Exhibit
10.21


 




 





MEZZANINE LOAN AGREEMENT


 


 


Dated as of
December 23, 2003


 


 


Between


 


 


ROSE MEZZANINE SPE, LP,

as Borrower


 


 


and


 


 


FLEET NATIONAL BANK,

as Lender




 





 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1 DEFINITIONS;
  PRINCIPLES OF CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
  DEFINITIONS

  	
   

  
	
  SECTION 1.2.

  	
  PRINCIPLES OF CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 GENERAL TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
  LOAN
  COMMITMENT; DISBURSEMENT TO BORROWER

  	
   

  
	
  SECTION 2.2.

  	
  INTEREST RATE

  	
   

  
	
  SECTION 2.3.

  	
  LOAN PAYMENTS

  	
   

  
	
  SECTION 2.4.

  	
  PREPAYMENTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 CONDITIONS
  PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
  REPRESENTATIONS
  AND WARRANTIES; COMPLIANCE WITH CONDITIONS

  	
   

  
	
  SECTION 3.2.

  	
  DELIVERY OF
  LOAN DOCUMENTS; REPORTS; LEASES

  	
   

  
	
  SECTION 3.3.

  	
  RELATED DOCUMENTS

  	
   

  
	
  SECTION 3.4.

  	
  ORGANIZATIONAL DOCUMENTS

  	
   

  
	
  SECTION 3.5.

  	
  OPINIONS OF BORROWER’S
  COUNSEL

  	
   

  
	
  SECTION 3.6.

  	
  ANNUAL BUDGET

  	
   

  
	
  SECTION 3.7.

  	
  TAXES AND OTHER CHARGES

  	
   

  
	
  SECTION 3.8.

  	
  COMPLETION OF PROCEEDINGS

  	
   

  
	
  SECTION 3.9.

  	
  PAYMENTS

  	
   

  
	
  SECTION 3.10.

  	
  TRANSACTION COSTS

  	
   

  
	
  SECTION 3.11.

  	
  NO MATERIAL ADVERSE CHANGE

  	
   

  
	
  SECTION 3.12.

  	
  OPERATING LEASES

  	
   

  
	
  SECTION 3.13.

  	
  LEASES; RENT ROLLS

  	
   

  
	
  SECTION 3.14.

  	
  TENANT ESTOPPELS

  	
   

  
	
  SECTION 3.15.

  	
  REA ESTOPPELS

  	
   

  
	
  SECTION 3.16.

  	
  SUBORDINATION AND
  ATTORNMENT

  	
   

  
	
  SECTION 3.17.

  	
  TAX LOT

  	
   

  
	
  SECTION 3.18.

  	
  PHYSICAL
  CONDITIONS REPORT; PIP REPORT

  	
   

  
	
  SECTION 3.19.

  	
  MANAGEMENT AGREEMENT

  	
   

  
	
  SECTION 3.20.

  	
  APPRAISAL

  	
   

  
	
  SECTION
  3.21.

  	
  FINANCIAL
  STATEMENTS

  	
   

  
	
  SECTION
  3.22.

  	
  NET
  OPERATING INCOME

  	
   

  
	
  SECTION
  3.23.

  	
  FRANCHISE
  AGREEMENTS

  	
   

  
	
  SECTION
  3.24.

  	
  GROUND
  LEASE

  	
   

  
	
  SECTION
  3.25.

  	
  FURTHER
  DOCUMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.1.

  	
  ORGANIZATION

  	
   

  
	
  SECTION
  4.2.

  	
  STATUS
  OF BORROWER; AFFILIATED LESSEE

  	
   

  
	
  SECTION
  4.3.

  	
  VALIDITY
  OF DOCUMENTS

  	
   

  
	
  SECTION
  4.4.

  	
  NO
  CONFLICTS

  	
   

  
	
  SECTION
  4.5.

  	
  LITIGATION

  	
   

  
	
  SECTION
  4.6.

  	
  AGREEMENTS

  	
   

  
	
  SECTION
  4.7.

  	
  SOLVENCY

  	
   

  
	
  SECTION
  4.8.

  	
  FULL
  AND ACCURATE DISCLOSURE

  	
   

  
	
  SECTION
  4.9.

  	
  NO PLAN
  ASSETS

  	
   

  
	
  SECTION
  4.10.

  	
  NOT A
  FOREIGN PERSON

  	
   

  
	
  SECTION
  4.11.

  	
  ENFORCEABILITY

  	
   

  
	
  SECTION
  4.12.

  	
  BUSINESS
  PURPOSES

  	
   

  



 


i

















 


	
  SECTION
  4.13.

  	
  COMPLIANCE

  	
   

  
	
  SECTION
  4.14.

  	
  FINANCIAL
  INFORMATION

  	
   

  
	
  SECTION
  4.15.

  	
  ILLEGAL
  ACTIVITY

  	
   

  
	
  SECTION
  4.16.

  	
  PERMITTED
  ENCUMBRANCES

  	
   

  
	
  SECTION
  4.17.

  	
  FEDERAL
  RESERVE REGULATIONS

  	
   

  
	
  SECTION
  4.18.

  	
  INVESTMENT
  COMPANY ACT

  	
   

  
	
  SECTION
  4.19.

  	
  NO
  CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE

  	
   

  
	
  SECTION
  4.20.

  	
  SPECIAL
  PURPOSE ENTITY

  	
   

  
	
  SECTION
  4.21.

  	
  INTELLECTUAL
  PROPERTY

  	
   

  
	
  SECTION
  4.22.

  	
  EMBARGOED
  PERSON

  	
   

  
	
  SECTION
  4.23.

  	
  PATRIOT
  ACT

  	
   

  
	
  SECTION
  4.24.

  	
  MORTGAGE
  LOAN REPRESENTATIONS

  	
   

  
	
  SECTION
  4.25.

  	
  NO
  CONTRACTUAL OBLIGATIONS

  	
   

  
	
  SECTION
  4.26.

  	
  PLEDGED
  SECURITIES

  	
   

  
	
  SECTION
  4.27.

  	
  TAXES

  	
   

  
	
  SECTION
  4.28.

  	
  SURVIVAL;
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5
  BORROWER COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.1.

  	
  EXISTENCE;
  COMPLIANCE WITH LEGAL REQUIREMENTS

  	
   

  
	
  SECTION
  5.2.

  	
  MAINTENANCE
  AND USE OF PROPERTY

  	
   

  
	
  SECTION
  5.3.

  	
  WASTE

  	
   

  
	
  SECTION
  5.4.

  	
  TAXES
  AND OTHER CHARGES

  	
   

  
	
  SECTION
  5.5.

  	
  LITIGATION

  	
   

  
	
  SECTION
  5.6.

