negligence or willful misconduct. In no event shall 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 Lender's reasonable control or for indirect, special or consequential
damages except to the extent of Lender's gross negligence or willful misconduct.
Notwithstanding the foregoing, Borrower acknowledges and agrees that (i) Lender
does not have custody of the Account Collateral, (ii) Cash Management Bank has
custody of the Account Collateral, (iii) the initial Cash Management Bank was
chosen by Borrower and (iv) Lender has no obligation or duty to supervise Cash
Management Bank or to see to the safe custody of the Account
Collateral.

 

3.1.12  Lender's
Liability

 

.


 

(a)  Lender
shall be responsible for the performance only of such duties with respect to the
Account Collateral as are specifically set forth in this Section
3.1 or
elsewhere in the Loan Documents, and no other duty shall be implied from any
provision hereof. Lender shall not be under any obligation or duty to perform
any act with respect to the Account Collateral 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. Borrower shall indemnify and hold Lender, its
employees and officers harmless from and against any loss, cost or damage
(including, without limitation, reasonable attorneys' fees 

 






















and
disbursements) incurred by Lender in connection with the transactions
contemplated hereby with respect to the Account Collateral (excluding losses on
Permitted Investments) except as such may be caused by the gross negligence or
willful misconduct of Lender, its employees, officers or agents. 

 

(b)  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. 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.

 

3.1.13  Continuing
Security Interest

 

. This
Agreement shall create a continuing security interest in the Account Collateral
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 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 Borrower shall be entitled to the return, upon
its request, of such of the Account Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof and Lender shall execute such
instruments and documents as may be reasonably requested by Borrower to evidence
such termination and the release of the Account Collateral.

 


	IV.  	
      REPRESENTATIONS
      AND WARRANTIES




 


	Section
      4.1  	
      Borrower
      Representations




 

Borrower
represents and warrants as of the Closing Date that:

 

4.1.1  Organization

 

. Each of
Borrower, Operating Lessee, and CNL Hospitality Partners, LP is a limited
partnership, and each of KSL DC Operating, LLC and Manager is a limited
liability company, and 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 Borrower, Operating Lessee, Guarantor 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 Borrower, Operating Lessee, Guarantor 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 Borrower is the
ownership of the Property. The organizational structure of Borrower is
accurately depicted by the 

 






















schematic
diagram attached hereto as Exhibit
H.
Borrower shall not itself, and shall not permit Operating Lessee to, change its
name, identity, corporate structure or jurisdiction of organization unless it
shall have given Lender thirty (30) days prior written notice of any such change
and shall have taken all steps reasonably requested by Lender to grant, perfect,
protect and/or preserve the security interest granted hereunder to
Lender.

 

4.1.2  Proceedings

 

. Each of
Borrower, Operating Lessee, Guarantor 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. This Agreement and the other
Loan Documents have been duly executed and delivered by, or on behalf of,
Borrower, Operating Lessee, Guarantor and Manager, as applicable, and constitute
legal, valid and binding obligations of Borrower, Operating Lessee, Guarantor
and Manager, as applicable, enforceable against Borrower, Operating Lessee,
Guarantor 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 by Borrower, Operating Lessee, Guarantor 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) upon
any of the property or assets of Borrower, Operating Lessee, Guarantor or
Manager pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, partnership agreement or other agreement or instrument to which
Borrower, Operating Lessee, Guarantor or Manager is a party or by which any of
Borrower's, Operating Lessee's, Guarantor's or 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 Borrower, Operating Lessee, Guarantor or Manager of this
Agreement or any other Loan Documents 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 Borrower's Knowledge, otherwise pending or threatened against or affecting
Borrower, Operating Lessee, Manager, or the Property whose outcome, if
determined against Borrower, Manager, Operating Lessee, or the Property, would
have a Material 

 






















Adverse
Effect. To the Best of Borrower's Knowledge, Schedule
I includes
each pending action against 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 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 Borrower's Knowledge, threatened against or affecting
Guarantor which, if determined against Guarantor would have a Material Adverse
Effect. 

 

4.1.5  Agreements

 

. Neither
Borrower nor Operating Lessee is a party to any agreement or instrument or
subject to any restriction which is reasonably likely to have a Material Adverse
Effect. Neither Borrower nor Operating Lessee is 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 Borrower, Operating Lessee, or the Property is bound, which default is
reasonably likely to have a Material Adverse Effect. Neither Borrower nor
Operating Lessee has any material financial obligation (contingent or otherwise)
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which Borrower or Operating Lessee is a party or by which
Borrower, Operating Lessee, 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 Lender on or prior to the
date hereof, and (b) obligations under the Loan Documents.

 

4.1.6  Title

 

.
Borrower has good, marketable and insurable fee simple title to the Land and the
Improvements, free and clear of all Liens whatsoever except the Permitted
Encumbrances, such other Liens as are permitted pursuant to the Loan Documents
and the Liens created by the Loan Documents. Borrower or Operating Lessee, as
applicable, has good and marketable title to the remainder of the Property, free
and clear of all Liens whatsoever except the Permitted Encumbrances. The
Security Instrument, when properly recorded in the appropriate records, and
Accommodation Security Documents, together with any Uniform Commercial Code
financing statements required to be filed in connection therewith, will create
(a) a valid, perfected first mortgage lien on the Land and the Improvements,
subject only to Permitted Encumbrances and (b) perfected security interests in
and to, and perfected collateral assignments of, all personalty (including the
Leases), all in accordance with the terms thereof, in each case subject only to
any applicable Permitted Encumbrances. Except as may be indicated in and insured
over by the Title Policy, to the Best of Borrower's Knowledge, there are no
claims for payment for work, labor or materials affecting the Property which are
or may become a lien prior to, or of equal priority with, the Liens created by
the Loan Documents. Borrower represents and warrants that none of the Permitted
Encumbrances will have a Material Adverse Effect. Borrower shall preserve its
right, title and interest in and to the Property for so long as the Note remains
outstanding and will warrant and defend same and the validity and priority of
the Lien hereof from and against any and all claims whatsoever other than the
Permitted Encumbrances.

 

4.1.7  No
Bankruptcy Filing

 

. None of
Borrower, Operating Lessee, Manager or Guarantor, 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 Borrower has no knowledge of any Person contemplating the filing
of any such petition against it or against Operating Lessee, Manager or
Guarantor.

 

4.1.8  Full
and Accurate Disclosure

 

. To the
Best of Borrower's Knowledge, no statement of fact made by Borrower in this
Agreement or in any of the other Loan Documents 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
Borrower which has not been disclosed which has a Material Adverse Effect, or to
the Best of Borrower's Knowledge could reasonably be expected to have a Material
Adverse Effect.

 

4.1.9  All
Property

 

. The
Property constitutes all of the real property, personal property, equipment and
fixtures currently (i) owned or leased by Borrower or Operating Lessee or (ii)
used in the operation of the business located on the Property, other than items
owned by Manager or any Tenants (excluding items owned by Operating
Lessee).

 

4.1.10  ERISA

 

(a)  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 Borrower (i) has no knowledge of any material liability which has
been incurred or is expected to be incurred by 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 Borrower
or by any entity that is under common control with 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) 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)
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.


 

(c)  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 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 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 (Similar
Laws), which
prohibit or otherwise restrict the transactions contemplated by this
Agreement.

 

4.1.11  Compliance

 

.
Borrower 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
Borrower's Knowledge, neither Borrower nor Operating Lessee is in default or in
violation of any order, writ, injunction, decree or demand of any Governmental
Authority. To the Best of Borrower's Knowledge, there has not been committed by
Borrower or Operating Lessee any act or omission affording the federal
government or any other Governmental Authority the right of forfeiture as
against the Property or any part thereof or any monies paid in performance of
Borrower's obligations under any of the Loan Documents.

 

4.1.12  Financial
Information

 

. To the
Best of Borrower's Knowledge, all financial data including, without limitation,
the statements of cash flow 

 






















and
income and operating expense, that have been delivered by or on behalf of
Borrower to 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 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. Neither Borrower nor Operating Lessee 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 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 condition, operations or
business of Borrower or Operating Lessee from that set forth in said financial
statements.

 

4.1.13  Condemnation

 

. No
Condemnation has been commenced or, to the Best of Borrower's Knowledge, is
contemplated with respect to all or any portion of the Property.

 

4.1.14  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, Borrower does not own any
"margin stock."

 

4.1.15  Utilities
and Public Access

 

. The
Property has rights of access to public ways and is served by water, sewer,
sanitary sewer and storm drain facilities adequate to service the Property for
its intended uses. To the Best of Borrower's Knowledge, all utilities necessary
to the existing use of the Property are located either in the public
right-of-way abutting the Property (which are connected so as to serve the
Property without passing over other property) or in recorded easements serving
the Property. All roads necessary for the use of the Property for its current
purposes have been completed and, if necessary, dedicated to public
use.

 

4.1.16  Not
a Foreign Person

 

.
Borrower is not a foreign person within the meaning of § 1445(f)(3) of the
Code.

 

4.1.17  Separate
Lots

 






















. The
Property is comprised of one (1) or more contiguous parcels which constitute a
separate tax lot or lots and does not constitute or include a portion of any
other tax lot not a part of the Property.

 

4.1.18  Assessments

 

. To the
Best of Borrower's Knowledge, there are no pending or proposed special or other
assessments for public improvements or otherwise affecting the Property, nor are
there any contemplated improvements to the Property that may result in such
special or other assessments.

 

4.1.19  Enforceability

 

. The
Loan Documents are not subject to any existing right of rescission, set-off,
counterclaim or defense by Borrower, including the defense of usury, nor would
the operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents 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
Borrower has not asserted any right of rescission, set-off, counterclaim or
defense with respect thereto.

 

4.1.20  No
Prior Assignment

 

. There
are no prior sales, transfers or assignments of the Leases or any portion of the
Rents due and payable or to become due and payable which are presently
outstanding following the funding of the Loan, other than those being terminated
or assigned to Lender concurrently herewith.

 

4.1.21  Insurance

 

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

 

4.1.22  Use
of Property

 

. The
Property is used exclusively for hotel purposes and other appurtenant and
related uses.

 

4.1.23  Certificate
of Occupancy; Licenses

 

. To the
Best of Borrower's Knowledge, all material certifications, permits, licenses and
approvals, including without limitation, certificates of completion and
occupancy permits required of Borrower for the legal use, occupancy and
operation of the Property for hotel purposes (collectively, the Licenses), have
been obtained and 

 






















are in
full force and effect. Borrower shall keep and maintain all Licenses necessary
for the operation of the Property for hotel purposes. The use being made of the
Property is in conformity with the certificate of occupancy issued for the
Property.

 

4.1.24  Flood
Zone

 

. Except
as may be shown on the Survey with respect to portions of the Improvements other
than buildings and enclosed structures, none of the Improvements on the Property
are located in an area as identified by the Federal Emergency Management Agency
as an area having special flood hazards.

 

4.1.25  Physical
Condition

 

. To the
Best of 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 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 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.

 

4.1.26  Boundaries

 

. To the
Best of Borrower's Knowledge and except as disclosed on the Survey, all of the
Improvements lie wholly within the boundaries and building restriction lines of
the Real Property, and no improvements on adjoining properties encroach upon the
Real Property, and no easements or other encumbrances upon the Real Property
encroach upon any of the Improvements, so as to have a Material Adverse Effect
on the value or marketability of the Real Property except those which are
insured against by the Title Policy.

 

4.1.27  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 Borrower's Knowledge, there are no
material defaults thereunder by either party (other than as expressly disclosed
on the certified rent roll delivered to Lender or the Tenant estoppel
certificates delivered 

 






















to 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 Lender in connection with the closing of the Loan. There has been
no prior sale, transfer or assignment, hypothecation or pledge by Borrower of
any Lease or of the Rents received therein, which will be outstanding following
the funding of the Loan, other than those being assigned to Lender 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. 

 

4.1.28  Filing
and Recording Taxes

 

. All
transfer taxes, deed stamps, intangible taxes or other amounts in the nature of
transfer taxes required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the transfer of the Property
to Borrower have been paid and the granting and recording of the Security
Instrument and the UCC financing statements required to be filed in connection
with the Loan. All mortgage, mortgage recording, stamp, intangible or other
similar tax required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Security Instrument, have been
paid, and, under current Legal Requirements, the Security Instrument is
enforceable against Borrower in accordance with its terms by Lender (or any
subsequent holder thereof) 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.

 

4.1.29  Single
Purpose Entity/Separateness

 

Borrower
hereby represents, warrants and covenants that each of Operating Lessee, CNL
Hotel Del Tenant Corp., Borrower, General Partner, each Mezzanine Borrower, each
general partner of each Mezzanine Borrower, Revolving Credit Borrower and the
general partner of Revolving Credit Borrower is and has been since the date of
its respective formation, a Single Purpose Entity, except that (i) other than
the general partners of Borrower and Operating Lessee (each of which has two
Independent Directors), and (ii) other than the general partners of Revolving
Credit Borrower (which does not have an Independent Director), each of the
general partners of the Mezzanine Borrowers and Revolving Credit Borrower has a
single Independent Director.

 

(a)  All of
the assumptions made in the Non-Consolidation Opinion, including, but not
limited to, any exhibits attached thereto and any certificates delivered by
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 (an
Additional
Non-Consolidation Opinion),
including, but not limited to, any exhibits attached thereto, 

 






















are true
and correct in all material respects. Borrower has complied with all of the
assumptions made with respect to it in the Non-Consolidation Opinion. To the
Best of Borrower's Knowledge, each entity other than 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.

 

4.1.30  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.

 

4.1.31  Illegal
Activity

 

. No
portion of the Property has been or will be purchased with proceeds of any
illegal activity.

 

4.1.32  Intentionally
Deleted

 

.


 

4.1.33  Tax
Filings

 

.
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 Borrower.

 

4.1.34  Solvency/Fraudulent
Conveyance

 

.
Borrower (a) has not entered into the transaction contemplated by this Agreement
or any Loan Document 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. After giving effect to the Loan, the fair
saleable value of Borrower's assets exceeds and will, immediately following the
making of the Loan, exceed Borrower's total liabilities, including, without
limitation, subordinated, unliquidated, disputed and contingent liabilities. The
fair saleable value of Borrower's assets is and will, immediately following the
making of the Loan, be greater than Borrower's probable liabilities, including
the maximum amount of its contingent liabilities on its Debts as such Debts
become absolute and matured. 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. 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 Borrower and the amounts to be payable on or in
respect of obligations of Borrower).

 

4.1.35  Investment
Company Act

 

.
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.

 

4.1.36  Interest
Rate Cap Agreement

 

. The
Interest Rate Cap Agreement is in full force and effect and enforceable against
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).

 

4.1.37  Labor

 

. Except
as described on Schedule
I, no work
stoppage, labor strike, slowdown or lockout is pending or threatened by
employees and other laborers at the Property. Except as described on
Schedule
I, neither
Borrower, Operating Lessee, nor Manager (i) is involved in or, to the Best of
Borrower's Knowledge, threatened with any material labor dispute, material
grievance or litigation relating to labor matters involving any employees and
other laborers at the Property, including, without limitation, violation of any
federal, state or local labor, safety or employment laws (domestic or foreign)
and/or charges of unfair labor practices or discrimination complaints, (ii) to
the Best of Borrower's Knowledge, has engaged with respect to the Property, in
any unfair labor practices within the meaning of the National Labor Relations
Act or the Railway Labor Act, or (iii) is a party to, or bound by, any existing
collective bargaining agreement or union contract with respect to employees and
other laborers at the Property. 

 

4.1.38  Brokers

 

. Neither
Borrower nor, to the Best of Borrower's Knowledge, Lender has dealt with any
broker or finder with respect to the loan transactions contemplated by the Loan
Documents 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. 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 Borrower with respect to the
transactions contemplated by the Loan Documents. Borrower and 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
4.1.38 shall
survive the expiration and termination of this Agreement and the payment of the
Indebtedness.

 

4.1.39  No
Other Debt

 

.
Borrower has not borrowed or received debt financing that has not been
heretofore repaid in full, other than the Permitted Debt.

 

4.1.40  Taxpayer
Identification Number

 

.
Borrower's Federal taxpayer identification number is 20-0493938.

 

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

 

. (i)
None of Borrower or any Person who owns any equity interest in or Controls
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
Borrower has implemented procedures to ensure that no Person who now or
hereafter owns any equity interest in Borrower or Guarantor is a Prohibited
Person or Controlled by a Prohibited Person, and (ii) none of Borrower or
Guarantor is in violation of any Legal Requirements relating to anti-money
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. 

 

4.1.42  Knowledge
Qualifications

 

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

 

4.1.43  Leases

 

.
Borrower represents that it has heretofore delivered to Lender true and complete
copies of all Leases and any and all amendments or modifications
thereof.

 

























 

4.1.44  FF&E

 

. Manager
is reserving for FF&E on a monthly basis in accordance with the terms of the
Management Agreement not less than an amount equal to four percent (4%) of gross
revenues with respect to the Property; such reserves are maintained in the
FF&E Reserve Account (subject to disbursements therefrom as permitted by the
Management Agreement).

 

4.1.45  Survival
of Representations

 

.
Borrower agrees that all of the representations and warranties of Borrower set
forth in Section
4.1 and
elsewhere in this Agreement and in the other Loan Documents 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 Lender under this Agreement or any of the other
Loan Documents by Borrower or Guarantor unless a longer survival period is
expressly stated in a Loan Document 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 by Borrower shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.

 


	V.  	
      BORROWER
      COVENANTS




 


	Section
      5.1  	
      Affirmative
      Covenants




 

.

 

From the
Closing Date and until payment and performance in full of all obligations of
Borrower under the Loan Documents, Borrower hereby covenants and agrees with
Lender to comply with and to cause Operating Lessee to comply with, the
following covenants, and in such connection, references in this Article
V to
Borrower shall alternatively mean Operating Lessee, as the context may
require:

 

5.1.1  Performance
by Borrower

 

.
Borrower shall observe, perform and fulfill each and every covenant, term and
provision of each Loan Document executed and delivered by, or applicable to,
Borrower, in accordance with the provisions of each Loan Document, and shall not
enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrower, as applicable, without the prior written consent
of Lender.

 

5.1.2  Existence;
Compliance with Legal Requirements; Insurance

 






















. Subject
to Borrower's right of contest pursuant to Section
7.3,
Borrower shall comply and cause the Property to be in compliance with all Legal
Requirements applicable to the Borrower, Manager and the Property and the uses
permitted upon the Property. 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 Borrower, and Borrower shall not knowingly permit 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 Borrower's obligations under any of the
Loan Documents. Borrower hereby covenants and agrees not to commit, knowingly
permit or suffer to exist any act or omission affording such right of
forfeiture. Borrower shall 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,
all as more fully set forth in the Security Instrument. Borrower shall 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. 

 

5.1.3  Litigation

 

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

 

5.1.4  Single
Purpose Entity

 

.


 

(a)  Borrower
and General Partner are and shall each remain a Single Purpose
Entity.

 

(b)  Borrower
shall continue to maintain its own deposit account or accounts, separate from
those of any Affiliate, with commercial banking institutions. None of the funds
of Borrower will be commingled with the funds of any other
Affiliate.

 

(c)  To the
extent that Borrower shares the same officers or other employees as any of its
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 Borrower jointly contracts with any of its Affiliates 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 Borrower
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) Borrower and any of its
Affiliates shall be conducted on substantially the same terms (or on more
favorable terms for Borrower) as would be conducted with third
parties.