  	
  ACCESS
  TO PROPERTY

  	
   

  
	
  SECTION
  5.7.

  	
  NOTICE
  OF DEFAULT

  	
   

  
	
  SECTION
  5.8.

  	
  COOPERATE
  IN LEGAL PROCEEDINGS

  	
   

  
	
  SECTION
  5.9.

  	
  PERFORMANCE
  BY BORROWER

  	
   

  
	
  SECTION
  5.10.

  	
  AWARDS;
  INSURANCE PROCEEDS

  	
   

  
	
  SECTION
  5.11.

  	
  FINANCIAL
  REPORTING

  	
   

  
	
  SECTION
  5.12.

  	
  ESTOPPEL
  STATEMENT

  	
   

  
	
  SECTION
  5.13.

  	
  OPERATING
  LEASE; LEASING MATTERS

  	
   

  
	
  SECTION
  5.14.

  	
  PROPERTY
  MANAGEMENT

  	
   

  
	
  SECTION
  5.15.

  	
  LIENS

  	
   

  
	
  SECTION
  5.16.

  	
  DEBT
  CANCELLATION

  	
   

  
	
  SECTION
  5.17.

  	
  ZONING

  	
   

  
	
  SECTION
  5.18.

  	
  ERISA

  	
   

  
	
  SECTION
  5.19.

  	
  NO
  JOINT ASSESSMENT

  	
   

  
	
  SECTION
  5.20.

  	
  RECIPROCAL
  EASEMENT AGREEMENTS

  	
   

  
	
  SECTION
  5.21.

  	
  ALTERATIONS

  	
   

  
	
  SECTION
  5.22.

  	
  FRANCHISE
  AGREEMENTS.

  	
   

  
	
  SECTION
  5.23.

  	
  GROUND
  LEASE

  	
   

  
	
  SECTION
  5.24.

  	
  INTEREST
  RATE CAP AGREEMENT

  	
   

  
	
  SECTION
  5.25.

  	
  NOTICES

  	
   

  
	
  SECTION
  5.26.

  	
  CURING

  	
   

  
	
  SECTION
  5.27.

  	
  SPECIAL
  DISTRIBUTIONS

  	
   

  
	
  SECTION
  5.28.

  	
  LIMITATION
  ON SECURITIES ISSUANCES

  	
   

  
	
  SECTION
  5.29.

  	
  LIMITATIONS
  ON DISTRIBUTIONS

  	
   

  
	
  SECTION
  5.30.

  	
  OTHER
  LIMITATIONS

  	
   

  
	
  SECTION
  5.31.

  	
  CONTRACTUAL
  OBLIGATIONS

  	
   

  
	
  SECTION
  5.32.

  	
  MANAGER
  OF FLINT PROPERTY

  	
   

  
	
  SECTION
  5.33.

  	
  CONSOLIDATED
  TANGIBLE NET WORTH

  	
   

  
	
  SECTION
  5.34.

  	
  REFINANCING

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6
  ENTITY COVENANTS

  	
   

  



 


ii

















 


	
  SECTION
  6.1.

  	
  SINGLE
  PURPOSE ENTITY/SEPARATENESS

  	
   

  
	
  SECTION
  6.2.

  	
  CHANGE
  OF NAME, IDENTITY OR STRUCTURE

  	
   

  
	
  SECTION
  6.3.

  	
  BUSINESS
  AND OPERATIONS

  	
   

  
	
  SECTION
  6.4.

  	
  INDEPENDENT
  DIRECTOR

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 NO
  SALE OR ENCUMBRANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.1.

  	
  TRANSFER
  DEFINITIONS

  	
   

  
	
  SECTION
  7.2.

  	
  NO
  SALE/ENCUMBRANCE

  	
   

  
	
  SECTION
  7.3.

  	
  PERMITTED
  TRANSFERS

  	
   

  
	
  SECTION
  7.4.

  	
  LENDER’S
  RIGHTS

  	
   

  
	
  SECTION
  7.5.

  	
  ASSUMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8
  INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.1.

  	
  INSURANCE

  	
   

  
	
  SECTION
  8.2.

  	
  CASUALTY

  	
   

  
	
  SECTION
  8.3.

  	
  CONDEMNATION

  	
   

  
	
  SECTION
  8.4.

  	
  RESTORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9
  RESERVE FUNDS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10
  CASH MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11
  EVENTS OF DEFAULT; REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  11.1.

  	
  EVENT
  OF DEFAULT

  	
   

  
	
  SECTION
  11.2.

  	
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12
  ENVIRONMENTAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  12.1.

  	
  ENVIRONMENTAL
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  SECTION
  12.2.

  	
  ENVIRONMENTAL
  COVENANTS

  	
   

  
	
  SECTION
  12.3.

  	
  LENDER’S
  RIGHTS

  	
   

  
	
  SECTION
  12.4.

  	
  OPERATIONS
  AND MAINTENANCE PROGRAMS

  	
   

  
	
  SECTION
  12.5.

  	
  ENVIRONMENTAL
  DEFINITIONS

  	
   

  
	
  SECTION
  12.6.

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13
  SECONDARY MARKET

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.1.

  	
  TRANSFER
  OF LOAN

  	
   

  
	
  SECTION
  13.2.

  	
  DELEGATION
  OF SERVICING

  	
   

  
	
  SECTION
  13.3.

  	
  DISSEMINATION
  OF INFORMATION

  	
   

  
	
  SECTION
  13.4.

  	
  COOPERATION

  	
   

  
	
  SECTION
  13.5.

  	
  SECURITIZATION
  INDEMNIFICATION

  	
   

  
	
  SECTION
  13.6.

  	
  INTENTIONALLY
  OMITTED.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14
  INDEMNIFICATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  14.1.

  	
  GENERAL
  INDEMNIFICATION

  	
   

  
	
  SECTION
  14.2.

  	
  INTANGIBLE
  TAX INDEMNIFICATION

  	
   

  
	
  SECTION
  14.3.

  	
  ERISA
  INDEMNIFICATION

  	
   

  
	
  SECTION
  14.4.

  	
  SURVIVAL

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15
  EXCULPATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  15.1.

  	
  EXCULPATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  16.1.

  	
  NOTICES

  	
   

  



 


iii

















 


	
  ARTICLE 17
  FURTHER ASSURANCES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  17.1.

  	
  REPLACEMENT
  DOCUMENTS

  	
   

  
	
  SECTION
  17.2.

  	
  INTENTIONALLY
  OMITTED

  	
   

  
	
  SECTION
  17.3.

  	
  FURTHER
  ACTS, ETC.

  	
   

  
	
  SECTION
  17.4.

  	
  CHANGES
  IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS

  	
   

  
	
  SECTION
  17.5.

  	
  EXPENSES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 18
  WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  18.1.

  	
  REMEDIES
  CUMULATIVE; WAIVERS

  	
   

  
	
  SECTION
  18.2.

  	
  MODIFICATION,
  WAIVER IN WRITING

  	
   

  
	
  SECTION
  18.3.

  	
  DELAY
  NOT A WAIVER

  	
   

  
	
  SECTION
  18.4.

  	
  TRIAL
  BY JURY

  	
   

  
	
  SECTION
  18.5.

  	
  WAIVER
  OF NOTICE

  	
   

  
	
  SECTION
  18.6.

  	
  REMEDIES
  OF BORROWER

  	
   

  
	
  SECTION
  18.7.

  	
  WAIVER
  OF MARSHALLING OF ASSETS

  	
   

  
	
  SECTION
  18.8.

  	
  WAIVER
  OF STATUTE OF LIMITATIONS

  	
   

  
	
  SECTION
  18.9.

  	
  WAIVER
  OF COUNTERCLAIM

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  19.1.

  	
  CHOICE
  OF LAW

  	
   

  
	
  SECTION
  19.2.

  	
  SEVERABILITY

  	
   

  
	
  SECTION
  19.3.

  	
  PREFERENCES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 20
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  20.1.

  	
  SURVIVAL

  	
   

  
	
  SECTION
  20.2.

  	
  LENDER’S
  DISCRETION

  	
   

  
	
  SECTION
  20.3.

  	
  HEADINGS

  	
   

  
	
  SECTION
  20.4.

  	
  COST OF
  ENFORCEMENT

  	
   

  
	
  SECTION
  20.5.

  	
  SCHEDULES
  INCORPORATED

  	
   

  
	
  SECTION
  20.6.

  	
  OFFSETS,
  COUNTERCLAIMS AND DEFENSES

  	
   

  
	
  SECTION
  20.7.

  	
  NO
  JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES

  	
   

  
	
  SECTION
  20.8.

  	
  PUBLICITY

  	
   

  
	
  SECTION
  20.9.

  	
  CONFLICT;
  CONSTRUCTION OF DOCUMENTS; RELIANCE

  	
   

  
	
  SECTION
  20.10.

  	
  ENTIRE
  AGREEMENT

  	
   

  
	
  SECTION
  20.11.

  	
  TAX
  DISCLOSURE

  	
   

  



 


iv

















 


MEZZANINE LOAN AGREEMENT


 


THIS MEZZANINE
LOAN AGREEMENT, dated as of December 23, 2003 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this “Agreement”),
between FLEET NATIONAL BANK, a national banking association, having an address
at 100 Federal Street, MA DE 10009A, Boston, Massachusetts 02110 (together with
its successors and/or assigns, “Lender”) and ROSE MEZZANINE SPE, LP, a
Delaware limited partnership having an address at 450 South Orange Avenue,
Orlando, Florida 32801-3336 (together with its successors and/or assigns, “Borrower”).


 


RECITALS:


 


WHEREAS, Bank of
America, N.A., a national banking association, as mortgage lender (together
with its successors and assigns, “Mortgage Lender”) is making a loan
in the principal amount of $130,000,000.00 (the “Mortgage Loan”)
(a) evidenced by (i) an Amended and Restated Promissory Note of even date
herewith (together with any and all extensions, renewals, substitutions,
replacements, amendments, modifications and/or restatements thereof, the “Mortgage Note”) made by Rose SPE 1, LP,
a Delaware limited partnership (“Mortgage Borrower”) and (ii) an Amended and
Restated Loan Agreement of even date herewith (as the same may be amended,
modified and in effect from time to time, the “Mortgage Loan Agreement”),
and (b) secured by, among other things, certain fee and/or leasehold deeds of
trust, mortgages, and deeds to secure debt 
(individually and collectively, as the case may be, together with any
and all extensions, renewals, substitutions, replacements, amendment,
modifications and/or restatements thereof, the “Mortgage”),
which Mortgages grant Mortgage Lender a first priority lien on, among other
things, the properties more fully described in each Mortgage (each a “Property”
and collectively, the “Properties”).


 


WHEREAS, Borrower
is the legal and beneficial owner of: 
(i) 99.0% of the limited partnership interests in Mortgage Borrower
and (ii) 100% of the membership interests of Rose SPE 1 GP, LLC, a
Delaware limited liability company (“Mortgage Borrower GP”), the general partner
of Mortgage Borrower and the legal and beneficial holder of the 1.0% general
partnership interest in Mortgage Borrower (said 99.0% limited partnership
interest in Mortgage Borrower and 100% membership interest in Mortgage Borrower
GP, collectively, the “Pledged Securities”).


 


WHEREAS Borrower
is the legal and beneficial owner of all of the Pledged Securities.


 


WHEREAS, Borrower
has requested Lender to make a loan to it in the aggregate principal amount of
$35,000,000.00 (as the same may be reduced in accordance with this Agreement,
the “Loan”).


 


WHEREAS, as a
condition precedent to the obligation of Lender to make the Loan to Borrower,
Borrower has entered into that certain Pledge and Security Agreement, dated of
even date herewith, in favor of Lender (as amended, restated, replaced,
supplemented or


 

















 


otherwise modified from time to time, “Pledge Agreement”),
pursuant to which Borrower has granted to Lender a first priority security interest
in its respective Collateral (as defined in the Pledge Agreement) as collateral
security for the Debt (as defined below).


 


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:


 


ARTICLE 1

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
Accountant” shall mean a “Big Four” accounting firm or other
independent certified public accountant acceptable to Lender.


 


“Acceptable
Counterparty” shall mean any counterparty to the Rate Cap that
has and shall maintain, until the expiration of the applicable Rate Cap, a
credit rating of not less than AA- from S&P and not less than Aa3 from
Moody’s.


 


“Acquired
Property” shall have the meaning set forth in
Section 5.11(c)(i)(A) hereof.


 


“Acquired
Property Statements” shall have the meaning set forth in
Section 5.11(c)(i)(A) hereof.


 


“Act”
shall have the meaning set forth in Section 6.1.


 


“Affiliate”
shall mean, as to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by or is under common control with such Person or
is a director or officer of such Person or of an Affiliate of such Person.


 


“Affiliated
Lessee” shall mean, individually or collectively, as the context
may require, any operating lessee under an Operating Lease, which is an
Affiliate of Borrower and which qualifies as a special purpose entity as
defined from time to time by the Rating Agencies, provided that such operating
lessee shall be selected in accordance with the terms hereof.  As of the date hereof, the term Affiliated
Lessee shall refer to CNL Rose SPE Tenant Corp., a Delaware corporation, the
current operating lessee of each Property other than the “Miami Lakes Property”
and the “Miami Airport West Property” (each as defined on Schedule A
attached hereto), and an Affiliate of Borrower.