 

(e)  To the
extent that Borrower or any of its 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)  Borrower
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 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, Borrower shall: (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-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
Borrower 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 Borrower 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 Borrower


 






















shall be
required to (i) file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings or to authorize Borrower to do so or (ii) file an
involuntary bankruptcy petition against any Close Affiliate, Manager, or any
Close Affiliate of Manager. Furthermore, Borrower's formation documents shall
expressly state that for so long as the Loan is outstanding, Borrower shall not
be permitted to (i) dissolve, liquidate, consolidate, merge or sell all or
substantially all of Borrower'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  Access
to Property

 

.
Borrower shall permit agents, representatives and employees of Lender and the
Rating Agencies to inspect the Property or any part thereof during normal
business hours on Business Days upon reasonable advance notice.

 

5.1.7  Notice
of Default

 

.
Borrower shall promptly advise 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 of which Borrower has knowledge.

 

5.1.8  Cooperate
in Legal Proceedings

 

.
Borrower shall cooperate fully with 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 Lender hereunder
or under any of the other Loan Documents and, in connection therewith, permit
Lender, at its election, to participate in any such proceedings which may have a
Material Adverse Effect.

 

5.1.9  Perform
Loan Documents

 

.
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 executed and delivered by, or
applicable to, Borrower.

 

5.1.10  Insurance

 

.

 

(a)  Borrower
shall cooperate with Lender in obtaining for Lender the benefits of any Proceeds
lawfully or equitably payable in connection with the Property, and Lender shall
be reimbursed for any expenses incurred in connection therewith (including
reasonable attorneys' fees and disbursements) out of such Proceeds.

 

























 

(b)  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 hereunder to be
maintained by Borrower on or with respect to any part of the Property pursuant
to Section
6.1.


 

5.1.11  Further
Assurances; Separate Notes

 

.

 

(a)  Borrower
shall execute and acknowledge (or cause to be executed and acknowledged) and
deliver to Lender all documents, and take all actions, reasonably required by
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 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, to subject to the Loan Documents any property of Borrower
intended by the terms of any one or more of the Loan Documents to be encumbered
by the Loan Documents, or otherwise carry out the purposes of the Loan Documents
and the transactions contemplated thereunder. Borrower agrees that it shall,
upon request, reasonably cooperate with Lender in connection with any request by
Lender to sever the 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 Lender new substitute or component
notes to replace the Note, amendments to or replacements of existing Loan
Documents to reflect such severance and/or Opinions of Counsel with respect to
such substitute or component notes, amendments and/or replacements, provided
that Borrower shall bear no costs or expenses in connection therewith (other
than administrative costs and expenses of Borrower), and the holders of such
substitute or component notes shall designate a lead lender or agent for such
holders to whom 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 notes shall be the same as the scheduled Maturity Date
of the 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 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 Note and Mezzanine
Notes 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 manner which is
adverse to Borrower. Upon the occurrence and during the continuance of an Event
of Default, Lender may apply payment of all sums due under such substitute notes
in such order and priority as Lender shall elect in its sole and absolute
discretion.

 

























 

(b)  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 Loan were to be
decreased and, as a result, the principal amount of the Loan is decreased, then
(i) the Borrower shall take all actions as are necessary to effect the
"resizing" of any or all of the Mezzanine Loans and the Loan, (ii) the Borrower
shall cause the respective Mezzanine Borrower(s) to comply with its agreements
to effect a "resizing", and (iii) Lender shall on the date of the "resizing" of
the Loan lend to the respective Mezzanine Borrower(s) (by way of a reallocation
of the principal amount of the Loan and the respective Mezzanine Loan(s)) such
additional amount equal to the amount of the principal reduction of the Loan
provided that Borrower and the respective Mezzanine Borrower(s) execute and
deliver any and all necessary amendments or modifications to the Loan Documents
and the respective Mezzanine Loan Documents. In addition, Borrower and Lender
agree that if, in connection with the Securitization, it is determined by the
Rating Agencies that, if the principal amount of any or all of the Mezzanine
Loan(s) were to be decreased and, as a result the principal amount of the Loan
were increased, more "investment grade" rated securities could be issued, then
(i) if "resizing" to decrease the size of the respective Mezzanine Loan(s) and
increase the size of the Loan is provided for in the respective Mezzanine Loan
Documents, 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
respective Mezzanine Loan(s), (ii) Borrower shall cause the respective Mezzanine
Borrower(s) to comply with its agreements to effect a "resizing" and (iii)
Lender shall on the date of the "resizing" of the Loan lend to the Borrower (by
way of a reallocation of the principal amount of the Loan and the respective
Mezzanine Loan(s)) an additional amount equal to the amount of principal
reduction of the respective Mezzanine Loan(s), provided that Borrower and the
respective Mezzanine Borrower(s) execute and deliver any and all necessary
modifications to the Loan Documents and Mezzanine Loan Documents. In connection
with the foregoing, Borrower agrees, at Lender's sole cost and expense other
than with respect to Borrower's, Operating Lessee's, each Guarantor's and their
Affiliate's counsel fees, to execute and deliver such documents and other
agreements reasonably required by any Mezzanine Lender and/or Lender to
"re-size" the Loan and the Mezzanine Loan(s), including, without limitation, an
amendment to this Agreement, the Note, the Security Instrument and the other
Loan Documents and, if the principal amount of the Loan is increased, an
endorsement to the Title Policy reflecting an increase in the insured amount
thereunder. Borrower agrees to reimburse Lender for all costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by Lender in connection with any "resizing" of the Loan.
Notwithstanding the foregoing, Lender agrees that any "resizing" of the Loan and
the Mezzanine Loan(s) shall not change the economics of the Loan and the
Mezzanine Loan(s) taken as a whole in a manner which is adverse to Borrower
..

 

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

 

























 

(i)  furnish
to Lender, to the extent not otherwise already furnished to Lender and
reasonably acceptable to 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 Borrower pursuant to the terms of the Loan Documents; 

 

(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 Lender to confirm the Lien of the Security Instrument on
any Building Equipment, Operating Asset or any Intangible;

 

(iii)  execute
and deliver to 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 Borrower under the Loan Documents, as 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, as 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 a trustee in a
Securitization if such trustee is different that the trustee currently listed in
such opinion.

 

5.1.12  Mortgage
Taxes

 

.
Borrower shall pay all taxes, charges, filing, registration and recording fees,
excises and levies payable with respect to the Note or the Liens created or
secured by the Loan Documents, other than income, franchise and doing business
taxes imposed on Lender.

 

5.1.13  Operation

 

.
Borrower shall, and shall cause Manager to, (i) promptly perform and/or observe
all of the covenants and agreements required to be performed and observed by it
under the Management Agreement and do all things necessary to preserve and to
keep unimpaired its material rights thereunder; (ii) promptly notify Lender of
any "event of default" under the Management Agreement of which it is aware;
(iii) enforce in a commercially reasonable manner the performance and observance
of all of the covenants and agreements required to be performed and/or observed
by the Manager under the Management Agreement. 

 

5.1.14  Business
and Operations

 

























 

.
Borrower 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. Borrower shall qualify to do business
and shall remain in good standing under the laws of the State in which the
Property is located and as and to the extent required for the ownership,
maintenance, management and operation of the Property.

 

5.1.15  Title
to the Property

 

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

 

5.1.16  Costs
of Enforcement

 

. In the
event (a) that this Agreement or the Security Instrument is foreclosed upon in
whole or in part or that this Agreement or the Security Instrument 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
in which proceeding Lender is made a party, or a mortgage prior to or subsequent
to the Security Instrument in which proceeding Lender is made a party, or (c) of
the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors,
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 Lender or 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.

 

5.1.17  Estoppel
Statement

 

.

 

(a)  Borrower
shall, from time to time, upon thirty (30) days' prior written request from
Lender, execute, acknowledge and deliver to the Lender, an Officer's
Certificate, stating that this Agreement and the other Loan Documents are
unmodified and in full force and effect (or, if there have been modifications,
that this Agreement and the other 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 Note and
containing such other information, qualified to the Best of Borrower's
Knowledge, with respect to the Borrower, the Property and the Loan as Lender
shall reasonably request. The estoppel certificate shall also state either that
no Default exists hereunder or, if any Default shall exist hereunder, specify
such Default and the steps being taken to cure such Default.

 

(b)  Borrower
shall use commercially reasonable efforts to deliver to Lender, within thirty
(30) days of 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 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 Borrower may be required to obtain such
certificates if a Default hereunder or under any of the Loan Documents has
occurred and is continuing.

 

5.1.18  Loan
Proceeds

 

.
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.

 

5.1.19  No
Joint Assessment

 

.
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.

 

5.1.20  No
Further Encumbrances

 

.
Borrower shall do, or cause to be done, all things necessary to keep and protect
the Property 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) Permitted Encumbrances, (b) Liens permitted pursuant to
the Loan Documents, (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.

 

























 

5.1.21  Leases

 

.
Borrower shall promptly after receipt thereof deliver to Lender a copy of any
notice received with respect to the Leases claiming that 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.

 

5.1.22  Membership
Programs

 

.
Borrower shall receive Lender's prior written consent 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 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
Lender's security for the Loan. Borrower shall cause any membership deposits
which are not subject to a minimum 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. 

 

5.1.23  Article
8 "Opt In" Language

 

. Each
organizational document of Borrower, General Partner, each Mezzanine Borrower
and each of the other entities identified in Section
4.1.29 hereof
shall be modified to include the language set forth on Exhibit
R.

 

5.1.24  FF&E.
Borrower
shall cause Manager to reserve for FF&E on a monthly basis in accordance
with the Management Agreement not less than an amount equal to four percent (4%)
of gross revenues with respect to the Property, such reserves to be maintained
in the FF&E Reserve Account.

 


	Section
      5.2  	
      Negative
      Covenants




 

.

 

From the
Closing Date until payment and performance in full of all Obligations of
Borrower under the Loan Documents or the earlier release of the Lien of this
Agreement or the Security Instrument in accordance with the terms of this
Agreement and the other Loan Documents, Borrower hereby covenants and agrees
with 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 Borrower shall alternatively mean Operating Lessee, as the
context may require):

 

5.2.1  Incur
Debt

 

. Incur,
create or assume (or permit General Partner, Operating Lessee or CNL Hotel Del
Tenant Corp. to incur, create or assume) any Debt other than Permitted Debt or
Transfer all or any part of the Property or any interest therein, except as
permitted in the Loan Documents;

 

5.2.2  Encumbrances

 

. Other
than in connection with a Permitted Mezzanine Transfer, Incur, create or assume
or permit the incurrence, creation or assumption of any Debt secured by an
interest in Borrower, General Partner, Operating Lessee, CNL Hotel Del Tenant
Corp., Mezzanine Borrowers or Manager and shall not Transfer or permit the
Transfer of any interest in such Persons except as permitted pursuant to
Article
VIII;

 

5.2.3  Engage
in Different Business

 

. Engage,
or permit Operating Lessee to engage, directly or indirectly, in any business
other than that of entering into this Agreement and the other Loan Documents to
which Borrower is a party and the use, ownership, management, leasing,
renovation, financing, development, operation and maintenance of the Property
and activities related thereto;

 

5.2.4  Make
Advances

 

. Make or
permit Operating Lessee to 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;

 

5.2.5  Partition

 

.
Partition or permit the partition of the Property;

 

5.2.6  Commingle

 

.
Commingle its assets or permit Operating Lessee to commingle its assets with the
assets of any of Borrower's and/or Operating Lessee's Affiliates;

 

5.2.7  Guarantee
Obligations

 

.
Guarantee or permit Operating Lessee to guarantee any obligations of any
Person;

 

5.2.8  Transfer
Assets

 

























 

.
Transfer or permit Operating Lessee to 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;

 

5.2.9  Amend
Organizational Documents

 

. Amend
or modify any of its, Operating Lessee's, CNL Hotel Del Tenant Corp.'s or
General Partner's organizational documents without 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 each such Person 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 (or permit General Partner, CNL Hotel Del Tenant Corp. or Operating Lessee
to file) a bankruptcy or insolvency petition or otherwise institute insolvency
proceedings, (ii) dissolve, liquidate, consolidate, merge 

 






















or sell
all or substantially all of Borrower's assets other than in connection with the
repayment of the Loan, (iii) engage (or permit General Partner, CNL Hotel Del
Tenant Corp. or Operating Lessee to engage) in any other business activity or
(iv) file or solicit the filing (or permit General Partner, CNL Hotel Del Tenant
Corp. or Operating Lessee to file or solicit the filing) of an involuntary
bankruptcy petition against Borrower, Operating Lessee, General Partner, CNL
Hotel Del Tenant Corp., Manager or any Close Affiliate of any such Person
without obtaining the prior consent of all of the directors of 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 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
(or permit Operating Lessee to make) any distributions to or for the benefit of
any of Borrower's or Operating Lessee's shareholders, partners or members, as
the case may be, or its or their Affiliates (provided, without limiting any of
the terms of the Assignment of Management Agreement, Lender hereby agrees that
payment of any Management Fees is not deemed a "distribution"); 

 

5.2.14  Manager

 

.

 

(a)  Borrower
represents, warrants and covenants on behalf of itself and Operating Lessee that
the Property shall at all times be managed by an Acceptable Manager pursuant to
an Acceptable Management Agreement. 

 

(b)  Notwithstanding
any provision to the contrary contained herein or in the other Loan Documents,
except as provided in this Section
5.2.14,
Borrower may not amend, modify, supplement, alter or waive any right under the
Management Agreement (or permit any such action) without the receipt of a Rating
Agency Confirmation. Without the receipt of a Rating Agency Confirmation,
Borrower shall be permitted 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, decrease
the cash flow of the Property, adversely affect the marketability of the
Property, change the definitions of "default" or "event of default," change the
definitions of "operating expense" or words of similar meaning to add additional
items to such definitions, change any definitions or provisions so as to reduce
the payments due the Borrower thereunder, change the timing of remittances to
the 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.

 

(c)  Borrower
may enter into a new Management Agreement with an Acceptable Manager upon
receipt of a Rating Agency Confirmation (or, if such manager is a Pre-approved
Manager, upon receipt of Lender's prior written consent) with respect to the
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 Borrower.

 

(d)  Borrower
hereby agrees that, subject to any non-disturbance provisions of the Assignment
of Management Agreement, Lender shall have the right to terminate the Manager
subsequent to (i) an Event of Default on the part of Manager under the
Management Agreement, and (ii) an acceleration of the Loan. 

 

5.2.15  Franchise
Fee and Management Fee

 

.
Borrower may not, without the prior written consent of Lender (which may be
withheld in its sole and absolute discretion) take or permit to be taken 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  Modify
Account Agreement 

 

. Without
the prior consent of Lender, which shall not be unreasonably withheld, delayed
or conditioned (and if a Securitization shall have occurred, a Rating Agency
Confirmation obtained by Borrower), Borrower shall not execute any modification
to the Account Agreement;

 

5.2.18  Zoning
Reclassification

 

. Except
as contemplated by Section
2.3.4, without
the prior written consent of Lender, which consent shall not be unreasonably
withheld, (a) initiate or consent to any zoning reclassification of any portion
of the Property, (b) seek any variance under any existing zoning ordinance that
would 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;

 

5.2.19  Reserved

 

.


 

5.2.20  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 and except for termination of a Lease as permitted by Section
8.8;

 

























 

5.2.21  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 Collection Accounts
or Holding Account, as applicable, as required by Section
3.1,
misappropriate any security deposit or portion thereof or apply the proceeds of
the Loan in violation of Section
2.1.4;
or

 

5.2.22  Single-Purpose
Entity

 

. Fail to
be (or permit Operating Lessee, General Partner, or Operating Lessee GP) to fail
to be a Single-Purpose Entity or take or suffer any action or inaction the
result of which would be to cause such Person to cease to be a Single-Purpose
Entity.

 


	VI.  	
      INSURANCE;
      CASUALTY; CONDEMNATION;
RESTORATION




 


	Section
      6.1  	
      Insurance
      Coverage Requirements




 

.
Borrower shall, at its sole cost and expense, keep in full force and effect
insurance coverage of the types and minimum limits as follows during the term of
this Agreement for the mutual benefit of Borrower and Lender:

 

6.1.1  Property
Insurance

 

.
Insurance insuring against loss or damage by standard perils included within the
classification "All Risks of Physical Loss". Except as otherwise provided in
section 6.1.11, such insurance (i) shall be Replacement Cost Coverage in an
amount equal to $276,000,000 or such lesser amounts approved by Lender in its
sole discretion (or after a Securitization, upon receipt of a Rating Agency
Confirmation), and (ii) shall have deductibles no greater than $1,000,000 for
insurance required hereunder (or, with respect to named storm windstorm
insurance, deductibles no greater than the sum of (x) 5% of the insured value of
the applicable Property and (y) $10,000,000, and with respect to non-Federal
flood insurance, deductibles no greater than $10,000,000 per occurrence). The
policies of insurance carried in accordance with this paragraph shall be paid
annually in advance and shall contain a "Replacement Cost Endorsement" with a
waiver of depreciation and with an "Agreed Amount Endorsement";

 

6.1.2  Liability
Insurance

 

.
Commercial general liability insurance, including broad form property damage,
blanket contractual and personal injuries (including death resulting therefrom)
coverages and containing minimum limits per occurrence of $1,000,000 with a
$2,000,000 general aggregate for any policy year. In addition, at least
$100,000,000 excess and/or umbrella liability insurance shall be obtained and
maintained for claims, 

 






















including
legal liability imposed upon Borrower and all related court costs and attorneys'
fees and disbursements;

 

6.1.3  Workers'
Compensation Insurance

 

.
Worker's compensation insurance with respect to all employees of Borrower as and
to the extent required by any Governmental Authority or Legal Requirement and
employer's liability coverage of at least $1,000,000 which is scheduled to the
excess and/or umbrella liability insurance as referenced in Section
6.1.2
above;

 

6.1.4  Commercial
Rents Insurance

 

.
Business interruption insurance in an amount sufficient to avoid any
co-insurance penalty and equal to the greater of (A) the estimated gross
revenues (minus estimated variable costs which will no longer be incurred due to
the business interruption) from the operation of the Property (including (x) the
total payable under the Leases and all Rents and (y) the total of all other
amounts to be received by Borrower or third parties that are the legal
obligation of the Tenants), net of non-recurring expenses, for a period of up to
the next succeeding eighteen (18) months (subject to adjustment for each such 18
month period), or (B) the projected Operating Expenses (including Debt Service)
for the maintenance and operation of the Property for a period of up to the next
succeeding eighteen (18) months as the same may be reduced or increased from
time to time due to changes in such Operating Expenses. The amount of such
insurance shall be (a) increased from time to time as and when the Rents
increase or the estimates of (or the actual) gross revenue (minus estimated (or
actual) variable costs which will no longer be incurred due to the business
interruption) increases or (b) decreased from time to time to the extent Rents
or the estimates of such gross revenue or variable costs decreases;

 

6.1.5  Builder's
All-Risk Insurance

 

. During
any period of repair or restoration, builder's "all risk" insurance in amounts
equal to not less than the full insurable value of the applicable Improvements
and insuring against such risks (including fire and extended coverage and
collapse of the Improvements to agreed limits) as Lender may request, in form
and substance acceptable to Lender;