 


“Affiliated
Loans” shall mean a loan made by Lender to a parent, subsidiary
or other entity which is an Affiliate of Borrower or Borrower Principal.


 


“Affiliated
Manager” shall have the meaning set forth in Section 7.1
hereof.


 


2

















 


“Allocated
Loan Amount” shall mean as of the Closing Date a certain portion
of the original principal amount of the Note allocated, solely for the purposes
of performing certain calculations hereunder, to each Property based on the
initial Allocated Loan Percentages, as the same shall hereafter be reduced by
(a) ratable application of payments of principal made under and in accordance
with the terms of this Agreement and the Note, determined based on the
Allocated Loan Percentage and/or (b) deemed reductions attributable to any
partial prepayment made pursuant to the provisions of Section 2.4(c)(ii)
hereof.  The Allocated Loan Amounts
shall at all times equal the then outstanding principal balance of the
Note.  The initial Allocated Loan
Amounts are set forth on Schedule A hereto.


 


“Allocated
Loan Percentage” shall mean that proportion, expressed as a
percentage, which each Allocated Loan Amount, if any, bears to the outstanding
principal balance of the Note.  The sum
of the Allocated Loan Percentages shall at all times equal 100%.  The initial Allocated Loan Percentages are
as set forth on Schedule A hereto.


 


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


 


“Alteration
Threshold” means with respect to any particular Property five
percent (5%) of the then Allocated Loan Amount attributable to such Property.


 


“Annex”
shall have the meaning set forth in Section 4.23 hereof.


 


“Annual
Budget” shall mean, individually or collectively, as the context
may require, the operating budgets, including all planned capital expenditures,
for each Property approved by Lender in accordance with
Section 5.11(a)(iv) hereof for the applicable calendar year or other
period.


 


“Award”
shall mean any compensation paid by any Governmental Authority in connection
with a Condemnation in respect of all or any part of any Property.


 


“Borrower
Partnership Agreement” 
shall mean that certain Amended and Restated Partnership Agreement of
Rose Mezzanine SPE, LP, dated as of December 4, 2003, by and between Rose
Mezzanine SPE GP, LLC, a Delaware limited liability company, as general
partner, and RFS Partnership, L.P. and RFS Financing Partnership, L.P., each a
Tennessee limited partnership, as limited partners.


 


“Borrower
Principal” shall mean RFS Partnership, L.P., a Tennessee limited
partnership.


 


“Breakage
Costs” shall have the meaning set forth in
Section 2.3(f)(v) hereof.


 


“Bridge
Loan” shall have the meaning set forth in the Mortgage Loan
Agreement.


 


“Business
Day” shall mean any day other than (i) a Saturday or a Sunday or
(ii) a day on which federally insured depository institutions in the States of
New York or North Carolina or the state in which the offices of the Lender’s
servicer and the trustee in the Securitization are located are authorized or
obligated by law, governmental decree or executive order to be closed, except
that when used with respect to the determination of LIBOR, “Business Day” shall
be a


 


3

















 


day on which commercial banks are open for international business
(including dealings in U.S. Dollar deposits) in London, England.


 


“Cash
Management Account” shall mean an Eligible Account established
pursuant to the Cash Management Agreement.


 


“Cash
Management Agreement” shall mean that certain Cash Management
Agreement by and among Mortgage Borrower, Agent and Mortgage Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified
from time to time, relating to funds deposited in the Cash Management Account.


 


“Casualty”
shall have the meaning set forth in Section 8.2.


 


“Closing
Date” shall mean the date of the funding of the Loan.


 


“Collateral”
shall have the meaning set forth in the Pledge Agreement.


 


“Collateral
Assignment of Interest Rate Cap” shall mean that certain
Collateral Assignment of Interest Rate Cap Agreement, dated as of the date
hereof, executed by Borrower in connection with the Loan for the benefit of
Lender, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.


 


“Condemnation”
shall mean a temporary or permanent taking by any Governmental Authority as the
result, in lieu or in anticipation, of the exercise of the right of condemnation
or eminent domain, of all or any part of any Property, or any interest therein
or right accruing thereto, including any right of access thereto or any change
of grade affecting any Property or any part thereof.


 


“Condemnation
Proceeds” shall have the meaning set forth in
Section 8.4(b).


 


“Consequential
Loss” shall have the meaning set forth in Section 2.3(f)(i)
hereof.


 


“Consolidated
Tangible Net Worth” means, for Borrower Principal and its
Subsidiaries on a consolidated basis as of any date of determination, Partners’
Capital on that date minus Intangible Assets on that date.


 


“Contractual
Obligation” shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or undertaking
to which such Person is a party or by which it or any of its property is bound,
or any provision of the foregoing.


 


“Control”
shall have the meaning set forth in Section 7.1 hereof.


 


“Creditors
Rights Laws” shall mean with respect to any Person any existing
or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to its debts or debtors.


 


4

















 


“Debt”
shall mean the outstanding principal amount set forth in, and evidenced by,
this Agreement and the Note, without duplication, together with all interest
accrued and unpaid thereon and all other sums due to Lender in respect of the
Loan under the Note, this Agreement, the Pledge Agreement or any other Loan
Document.


 


“Debt
Service” shall mean, with respect to any particular period of
time, scheduled principal and/or 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 mean, with respect to the Loan, a rate per annum
equal to the lesser of (a) the maximum rate permitted by applicable law, or (b)
four percent (4%) above the Note Rate.


 


“Determination
Date” shall mean (a) with respect to any Interest Period prior
to the Interest Period within which the Securitization Closing Date occurs, two
(2) Business Days prior to the start of the applicable Interest Period; (b)
with respect to the Interest Period within which the Securitization Closing
Date occurs, (i) for that portion of such Interest Period which ends on the day
prior to the Securitization Closing Date, the date that is two (2) Business
Days prior to the start of such Interest Period, and (ii) for the remaining
portion of such Interest Period which commences on the Securitization Closing
Date, the date that is two (2) Business Days prior to the Securitization
Closing Date; and (iii) with respect to each Interest Period thereafter, the
date that is two (2) Business Days prior to the beginning of such Interest
Period.


 


“Disclosure
Document” shall have the meaning set forth in Section 13.5
hereof.


 


“Eligible
Account” shall mean a separate and identifiable account from all
other funds held by the holding institution that is either (a) an account or
accounts maintained with a federal or state chartered depository institution or
trust company which complies with the definition of Eligible Institution or (b)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or
trust company, is subject to regulations substantially similar to 12 C.F.R.
§9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal and state
authority.  An Eligible Account will not
be evidenced by a certificate of deposit, passbook or other instrument.