 

6.1.6  Boiler
and Machinery Insurance

 

.
Insurance against loss or damage from explosion of steam boilers, air
conditioning equipment, high pressure piping, machinery and equipment, pressure
vessels or similar apparatus now or hereafter installed in any of the
Improvements and insurance against loss of occupancy or use arising from any
breakdown, in such amounts as are generally available at reasonable premiums and
are generally required by institutional lenders for properties comparable to the
Property;

 

























 

6.1.7  Flood
Insurance

 

. Flood
insurance if any part of any structure or improvement comprising the Property is
located in an area identified by the Federal Emergency Management Agency as an
area federally designated a "100 year flood plain" and (a) flood insurance is
generally available at reasonable premiums and in such amount as generally
required by institutional lenders for similar properties or (b) if not so
available from a private carrier, from the federal government at commercially
reasonable premiums to the extent available;

 

6.1.8  Terrorism
Insurance

 

.
Provided that foreign insurance coverage (Terrorism
Insurance)
relating to the acts of terrorism on behalf of foreign individuals or interests
as contemplated by the Foreign Terrorism Insurance Act is either (i)
commercially available, (ii) commonly obtained by owners of commercial
properties in the same geographic area as the Property and which are similar to
the Property or (iii) maintained for another hotel property in the same
geographic area as the Property which is at least 51% owned directly or
indirectly by Guarantor, Borrower shall be required to carry Terrorism Insurance
throughout the term of the Loan (including any extension terms) on a per
occurrence basis in an amount equal to $276,000,000. Borrower shall limit the
deductible amount for Terrorism Insurance to no more than
$1,000,000;

 

6.1.9  Demolition
and Increased Construction Costs

 

.
Coverage to compensate for the cost of demolition and the increased cost of
construction for the Property;

 

6.1.10  Law
and Ordinance Insurance

 

. Law and
ordinance insurance coverage in an amount no less than $25,000,000;

 

6.1.11  Other
Insurance

 

. Upon
sixty (60) days' notice, such other reasonable types of insurance not covered in
Sections
6.1.1 through
6.1.10 and in
such reasonable amounts as Lender from time to time may reasonably require
against such other insurable hazards (but not earthquake) which at the time are
commonly insured against for property similar to the Property located in or
around the region in which the Property is located and as may be reasonably
required to protect Lender's interests. Provided that seismic insurance coverage
(Seismic
Insurance) is
either (i) commercially available, (ii) commonly obtained by owners of
commercial properties in the same geographic area as the Property and which are
similar to the Property or (iii) maintained for another hotel property in the
same geographic area as the Property which is at least 51% owned directly or
indirectly by Guarantor, Borrower shall be required to carry Seismic Insurance
throughout the term 

 






















of the
Loan (including any extension terms) in an amount equal to $60,000,000 (the
"Seismic Required Coverage Amount") (with a maximum deductible of five percent
(5%) of the total insurable value per building, unless a greater deductible is
agreed to by Lender in writing in its reasonable discretion); provided, however;
if Borrower maintains a seismic deductible of less than five percent (5%), the
Seismic Required Coverage Amount may be reduced by the difference between (i)
10% of the Seismic Required Coverage Amount and (ii) the actual amount of the
seismic deductible; provided, further, that in no event shall the Seismic
Required Coverage Amount exceed the amount of Seismic Insurance that Borrower
can purchase for $500,000 (on a per annum basis).

 

6.1.12  Ratings
of Insurers

 

.
Borrower shall maintain insurance coverage with one or more domestic primary
insurers reasonably acceptable to Lender, having claims-paying-ability and
financial strength ratings by S&P of not less than (i) "A" (and its
equivalent by the other Rating Agencies) in the case of insurance coverage
required under Sections
6.1.1 and
6.1.4 and (ii)
"A-" (and its equivalent by the other Rating Agencies) in the case of insurance
coverage required under Sections
6.1.2,
6.1.3 and
6.1.5 through
6.1.12 (Lender
shall not unreasonably withhold its consent in the event Borrower shall request
a reduced rating requirement for the insurance coverage required by Section
6.1.11);
provided,
however, if the
insurance provided pursuant to Sections
6.1.1 and
6.1.4 is
procured by a syndication of more then five (5) insurers then the foregoing
requirement under clause (i) shall not be violated if such insurance is provided
under a blanket policy or separate policies and at least sixty percent (60%) of
the property coverage under policies is with carriers having a claims paying
ability rating of "A" or better by S&P and its equivalent by the other
Rating Agencies (provided, however, any seismic insurance required hereunder may
be provided by insurers with lower claims paying ratings). Notwithstanding the
foregoing, after a Securitization, the claims paying ability rating of an
insurer may be lesser than "A-", if Borrower shall have obtained a Rating Agency
Confirmation with respect thereto (provided, however, any seismic insurance
required hereunder may be provided by insurers with lower claims paying
ratings). All insurers providing insurance required by this Agreement shall be
authorized to issue insurance in the applicable State.

 

6.1.13  Form
of Insurance Policies; Endorsements

 

. The
Policies (i) shall name Lender and its successors and/or assigns as their
interest may appear as an additional insured or as a loss payee (except that in
the case of general liability insurance, Lender shall be named an additional
insured and not a loss payee); (ii) shall contain a Non-Contributory Standard
Lender Clause and, except with respect to general liability insurance and
workers' compensation insurance, a Lender's Loss Payable Endorsement, or their
equivalents; (iii) shall include effective waivers by the insurer of all claims
for insurance premiums against all loss payees, additional insureds and named
insureds (other than Borrower) and all rights of subrogation against any loss
payee, additional insured or named insured; (iv) shall be assigned to Lender;
(v) except as otherwise provided above, shall be subject to a deductible, if
any, not greater in any material respect than the deductible for such


 






















coverage
on the date hereof; (vi) shall contain such provisions as Lender deems
reasonably necessary or desirable to protect its interest, including
endorsements providing that neither Borrower, Lender nor any other party shall
be a Contributor-insurer (except deductibles) under said Policies and that no
material modification, reduction, cancellation or termination in amount of, or
material change (other than an increase) in, coverage of any of the Policies
shall be effective until at least thirty (30) days after receipt by each named
insured, additional insured and loss payee of written notice thereof or ten (10)
days after receipt of such notice with respect to nonpayment of premium; (vii)
shall permit Lender to pay the premiums and continue any insurance upon failure
of Borrower to pay premiums when due, upon the insolvency of Borrower or through
foreclosure or other transfer of title to the Property (it being understood that
Borrower's rights to coverage under such policies may not be assignable without
the consent of the insurer); and (viii) shall provide that any proceeds shall be
payable to Lender and that the insurance shall not be impaired or invalidated by
virtue of (A) any act, failure to act, negligence of, or violation of
declarations, warranties or conditions contained in such policy by the Borrower,
Lender or any other named insured, additional insured or loss payee, except for
the willful misconduct of Lender knowingly in violation of the conditions of
such policy, (B) the occupation, use, operation or maintenance of the Property
for purposes more hazardous than permitted by the terms of the Policy, (C) any
foreclosure or other proceeding or notice of sale relating to the Property, or
(D) any change in the possession of the Property without a change in the
identity of the holder of actual title to the Property (provided that with
respect to items (C) and (D), any notice requirements of the applicable Policies
are satisfied). Lender agrees that the insurance policies delivered to Lender on
the date hereof are satisfactory to Lender. 

 

6.1.14  Premiums;
Certificates; Renewals

 

.


 

























 

(a)  Borrower
shall pay or cause to be paid the premiums for such Policies (the Insurance
Premiums) as the
same become due and payable and shall furnish to Lender the receipts for the
payment of the Insurance Premiums or other evidence of such payment reasonably
satisfactory to Lender (provided, however, that Borrower is not required to
furnish such evidence of payment to Lender if such Insurance Premiums are to be
paid by Lender pursuant to the terms of this Agreement). Within thirty (30) days
after request by Lender, Borrower shall obtain such increases in the amounts of
coverage required hereunder as may be reasonably requested in writing by Lender
or as may be requested in writing by the Rating Agencies (except with respect to
the Terrorism Insurance and seismic insurance required hereunder), taking into
consideration changes in liability laws, changes in prudent customs and
practices, and the like. In the event Borrower satisfies the requirements under
this Section
6.1.15 through
the use of a Policy covering properties in addition to the Property, then
(unless such policy is provided in substantially the same manner as it is as of
the date hereof), Borrower shall provide evidence satisfactory to Lender that
the Insurance Premiums for the Property are separately allocated under such
Policy to the Property and that payment of such allocated amount (A) shall
maintain the effectiveness of such Policy as to the Property and (B) shall
otherwise provide the same protection as would a separate policy that complies
with the terms of this Agreement as to the Property, notwithstanding the failure
of payment of any other portion of the insurance premiums. If no such allocation
is available, Lender shall have the right to increase the amount required to be
deposited into the Insurance Reserve Account in an amount sufficient to purchase
a nonblanket Policy covering the Property from insurance companies which qualify
under this Agreement.

 

(b)  Borrower
shall deliver to Lender on or prior to the Closing Date certificates setting
forth in reasonable detail the material terms (including any applicable notice
requirements) of all Policies from the respective insurance companies (or their
authorized agents) that issued the Policies, including that such Policies may
not be canceled or modified in any material respect without thirty (30) days'
prior notice to Lender, or ten (10) days' notice with respect to nonpayment of
premium. Borrower shall deliver to Lender, concurrently with each change in any
Policy, a certificate with respect to such changed Policy certified by the
insurance company issuing that Policy, in substantially the same form and
containing substantially the same information as the certificates required to be
delivered by Borrower pursuant to the first sentence of this clause (i) and
stating that all premiums then due thereon have been paid to the applicable
insurers and that the same are in full force and effect (or if such certificate
and/or other information described in this clause (ii) shall not be obtainable
by Borrower, Borrower may deliver an Officer's Certificate to such effect in
lieu thereof).

 

(c)  Within
three (3) Business Days prior to the expiration, termination or cancellation of
any Policy, Borrower shall renew such policy or obtain a replacement policy or
policies (or a binding commitment for such replacement policy or policies),
which shall be effective no later than the date of the expiration, termination
or cancellation of the previous policy, and shall deliver to Lender a
certificate in respect of 

 






















such
policy or policies (A) containing the same information as the certificates
required to be delivered by Borrower pursuant to clause (b) above, or a copy of
the binding commitment for such policy or policies and (B) confirming that such
policy complies with all requirements hereof.

 

(d)  If
Borrower does not furnish to Lender the certificates as required under clause
(c) above, upon three (3) Business Days prior notice to Borrower, Lender may
procure, but shall not be obligated to procure, such replacement policy or
policies and pay the Insurance Premiums therefor, and Borrower agree to
reimburse Lender for the cost of such Insurance Premiums promptly on
demand.

 

(e)  Concurrently
with the delivery of each replacement policy or a binding commitment for the
same, Borrower shall deliver to Lender a report or attestation from a duly
licensed or authorized insurance broker or from the insurer, setting forth the
particulars as to all insurance obtained by Borrower pursuant to this
Section
6.1 and then
in effect and stating that all Insurance Premiums then due thereon have been
paid in full to the applicable insurers, that such insurance policies are in
full force and effect and that, in the opinion of such insurance broker or
insurer, such insurance otherwise complies with the requirements of this
Section
6.1 (or if
such report shall not be available after Borrower shall have used reasonable
efforts to provide the same, Borrower will deliver to Lender an Officer's
Certificate containing the information to be provided in such
report).

 

6.1.15  Separate
Insurance

 

.
Borrower shall not take out separate insurance contributing in the event of loss
with that required to be maintained pursuant to this Section
6.1 unless
such insurance complies with this Section
6.1.

 

6.1.16  Blanket
Policies

 

. The
insurance coverage required under this Section
6.1 may be
effected under a blanket policy or policies covering the Property and other
properties and assets not constituting a part of the Property; provided that any
such blanket policy shall specify, except in the case of public liability
insurance, the portion of the total coverage of such policy that is allocated to
the Property, and any sublimits in such blanket policy applicable to the
Property, which amounts shall not be less than the amounts required pursuant to
this Section
6.1 and
which shall in any case comply in all other respects with the requirements of
this Section
6.1. Upon
Lender's request, Borrower shall deliver to Lender an Officer's Certificate
setting forth (i) the number of properties covered by such policy, (ii) the
location by city (if available, otherwise, county) and state of the properties,
(iii) the average square footage of the properties (or the aggregate square
footage), (iv) a brief description of the typical construction type included in
the blanket policy and (v) such other information as Lender may reasonably
request.

 

6.1.17  Securitization

 






















Following
any Securitization, Borrower shall name any trustee, servicer or special
servicer designated by Lender as a loss payee, and any trustee, servicer and
special servicer as additional insureds, with respect to any Policy for which
Lender is to be so named hereunder.

 




 


	Section
      6.2  	
      Condemnation
      and Insurance Proceeds




 

.

 

6.2.1  Right
to Adjust

 

(a)  If the
Property is damaged or destroyed, in whole or in part in any material respect,
by a Casualty, Borrower shall give prompt written notice thereof to Lender,
generally describing the nature and extent of such Casualty. Following the
occurrence of a Casualty, Borrower, regardless of whether proceeds are
available, shall in a reasonably prompt manner proceed to restore, repair,
replace or rebuild the Property to the extent practicable to be of at least
equal value and of substantially the same character as prior to the Casualty,
all in accordance with the terms hereof applicable to Alterations.

 

(b)  Subject
to clause (e) below, in the event of a Casualty where the loss does not exceed
$5,000,000, Borrower may settle and adjust such claim; provided that such
adjustment is carried out in a competent and timely manner. In such case,
Borrower are hereby authorized to collect and receipt for Lender any
Proceeds.

 

(c)  Subject
to clause (e) below, in the event of a Casualty where the loss exceeds
$5,000,000, Borrower may settle and adjust such claim only with the consent of
Lender (which consent shall not be unreasonably withheld or delayed) and Lender
shall have the opportunity to participate, at Borrower's cost, in any such
adjustments. 

 

(d)  The
proceeds of any Policy shall be due and payable solely to Lender and held and
applied in accordance with the terms hereof (or, if mistakenly paid to the
Borrower, shall be held in trust by the Borrower for the benefit of Lender and
shall be paid over to Lender by the Borrower within two (2) Business Days of
receipt).

 

(e)  Notwithstanding
the terms of clauses (a) and (b) above, Lender shall have the sole authority to
adjust any claim with respect to a Casualty and to collect all Proceeds if an
Event of Default shall have occurred and is continuing.

 

6.2.2  Right
of the Borrower to Apply to Restoration

 

. In the
event of (a) a Casualty that does not constitute a Material Casualty, or (b) a
Condemnation that does not constitute a Material Condemnation, Lender shall
permit the application of the Proceeds (after reimbursement of any expenses
incurred by Lender) to reimburse or pay Borrower for the cost of restoring,
repairing, replacing or rebuilding or otherwise curing title defects at the
Property (the Restoration),


 






















in the
manner required hereby, provided and on the condition that (1) no Event of
Default shall have occurred and be then continuing and (2) in the reasonable
judgment of Lender:

 

(i)  the
Property can be restored to an economic unit not materially less valuable
(taking into account the effect of the termination of any Leases and the
proceeds of any rental loss or business interruption insurance which the
Borrower receives or is entitled to receive, in each case, due to such Casualty
or Condemnation) and not materially less useful than the same was prior to the
Casualty or Condemnation,

 

(ii)  the
Property, after such Restoration and stabilization, will adequately secure the
outstanding balance of the Loan,

 

(iii)  the
Restoration can be completed by the earliest to occur of:

 

(A)  the date
on which the business interruption insurance carried by Borrower with respect to
the Property shall expire;

 

(B)  the 180th
day prior to the Maturity Date, and

 

(C)  with
respect to a Casualty, the expiration of the payment period on the rental loss
or business interruption insurance coverage in respect of such Casualty;
and

 

(iv)  after
receiving reasonably satisfactory evidence to such effect, during the period of
the Restoration, the sum of (A) income derived from the Property, plus (B)
proceeds of rental loss insurance or business interruption insurance, if any,
payable together with such other monies as Borrower may irrevocably make
available for the Restoration, will equal or exceed 105% of the sum of (x)
Operating Expenses and (y) the Debt Service.

 

Notwithstanding
the foregoing, if any of the conditions set forth in sub-clauses (1) and (2) of
the proviso in this Section
6.2.2 is not
satisfied, then, unless Lender shall otherwise elect, at its sole option, the
Proceeds shall be applied in the following order of priority: (A) first, to
prepay the principal of the Loan; (B) second, to pay the amount of (1) all
accrued and unpaid interest in respect of the Principal Amount of the
Indebtedness so prepaid through the date which is the final day of the Interest
Period in which such prepayment is made (including, if an Event of Default has
occurred and is then continuing, interest owed at the Default Rate), and (2) all
other sums (excluding any Prepayment Fee) then due and owing under the Loan
Documents and (C) third, to reimburse Lender for any fees and expenses of Lender
incurred in connection therewith (it being agreed that, upon satisfaction in
full of the entitlements under clauses (A), (B) and (C) of this sentence,
Borrower shall be entitled to receive a release of the Lien of the Mortgage and
the other Loan Documents with respect to the Property in accordance with and
subject to the terms of Section
2.3.3 hereof
and any surplus Proceeds shall be paid over to (i) the Senior Mezzanine Lender
to be applied in accordance with the terms of the Senior Mezzanine Loan
Agreement, or (ii) if the Senior Mezzanine Loan is no longer outstanding, to the
Intermediate Mezzanine Lender to be applied in accordance with the terms of the
Intermediate Mezzanine Loan Agreement or (iii) if the Senior Mezzanine Loan and


 






















Intermediate
Mezzanine Loan are no longer outstanding, to the Junior Mezzanine Lender (if
funded and outstanding) to be applied in accordance with the terms of the Junior
Mezzanine Loan Agreement).

 

6.2.3  Material
Casualty or Condemnation and Lender's Right to Apply
Proceeds

 

. In the
event of a Material Casualty or a Material Condemnation, then Lender shall have
the option to (i) apply the Proceeds hereof in the following order of priority:
(A) first, to prepay the principal of the Loan; (B) second, to pay the amount of
(1) all accrued and unpaid interest in respect of the Principal Amount of the
Indebtedness so prepaid through the date which is the final day of the Interest
Period in which such prepayment is made (including, if an Event of Default has
occurred and is then continuing, interest owed at the Default Rate), and (2) all
other sums (excluding any Prepayment Fee) then due and owing under the Loan
Documents; (C) third, to reimburse Lender for any fees and expenses of Lender
incurred in connection therewith; and (D) fourth, the balance of Proceeds shall
then be paid to Senior Mezzanine Lender to be applied pursuant to the terms of
the Senior Mezzanine Loan Agreement or, following the repayment of the Senior
Mezzanine Loan to the Intermediate Mezzanine Lender to be applied pursuant to
the terms of the Intermediate Mezzanine Loan Agreement, or, following the
repayment of the Senior Mezzanine Loan and the Intermediate Mezzanine Loan, to
the Junior Mezzanine Lender to be applied pursuant to the terms of the Junior
Mezzanine Loan Agreement (it being agreed that, upon satisfaction in full of the
entitlements under clauses (A), (B) (C) and (D) of this sentence, Borrower shall
be entitled to receive the balance of the Proceeds, if any. and a release of the
Lien of the Mortgage and the other Loan Documents with respect to the Property
in accordance with and subject to the terms of Section
2.3.3 hereof),
or (ii) make such Proceeds available to reimburse Borrower for the cost of any
Restoration in the manner set forth below in Section
6.2.4 hereof.
Notwithstanding anything to the contrary contained herein, in the event of a
Material Casualty or a Material Condemnation, where Borrower cannot restore,
repair, replace or rebuild the Property to be of at least substantially equal
value and of substantially the same character as prior to the Material Casualty
or Material Condemnation or title defect because the Property is a legally
non-conforming use or as a result of any other Legal Requirement, Borrower
hereby agrees that Lender may apply the Proceeds payable in connection therewith
in accordance with clauses (A), (B) (C) and (D).