 


“Eligible
Institution” shall mean Bank of America, N.A. or a depository
institution or trust company insured by the Federal Deposit Insurance
Corporation, the short term unsecured debt obligations or commercial paper of
which are rated at least “A-1+” by S&P, “P-1” by Moody’s and “F-1+” by
Fitch in the case of accounts in which funds are held for thirty (30) days or
less (or, in the case of accounts in which funds are held for more than thirty
(30) days, the long term unsecured debt obligations of which are rated at least
“AA” by Fitch and S&P and “Aa2” by Moody’s).


 


“Embargoed
Person” shall have the meaning set forth in Section 4.22
hereof.


 


5

















 


“Environmental
Law” shall have the meaning set forth in Section 12.5
hereof.


 


“Environmental
Liens” shall have the meaning set forth in Section 12.5
hereof.


 


“Environmental
Report” shall have the meaning set forth in Section 12.5
hereof.


 


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time and any successor statutes thereto and applicable regulations
issued pursuant thereto in temporary or final form.


 


“Event of
Default” shall have the meaning set forth in Section 11.1
hereof.


 


“Exchange
Act” shall mean the Securities and Exchange Act of 1934, as
amended.


 


“Exchange
Act Filing” shall have the meaning set forth in
Section 5.11(c) hereof.


 


“Extended
Maturity Date” shall have the meaning set forth in
Section 2.3(b).


 


“Extension
Fee” shall mean 0.250% of the original principal amount of the
Note.


 


“Extension
Option” shall have the meaning set forth in Section 2.3(b).


 


“FF&E”
shall mean all furniture, fixtures, outfittings, apparatus, equipment and all
other items of personal property of the type customarily installed in, held in
storage for use in, used in or required for use in connection with any Property
as a hotel.


 


“First
Payment Date” shall mean the Payment Date occurring in January,
2004.


 


“Fitch”
shall mean Fitch, Inc.


 


“Flagstone”
shall have the meaning set forth in Schedule B hereof.


 


“Flint
Property” shall have the meaning set forth in Schedule B
hereof.


 


“Foreign
Taxes” shall have the meaning set forth in
Section 2.3(f)(ii).


 


“Franchise
Agreement” shall mean, individually or collectively, as the
context may require, each franchise or similar agreement entered into by and
between the applicable Operating Lessee and Franchisor pursuant to which the Operating
Lessee is permitted to operate the applicable Property under the “flag” or
other trade name that is the subject thereof, as the same may be amended,
restated, replaced, supplemented or otherwise modified in accordance with the
terms hereof and of the Mortgage Loan Agreement; provided that, as long as the
Non-Affiliated Lessee leases the Miami Lakes Property or the Miami Airport West
Property, as to such Property, the term “Franchise Agreement” shall exclude any
franchise or similar agreement entered into by such Operating Lessee.


 


“Franchisor”
shall mean, individually or collectively, as the context may require, each
franchisor under a Franchise Agreement. 
As of the date hereof, each Franchisor of each such


 


6

















 


Property is set forth on Schedule B attached hereto, selected in
accordance with the terms of this Agreement and the Mortgage Loan Agreement.


 


“GAAP”
shall mean generally accepted accounting principles in the United States of
America as of the date of the applicable financial report.


 


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


 


“Ground
Lease” means, individually or collectively, as the context may
require, that certain (a) Ground Lease dated November 30, 1987 between
Commonwealth Trust Company, trustee for the Chopin Trust, as Lessor, and RFP
Group, Inc., as Lessee, the terms of which were amended and evidenced of record
by that certain Memorandum and Amendment to Ground Lease Agreement dated as of
June 20, 1988 and recorded in Book 730, Page 289 of the Office of the
Recorder of Deeds for new Castle County, Delaware, between Commonwealth Trust
Company, trustee for the Chopin Trust and RFP Group, Inc., as assigned under
Assignment of Lease from RFP Group, Inc. to RFS Partnership, L.P. dated
October 14, 1994 and recorded in Deed Book 1824, Page 196 and further
assigned by that certain assignment by RFS Partnership, L.P. to Mortgage
Borrower, and as amended by that certain Ground Lease Estoppel and Agreement by
Northtowne, Inc., as successor trustee for Chopin Trust, and Borrower and
agreed and consented to by the National Life Insurance Company of Vermont all
with respect to the “Wilmington Newark Property” (as defined on
Schedule A) (such Ground Lease, the “Wilmington Ground Lease”) and (b) Lease
between Shively Masonic Lodge No. 951, F. & A.M. by and through its Board
of Trustees and its Building Committee, as Lessor, and West, Inc. d/b/a Holiday
Inn Southwest, as Lessee which was recorded at Book 5039, Page 873 in the
Office of the Clerk of the County Court of Jefferson County, Kentucky being the
same leasehold estate which was acquired by LVSW Partners, LP, a Tennessee
limited partnership, from West, Inc. by Assignment of Lease dated
November 27, 1984 and recorded in Deed Book 5463, page 861 in the
aforesaid clerk’s office, which was further assigned to RFS Partnership, L.P.
by Assignment of Lease dated August 5, 1993 and recorded in Book 6345,
Page 085 in the same clerk’s office and which was further assigned by RFS
Partnership, L.P. to Mortgage Borrower, under Assignment and Assumption of
Ground Lease dated as of and recorded promptly following the date hereof, all
with respect to the “Louisville Southwest Property” (as defined on
Schedule A) (such Ground Lease, the “Louisville Southwest Ground Lease”).


 


“Hazardous
Materials” shall have the meaning set forth in Section 12.5
hereof.


 


“Improvements”
shall have the meaning set forth in the granting clause of the Mortgage.


 


“Indemnified
Parties” shall mean (a) Lender, (b) any prior owner or holder of
the Loan or Participations in the Loan, (c) any servicer or prior servicer of
the Loan, (d) any Investor or any prior Investor in any Securities, (e) any
trustees, custodians or other fiduciaries who hold or who have held a full or
partial interest in the Loan for the benefit of any Investor or other third
party, (f) any receiver  or other
fiduciary appointed in a foreclosure or other Creditors Rights Laws proceeding,
(g) any officers, directors, shareholders, partners, members, employees,


 


7

















 


agents, servants, representatives, contractors, subcontractors,
Affiliates or subsidiaries of any and all of the foregoing, and (h) the heirs,
legal representatives, successors and assigns of any and all of the foregoing
(including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of the Indemnified Parties’ assets
and business), in all cases whether during the term of the Loan or as part of
or following a foreclosure of any or all of the Mortgages.


 


“Indemnity”
means that certain Indemnity Agreement of even date herewith from Borrower
Principal to Lender as amended, modified and in effect from time to time.


 


“Independent Director” shall
have the meaning set forth in Section 6.4 hereof.