 

6.2.4  Manner
of Restoration and Reimbursement

 

. If
Borrower is entitled pursuant to Sections
6.2.2 or
6.2.3 above to
reimbursement out of Proceeds (and the conditions specified therein shall have
been satisfied), such Proceeds shall be disbursed on a monthly basis upon Lender
being furnished with (i) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds, plats of
survey and such other evidences of cost, payment and performance as Lender may
reasonably require and approve, and (ii) all plans and specifications for such
Restoration, such plans and specifications to be approved by Lender prior to
commencement of any work (such approval not to be 

 






















unreasonably
withheld or delayed). In addition, no payment made prior to the Final Completion
of the Restoration (excluding punch-list items) shall exceed ninety percent
(90%) of the aggregate value of the work performed from time to time; funds
other than Proceeds shall be disbursed prior to disbursement of such Proceeds;
and at all times, the undisbursed balance of such Proceeds remaining in the
hands of Lender, together with funds deposited for that purpose or irrevocably
committed to the satisfaction of Lender by or on behalf of Borrower for that
purpose, shall be at least sufficient in the reasonable judgment of Lender to
pay for the cost of completion of the Restoration, free and clear of all Liens
or claims for Lien. Prior to any disbursement, Lender shall have received
evidence reasonably satisfactory to it of the estimated cost of completion of
the Restoration (such estimate to be made by Borrower's architect or contractor
and approved by Lender in its reasonable discretion), and Borrower shall have
deposited with Lender Eligible Collateral in an amount equal to the excess (if
any) of such estimated cost of completion over the net Proceeds. Any surplus
which may remain out of Proceeds received pursuant to a Casualty after payment
of such costs of Restoration shall be paid to (i) the Senior Mezzanine Lender to
be applied in accordance with the terms of the Senior Mezzanine Loan Agreement,
or (ii) if the Senior Mezzanine Loan is no longer outstanding, to the
Intermediate Mezzanine Lender to be applied in accordance with the terms of the
Intermediate Mezzanine Loan Agreement or (iii) if the Senior Mezzanine Loan and
Intermediate Mezzanine Loan are no longer outstanding, to the Junior Mezzanine
Lender to be applied in accordance with the terms of the Junior Mezzanine Loan
Agreement (if the Junior Mezzanine Loan is funded and then outstanding)). Any
surplus which may remain out of Proceeds received pursuant to a Condemnation
shall be paid to (i) the Senior Mezzanine Lender to be applied in accordance
with the terms of the Senior Mezzanine Loan Agreement, or (ii) if the Senior
Mezzanine Loan is no longer outstanding, to the Intermediate Mezzanine Lender to
be applied in accordance with the terms of the Intermediate Mezzanine Loan
Agreement or (iii) if the Senior Mezzanine Loan and Intermediate Mezzanine Loan
are no longer outstanding, to the Junior Mezzanine Lender (if the Junior
Mezzanine Loan is funded and then outstanding) to be applied in accordance with
the terms of the Junior Mezzanine Loan Agreement).

 

6.2.5  Condemnation

 

.


 

(a)  Borrower
shall promptly give Lender written notice of the actual commencement or written
threat of commencement of any Condemnation and shall deliver to Lender copies of
any and all papers served in connection with such Condemnation. Following the
occurrence of a Condemnation, Borrower, regardless of whether Proceeds are
available, shall promptly proceed to restore, repair, replace or rebuild the
same to the extent practicable to be of at least equal value and of
substantially the same character as prior to such Condemnation, all to be
effected in accordance with the terms hereof applicable to
Alterations.

 

(b)  Lender is
hereby irrevocably appointed as Borrower's attorney-in-fact, coupled with an
interest, with exclusive power to collect, receive and retain any Proceeds in
respect of a Condemnation and to make any compromise or settlement in


 






















connection
with such Condemnation, subject to the provisions of this Section. Provided no
Event of Default has occurred and is continuing, (x) in the event of a
Condemnation where the loss does not exceed $5,000,000, Borrower may settle and
compromise such Proceeds; provided that the same is effected in a competent and
timely manner, and (y) in the event of a Condemnation, where the loss exceeds
$5,000,000, Borrower may settle and compromise the Proceeds only with the
consent of Lender (which consent shall not be unreasonably withheld or delayed)
and Lender shall have the opportunity to participate, at Borrower' cost, in any
litigation and settlement discussions in respect thereof. Notwithstanding any
Condemnation by any public or quasi-public authority (including any transfer
made in lieu of or in anticipation of such a Condemnation), Borrower shall
continue to pay the Indebtedness at the time and in the manner provided for in
the Note, this Agreement and the other Loan Documents, and the Indebtedness
shall not be reduced unless and until any Proceeds shall have been actually
received and applied by Lender to discharge the Indebtedness, pay required
interest and pay any other required amounts, in each case, pursuant to the terms
of Sections
6.2.2 or
6.2.3 above.
Lender shall not be limited to the interest paid on the Proceeds by the
condemning authority but shall be entitled to receive out of the Proceeds
interest at the rate or rates provided in the Note. Borrower shall cause any
Proceeds that are payable to Borrower to be paid directly to Lender to be held
and applied in accordance with the terms hereof. 

 


	VII.  	
      IMPOSITIONS,
      OTHER CHARGES, LIENS AND OTHER
ITEMS




 


	Section
      7.1  	
      Impositions
      and Other Charges




 

. Subject
to the third sentence of this Section
7.1,
Borrower shall pay, or shall cause Operating Lessee to pay all Impositions now
or hereafter levied or assessed or imposed against the Property or any part
thereof prior to the imposition of any interest, charges or expenses for the
non-payment thereof and shall pay all Other Charges on or before the date they
are due. Subject to Borrower's right of contest set forth in Section
7.3, as set
forth in the next two sentences and provided that there are sufficient funds
available in the Tax Reserve Account, Lender, on behalf of Borrower, shall pay
all Impositions and Other Charges which are attributable to or affect the
Property or Borrower, prior to the date such Impositions or Other Charges shall
become delinquent or late charges may be imposed thereon, directly to the
applicable taxing authority with respect thereto. Lender shall, or Lender shall
direct the Cash Management Bank to, pay to the taxing authority such amounts to
the extent funds in the Tax Reserve Account are sufficient to pay such
Impositions. Nothing contained in this Agreement or the Security Instrument
shall be construed to require Borrower to pay any tax, assessment, levy or
charge imposed on Lender in the nature of a franchise, capital levy, estate,
inheritance, succession, income or net revenue tax.

 


	Section
      7.2  	
      No
      Liens




 

. Subject
to its right of contest set forth in Section
7.3,
Borrower shall at all times keep, or cause to be kept, the Property free from
all Liens (other than Permitted Encumbrances) and shall pay when due and payable
(or bond over) all claims and demands of mechanics, 

 






















materialmen,
laborers and others which, if unpaid, might result in or permit the creation of
a Lien on the Property or any portion thereof and shall in any event cause the
prompt, full and unconditional discharge of all Liens imposed on or against the
Property or any portion thereof within forty-five (45) days after receiving
written notice of the filing (whether from Lender, the lienor or any other
Person) thereof. Borrower shall do or cause to be done, at the sole cost of
Borrower, everything reasonably necessary to fully preserve the first priority
of the Lien of the Security Instrument against the Property, subject to the
Permitted Encumbrances. Upon the occurrence and during the continuance of an
Event of Default with respect to its Obligations as set forth in this
Article
VII, Lender
may (but shall not be obligated to) make such payment or discharge such Lien,
and Borrower shall reimburse Lender on demand for all such advances pursuant to
Section
19.12
(together with interest thereon at the Default Rate).

 


	Section
      7.3  	
      Contest




 

. Nothing
contained herein shall be deemed to require Borrower to pay, or cause to be
paid, any Imposition or to satisfy any Lien, or to comply with any Legal
Requirement or Insurance Requirement, so long as Borrower is in good faith, and
by proper legal proceedings, where appropriate, diligently contesting the
validity, amount or application thereof, provided that in each case, at the time
of the commencement of any such action or proceeding, and during the pendency of
such action or proceeding (i) no Event of Default shall exist and be continuing
hereunder, (ii) Borrower shall keep Lender informed of the status of such
contest at reasonable intervals, (iii) if Borrower is not providing security as
provided in clause (vi) below, adequate reserves with respect thereto are
maintained on Borrower's books in accordance with GAAP or in the Tax Reserve
Account or Insurance Reserve Account, as applicable, (iv) either such contest
operates to suspend collection or enforcement as the case may be, of the
contested Imposition, Lien or Legal Requirement and such contest is maintained
and prosecuted continuously and with diligence or the Imposition or Lien is
bonded, (v) in the case of any Insurance Requirement, the failure of Borrower to
comply therewith shall not impair the validity of any insurance required to be
maintained by Borrower under Section
6.1 or the
right to full payment of any claims thereunder, and (vi) in the case of
Impositions and Liens which are not bonded in excess of $1,000,000 individually,
or in the aggregate, during such contest, Borrower, shall deposit with or
deliver to Lender either Cash and Cash Equivalents or a Letter or Letters of
Credit in an amount equal to 125% of (A) the amount of Borrower's obligations
being contested plus (B) any additional interest, charge, or penalty arising
from such contest. Notwithstanding the foregoing, the creation of any such
reserves or the furnishing of any bond or other security, Borrower promptly
shall comply with any contested Legal Requirement or Insurance Requirement or
shall pay any contested Imposition or Lien, and compliance therewith or payment
thereof shall not be deferred, if, at any time the Property or any portion
thereof shall be, in Lender's reasonable judgment, in imminent danger of being
forfeited or lost or Lender is likely to be subject to civil or criminal damages
as a result thereof. If such action or proceeding is terminated or discontinued
adversely to Borrower, Borrower shall deliver to Lender reasonable evidence of
Borrower's compliance with such contested Imposition, Lien, Legal Requirements
or Insurance Requirements, as the case may be.

 

























 


	VIII.  	
      TRANSFERS,
      INDEBTEDNESS AND SUBORDINATE
LIENS




 


	Section
      8.1  	
      Restrictions
      on Transfers and Indebtedness




 

.


 

(a)  Except in
connection with a Permitted Mezzanine Transfer, unless such action is permitted
by the subsequent provisions of this Article
VIII,
Borrower will not, without Lender's prior written consent and a Rating Agency
Confirmation with respect to the transfer or other matter in question, (A),
Transfer legal, Beneficial or direct or indirect equitable interests in all or
any part of the Property, the Borrower, Operating Lessee, any Mezzanine Borrower
or the General Partner, (B) permit or suffer any owner, directly or indirectly,
of a legal, Beneficial or equitable interest in the Property, the Borrower,
Operating Lessee or the 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 Property, the Borrower, the Operating Lessee
or the 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)  Borrower
shall not incur, create or assume any Debt or incur any liabilities without the
consent of Lender; provided,
however,
Borrower may, without the consent of Lender, incur, create or assume Permitted
Debt.

 


	Section
      8.2  	
      Sale
      of Building Equipment




 

.
Borrower may Transfer or dispose of Building Equipment which is being replaced
or which is no longer necessary in connection with the operation of the Property
free from the Lien of the Security Instrument provided that such Transfer or
disposal will not have a Material Adverse Effect on the value of the Property
taken as a whole, will not materially impair the utility of the Property, and
will not result in a reduction or abatement of, or right of offset against, the
Rents payable under any Lease, in either case as a result thereof, and provided
further that any new Building Equipment acquired by Borrower or Operating
Lessee(and not so disposed of) shall be subject to the Lien of the Security
Instrument. Lender shall, from time to time, upon receipt of an Officer's
Certificate requesting the same and confirming satisfaction of the conditions
set forth above, execute a written instrument in form reasonably satisfactory to
Lender to confirm that such Building Equipment which is to be, or has been, sold
or disposed of is free from the Lien of the Security Instrument.

 

























 


	Section
      8.3  	
      Immaterial
      Transfers and Easements, etc.




 

Borrower
and Operating Lessee may, without the consent of Lender, (i) make immaterial
Transfers of portions of the Property to Governmental Authorities for dedication
or public use (subject to the provisions of Section
6.2) or,
portions of the Property to third parties for the purpose of erecting and
operating additional structures whose use is integrated with the use of the
Property, and (ii) grant easements, restrictions, covenants, reservations and
rights of way in the ordinary course of business for access, water and sewer
lines, telephone and telegraph lines, electric lines or other utilities or for
other similar purposes, provided that no such Transfer, conveyance or
encumbrance set forth in the foregoing clauses (i) and (ii) shall materially
impair the utility and operation of the Property or have a Material Adverse
Effect on the value of the Property taken as a whole. In connection with any
Transfer permitted pursuant to this Section
8.3, Lender
shall execute and deliver any instrument reasonably necessary or appropriate, in
the case of the Transfers referred to in clause (i) above, to release the
portion of the Property affected by such Condemnation or such Transfer from the
Lien of the Security Instrument or, in the case of clause (ii) above, to
subordinate the Lien of the Security Instrument to such easements, restrictions,
covenants, reservations and rights of way or other similar grants upon receipt
by Lender of:

 

(a)  thirty
(30) days prior written notice thereof;

 

(b)  a copy of
the instrument or instruments of Transfer;

 

(c)  an
Officer's Certificate stating (x) with respect to any Transfer, the
consideration, if any, being paid for the Transfer and (y) that such Transfer
does not materially impair the utility and operation of the Property, materially
reduce the value of the Property or have a Material Adverse Effect;
and

 

(d)  reimbursement
of all of Lender's reasonable costs and expenses incurred in connection with
such Transfer.

 


	Section
      8.4  	
      Transfers
      of Interests in Borrower




 

. Each
holder of any direct or indirect interest in Junior Mezzanine Borrower shall
have the right to transfer (but not pledge, hypothecate or encumber) its equity
interest in the Junior Mezzanine Borrower to any Person who is not a
Disqualified Transferee without Lender's consent or a Rating Agency Confirmation
if Section
8.6 is
complied with and, after giving effect to such transfer:

 

(a)  (i) the
Property will be directly owned by a Single Purpose Entity in compliance with
the representations, warranties and covenants in Section
4.1.29 hereof
(as if the 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 Lender an assumption agreement in form and
substance acceptable to Lender, evidencing the continuing agreement of the
Borrower to abide and be bound by all the terms, covenants and conditions set
forth in this Agreement, the Note, the Security Instrument and the other 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 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 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 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 Borrower or
General Partner, Borrower shall have first delivered to Lender (and, after a
Securitization, the Rating Agencies) an Officer's Certificate and legal opinion
of the types described in Section
8.6 below;
and

 

(e)  Borrower
shall cause the transferee, if Lender so requests and if such transferee is
required to be a Single Purpose Entity pursuant to this Agreement, to deliver to
S&P and to any other Rating Agency Lender requests its organizational
documents solely for the purpose of Standard & Poor's and such other Rating
Agency Lender requests 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, 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 Property only if:

 

(a)  after
giving effect to the proposed transaction:

 

(i)  the
Property 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 both Lender and each Rating
Agency) which will be in compliance with the representations, warranties and
covenants contained in Section
4.1.29 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); such
Single Purpose Entity shall have executed and delivered to Lender an assumption
agreement and such other agreements as Lender may reasonably request
(collectively, the Assumption
Agreement) in form
and substance acceptable to 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 Note, the Security Instrument and the other Loan
Documents 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 (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 Lender, such legal opinions and title insurance endorsements as may be
reasonably requested by Lender;

 

























 

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

 

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

 

(b)  the
Assumption Agreement shall state the applicable transferee's agreement to abide
by and be bound by the terms in the 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 Note), the Security Instrument, 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 (or
other loan documents to be delivered by such transferee, which shall contain
terms substantially identical to the terms of the applicable Loan Documents)
whenever arising, and Borrower, and/or such transferee shall deliver such legal
opinions and title insurance endorsements as may reasonably be requested by
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, Borrower shall
submit notice of such sale to Lender. Borrower shall submit to Lender, not less
than ten (10) days prior to the expected date of such sale, the Assumption
Agreement for execution by Lender. Such documents shall be in a form appropriate
for the jurisdiction in which the Property is located and shall be reasonably
satisfactory to Lender. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by 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 Security
Instrument;

 

(d)  prior to
any such transaction, the proposed transferee shall deliver to 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 or a Permitted
Borrower Transferee, a Rating Agency Confirmation shall have been received in
respect of such proposed transfer (or, if the proposed transfer shall occur
prior to a Securitization, such transfer shall be subject to Lender's consent in
its sole discretion) and (ii) a Permitted Borrower Transferee, such transfer
shall be subject to Lender's prior written consent in its reasonable
discretion;

 

(f)  the terms
of Section
8.6 shall be
complied with and Borrower shall cause the transferee to deliver to S&P and
to any other Rating Agency Lender requests its 

 






















organizational
documents solely for the purpose of S&P and any other Rating Agency Lender
requests confirming that such organizational documents comply with the single
purpose bankruptcy remote entity requirements set forth herein; and

 

(g)  Lender
shall have received the payment of, or reimbursement for, all reasonable costs
and expenses incurred by Lender and the Rating Agencies (and any servicer in
connection with a Securitization) in connection therewith (including, without
limitation, reasonable attorneys' fees and disbursements); and 

 

(h)  Each of
the Mezzanine Borrowers shall simultaneously exercise its right to transfer the
"Collateral" (as defined in the Mezzanine Loan) pursuant to and in accordance
with Section
8.5 of each
Mezzanine the 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,
Borrower shall deliver or cause to be delivered to Lender (A) an Officer's
Certificate describing the proposed transaction and stating that such
transaction is permitted hereunder and under the other Loan Documents, together
with any documents upon which such Officer's Certificate is based, and (B) a
legal opinion of counsel to Borrower or the transferee selected by either of
them (to the extent approved by Lender and the Rating Agencies), in form and
substance consistent with similar opinions then being required by the Rating
Agencies and acceptable to the Rating Agencies, confirming, among other things,
that the assets of the 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 Borrower as Lender or the Rating
Agencies 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,
Borrower shall not and shall not permit Operating Lessee to (i) enter into any
Lease on terms other than "market" and rental rates (in Borrower's or Operating
Lessee's good faith judgment), or (ii) enter into any Material Lease (a
New
Lease), or
(iii) 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 (iv) 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 Material 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 (iii) and (iv) being referred to
herein as a Lease
Modification) without
the prior written 

 






















consent
of Lender which consent shall not be unreasonably withheld or delayed. Any New
Lease or Lease Modification that requires Lender's consent shall be delivered to
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 Lender in its sole but
reasonable discretion) may be permitted without requiring Borrower to deliver to
Lender a Rating Agency Confirmation.

 

8.7.2  Leasing
Conditions

 

. Subject
to terms of this Section
8.7,
provided no Event of Default shall have occurred and be continuing, Borrower may
enter into a New Lease or Lease Modification, without Lender's prior written
consent, that satisfies each of the following conditions (as evidenced by an
Officer's Certificate delivered to Lender prior to 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 Lender's rights under
the Loan Documents 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 Borrower;

 

(f)  the New
Lease or Lease Modification, as applicable, does not prevent Proceeds from being
held and disbursed by Lender in accordance with the terms hereof 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

 






















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

 

8.7.4  Lease
Amendments

 

.
Borrower agrees that it shall not have the right or power, as against 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 Borrower, and such deposits shall be deposited, upon
receipt of the same by Borrower in a separate trust account maintained by
Borrower expressly for such purpose. Within ten (10) Business Days after written
request by Lender, Borrower shall furnish to Lender reasonably satisfactory
evidence of compliance with this Section
8.7.5,
together with a statement of all lease securities deposited with 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

 

.
Borrower shall (i) promptly perform and observe all of the material terms,
covenants and conditions required to be performed and observed by Borrower under
the Leases, 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 Lender, any right to request from the Tenant under any Lease 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 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).

 

8.7.7  Subordination

 

. All
Lease Modifications and New Leases entered into by Borrower after the date
hereof shall by their express terms be subject and subordinate to this Agreement
and the Security Instrument (through a subordination provision contained in such
Lease or otherwise) and shall provide that the Person holding any rights
thereunder shall attorn to Lender or any other Person succeeding to the
interests of Lender upon the exercise of its remedies hereunder or any transfer
in lieu thereof on the terms set forth in this Section
8.7.

 

8.7.8  Attornment

 

. Each
Lease Modification and New Lease entered into from and after the date hereof
shall provide that in the event of the enforcement by Lender of any


 






















remedy
under this Agreement or the Security Instrument, the Tenant under such Lease
shall, at the option of Lender or of any other Person succeeding to the interest
of Lender as a result of such enforcement, attorn to Lender or to such Person
and shall recognize Lender or such successor in the interest as lessor under
such Lease without change in the provisions thereof; provided,
however, Lender
or such successor in interest shall not be liable for or bound by (i) any
payment of an installment of rent or additional rent made more than thirty (30)
days before the due date of such installment, (ii) any act or omission of or
default by Borrower under any such Lease (but the Lender, or such successor,
shall be subject to the continuing obligations of the landlord to the extent
arising from and after such succession to the extent of Lender's, or such
successor's, interest in the Property), (iii) any credits, claims, setoffs or
defenses which any Tenant may have against Borrower, (iv) any obligation on
Borrower's part, pursuant to such Lease, to perform any tenant improvement work
or (v) any obligation on Borrower's part, pursuant to such Lease, to pay any sum
of money to any Tenant. Each such New Lease shall also provide that, upon the
reasonable request by Lender or such successor in interest, the Tenant shall
execute and deliver an instrument or instruments confirming such attornment.


 

8.7.9  Non-Disturbance
Agreements

 

. Lender
shall enter into, and, if required by applicable law to provide constructive
notice or requested by a Tenant, record in the county where the subject Property
is located, a subordination, attornment and non-disturbance agreement,
substantially in form and substance substantially similar to the form attached
hereto as Exhibit
K (a
Non-Disturbance
Agreement), with
any Tenant (other than an Affiliate of Borrower) entering into a New Lease
permitted hereunder or otherwise consented to by Lender within ten (10) Business
Days after written request therefor by Borrower, provided that, such request is
accompanied by an Officer's Certificate stating that such Lease complies in all
material respects with this Section
8.7. All
reasonable third party costs and expenses incurred by Lender in connection with
the negotiation, preparation, execution and delivery of any Non-Disturbance
Agreement, including, without limitation, reasonable attorneys' fees and
disbursements, shall be paid by Borrower (in advance, if requested by
Lender).

 


	IX.  	
      INTEREST
      RATE CAP AGREEMENT.




 


	Section
      9.1  	
      Interest
      Rate Cap Agreement




 

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


 

























 


	Section
      9.2  	
      Pledge
      and Collateral Assignment




 

.
Borrower hereby pledges, assigns, transfers, delivers and grants a continuing
first priority lien to 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 Document on Borrower's part to be
paid and performed, in, to and under all of Borrower's right, title and interest
whether now owned or hereafter acquired and whether now existing or hereafter
arising (collectively, the Rate
Cap Collateral): (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 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 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 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. Borrower shall
deliver to Lender an executed counterpart of such Interest Rate Cap Agreement,
Replacement Interest Rate Cap Agreement or Extension Interest Rate Cap Agreement
(which shall, by its terms, authorize the assignment to Lender and require that
payments be made directly to Lender) and notify the Counterparty of such
assignment (either in such Interest Rate Cap Agreement, Replacement Interest
Rate Cap Agreement or Extension Interest Rate Cap Agreement or by separate
instrument). Borrower shall not, without obtaining the prior written consent of
Lender, further pledge, transfer, deliver, assign or grant any security interest
in the Interest Rate Cap Agreement (or, when and if any such agreement becomes
effective, any Replacement Interest Rate Cap Agreement 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 Lender as the secured party, to be filed with respect
thereto.

 


	Section
      9.3  	
      Covenants




 

.

 

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

 

























 

(b)  Borrower
shall defend Lender's right, title and interest in and to the Rate Cap
Collateral pledged by 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 which are
described in Exhibit
I upon
such occurrence, the Borrower shall either (i) obtain a Rating Agency
Confirmation with respect to the Counterparty or (ii) replace the Interest Rate
Cap Agreement 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 Borrower fails to purchase and deliver to Lender the Interest Rate
Cap Agreement as and when required hereunder, Lender may purchase the Interest
Rate Cap Agreement and the cost incurred by Lender in purchasing the Interest
Rate Cap Agreement shall be paid by Borrower to Lender with interest thereon at
the Default Rate from the date such cost was incurred by Lender until such cost
is paid by Borrower to Lender.

 

(e)  Borrower
shall not (i) without the prior written consent of Lender, modify, amend or
supplement the terms of the Interest Rate Cap Agreement, (ii) without the prior
written consent of Lender, except in accordance with the terms of the Interest
Rate Cap Agreement, cause the termination of the Interest Rate Cap Agreement
prior to its stated maturity date, (iii) without the prior written consent of
Lender, except as aforesaid, waive or release any obligation of the Counterparty
(or any successor or substitute party to the Interest Rate Cap Agreement) under
the Interest Rate Cap Agreement, (iv) without the prior written consent of
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) which, without such consent or agreement, would constitute a default
under the Interest Rate Cap Agreement, (v) fail to exercise promptly and
diligently each and every material right which it may have under the Interest
Rate Cap Agreement, (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 or any defense by the Counterparty (or any
successor or substitute party to the Interest Rate Cap Agreement) to payment or
(vii) fail to give prompt notice to Lender of any notice of default given by or
to Borrower under or with respect to the Interest Rate Cap Agreement, together
with a complete copy of such notice. If Borrower shall have received written
notice that the Securitization shall have occurred, no consent by Lender
provided for in this Section
9.3 (e) shall be
given by Lender unless Lender shall have received a Rating Agency
Confirmation.

 

(f)  In
connection with an Interest Rate Cap Agreement, Borrower shall obtain and
deliver to Lender an Opinion of Counsel from counsel (which counsel may be
in-house counsel for the Counterparty) for the Counterparty upon which 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 Lender.

 


	Section
      9.4  	
      Representations
      and Warranties




 

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

 

(a)  The
Interest Rate Cap Agreement constitutes the legal, valid and binding obligation
of Borrower, enforceable against 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 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, and 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 has been duly and validly pledged hereunder. All consents and
approvals required to be obtained by Borrower for the consummation of the
transactions contemplated by this Agreement have been obtained.

 

(d)  Giving
effect to the aforesaid grant and assignment to Lender, Lender has, as of the
date of this Agreement, and as to Rate Cap Collateral 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 interest in the Rate Cap
Collateral; provided that no representation or warranty is made with respect to
the perfected status of the security interest of Lender in the proceeds of Rate
Cap Collateral 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 Lender as secured
party, there are no financing statements under the UCC covering any or all of
the Rate Cap Collateral and Borrower shall not, without the prior written
consent of Lender, until payment in full of all of the Obligations, execute and
file in any public office, any enforceable financing statement or statements
covering any or all of the Rate Cap Collateral, except financing statements
filed or to be filed in favor of Lender as secured party.

 


	Section
      9.5  	
      Payments




 

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

 


	Section
      9.6  	
      Remedies




 

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

 

(a)  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 (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 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
are being purchased for investment only, 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 is sold by
Lender upon credit or for future delivery, 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, Lender may resell
such Rate Cap Collateral. It is expressly agreed that Lender may exercise its
rights with respect to less than all of the Rate Cap Collateral, leaving
unexercised its rights with respect to the remainder of the Rate Cap Collateral,
provided,
however, that
such partial exercise shall in no way restrict or jeopardize Lender's right to
exercise its rights with respect to all or any other portion of the Rate Cap
Collateral at a later time or times.

 

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

 

(c)  Borrower
hereby irrevocably, in the name of Borrower or otherwise, authorizes and
empowers Lender and assigns and transfers unto Lender, and constitutes and
appoints Lender its true and lawful attorney-in-fact, and as its agent,
irrevocably, with full power of substitution for Borrower and in the name of
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 Borrower under the Interest Rate Cap Agreement, including any power
to subordinate or modify the Interest Rate Cap Agreement (but not, unless an
Event of Default exists and is continuing, the right to terminate or cancel the
Interest Rate Cap Agreement), 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 Lender the rights and remedies provided for
herein, to exercise all of the rights, remedies and powers granted to Lender in
this Agreement, and Borrower further authorizes and empowers Lender, as
Borrower's attorney-in-fact, and as its agent, irrevocably, with full power of
substitution for Borrower and in the name of 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 Borrower which in
the opinion of Lender may be necessary or appropriate to be given, furnished,
made, exercised or taken under the Interest Rate Cap Agreement, in order to
comply therewith, to perform the conditions thereof or to prevent or remedy any
default by Borrower thereunder or to enforce any of the rights of Borrower
thereunder. These powers-of-attorney are irrevocable and coupled with an
interest, and any similar or dissimilar powers heretofore given by Borrower in
respect of the Rate Cap Collateral to any other Person are hereby
revoked.

 

(d)  Upon the
occurrence and during the continuance of an Event of Default, Lender may,
without notice to, or assent by, Borrower or any other Person (to the extent
permitted by law), but without affecting any of the Obligations, in the name of
Borrower or in the name of Lender, notify the Counterparty, or if applicable,
any other counterparty to the Interest Rate Cap Agreement, to make payment and
performance directly to 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 Borrower, or claims of Borrower, under the
Interest Rate Cap Agreement; file any claims, commence, maintain or discontinue
any actions, suits or other proceedings deemed by Lender necessary or advisable
for the purpose of collecting upon or enforcing the Interest Rate Cap Agreement;
and execute any instrument and do all other things 

 






















deemed
necessary and proper by Lender to protect and preserve and realize upon the Rate
Cap Collateral and the other rights contemplated hereby. 

 

(e)  Pursuant
to the powers-of-attorney provided for above, 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 Lender shall not be
permitted to take any action pursuant to said power-of-attorney that would
conflict with any limitation on Lender's rights with respect to the Rate Cap
Collateral. Without limiting the generality of the foregoing, 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 Borrower representing: (i) any payment of obligations owed pursuant
to the Interest Rate Cap Agreement, (ii) interest accruing on any of the Rate
Cap Collateral or (iii) any other payment or distribution payable in respect of
the Rate Cap Collateral or any part thereof, and for and in the name, place and
stead of 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 hereunder.

 

(f)  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 Borrower's rights
hereunder, and without waiving or releasing Borrower from any obligation or
default hereunder, 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 to be performed
or observed by Borrower to be promptly performed or observed on behalf of
Borrower. All amounts advanced by, or on behalf of, 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 Borrower to Lender
upon demand and shall be secured by this Agreement.

 


	Section
      9.7  	
      Sales
      of Rate Cap Collateral




 

. No
demand, advertisement or notice, all of which are, to the fullest extent
permitted by law, hereby expressly waived by Borrower, shall be required in
connection with any sale or other disposition of all or any part of the Rate Cap
Collateral, except that Lender shall give 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 Borrower hereby agrees is reasonable, all other demands,
advertisements and notices being hereby waived. To the extent permitted by law,
Lender shall not be obligated to make any sale of the Rate Cap Collateral if it
shall determine not to do so, regardless of the fact that notice of sale may
have been given, and 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 of a type
customarily sold in a recognized market and upon each public sale, unless
prohibited by any applicable statute which cannot be waived, Lender (or its
nominee or designee) may purchase any or all of the Rate Cap Collateral being
sold, free and discharged from any trusts, claims, equity or right of redemption
of 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
in lieu of cash or any other obligations. In the case of all sales of the Rate
Cap Collateral, public or private, 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 shall be available to cover such costs and expenses,
and, after deducting such costs and expenses from the proceeds of sale, Lender
shall apply any residue to the payment of the Obligations in the order of
priority as set forth in Section
11 of the
Security Instrument.

 


	Section
      9.8  	
      Public
      Sales Not Possible




 

.
Borrower acknowledges that the terms of the Interest Rate Cap Agreement may
prohibit public sales, that the Rate Cap Collateral 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, Borrower agrees that private sales of the
Rate Cap Collateral 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 by Lender hereunder (whether by virtue of
the power of sale herein granted, pursuant to judicial process or otherwise),
the receipt by 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 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 Lender
or such officer or be answerable in any way for the misapplication or
non-application thereof.

 


	Section
      9.10  	
      Extension
      Interest Rate Cap Agreement




 

. If
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 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 Borrower after giving effect to payments made under such Extension
Interest Rate Cap Agreement shall equal no more than
the Maximum Pay Rate.

 


	Section
      9.11  	
      Filing
      of Financing Statements
Authorized




 






















.
Borrower and Operating Lessee hereby authorize the filing of a form UCC-1
financing statement naming the Borrower and the Operating Lessee as debtors and
the 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 Borrower and the
Operating Lessee (including, but not limited to, the Account Collateral and the
Rate Cap Collateral, but excluding Excess Cash Flow).

 




 


	X.  	
      MAINTENANCE
      OF PROPERTY; ALTERATIONS




 


	Section
      10.1  	
      Maintenance
      of Property




 

.
Borrower shall keep and maintain, or cause to be kept and maintained, the
Property and every part thereof in good condition and repair, subject to
ordinary wear and tear, and, subject to Excusable Delays and the provisions of
this Agreement with respect to damage or destruction caused by a Casualty or
Condemnation, shall not permit or commit any waste, impairment, or deterioration
of any portion of the Property in any material respect. Borrower further
covenants to do all other acts which from the character or use of the Property
may be reasonably necessary to protect the security hereof, the specific
enumerations herein not excluding the general. Borrower shall not demolish any
Improvement on the Property except as the same may be necessary in connection
with an Alteration or a restoration in connection with a Condemnation or
Casualty, or as otherwise permitted herein, in each case in accordance with the
terms and conditions hereof.

 


	Section
      10.2  	
      Alterations
      and Expansions




 

.
Borrower shall not perform or undertake or consent to the performance or
undertaking of any Alteration or Expansion, except in accordance with the
following terms and conditions:

 

(a)  The
Alteration or Expansion shall be undertaken in accordance with the applicable
provisions of this Agreement, the other Loan Documents, the Leases and all Legal
Requirements.

 

(b)  No Event
of Default shall have occurred and be continuing or shall occur as a result of
such action.

 

(c)  A
Material Alteration or Material Expansion, to the extent architects are
customarily used for alterations or expansions of those types, but including any
structural change to any of the Property or the Improvements, shall be conducted
under the supervision of an Independent Architect and shall not be undertaken
until ten (10) Business Days after there shall have been filed with Lender, for
information purposes only and not for approval by Lender, detailed plans and
specifications and cost estimates therefor, prepared and approved in writing by
such Independent Architect. Such plans and specifications may be revised at any
time and from time to time, provided 

 






















that
revisions of such plans and specifications shall be filed with Lender, for
information purposes only.

 

(d)  The
Alteration or Expansion may not in and of itself, either during the Alteration
or Expansion or upon completion, be reasonably expected to have a Material
Adverse Effect with respect to the Property or, if a Low DSCR Period then
exists, adversely affect the annual Net Operating Income by more than $500,000,
taking into account the required escrows (or completion bond) provided under
clause (h)(i) below; provided that if, as reasonably determined by the Lender,
such Alteration or Expansion would reduce annual Net Operating Income by
$500,000 or more and a Low DSCR Period then exists, then in order to proceed
with the Alteration or Expansion the Borrower shall deliver to Lender Eligible
Collateral in the amount that the projected reduction in Net Operating Income
resulting from the Alteration or Expansion exceeds $500,000 as additional
security for the Indebtedness, which Eligible Collateral shall be returned to
Borrower after evidence of completion of the applicable Alteration or Expansion
and no Event of Default has occurred and is continuing.

 

(e)  All work
done in connection with any Alteration or Expansion shall be performed with due
diligence to Final Completion in a good and workmanlike manner, all materials
used in connection with any Alteration or Expansion shall be not less than the
standard of quality of the materials generally used at the Property as of the
date hereof (or, if greater, the then-current customary quality in the
sub-market in which the Property is located) and all work shall be performed and
all materials used in accordance with all applicable Legal Requirements and
Insurance Requirements.

 

(f)  The cost
of any Alteration or Expansion shall be promptly and fully paid for by Borrower,
subject to the next succeeding sentence. No payment made prior to the Final
Completion (excluding punch-list items) of an Alteration or Expansion or
Restoration to any contractor, subcontractor, materialman, supplier, engineer,
architect, project manager or other Person who renders services or furnishes
materials in connection with such Alteration shall exceed ninety percent (90%)
of the aggregate value of the work performed by such Person from time to time
and materials furnished and incorporated into the Improvements.

 

(g)  Intentionally
omitted.

 

(h)  With
respect to any Material Alteration or Material Expansion:

 

(i)  Borrower
shall have delivered to Lender Eligible Collateral in an amount equal to at
least the total estimated remaining unpaid costs of such Material Alteration or
Material Expansion which is in excess of the Threshold Amount, which Eligible
Collateral shall be held by Lender as security for the Indebtedness and released
to Borrower as such work progresses in accordance with Section
10.2(h)(iii);
provided, however, in the event that any Material Alteration or Material
Expansion shall be made in conjunction with any Restoration with respect to
which Borrower shall be entitled to withdraw Proceeds pursuant to Section 6.2
hereof (including any Proceeds remaining after completion of such Restoration),
the amount of the Eligible Collateral to be 

 






















furnished
pursuant hereto need not exceed the aggregate cost of such Restoration and such
Material Alteration or Material Expansion (in either case, as estimated by the
Independent Architect) less the sum of the amount of any Proceeds which the
Borrower is entitled to withdraw pursuant to Section
6.2 hereof
and the Threshold Amount;

 

(ii)  Prior to
commencement of construction of such Material Alteration or Material Expansion,
Borrower shall deliver to Lender a schedule (with the concurrence of the
Independent Architect) setting forth the projected stages of completion of such
Alteration or Expansion and the corresponding amounts expected to be due and
payable by or on behalf of Borrower in connection with such completion, such
schedule to be updated quarterly by Borrower (and with the concurrence of the
Independent Architect) during the performance of such Alteration or
Expansion.