 


“Insurance
Premiums” shall have the meaning set forth in
Section 8.1(b) hereof.


 


“Insurance
Proceeds” shall have the meaning set forth in
Section 8.4(b) hereof.


 


“Intangible Assets”
means assets that are considered to be intangible assets under GAAP, including
customer lists, goodwill, computer software, copyrights, trade names,
trademarks, patents, franchises, licenses, unamortized deferred charges,
unamortized debt discount, and capitalized research and development costs.


 


“Intercreditor
Agreement” shall mean the Intercreditor Agreement, dated of even
date herewith, by and between Lender and Mortgage Lender.


 


“Interest
Period” shall mean (a) with respect to the initial period for
the accrual of interest due under this Agreement, the Interim Interest Period,
and (b) with respect to the First Payment Date and each Payment Date
thereafter, the period from and including the Selected Day immediately
preceding the applicable Payment Date through but excluding the Selected Day
next occurring after the applicable Payment Date.  Notwithstanding the foregoing clause (b), if the Lender so elects
at any time, the “Interest Period” shall be the calendar month preceding each
Payment Date.


 


“Interim
Interest Period” shall mean the period from and including the
Closing Date through but excluding the Selected Day first occurring after the
Closing Date, provided, however, there shall be no “Interim Interest Period” in
the event the Closing Date shall occur on a Selected Day.


 


“Internal
Revenue 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.


 


“Investor”
shall have the meaning set forth in Section 13.3 hereof.


 


“Issuer
Group” shall have the meaning set forth in Section 13.5(b)
hereof.


 


“Issuer
Person” shall have the meaning set forth in Section 13.5(b)
hereof.


 


8

















 


“Lease”
shall have the meaning set forth in the Mortgages (and shall include, but not
be limited to, each Operating Lease).


 


“Legal
Requirements” shall mean all statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities
affecting Borrower, Mortgage Borrower, Mortgage Borrower GP, Borrower
Principal, any other SPE Component Entity, Affiliated Lessee, the Collateral,
any Property or any part thereof, or the construction, use, alteration or
operation thereof, whether now or hereafter enacted and in force, and all
permits, licenses, authorizations and regulations relating thereto, and all
covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to Borrower or Mortgage Borrower, at any
time in force affecting Borrower, Mortgage Borrower, Mortgage Borrower GP, any
other SPE Component Entity, Borrower Principal, Affiliated Lessee, the
Collateral, any Property or any part thereof, including, without limitation,
any which may (a) require repairs, modifications or alterations in or to any
Property or any part thereof, or (b) in any way materially limit the use and
enjoyment thereof for hotel and related uses.


 


“Letter of
Credit”  shall mean an
irrevocable, unconditional, transferable, clean sight draft letter of credit
acceptable to Lender and the Rating Agencies (either an evergreen letter of
credit or one which does not expire until the applicable date in the event of a
Letter of Credit delivered pursuant to the provisions of Section 5.21) in
favor of Lender and entitling Lender to draw thereon in New York, New York
issued by a domestic Eligible Institution or the U.S. agency or branch of a
foreign Eligible Institution.  If at any
time the bank issuing the Letter of Credit shall cease to be an Eligible
Institution, Lender shall have the right to immediately draw down the Letter of
Credit in full and apply the proceeds thereof in accordance with the terms
hereof.


 


“LIBOR” shall mean, with respect to each
Interest Period, a rate of interest per annum obtained by dividing


 


(a)                                  the
rate for deposits in U.S. Dollars, for a period equal to one month, which
appears on the Telerate Page 3750 as of 11:00 a.m., London time, on the related
Determination Date; provided, however, if Telerate is unavailable, the rate
shall be as specified on Reuters Screen LIBOR Page or, more than one rate is
specified on Reuters Screen LIBOR Page, the LIBOR Rate shall be the arithmetic
mean of all rates.  Lender shall
determine the LIBOR Rate for each Interest Period and Selected Day and the
determination of the LIBOR Rate by Lender shall be binding upon Borrower absent
manifest error, by


 


(b)                                 a
percentage equal to 100% minus the applicable Reserve Percentage then in
effect.


 


LIBOR may or may
not be the lowest rate based upon the market for U.S. Dollar deposits in the
London Interbank Eurodollar Market at which the Lender prices loans on the date
which LIBOR is determined by Lender as set forth above.


 


“LIBOR
Loan” shall mean the Loan at such time as interest thereon
accrues at the LIBOR Rate.


 


“LIBOR
Margin” shall mean 4.65%.


 


9

















 


“LIBOR
Rate” shall mean the sum of (i) LIBOR plus (ii) the LIBOR
Margin, provided that the LIBOR Rate shall at no time be less than 6.65%.


 


“Lien”
shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting Borrower, Mortgage Borrower, Mortgage Borrower GP, any other
SPE Component Entity, the Collateral, any 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 mechanic’s, materialmen’s and other similar liens and encumbrances.


 


“Liquidation
Event” shall have the meaning set forth in Section 2.4(g)
hereof.


 


“LLC
Agreement” shall have the meaning set forth in Section 6.1.


 


“Loan”
shall mean the loan made by Lender to Borrower pursuant to this Agreement.


 


“Loan
Documents” shall mean, collectively, this Agreement, the Note,
the Pledge Agreement, the Indemnity, each Subordination of Management
Agreement/Estoppel, the Collateral Assignment of Interest Rate Cap, each
Subordination, Non-Disturbance and Attornment Agreement, each Subordination and
Attornment Agreement, and any and all other documents, agreements and
certificates executed and/or delivered in connection with the Loan, as the same
may be amended, restated, replaced, supplemented or otherwise modified from
time to time.


 


“Lockout
Period” shall mean the period commencing on the date hereof
through and including the Payment Date occurring in June, 2005.


 


“Lockout
Yield Maintenance Premium” shall mean an amount equal to four  percent
(4%) of the then principal amount of the Loan.


 


“Losses”
shall mean any and all claims, suits, liabilities (including, without
limitation, strict liabilities), actions, proceedings, obligations, debts,
damages, losses, costs, expenses, fines, penalties, charges, fees, judgments,
awards, amounts paid in settlement of whatever kind or nature (including but
not limited to legal fees and other costs of defense).


 


“Louisville
Property” shall have the meaning set forth on Schedule B
attached hereto.


 


“Major
Lease” shall mean as to any Property (i) any Lease which,
individually or when aggregated with all other leases at such Property with the
same Tenant or its Affiliate, either (A) accounts for five percent (5%) or more
of such Property’s aggregate Net Operating Income, or (B) demises 5,000 square
feet or more of such Property’s gross leasable area, (ii) any Lease which
contains any option, offer, right of first refusal or other similar entitlement
to acquire all or any portion of any Property, or (iii) any instrument
guaranteeing or providing credit support for any Lease meeting the requirements
of (i) or (ii) above.  Without limiting
any of the foregoing, each Operating Lease shall be considered a Major Lease
for all purposes hereunder.