 

(iii)  Any
Eligible Collateral that a Borrower delivers to Lender pursuant hereto (and the
proceeds of any such Eligible Collateral) shall be invested (to the extent such
Eligible Collateral can be invested) by Lender in Permitted Investments for a
period of time consistent with the date on which the Borrower notifies Lender
that the Borrower expects to request a release of such Eligible Collateral in
accordance with the next succeeding sentence. From time to time as the
Alteration or Expansion progresses, the amount of any Eligible Collateral so
furnished may, upon the written request of Borrower to Lender, be withdrawn by
Borrower and paid or otherwise applied by or returned to Borrower in an amount
equal to the amount Borrower would be entitled to so withdraw if Section
6.2.4 were
applicable, and any Eligible Collateral so furnished which is a Letter of Credit
may be reduced by Borrower in an amount equal to the amount Borrower would be
entitled to so reduce if Section
6.2.4 hereof
were applicable, subject, in each case, to the satisfaction of the conditions
precedent to withdrawal of funds or reduction of the Letter of Credit set forth
in Section
6.2.4 hereof.
In connection with the above-described quarterly update of the projected stages
of completion of the Material Alteration or Material Expansion (as concurred
with by an Independent Architect), Borrower shall increase (or be permitted to
decrease, as applicable) the Eligible Collateral then deposited with Lender as
necessary to comply with Section
10.2(h)(i)
hereof.

 

(iv)  At any
time after Final Completion of such Material Alterations or Material Expansions,
the whole balance of any Cash deposited with Lender pursuant to Section
10.2(h) hereof
then remaining on deposit may be withdrawn by Borrower and shall be paid by
Lender to Borrower, and any Eligible Collateral so deposited shall, to the
extent it has not been called upon, reduced or theretofore released, be released
by Lender to Borrower, within ten (10) days after receipt by Lender of an
application for such withdrawal and/or release together with an Officer's
Certificate, and as to the following clauses (A) and (B) of this clause also a
certificate of the Independent Architect, setting forth in substance as
follows:

 

(A)  that such
Material Alteration(s) or Material Expansion(s) has been completed in all
material respects in accordance with any plans and specifications therefor
previously filed with Lender under Section
10.2(c)
hereof;

 

























 

(B)  that to
the knowledge of the certifying Person, (x) such Material Alteration(s) or
Material Expansion(s) has been completed in compliance with all Legal
Requirements, and (y) to the extent required for the legal use or occupancy of
the portion of the Property affected by such Alteration(s) or Expansion(s), the
applicable Borrower has obtained a temporary or permanent certificate of
occupancy (or similar certificate) or, if no such certificate is required, a
statement to that effect;

 

(C)  that to
the knowledge of the certifying Person, all amounts that a Borrower is or may
become liable to pay in respect of such Material Alteration(s) or Material
Expansion(s) through the date of the certification have been paid in full or
adequately provided for and, to the extent that such are customary and
reasonably obtainable by prudent property owners in the area where the
applicable Property is located, that Lien waivers have been obtained from the
general contractor and subcontractors performing such Alteration(s) or
Expansion(s) or at its sole cost and expense, Borrower shall cause a nationally
recognized title insurance company to deliver to Lender an endorsement to the
Title Policy, updating such policy and insuring over such Liens without further
exceptions to such policy other than Permitted Encumbrances, or shall, at its
sole cost and expense, cause a reputable title insurance company to deliver a
lender's title insurance policy, in such form, in such amounts and with such
endorsements as the Title Policy, which policy shall be dated the date of
completion of the Material Alteration and shall contain no exceptions other than
Permitted Encumbrances; provided, however, that if, for any reason, Borrower are
unable to deliver the certification required by this clause (C) with respect to
any costs or expenses relating to the Alteration(s) or Expansion(s), then,
assuming Borrower are able to satisfy each of the other requirements set forth
in clauses (A) and (B) above, Borrower shall be entitled to the release of the
difference between the whole balance of such Eligible Collateral and the total
of all costs and expenses to which Borrower are unable to certify;
and

 

(D)  that to
the knowledge of the certifying Person, no Event of Default has occurred and is
continuing.

 


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




 


	Section
      11.1  	
      Books
      and Records




 

.
Borrower shall 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 Note, the Property
and the business and affairs of 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. Lender and its authorized representatives shall have the
right at reasonable times and upon reasonable notice to examine the books and
records of Borrower relating to the operation of the Property and to make such
copies or extracts thereof as Lender may reasonably require.

 


	Section
      11.2  	
      Financial
      Statements




 

.

 

11.2.1  Monthly
Reports

 

. During
a Low DSCR Period, Borrower shall furnish to Lender, within thirty (30) days
after the end of each calendar month, unaudited operating statements, aged
accounts receivable reports, rent rolls, STAR Reports and PACE Reports;
occupancy and ADR reports for the Property, in each case accompanied by an
Officer's Certificate certifying (i) with respect to the operating statements,
that to the Best of Borrower's Knowledge and the best of such officer's
knowledge such statements are true, correct, accurate and complete and fairly
present the results of the operations of Borrower and the Property, and (ii)
with respect to the aged accounts receivable reports, rent rolls, occupancy and
ADR reports, that such items are to 

 






















the Best
of Borrower's Knowledge and the best of such officer's knowledge true, correct
and accurate and fairly present the results of the operations of Borrower and
the Property. Borrower will also provide Lender copies of all flash reports as
to monthly revenues upon request; 

 

11.2.2  Quarterly
Reports

 

.
Borrower will furnish, or cause to be furnished, to Lender on or before the
forty-fifth (45th) day after the end of each Fiscal Quarter, the following
items, accompanied by an Officer’s Certificate, certifying that to the Best of
Borrower's Knowledge and the best of such officer's knowledge such items are
true, correct, accurate and complete and fairly present the financial condition
and results of the operations of Borrower and the Property in a manner
consistent with GAAP (subject to normal year end adjustments) to the extent
applicable:

 

(a)  quarterly
and year to date financial statements prepared for such fiscal quarter with
respect to the Borrower, including a balance sheet and operating statement for
such quarter for the Borrower for such quarter;

 

(b)  during a
Low DSCR Period, a comparison of the budgeted income and expenses and the actual
income and expenses for such quarter for the Property, together with a detailed
explanation of any variances of five percent (5%) or more between budgeted and
actual amounts in the aggregate and on a line-item basis for such period and
year to date; provided, however, that Borrower shall not be obligated to provide
such detailed explanation for line items the actual amounts for such quarter of
which are less than $100,000;

 

(c)  occupancy
levels at the Property for such period, including average daily room rates and
the average revenue per available room;

 

(d)  concurrently
with the provision of such reports, Borrower shall also furnish a report of
Operating Income and Operating Expenses (as well as a calculation of Net
Operating Income based thereon) with respect to the Borrower and the Property
for the most recently completed quarter;

 

(e)  a STAR
Report and a PACE Report for the most recently completed quarter;

 

(f)  a
calculation of DSCR for the trailing four (4) Fiscal Quarters; and

 

(g)  a report
of aged accounts receivable relating to the Property as of the most recently
completed quarter and a list of Security Deposits and the aggregate amount of
all Security Deposits. 

 

11.2.3  Annual
Reports

 

.
Borrower shall furnish to Lender within ninety (90) days following the end of
each Fiscal Year a complete copy of the annual financial statements


 






















of the
Borrower, audited by a “Big Four” accounting firm or another independent
certified public accounting firm acceptable to Lender in accordance with GAAP
for such Fiscal Year and containing a balance sheet, a statement of operations
and a statement of cash flows. The annual financial statements of the Borrower
shall be accompanied by (i) an Officer’s Certificate certifying that each such
annual financial statement presents fairly, in all material respects, the
financial condition and results of operation of the Property and has been
prepared in accordance with GAAP and (ii) a management report, in form and
substance reasonably satisfactory to Lender, discussing the reconciliation
between the financial statements for such Fiscal Year and the most recent
Budget. Together with the Borrower’s annual financial statements, the Borrower
shall furnish to Lender (A) an Officer’s Certificate certifying as of the date
thereof whether, to Borrower’s knowledge, there exists a Default or Event of
Default, and if such Default or Event of Default exists, the nature thereof, the
period of time it has existed and the action then being taken to remedy the
same; and (B) an annual report, for the most recently completed fiscal year,
containing:

 

(1)  Capital
Expenditures (including for this purpose any and all additions to, and
replacements of, FF&E,) made in respect of the Property, including separate
line items with respect to any project costing in excess of
$500,000;

 

(2)  occupancy
levels for the Property for such period; and

 

(3)  average
daily room rates at the Property for such period.

 

11.2.4  Leasing
Reports

 

. Not
later than forty-five (45) days after the end of each fiscal quarter of
Borrower's operations, Borrower shall deliver to Lender a true and complete rent
roll for the Property, dated as of the last month of such fiscal quarter,
showing the percentage of gross leasable area of the Property, if any, leased as
of the last day of the preceding calendar quarter, the current annual rent for
the Property, the expiration date of each Lease, whether to Borrower's knowledge
any portion of the Property has been sublet, and if it has, the name of the
subtenant, and such rent roll shall be accompanied by an Officer's Certificate
certifying that such rent roll is true, correct and complete in all material
respects as of its date and stating whether Borrower, within the past three (3)
months, has issued a notice of default with respect to any Lease which has not
been cured and the nature of such default.

 

11.2.5  Management
Agreement

 

.
Borrower shall deliver to Lender, within ten (10) Business Days of the receipt
thereof by Borrower, a copy of all reports prepared by Manager pursuant to the
Management Agreement, including, without limitation, the Budget and any
inspection reports.

 

11.2.6  Budget

 

























 

(a)  Not later
than March 1st of each Fiscal Year hereafter, Borrower shall prepare or cause to
be prepared and deliver to Lender, for informational purposes only, a Budget in
respect of the Property for the Fiscal Year in which such delivery date falls.
If Borrower subsequently amends the Budget, Borrower shall promptly deliver the
amended Budget to 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 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, Borrower shall (unless the then current Budget has been approved in
writing by Lender) prepare or cause to be prepared and deliver to Lender for
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.
Borrower shall consult with Lender and shall afford Lender a reasonable
opportunity to meet and confer with 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.

 

11.2.7  Other
Information

 

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

 


	XII.  	
      ENVIRONMENTAL
      MATTERS.




 


	Section
      12.1  	
      Representations




 

.
Borrower hereby represents and warrants that except as set forth in the
environmental reports and studies delivered to Lender (the Environmental
Reports), (i)
Borrower has not 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
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 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 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 Borrower; and
(v) to the Best of 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
Borrower.

 


	Section
      12.2  	
      Covenants




 

.

 

12.2.1  Compliance
with Environmental Laws

 

. Subject
to Borrower's right to contest under Section
7.3,
Borrower covenants and agrees with Lender that it shall comply with all
Environmental Laws. If at any time during the continuance of the Lien of the
Security Instrument, 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),
Borrower shall deliver prompt notice of the occurrence of such Environmental
Event to Lender. Within thirty (30) days after Borrower has knowledge of the
occurrence of an Environmental Event, Borrower shall deliver to Lender an
Officer's Certificate (an Environmental
Certificate)
explaining the Environmental Event in reasonable detail and setting forth the
proposed remedial action, if any. Borrower shall promptly provide Lender with
copies of all notices which allege or identify any actual or potential violation
or noncompliance received by or prepared by or for Borrower in connection with
any Environmental Law. For purposes of this paragraph, the term "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 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, 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 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 Lender may reasonably require due to the results obtained from the foregoing.
Borrower grants 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 Borrower to Lender upon demand and shall be secured
by the Lien of the Security Instrument. Lender shall not unreasonably interfere
with, and Lender shall direct the environmental consultant to use its
commercially reasonable efforts not to hinder, 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, Lender
shall not be deemed to be exercising any control over the operations of Borrower
or the handling of any environmental matter or hazardous wastes or substances of
Borrower for purposes of incurring or being subject to liability
therefore

 


	Section
      12.4  	
      Environmental
      Indemnification




 

.
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 Borrower; provided that,
in each case, 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 discovered) prior to (1) the foreclosure of the Security
Instrument, (2) the delivery by Borrower to Lender or its designee of a
deed-in-lieu of foreclosure with respect to the Property, or (3) Lender's or its
designee's taking possession and control of the Property after the occurrence of
an Event of Default hereunder. If any such action or other proceeding shall be
brought against Lender, upon written notice from Borrower to Lender (given
reasonably promptly following Lender's notice to Borrower of such action or
proceeding), Borrower shall be entitled to assume the defense thereof, at
Borrower's expense, with counsel reasonably acceptable to Lender; provided,
however, Lender
may, at its own expense, retain separate counsel to participate in such defense,
but such participation shall not be deemed to give Lender a right to control
such defense, which right Borrower expressly retains. Notwithstanding the
foregoing, each Indemnified Party shall have the right to employ 

 






















separate
counsel at Borrower's expense if, in the reasonable opinion of legal counsel, a
conflict or potential conflict exists between the Indemnified Party and Borrower
that would make such separate representation advisable. 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, the indemnification provided in Section
12.4 shall be
fully recourse to Borrower and shall be independent of, and shall survive, the
discharge of the Indebtedness, the release of the Lien created by the Security
Instrument, and/or the conveyance of title to the Property to Lender or any
purchaser or designee in connection with a foreclosure of the Security
Instrument or conveyance in lieu of foreclosure.

 


	XIII.  	
      RESERVED




 


	XIV.  	
      SECURITIZATION
      AND PARTICIPATION




 


	Section
      14.1  	
      Sale
      of Note and Securitization




 

. At the
request of Lender and, to the extent not already required to be provided by
Borrower under this Agreement, Borrower shall use reasonable efforts to satisfy
the market standards which may be reasonably required in the marketplace or by
the Rating Agencies in connection with the sale of the Note or participation
therein as part of the first successful securitization (such sale and/or
securitization, the Securitization) of
rated single or multi-class securities (the Securities) secured
by or evidencing ownership interests in the Note and this Agreement, including
using reasonable efforts to do (or cause to be done) the following (but Borrower
shall not in any event be required to incur, suffer or accept (except to a de
minimis extent)) (i) any lesser rights or greater obligations or liability than
as currently set forth in the Loan Documents (except any increase in the
weighted average interest rate of the Notes that may result after certain
prepayments of the Loan have been made and applied in accordance with the terms
hereof) and (ii) except as set forth in this Article
XIV and
other than payment by Borrower of any legal fees of Borrower and Guarantor, any
expense or any liability:

 

14.1.1  Provided
Information

 

. (i)
Provide, at the sole expense of the holder of the Note (other than legal fees of
counsel to the Borrower and Guarantor), such non-confidential financial and
other information (but not projections) with respect to the Property and
Borrower and Manager to the extent such information is reasonably available to
Borrower or Manager, (ii) provide, at the sole expense of the holder of the Note
(other than legal fees of counsel to the Borrower and Guarantor), business plans
(but not projections) and budgets relating to the Property, to the extent
prepared by the Borrower or Manager and (iii) cooperate with the holder of the
Note (and its representatives) in obtaining, at the sole expense of the holder
of the Note (other than legal fees of counsel to the Borrower and Guarantor),
such site inspection, appraisals, market studies, 

 






















environmental
reviews and reports, engineering reports and other due diligence investigations
of the Property, as may be reasonably requested by the holder of the Note or
reasonably requested by the Rating Agencies (all information provided pursuant
to this Section
14.1 together
with all other information heretofore provided to Lender in connection with the
Loan, as such may be updated, at Borrower's request, in connection with a
Securitization, or hereafter provided to Lender in connection with the Loan or a
Securitization, being herein collectively called the Provided
Information);


 

14.1.2  Opinions
of Counsel

 

. Use
reasonable efforts to cause to be rendered such customary updates or customary
modifications to the Opinions of Counsel delivered at the closing of the Loan as
may be reasonably requested by the holder of the Note or the Rating Agencies in
connection with the Securitization. Borrower's failure to use reasonable efforts
to deliver or cause to be delivered the opinion updates or modifications
required hereby within twenty (20) Business Days after written request therefor
shall constitute an "Event of Default" hereunder. To the extent any of the
foregoing Opinions of Counsel were required to be delivered in connection with
the closing of the Loan, any update thereof shall be without cost to Borrower.
Any such Opinions of Counsel that Borrower is reasonably required to cause to be
delivered in connection with a Securitization (which the parties agree shall
consist of a "Review Letter" in substantially the form attached hereto as
Schedule
VII and
bring downs of the Opinions of Counsel delivered as of the date hereof which
Borrower acknowledges will be required to be delivered by Borrower's counsel in
connection with a Securitization taking into account the due diligence
Borrower's counsel deems reasonably necessary to deliver such "Review Letter");
and

 

14.1.3  Modifications
to Loan Documents

 

. Without
cost to the Borrower (other than legal fees of counsel to the Borrower and
Guarantor), execute such amendments to the organizational documents of Borrower,
Security Instrument and Loan Documents as may be reasonably requested by Lender
or the Rating Agencies in order to achieve the required rating or to effect the
Securitization (including, without limitation, modifying the Payment Date, as
defined in the Note, to a date other than as originally set forth in the Note),
provided, that nothing contained in this Section
14.1.3 shall
result in any economic or other adverse change in the transaction contemplated
by the Security Instrument or the Loan Documents (unless Borrower is made whole
by the holder of Note) or result in any operational changes that are burdensome
to the Property, Operating Lessee, Manager or Borrower. 

 


	Section
      14.2  	
      Cooperation
      with Rating Agencies




 

.
Borrower shall, at Lender's expense (other than legal fees of counsel to the
Borrower and Guarantor), (i) at Lender's request, meet with representatives of
the Rating Agencies at reasonable times to discuss the business and operations
of the Property, and (ii) cooperate with the reasonable requests of the Rating
Agencies in connection with the Property. Until the Obligations are paid in
full, Borrower shall provide the Rating Agencies with all financial reports
required hereunder and such other information as they 

 






















shall
reasonably request, including copies of any default notices or other material
notices delivered to and received from Lender hereunder, to enable them to
continuously monitor the creditworthiness of Borrower and to permit an annual
surveillance of the implied credit rating of the Securities.

 


	Section
      14.3  	
      Securitization
      Financial Statements




 

.
Borrower acknowledges that all such financial information delivered by Borrower
to Lender pursuant to Article XI may, at Lender's option, be delivered to the
Rating Agencies.

 


	Section
      14.4  	
      Securitization
      Indemnification




 

.

 

14.4.1  Disclosure
Documents

 

.
Borrower understands that certain of the Provided Information may be included in
disclosure documents in connection with the Securitization, including a
prospectus or private placement memorandum or a public registration statement
(each, a Disclosure
Document) and may
also be included in filings with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended (the Securities
Act) or the
Securities and Exchange Act of 1934, as amended (the Exchange
Act), or
provided or made available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating to the
Securitization. In the event that the Disclosure Document is required to be
revised prior to the sale of all Securities, upon request, Borrower shall
reasonably cooperate with the holder of the Note in updating the Provided
Information for inclusion or summary in the Disclosure Document by providing all
current information pertaining to Borrower and the Property reasonably requested
by Lender.

 

14.4.2  Indemnification
Certificate

 

. In
connection with each of (x) a preliminary and a private placement memorandum, or
(y) a preliminary and final prospectus, as applicable, Borrower agrees to
provide, at Lender's reasonable request, an indemnification certificate (at no
cost to Borrower other than legal fees of counsel to the Borrower and
Guarantor):

 

(a)  certifying
that Borrower has carefully examined those portions of such memorandum or
prospectus, as applicable, reasonably designated in writing by Lender for
Borrower's review pertaining to Borrower, the Property, the Loan and/or the
Provided Information and insofar as such sections or portions thereof
specifically pertain to Borrower, the Property, the Provided Information or the
Loan (such portions, the Relevant
Portions), the
Relevant Portions do not (except to the extent specified by Borrower if Borrower
does not agree with the statements therein), as of the date of such certificate,
to the Best of Borrower's Knowledge, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made, not
misleading.

 

























 

(b)  indemnifying
Lender and the Affiliates of Deutsche Bank Securities, Inc. (collectively,
DBS) that
have prepared the Disclosure Document relating to the Securitization, each of
its directors, each of its officers who have signed the Disclosure Document and
each person or entity who controls DBS within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the DBS
Group), and
DBS, together with the DBS Group, each of their respective directors and each
person who controls DBS or the DBS Group, within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act (collectively, the
Underwriter
Group) for any
actual, out-of-pocket losses, third party claims, damages (excluding lost
profits, diminution in value and other consequential damages) or liabilities
arising out of third party claims (the Liabilities) to
which any member of the Underwriter Group may become subject to the extent such
Liabilities arise out of or are based upon any untrue statement of any material
fact contained in the Relevant Portions and in the Provided Information or arise
out of or are based upon the omission by Borrower to state therein a material
fact required to be stated in the Relevant Portions in order to make the
statements in the Relevant Portions in light of the circumstances under which
they were made, not misleading (except that (x) Borrower's obligation to
indemnify in respect of any information contained in a preliminary or final
registration statement, private placement memorandum or preliminary or final
prospectus shall be limited to any untrue statement or omission of material fact
therein known to Borrower to the extent in breach of Borrower's certification
made pursuant to clause (a) above and (y) Borrower shall have no responsibility
for the failure of any member of the Underwriting Group to accurately transcribe
written information supplied by Borrower or to include such portions of the
Provided Information).

 

(c)  Borrower's
liability under clauses (a) and (b) above shall be limited to Liabilities
arising out of or based upon any such untrue statement or omission made in a
Disclosure Document in reliance upon and in conformity with information
furnished to Lender by, or furnished at the direction and on behalf of, Borrower
in connection with the preparation of those portions of the registration
statement, memorandum or prospectus pertaining to Borrower, the Property or the
Loan, including financial statements of Borrower and operating statements with
respect to the Property. This indemnity agreement will be in addition to any
liability which Borrower may otherwise have. 

 

(d)  Promptly
after receipt by an indemnified party under this Article
XIV of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Article
XIV, notify
the indemnifying party in writing of the commencement thereof, but the omission
to so notify the indemnifying party will not relieve the indemnifying party from
any liability which the indemnifying party may have to any indemnified party
hereunder except to the extent that failure to notify causes prejudice to the
indemnifying party. In the event that any action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled, jointly with any other
indemnifying party, to participate therein and, to the extent that it (or they)
may elect by written notice delivered to the indemnified party promptly after


 






















receiving
the aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party. After notice
from the indemnifying party to such indemnified party under this Article
XIV of its
assumption of such defense, the indemnifying party shall not be liable for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof; provided,
however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there are any legal defenses available to it and/or other indemnified
parties that are different from or in conflict with those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties at the expense of the indemnifying party. The indemnifying party shall
not be liable for the expenses of separate counsel unless an indemnified party
shall have reasonably concluded that there may be legal defenses available to it
that are different from or in conflict with those available to another
indemnified party.

 

(e)  In order
to provide for just and equitable contribution in circumstances in which the
indemnity provided for in this Article
XIV is for
any reason held to be unenforceable by an indemnified party in respect of any
actual, out-of-pocket losses, claims, damages or liabilities relating to third
party claims (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under this Article
XIV, the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such actual, out of pocket losses, third party
claims, damages or liabilities (or action in respect thereof) (but excluding
damages for lost profits, diminution in value of the Property and consequential
damages); provided,
however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution for Liabilities
arising therefrom from any person who was not guilty of such fraudulent
misrepresentation. In determining the amount of contribution to which the
respective parties are entitled, the following factors shall be considered: (i)
the DBS Group's and Borrower's relative knowledge and access to information
concerning the matter with respect to which the claim was asserted; (ii) the
opportunity to correct and prevent any statement or omission; (iii) the limited
responsibilities and obligations of Borrower as specified herein; and (iv) any
other equitable considerations appropriate in the circumstances. 

 


	Section
      14.5  	
      Retention
      of Servicer




 

. Lender
reserves the right, at Lender's sole cost and expense, to retain the Servicer.
Lender has advised Borrower that the Servicer initially retained by Lender shall
be Midland Loan Services, Inc. Borrower shall pay any special servicing fees and
any administrative fees and expenses of the Servicer, including, without
limitation, reasonable attorney and other third-party fees and disbursements in
connection with a prepayment, release of the Property, assumption or
modification of the Loan or enforcement of the Loan Documents. Lender shall pay
the ongoing standard monthly servicing fee.

 


	XV.  	
      ASSIGNMENTS
      AND PARTICIPATIONS.




 

























 


	Section
      15.1  	
      Assignment
      and Acceptance




 

. At no
incremental cost or liability to Borrower, 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 (including, without limitation, all or a portion of the
Note); provided that the parties to each such assignment shall execute and
deliver to Lender, for its acceptance and recording in the Register (as
hereinafter defined), an Assignment and Acceptance. In addition, at no
incremental cost to Borrower, 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 (including without limitation, all or a portion of the Note)
utilizing such documentation to evidence such participation and the parties'
respective rights thereunder as Lender, in its sole discretion, shall
elect.

 


	Section
      15.2  	
      Effect
      of Assignment and Acceptance




 

. 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 Lender, as the case may be, hereunder and such
assignee shall be deemed to have assumed such rights and obligations, and (ii)
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 (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of Lender's rights and obligations under this Agreement and
the other Loan Documents, 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 Borrower to Lender pursuant to the terms of
the Loan Documents 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 Lien of the Security Instrument and the other Loan Documents) delivered to
or for the benefit of or deposited with German American Capital Corporation, as
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, 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, 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 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 or any
other instrument or document furnished pursuant hereto or thereto; (ii) Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of Borrower or the performance or observance by
Borrower of any of its obligations under any Loan Documents 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 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; (v) such assignee appoints and
authorizes Lender to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to 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 are required to be performed by
Lender.

 


	Section
      15.4  	
      Register




 

. 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
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 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 Note or Notes subject to such assignment, 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
Borrower. Within five (5) Business Days after its receipt of such notice,
Borrower, at Lender's own expense, shall execute and deliver to Lender in
exchange and substitution for the surrendered Note or Notes a new Note to the
order of such assignee in an amount equal to the portion of the Loan assigned to
it and a new Note to the order of Lender in an amount equal to the portion of
the Loan retained by it hereunder. Such new Note or Notes shall be in an
aggregate Principal Amount equal to the aggregate then outstanding principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the Note (modified, however, to the extent necessary so as not to impose
duplicative or increased obligations on Borrower and to delete obligations
previously satisfied by Borrower). Notwithstanding the provisions of this
Article
XV,
Borrower and Operating Lessee 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
Note contemplated by this Section
15.5,
including, without limitation, any mortgage tax. Lender and/or the assignees, as
the case may be, shall from time to time designate one agent through which
Borrower shall request all approvals and consents required or contemplated by
this Agreement and on whose statements Borrower and Operating Lessee may
rely.

 


	Section
      15.6  	
      Participations




 

. Each
assignee pursuant to this Article
XV may sell
participations to one or more Persons (other than 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 (including, without limitation, all or a
portion of the Note held by it); provided,
however, that
(i) such assignee's obligations under this Agreement and the other Loan
Documents 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 Note for all purposes of
this Agreement and the other Loan Documents, and (iv) Borrower, 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. In the event that more than
one (1) party comprises Lender, Lender shall designate one party to act on the
behalf of all parties comprising Lender in providing approvals and all other
necessary consents under the Loan Documents and on whose statements Borrower and
Operating Lessee 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 Borrower furnished to such assignee by or on behalf
of 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 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, 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
(including, without limitation, the amounts owing to it and the Note or 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. 

 


	XVI.  	
      RESERVE
      ACCOUNTS




 


	Section
      16.1  	
      Tax
      Reserve Account




 

. In
accordance with the time periods set forth in Section
3.1, and
during any period when the Manager is not reserving for Impositions and Other
Charges, Borrower shall deposit into the Tax Reserve Account an amount equal to
(a) one-twelfth of the annual Impositions that Lender reasonably estimates,
based on the most recent tax bill for the Property, will be payable during the
next ensuing twelve (12) months in order to accumulate with Lender sufficient
funds to pay all such Impositions at least twenty (20) days prior to the
imposition of any interest, charges or expenses for the non-payment thereof and
(b) one-twelfth of the annual Other Charges that Lender reasonably estimates
will be payable during the next ensuing twelve (12) months (said monthly amounts
in (a) and (b) above hereinafter called the Monthly
Tax Reserve Amount, and the
aggregate amount of funds held in the Tax Reserve Account being the Tax
Reserve Amount). As of
the Closing Date, the Monthly Tax Reserve Amount is $0.00, but such amount is
subject to adjustment by Lender in accordance with the provisions of this
Section
16.1. The
Monthly Tax Reserve Amount shall be paid by Borrower to Lender on each Payment
Date. Lender will apply the Monthly Tax Reserve Amount to payments of
Impositions and Other Charges required to be made by Borrower pursuant to
Article
V and
Article
VII and
under the Security Instrument, subject to Borrower's right to contest
Impositions in accordance with Section
7.3. In
making any payment relating to the Tax Reserve Account, Lender may do so
according to any bill, statement or estimate procured from the appropriate
public office, without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien
or title or claim thereof. If the amount of funds in the Tax Reserve Account
shall exceed the amounts due for Impositions and Other Charges pursuant to
Article
V and
Article
VII, Lender
shall credit such excess against future payments to be made to the Tax Reserve
Account. If at any time Lender reasonably determines that the Tax Reserve Amount
is not or will not be sufficient to pay Impositions and Other Charges by the
dates set forth above, Lender shall notify Borrower of such determination and
Borrower shall increase its monthly payments to Lender by the amount that Lender
reasonably estimates is sufficient to make up the deficiency at least thirty
(30) days prior to the imposition of any interest, charges or expenses for the
non-payment of the Impositions and Other Charges. Upon payment of the
Impositions and Other Charges, Lender shall reassess the amount necessary to be
deposited in the Tax Reserve Account for the succeeding period, which
calculation shall take into account any excess amounts remaining in the Tax
Reserve Account.

 


	Section
      16.2  	
      Insurance
      Reserve Account




 

.
Following an Insurance Reserve Trigger, Borrower will immediately pay to Lender
for transfer by Lender to the Holding Account (or if Borrower fails to so pay
Lender, Lender 

 






















will
transfer from the Holding Account) an amount (the Insurance
Reserve Amount) equal
to payments of insurance premiums required to be made by Borrower to pay (or to
reimburse Borrower or Operating Lessee for) the insurance required pursuant to
Article
VI and
under the 

 






















Security
Instrument. In addition, prior to such time as Borrower maintains blanket
policies of insurance in all respects satisfactory to Lender pursuant to
Section
6.1.16, and
otherwise following an Insurance Reserve Trigger, in accordance with the time
periods set forth in Section
3.1,
Borrower shall deposit into the Insurance Reserve Account an amount equal to
one-twelfth of the insurance premiums that Lender reasonably estimates based on
the most recent bill, will be payable for the renewal of the coverage afforded
by the insurance policies upon the expiration thereof in order to accumulate
with Lender sufficient funds to pay all such insurance premiums at least twenty
(20) days prior to the expiration of the policies required to be maintained by
Borrower pursuant to the terms hereof (said monthly amounts hereinafter called
the Monthly
Insurance Reserve Amount);
provided, however, that immediately following an Insurance Reserve Trigger,
Borrower will pay to Lender for transfer by Lender to the Insurance Reserve
Account (or if Borrower fails to so pay Lender, Lender will transfer from the
Holding Account) an amount equal to payments of insurance premiums required to
be made by Borrower to pay (or to reimburse Borrower or Operating Lessee) for
the insurance required pursuant to Article
VI and
under the Security Instrument. As of the Closing Date, the Monthly Insurance
Reserve Amount is $0.00. The Monthly Insurance Reserve Amount, if same is
payable pursuant to this Section
16.2, shall
be paid by Borrower to Lender on each Payment Date. Lender will apply the
Monthly Insurance Reserve Amount to payments of insurance premiums required to
be made by Borrower to pay for the insurance required pursuant to Article
VI and
under the Security Instrument. In making any payment relating to the Insurance
Reserve Account, Lender may do so according to any bill, statement or estimate
procured from the insurer or agent, without inquiry into the accuracy of such
bill, statement or estimate or into the validity thereof. If at any time Lender
reasonably determines that the Insurance Reserve Amount is not or will not be
sufficient to pay insurance premiums (up to a maximum amount equal to the
aggregate annual insurance premium required hereunder), Lender shall notify
Borrower of such determination and Borrower shall increase the Insurance Reserve
Amount by the amount that Lender reasonably estimates is sufficient to make up
the deficiency at least thirty (30) days prior to expiration of the applicable
insurance policies. Upon payment of such insurance premiums, Lender shall
reassess the amount necessary to be deposited in the Insurance Reserve Account
for the succeeding period, which calculation shall take into account any excess
amounts remaining in the Insurance Reserve Account. 

 


	Section
      16.3  	
      Intentionally
      Omitted




 

.

 


	Section
      16.4  	
      Low
      DSCR Reserve Account




 

.
Following each Fiscal Quarter, Lender will perform a DSCR Test to determine
whether a Low DSCR Period has occurred and is continuing (it being hereby agreed
that all determinations as to whether a Low DSCR Period has occurred and is
continuing shall be made by Lender based on the financial information delivered
by Borrower pursuant to Section
11.2 hereof).
Pursuant to and in accordance with the provisions of Section
3.1.1, during
a Low DSCR Period, monies shall be transferred in accordance with Section
3.1.1 hereof
from the Holding Account into the applicable Low DSCR Reserve Account and


 






















retained
by Lender as additional security for the Indebtedness and shall be applied or
disbursed as hereinafter provided. From and after the occurrence and
continuation of an Event of Default, Lender shall have the right to apply any
amounts then remaining in the Low DSCR Reserve Accounts to repay the
Indebtedness or any other amounts due hereunder or under the other Loan
Documents in such order, manner and amount as Lender shall determine in its sole
discretion. Provided no Default or Event of Default shall have occurred and be
continuing, Lender shall instruct the Cash Management Bank to transfer to
Borrower's Account free and clear of all Liens, any amounts remaining in the Low
DSCR Reserve Account within ten (10) Business Days after Borrower provides
Lender with evidence satisfactory to Lender indicating that the Property has
achieved the DSCR requirement set forth in subclause (ii) of the definition of
Low DSCR Period in Section
1.1
hereof.

 


	Section
      16.5  	
      Intentionally
      Deleted




 

.

 


	Section
      16.6  	
      Intentionally
      Deleted




 

.


 


	Section
      16.7  	
      Franchise
      Fee Reserve Accounts




 

. Upon
the request of Borrower, Lender will, within ten (10) Business Days after the
receipt of such request and the satisfaction of the other conditions set forth
in this Section, cause disbursements to Operating Lessee from the Franchise Fee
Reserve Account, as applicable, to pay or to reimburse Borrower for actual costs
incurred in connection with the Third-Party Franchise Fee (to the extent any
such fee or expense is required to be paid under the related franchise
agreement), provided that (A) Lender has received evidence of payment of the
Third-Party Franchise Fee, or received invoices evidencing that the fees for
which such disbursements are requested are due and payable, are in respect of
the Third-Party Franchise Fee for the Property, and have not been previously
paid; (B) any amounts previously disbursed pursuant to this paragraph have been
properly applied; and (C) Lender has received an Officer's Certificate
confirming that the conditions in the foregoing clauses (A) and (B) have been
satisfied and that the copies of invoices (to the extent required above)
attached to such Officer's Certificate are true, complete and correct. Subject
to the terms of the Assignment of Management Agreement, in no event shall Lender
be obligated to disburse funds from the Franchise Fee Reserve Account if a
Monetary Default or an Event of Default exists.

 


	Section
      16.8  	
      Letter
      of Credit Provisions




 

.


 

16.8.1  Delivery
of Letter of Credit

 

. In lieu
of maintaining on deposit all or any portion of the funds in the Low Debt
Service Reserve Account with Lender pursuant to Section
16.4,


 






















Borrower
shall have the right to deliver a Letter of Credit in the amount of all or any
portion of the amounts on deposit with Lender from time to time under
Sections
16.4.

 

16.8.2  Reduction
of Letter of Credit

 

. In the
event that Borrower elects to deliver the Letter of Credit to Lender under the
terms of Section
16.4.1, Lender
agrees to permit the reduction from time to time of the outstanding amount of
the Letter of Credit by (i) the amount of cash funds delivered to Lender as
reserve funds by Borrower in place of such Letter of Credit, and (ii) the amount
that Borrower would otherwise be entitled to receive as a disbursement from the
applicable reserve account pursuant to Section
16.4.


 

16.8.3  Security
for Debt

 

. Each
Letter of Credit delivered under this Agreement shall be additional security for
the payment of the Indebtedness. Upon the occurrence and during the continuance
of an Event of Default, Lender shall have the right, at its option, to draw on
any Letter of Credit and to apply all or any part thereof to the payment of the
items for which such Letter of Credit was established or to apply each such
Letter of Credit to payment of the Indebtedness in such order, proportion or
priority as Lender may determine. 

 

16.8.4  Additional
Rights of Lender

 

. In
addition to any other right Lender may have to draw upon a Letter of Credit
pursuant to the terms and conditions of this Agreement, Lender shall have the
additional rights to draw in full any Letter of Credit: (a) if Lender has
received a notice from the issuing bank that the Letter of Credit will not be
renewed and a substitute Letter of Credit is not provided at least thirty (30)
days prior to the date on which the outstanding Letter of Credit is scheduled to
expire; (b) upon receipt of notice from the issuing bank that the Letter of
Credit will be terminated (except if a substitute Letter of Credit is provided);
or (c) if Lender has received notice that the bank issuing the Letter of Credit
shall cease to be an Approved Bank (unless an alternative Approved Bank issues
an equivalent Letter of Credit within fifteen (15) days of Borrower's receipt of
notice of same). Notwithstanding anything to the contrary contained in the
above, Lender is not obligated to draw any Letter of Credit upon the happening
of an event specified in (a), (b) or (c) above and shall not be liable for any
losses sustained by Borrower due to the insolvency of the bank issuing the
Letter of Credit if Lender has not drawn the Letter of Credit.