 


10

















 


“Management
Agreement” shall mean, individually or collectively, as the
context may require, each management agreement entered into by and between the
Operating Lessee and Manager, in form and substance reasonably acceptable to
Lender and Mortgage Lender in accordance with the terms of this Agreement and
the Mortgage Loan Agreement, pursuant to which each Manager is to provide
management and other services with respect to the applicable Property, as the
same may be amended, restated, replaced, supplemented or otherwise modified in
accordance with the terms hereof; provided that, as long as the Non-Affiliated
Lessee leases the Miami Lakes Property or the Miami Airport West Property, as
to each such Property, the term “Management Agreement” shall exclude any
management agreement entered into by such Operating Lessee.


 


“Manager”
shall mean, individually or collectively, as the context may require, each
manager of a Property under the terms of a Management Agreement.  As of the date hereof, each Manager of each
Property is set forth on Schedule B attached hereto, selected in
accordance with the terms of this Agreement and the Mortgage Loan Agreement.


 


“Maturity
Date” shall mean the Payment Date occurring in December, 2006,
as such date may be extended pursuant to Section 2.3(b) hereof.


 


“Maximum
Legal Rate” shall mean the maximum nonusurious 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.


 


“Member”
shall have the meaning set forth in Section 6.1(c) hereof.


 


“Miami
Airport West Property” shall have the meaning set forth on
Schedule B hereto.


 


“Miami
Lakes Property” shall have the meaning set forth on Schedule B
hereto.


 


“Monthly
Payment Amount” shall mean the monthly payment of interest due
on each Payment Date equal to the interest that has or will accrue at the Note
Rate during the Interest Period in which the applicable Payment Date shall
occur based on the outstanding principal balance of the Note (a) as the same
shall exist on the Closing Date in the instance of the First Payment Date and
(b) thereafter as the same shall exist on the Selected Day immediately
preceding the applicable Payment Date.


 


“Moody’s”
shall mean Moody’s Investor Services, Inc.


 


“Mortgage”
shall have the meaning set forth in the Recitals hereof.


 


“Mortgage
Borrower” shall have the meaning set forth in the Recitals
hereof


 


“Mortgage
Borrower GP” shall have the meaning set forth in the Recitals
hereof.


 


11

















 


“Mortgage
Borrower Partnership Agreement” shall mean that certain Amended
and Restated Limited Partnership Agreement of Rose SPE 1, LP dated as of
December 4, 2003, by and between Borrower and Mortgage Borrower GP.


 


“Mortgage
Lender” shall have the meaning set forth in the Recitals hereof.


 


“Mortgage
Loan” shall have the meaning set forth in the Recitals hereof.


 


“Mortgage
Loan Agreement” shall have the meaning set forth in the Recitals
hereof.


 


“Mortgage
Loan Documents” shall mean the “Loan Documents” as defined in
the Mortgage Loan Agreement.


 


“Mortgage
Loan Event of Default” shall mean an “Event of Default” under
and as defined in the Mortgage Loan Agreement.


 


“Mortgage
Note” shall have the meaning set forth in the Recitals hereto.


 


“Mortgage
Reserve Accounts” shall mean the “Reserve Accounts” as defined
in the Mortgage Loan Agreement.


 


“Net
Liquidation Proceeds After Debt Service” with respect to any
Liquidation Event, all amounts paid or payable to or received by or on behalf
of Mortgage Borrower in connection with such Liquidation Event, less amounts
required or permitted to be deducted therefrom pursuant to the Mortgage Loan
Documents and amounts paid pursuant to the Mortgage Loan Documents to Mortgage
Lender, including, without limitation, proceeds of any sale, refinancing or
other disposition or liquidation, the amount of any award or payment incurred
in connection with any condemnation or taking by eminent domain, and the amount
of any insurance proceeds paid in connection with any casualty loss, as
applicable, other than, in the case of a casualty loss or condemnation award,
amounts required or permitted by the terms of the Mortgage Loan Documents to be
applied to the restoration or repair of the Mortgaged Property, less (i) in the
case of a foreclosure sale or transfer of the Property in connection with
realization thereon following an Event of Default under the Mortgage Loan or
other disposition, such reasonable and customary costs and expenses of sale or
other disposition (including reasonable attorneys’ fees and brokerage
commissions), (ii) in the case of a foreclosure sale, such costs and expenses
incurred by Mortgage Lender under the Mortgage Loan Documents as Mortgage
Lender shall be entitled to receive reimbursement for under the terms of the
Mortgage Loan Documents, (iii) in the case of a casualty loss or condemnation,
such costs and expenses of collection (including reasonable attorneys’ fees) of
the related insurance proceeds or condemnation award as shall be approved by
Mortgage Lender pursuant to the terms of the Mortgage Loan Documents, or if the
Mortgage Loan has been paid in full, by Lender, and (iv) in the case of a
refinancing of the Mortgage Loan or the Property, such costs and expenses
(including reasonable attorneys’ fees) of such refinancing as shall be
reasonably approved by Lender.


 


“Net
Operating Income” shall mean, with respect to any period of
time, the amount obtained by subtracting Operating Expenses from Operating
Income, as such amount may be adjusted by Lender in its good faith discretion
based on Lender’s current underwriting standards


 


12

















 


and any underwriting standards then in use by any of the Rating Agencies,
including without limitation, adjustments for vacancy allowance.


 


“Net
Proceeds” shall have the meaning set forth in
Section 8.4(b) hereof.


 


“Net
Proceeds Deficiency” shall have the meaning set forth in
Section 8.4(b)(vi) hereof.


 


“Non-Affiliated Lessee”
shall mean, individually or collectively, as the context may require, each
operating lessee under an Operating Lease, which is not an Affiliate of
Borrower, provided that such operating lessee shall be selected in accordance
with the terms hereof.  As of the date
hereof, the term Non-Affiliated Lessee shall refer to Landcom Hospitality
Management, Inc., in its capacity as the lessee of (a) the Miami Lakes Property
and (b) the Miami Airport West Property.


 


“Note”
shall mean that certain Mezzanine Promissory Note of even date herewith in the
principal amount of $35,000,000, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.


 


“Note Rate”
shall mean (a) with respect to the Interim Interest Period, an interest rate
per annum equal to 6.65%; and (b) with respect to each Interest Period
thereafter, through and including the Interest Period in which the Maturity
Date or Extended Maturity Date, as applicable, shall occur, an interest rate
per annum equal to (i) the LIBOR Rate (in all cases where clause (ii) below
does not apply), or (ii) the Static LIBOR Rate, to the extent provided in
accordance with the provisions of Section 2.2(b).