 


	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 Note is not paid when due, (D) the
Prepayment Fee is not paid when due, (E) any deposit to the Deposit 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
Note or any other Loan Document is not paid in full when due and payable in
accordance with the provisions of the applicable Loan Document, with such
failure as described in subclauses (A), (B), (C), (D), and (E) continuing for
ten (10) Business Days after Lender delivers written notice thereof to
Borrower;

 

(ii)  subject
to Borrower's right to contest as set forth in Section
7.3, 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 Lender within ten (10) Business Days following
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 Property, (b) any Transfer of any direct or indirect
interest in Borrower, Guarantor or General Partner or other Person restricted by
the terms of Article
VIII, (c) any
Lien or encumbrance on all or any portion of the Property, (d) any pledge,
hypothecation, creation of a security interest in or other encumbrance of any
direct or indirect interests in Borrower, Guarantor or 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 Borrower in Section
4.1.23 shall
have been false or misleading in any material respect as of the date the
representation or warranty was made which incorrect, false or misleading
statement is not cured within thirty (30) days after receipt by Borrower of
notice from Lender in writing of such breach or (ii) if any other representation
or warranty made by Borrower herein by Borrower, Guarantor or any Affiliate of
Borrower in any other Loan Document, or in any report, certificate (including,
but not limited to, any certificate by Borrower delivered in connection with the
issuance of the Non-Consolidation Opinion), financial statement or other
instrument, agreement or document furnished to 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 Borrower's Knowledge, false or misleading in any material respect which
made, then same shall not constitute an Event of Default unless Borrower has not
cured 

 






















same
within five (5) Business Days after receipt by Borrower of notice from Lender in
writing of such breach;

 

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

 

(vii)  if a
receiver, liquidator or trustee shall be appointed for Borrower, General
Partner, Operating Lessee, CNL Hotel Del Tenant Corp., or any Guarantor or if
Borrower, General Partner, Operating Lessee, CNL Hotel Del Tenant Corp. 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, Borrower, Operating Lessee, CNL Hotel Del Tenant Corp.,
General Partner or any Guarantor, or if any proceeding for the dissolution or
liquidation of Borrower, General Partner, Operating Lessee, CNL Hotel Del Tenant
Corp., or any Guarantor shall be instituted; provided,
however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower, Operating Lessee, CNL Hotel Del Tenant Corp., General
Partner, or any Guarantor upon the same not being discharged, stayed or
dismissed within ninety (90) days;

 

(viii)  if
Borrower, Operating Lessee, CNL Hotel Del Tenant Corp., General Partner or any
Guarantor, as applicable, Transfers its rights under this Agreement or any of
the other Loan Documents or any interest herein or therein in contravention of
the Loan Documents;

 

(ix)  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 Borrower,
Operating Lessee, General Partner, Operating Lessee GP 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;

 

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

 

(xi)  if
Borrower or Operating Lessee 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 Lender delivers written
notice thereof to Borrower; 

 

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

 

























 

(xiii)  Borrower,
Operating Lessee, Manager or any Affiliate of any such Person shall fail to
deposit any sums required to be deposited in the Holding Account or any
Sub-Accounts thereof pursuant to the requirements herein when due;

 

(xiv)  if this
Agreement or any other Loan Document 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
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 or by reason of any
affirmative act of Lender);

 

(xv)  if the
Management Agreement is terminated (other than as a result of a Borrower default
as addressed in clause (xvii)) and an Acceptable Manager is not appointed as a
replacement manager pursuant to the provisions of Section
5.2.14 within
sixty (60) days after such termination;

 

(xvi)  if
Borrower shall default beyond the expiration of any applicable cure period under
any existing easement, covenant or restriction which affects the Property, the
default of which shall have a Material Adverse Effect;

 

(xvii)  There
exists any fact or circumstance that reasonably could be expected to result in
the (a) imposition of a Lien or security interest under Section 412(n) of the
Code or under ERISA or (b) the complete or partial withdrawal by Borrower or any
ERISA Affiliate from any "multiemployer plan" that is reasonably expected to
result in any material liability to Borrower; provided, however that the
existence of such fact or circumstance under clause (xvii)(b) shall not
constitute an Event of Default if such material withdrawal liability (x) in the
case of a withdrawal by an ERISA Affiliate that is reasonably expected to cause
a Material Adverse Effect or any withdrawal by Borrower, is paid within thirty
(30) days after the date incurred or is contested in accordance with
Section
7.3 hereof
or (y) in the case of a withdrawal by an ERISA Affiliate that is not reasonably
expected to cause a Material Adverse Effect, is paid within the period required
under applicable ERISA statutes or is contested in accordance with Section
7.3
hereof;

 

(xviii)  if
Borrower shall continue to be in Default under any of the other terms, covenants
or conditions of this Agreement or of any Loan Document not specified in
subsections
(i) to (xvii) above,
for thirty (30) days after notice from 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 Borrower 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 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 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) 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 or at law or in equity, take such action
that Lender deems advisable to protect and enforce its rights against Borrower
and in the Property, including, without limitation, (i) declaring immediately
due and payable the entire Principal Amount together with interest thereon and
all other sums due by Borrower under the Loan Documents, (ii) collecting
interest on the Principal Amount at the Default Rate whether or not Lender
elects to accelerate the Note and (iii) enforcing or availing itself of any or
all rights or remedies set forth in the Loan Documents against Borrower and the
Property, 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 Borrower hereunder and under the
other Loan Documents shall immediately and automatically become due and payable,
without notice or demand, and Borrower hereby expressly waives any such notice
or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding. The foregoing provisions shall not be construed as a
waiver by Lender of its right to pursue any other remedies available to it under
this Agreement, the Security Instrument or any other Loan Document. 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 Lender in the Loan Documents. 

 


	Section
      17.2  	
      Remedies




 

.

 

(a)  Unless
waived in writing by 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 Lender against Borrower under this Agreement or
any of the other Loan Documents executed and delivered by, or applicable to,
Borrower or at law or in equity may be exercised by 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 Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with respect to the Property. Any such actions taken
by Lender shall be cumulative and concurrent and may be pursued independently,
singly, successively, together or otherwise, at such time and in such order as
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
Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents. Without limiting the generality of the foregoing, Borrower
agrees that if an Event of Default is continuing (i) 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 Lender shall remain in full
force and effect until Lender has exhausted all of its remedies against the
Property and the Security Instrument has 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 and during the continuance of an Event of Default, with respect to
the Account Collateral, the Lender may:

 

(i)  Subject
to the terms of the Assignment of Management Agreement, without notice to
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
against the Obligations, Operating Expenses and/or Capital Expenditures for the
Property or any part thereof;

 

(ii)  in
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)  Subject
to the terms of the Assignment of Management Agreement, demand, collect, take
possession of or receipt for, settle, compromise, adjust, sue for, foreclose or
realize upon the Account Collateral (or any portion thereof) as Lender may
determine in its sole discretion; and

 

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

 

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

 


	Section
      17.3  	
      Remedies
      Cumulative; Waivers




 

.

 






















The
rights, powers and remedies of Lender under this Agreement and the Security
Instrument shall be cumulative and not exclusive of any other right, power or
remedy which Lender may have against Borrower pursuant to this Agreement or the
other Loan Documents, or existing at law or in equity or otherwise. Lender's
rights, powers and remedies may be pursued singly, concurrently or otherwise, at
such time and in such order as Lender may determine in 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 Borrower or any Guarantor shall
not be construed to be a waiver of any subsequent Default or Event of Default by
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 Note or any of the Loan Documents
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 Lender in any bankruptcy, reorganization, receivership, or other
proceedings affecting creditors' rights and involving a claim under the Note or
any of the Loan Documents; or (iii) an attorney is retained to protect or
enforce the lien or any of the terms of this Agreement, the Security Instrument
or any of the Loan Documents; then Borrower shall pay to 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
Lender at the Default Rate.

 


	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 Lender or enforceable against (i) Borrower,
(ii) any Affiliate of Borrower, (iii) any Person owning, directly or indirectly,
any legal or beneficial interest in Borrower or any Affiliate of 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, this
Agreement, the Security Instrument, the Note, the Property or any other Loan
Document, or the making, issuance or transfer thereof, all such liability, if
any, being expressly waived by Lender. The foregoing limitation shall not in any
way limit or affect Lender's right to any of the following and Lender shall not
be deemed to have waived any of the following:

 

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

 

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

 

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

 

(d)  Any right
which 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 Security Instrument or to require
that all collateral shall continue to secure all of the Indebtedness owing to
Lender in accordance with the Loan Documents; 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 to the contrary, there shall at no time be any limitation on
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 Note, the Security Instrument and the other Loan
Documents, to Lender of:

 

(a)  any loss,
damage, cost or expense incurred by or on behalf of Lender by reason of (i) the
fraudulent acts of or intentional misrepresentations by Borrower or any
Affiliate of Borrower and/or (ii) the failure of 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 Borrower or any Affiliate of Borrower has received and to which Lender is
entitled pursuant to the terms of this Agreement or any of the Loan Documents 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
provisions of this Agreement;

 

(c)  any
membership deposits and any security deposits and advance deposits which are not
delivered to 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 Lender by reason of all or
any part of the Property, the Account Collateral or the Rate Cap Collateral
being encumbered by a Lien (other than this Agreement and the Security
Instrument) in violation of the Loan Documents;

 

(e)  after the
occurrence and during the continuance of an Event of Default, any Rents, issues,
profits and/or income collected by Borrower, Operating Lessee or any Affiliate
of Borrower or Operating Lessee (other than Rents and credit card receivables
sent to the applicable Deposit Account or paid directly to 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;

 

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

 

(g)  any loss,
damage, cost or expense incurred by or on behalf of Lender by reason of the
breach of any representation, warranty, covenant or indemnification provision in
the Environmental Indemnity or in the Security Instrument 

 






















concerning
environmental laws, hazardous substances and asbestos and any indemnification of
Lender with respect thereto in either document;

 

(h)  any loss,
damage, cost or expense incurred by or on behalf of Lender by reason of the
failure of Borrower to comply with any of the provisions of Article
XIV;

 

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

 

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

 

(k)  any
actual loss, damage, cost, or expense incurred by or on behalf of Lender by
reason of Borrower, Operating Lessee, or their respective general partners
failing to be and have been since the date of its respective formation, a Single
Purpose Entity; and

 

(l)  reasonable
attorney's fees and expenses incurred by 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 Lender of the Loan and the execution and delivery to
Lender of the 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. 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 Borrower,


 






















shall
inure to the benefit of the successors and assigns of Lender. If Borrower
consists of more than one person, the obligations and liabilities of each such
person hereunder and under the other Loan Documents shall be joint and
several.

 


	Section
      19.2  	
      Lender's
      Discretion




 

.
Whenever pursuant to this Agreement, Lender exercises any right given to it to
approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of 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 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 LENDER
AND ACCEPTED BY 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 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. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, 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 LENDER OR BORROWER ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL
OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,


 






















ACTION
OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

 

    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 BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO
LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY
TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN
OFFICE IN NEW YORK, NEW YORK (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




 

. No
modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement, or of the Note, or of any other Loan Document, 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 Borrower shall entitle 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 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 Note or under any
other Loan Document, 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 Note or any other Loan Document, 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 Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.

 


	Section
      19.6  	
      Notices




 

. All
notices, consents, approvals and requests required or permitted hereunder or
under any other Loan Document 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 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: (913)
253-9001

                        Confirmation: (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 Borrower:
	
      CNL
      Hotel Del Partners, LP




 


           


               c/o CNL Hotels
& Resorts, Inc.


                        CNL Center at City
Commons


                        450 South Orange
Avenue

                        Orlando, Florida
32801

                        Attention: Senior
Vice President

                        Telefax No.: (407)
650-1085

 

























      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




 

.
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 SECURITY INSTRUMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT, 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 SECURITY INSTRUMENT, THE NOTE OR
ANY OTHER LOAN DOCUMENT (AS NOW OR HEREAFTER MODIFIED) OR ANY 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 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. 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 Borrower makes a payment or payments to 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 Lender.

 


	Section
      19.11  	
      Waiver
      of Notice




 

.
Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Lender
to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.

 

























 


	Section
      19.12  	
      Expenses;
      Indemnity




 

(a)  Except as
may be otherwise expressly set forth in the Loan Documents, Borrower covenants
and agrees to pay or, if Borrower fails to pay, to reimburse, Lender upon
receipt of written notice from Lender for all reasonable costs and expenses
(including reasonable attorneys' fees and disbursements) incurred by Lender in
connection with (i) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including without limitation any opinions requested by
Lender pursuant to this Agreement); (ii) Lender's ongoing performance of and
compliance with all agreements and conditions contained in this Agreement and
the other Loan Documents 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 and any other documents or matters
as required herein or under the other Loan Documents; (iv) securing 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 Lender
all required legal opinions, and other similar expenses incurred in creating and
perfecting the Lien in favor of Lender pursuant to this Agreement and the other
Loan Documents; (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 Borrower, this
Agreement, the other Loan Documents, the Property, or any other security given
for the Loan; (vii) enforcing any obligations of or collecting any payments due
from Borrower under this Agreement, the other Loan Documents or with respect to
the Property 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
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 Lender or (B) in connection with any action taken
under Article IV or a Securitization, other than the Borrower's internal
administrative costs. Any cost and expenses due and payable to Lender may be
paid from any amounts in the Deposit Accounts or the Holding Account if same are
not paid by Borrower within ten (10) Business Days after receipt of written
notice from Lender.

 

(b)  Subject
to the non-recourse provisions of Section
18.1,
Borrower shall protect, indemnify and save harmless 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 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 Lender or its designee of a
deed-in-lieu of foreclosure with respect to the Property, or (ii) an Indemnified
Party or its designee taking possession or control of the Property or (iii) the
foreclosure of the Security Instrument, 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 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 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 or any failure on the part of 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
Borrower or any of its agents, contractors, servants, employees, sublessees,
licensees or invitees, (7) any contest referred to in Section
7.3 hereof,
(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 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 the Security Instrument. In case any action,
suit or proceeding is brought against the Indemnified Parties by reason of any
such occurrence, Borrower shall at Borrower's expense resist and defend such
action, suit or proceeding or will cause the same to be resisted and defended by
counsel at Borrower's reasonable expense for the insurer of the liability or by
counsel designated by Borrower (unless reasonably disapproved by Lender promptly
after Lender has been notified of such counsel); provided,
however, that
nothing herein shall compromise the right of Lender (or any Indemnified Party)
to appoint its own counsel at Borrower's expense for its defense with respect to
any action which in its reasonable opinion presents a conflict or potential
conflict between Lender and Borrower that would make such separate
representation advisable; provided further that if Lender shall have appointed
separate counsel pursuant to the foregoing, Borrower shall not be responsible
for the expense of additional separate counsel of any Indemnified Party unless
in the reasonable opinion of Lender a conflict or potential conflict exists
between such Indemnified Party and Lender. So long as Borrower is resisting and
defending such 

 






















action,
suit or proceeding as provided above in a prudent and commercially reasonable
manner, Lender and the Indemnified Parties shall not be entitled to settle such
action, suit or proceeding without 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 Lender agrees that it will not
settle any such action, suit or proceeding without the consent of Borrower;
provided,
however, that if
Borrower is not diligently defending such action, suit or proceeding in a
prudent and commercially reasonable manner as provided above, and Lender has
provided 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, 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 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
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 Lender's interest in and to this Agreement, the Note and the other
Loan Documents shall take the same free and clear of all offsets, counterclaims
or defenses which are unrelated to such documents which Borrower may otherwise
have against any assignor of such documents, and no such unrelated counterclaim
or defense shall be interposed or asserted by 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 Borrower.

 


	Section
      19.15  	
      Liability
      of Assignees of Lender




 

. No
assignee of Lender shall have any personal liability, directly or indirectly,
under or in connection with this Agreement or any other Loan Document or any
amendment or amendments hereto made at any time or times, heretofore or
hereafter, any different than the liability of 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 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)  Borrower
and Lender intend that the relationships created hereunder and under the other
Loan Documents 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 Borrower and Lender nor to grant Lender any
interest in the Property other than that of mortgagee, beneficiary or
lender.

 

(b)  This
Agreement and the other Loan Documents are solely for the benefit of Lender and
Borrower and nothing contained in this Agreement or the other Loan Documents
shall be deemed to confer upon anyone other than Lender and Borrower any right
to insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein provided,
however, that it
is hereby agreed by Lender and Borrower that the provisions of Section
3.1.5 and the
provisions of Sections
6.2.2 and
6.2.5 (to the
extent they relate to disbursement of funds to any Mezzanine Account and/or to
pay amounts owed in connection with the Mezzanine Loans) are intended to confer
upon Mezzanine Lenders the right to insist upon and enforce the performance and
observance of the obligation expressly set forth therein. All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of 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 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 Lender if, in Lender's sole
discretion, Lender deems it advisable or desirable to do so.

 


	Section
      19.17  	
      Publicity




 

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


 


	Section
      19.18  	
      Waiver
      of Marshalling of Assets




 

. To the
fullest extent permitted by law, Borrower, for itself and its successors and
assigns, waives all rights to a marshalling of the assets of Borrower,
Borrower's shareholders and others with interests in Borrower and of the
Property, 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 Lender under the Loan
Documents to a sale of the Property for the collection of the Indebtedness
without any prior or different resort for collection or of the right of Lender
to the payment of the 

 






















Indebtedness
out of the net proceeds of the Property in preference to every other claimant
whatsoever.

 


	Section
      19.19  	
      Waiver
      of Counterclaim and other
Actions




 

.
Borrower hereby expressly and unconditionally waives, in connection with any
suit, action or proceeding brought by Lender on this Agreement, the Note, the
Security Instrument or any Loan Document, 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 Lender on this Agreement,
the Note, the Security Instrument or any Loan Document 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, 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
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, 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 Lender or any parent,
subsidiary or Affiliate of Lender. 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 or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or Affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender's exercise of any such rights
or remedies. Borrower acknowledges that 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 Borrower or its
Affiliates.

 


	Section
      19.21  	
      Prior
      Agreements




 

. This
Agreement and the other Loan Documents 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 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
14.4.1,
15.1 and
15.6, in
connection with the transactions contemplated by such Sections, in no event
shall Lender deliver financial information with respect to the Property or the
Guarantor to the Persons listed in Schedule
III, without
first obtaining Borrower's prior written consent; provided however,
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 Lender
delivers a confidentiality agreement from any of such Persons reasonably
acceptable to Borrower.

 

[REMAINDER
OF PAGE INTENTIONALLY BLANK]

 




 



























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.

 

BORROWER:




CNL HOTEL
DEL PARTNERS, LP, 

a
Delaware limited partnership





	 	
      By:
	
      CNL
      Hotel Del 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, Operating Lessee agrees that in consideration of the substantial
benefit that it will receive from Lender making the Loan to Borrower, to comply
with all of the terms, conditions, obligations and restrictions affecting
Operating Lessee set forth herein:

 

OPERATING
LESSEE:




HOTEL DEL
CORONADO, LP, 

a
Delaware limited partnership







By: CNL Hotel
Del Tenant Corp., 

a
Delaware corporation,

its sole
General Partner 




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

Name: 
John X. Brady, Jr.

Title:   
Vice Presient




 

By
signing below, General Partner agrees that in consideration of the substantial
benefit that it will receive from Lender making the Loan to Borrower, to comply
(or permit 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 Partners GP, LLC,

a
Delaware limited liability company







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

Name: 
John X. Brady, Jr.

Title: 
Vice President




[Lender's
signature appears on following page]

 






















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