 


“OFAC”
shall have the meaning set forth in Section 4.23 hereof.


 


“Offering
Document Date” shall have the meaning set forth in
Section 5.11(c)(i)(D) hereof.


 


“Officer’s
Certificate” shall mean a certificate delivered to Lender by
Borrower which is signed by an authorized officer of the general partner of
Borrower.


 


“Operating
Expenses” shall mean, with respect to any period of time, the
total of all expenses actually paid or payable, computed in accordance with
GAAP, of whatever kind relating to the operation, maintenance and management of
each Property, including without limitation, utilities, ordinary repairs and
maintenance, Insurance Premiums, Ground Rent (as defined in the Mortgage Loan
Agreement), license and franchise fees, Taxes and Other Charges, advertising
expenses, payroll and related taxes, computer processing charges, management
fees equal to the greater of four percent (4%) of the Operating Income of each
Property and the management fees actually paid under each Management Agreement,
operational equipment or other lease payments as approved by Lender, FF&E
expenditures equal to the greater of five percent (5%) per annum and the actual
FF&E expenditures per annum with respect to each Property, without
duplication of any other item identified above, all payments required to be made
pursuant to any Franchise Agreement and/or Management Agreement, but
specifically excluding  depreciation and amortization, income
taxes, Debt Service, any incentive fees due under the Management Agreement, any
item of expense that in accordance with GAAP should be capitalized but only to
the extent the same would qualify for funding from the Mortgage


 


13

















 


Reserve Accounts, any item of expense that would otherwise be covered
by the provisions hereof but which is paid by any Tenant (other than any
Affiliated Lessee) under such Tenant’s Lease or other agreement, and deposits
into the Mortgage Reserve Accounts.


 


“Operating
Income” shall mean, with respect to any period of time, all
income, computed in accordance with GAAP, derived from the ownership and
operation of  each Property from
whatever source, including, but not limited to, Rents,
utility charges, escalations, forfeited security deposits, interest on credit
accounts, service fees or charges, license fees, parking fees, rent concessions
or credits, and other required pass-throughs but excluding  sales, use
and occupancy or other taxes on receipts required to be accounted for by
Borrower to any Governmental Authority, refunds and uncollectible accounts,
sales of furniture, fixtures and equipment, interest income from any source
other than the escrow accounts, Mortgage Reserve Accounts or other accounts
required pursuant to the Loan Documents, Insurance Proceeds (other than
business interruption or other loss of income insurance), Awards, percentage
rents, unforfeited security deposits, utility and other similar deposits,
income from tenants not paying rent, income from tenants in bankruptcy,
non-recurring or extraordinary income, including, without limitation lease termination
payments, and any disbursements to Mortgage Borrower from the Mortgage Reserve
Accounts.


 


“Operating
Lease” shall mean, individually or collectively, as the context
may require, the operating lease or similar agreement entered into by and
between Mortgage Borrower and the applicable Operating Lessee, which governs
the operation of one of more of the Properties as the same may be amended,
restated, replaced, supplemented or modified from time to time, in accordance
with the terms hereof and of the Mortgage Loan Agreement.


 


“Operating
Lessee” shall mean, individually or collectively, as the context
may require, Affiliated Lessee and Non-Affiliated Lessee, together with any
substitutes or replacements determined by Lender and Mortgage Lender in accordance
with the terms hereof and of the Mortgage Loan Agreement, respectively.


 


“Organizational
Documents” shall mean, as to any Person, the certificate of
incorporation and by-laws with respect to a corporation; the certificate of
organization and operating agreement with respect to a limited liability
company; the certificate of limited partnership and partnership agreement with
respect to a limited partnership, or any other organizational or governing
documents of such Person.


 


“Other
Charges” shall mean all ground rents, maintenance charges,
impositions other than Taxes, and any other charges, including, without
limitation, vault charges and license fees for the use of vaults, chutes and
similar areas adjoining any Property, now or hereafter levied or assessed or
imposed against any Property or any part thereof.


 


“Participations”
shall have the meaning set forth in Section 13.1 hereof.


 


“Partners’ Capital” means, as of any
date of determination, with respect to any Person, consolidated partner’s
capital of such Person as of that date determined in accordance with GAAP.


 


“Patriot
Act” shall have the meaning set forth in Section 4.23
hereof.


 


14

















 


“Payment
Date” shall mean the day that is seven (7) Business Days prior
to the Selected Day.


 


“Permitted
Encumbrances” shall mean collectively, (a) the Lien and security
interests created by the Mortgage Loan Documents, (b) all Liens, encumbrances
and other matters disclosed in the Title Insurance Policy, (c) Liens, if any,
for Taxes imposed by any Governmental Authority not yet due or delinquent, (d)
such other title and survey exceptions as Mortgage Lender has approved or may
approve in writing in Mortgage Lender’s reasonable discretion, and (e) such
other easements reasonably created by Mortgage Borrower in the ordinary course
of business which do not have (and are not anticipated to have) a material
adverse affect on the value, use, operation or enjoyment of the applicable
Property as a hotel of a similar type as the hotel situated on such Property as
of the Closing Date or on the ability of Borrower to perform its obligations
(including its payment obligations under this Agreement, the Note and the other
Loan Documents).


 


“Person”
shall mean any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any other entity,
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.


 


“Personal
Property” shall have the meaning set forth in the granting
clause of the Mortgages.


 


“Physical
Conditions Report” shall mean a report regarding the physical
condition of each Property, satisfactory in form and substance to Mortgage
Lender in accordance with the terms of the Mortgage Loan Agreement.


 


“PIP
Report” shall mean any property improvement plan or other
similar report issued by any Franchisor or Manager (with respect to any
Property which is not subject to a Franchise Agreement), with respect to any
repairs, replacements, improvements or additions as may be required under the
applicable Franchise Agreement or Management Agreement.


 


“Pledge
Agreement” shall have the meaning set forth in the Recitals
hereto.


 


“Policies”
shall have the meaning specified in Section 8.1(b) hereof.


 


“Policy”
shall have the meaning specified in Section 8.1(b) hereof.


 


“Prohibited
Transfer” shall have the meaning set forth in Section 7.2
hereof.


 


“Property”
and “Properties”
shall have the meanings set forth in the Recitals hereto, provided that any
real property released from the lien of any Mortgage upon compliance with the
partial prepayment provisions of Section 2.4(c)(ii) of this Agreement and
the Mortgage Loan Agreement shall no longer be included in the definition of
Property or Properties.


 


“Provided
Information” shall have the meaning set forth in
Section 13.4(a) hereof.


 


15

















 


“Qualified Lessee” shall
mean (a) CNL Rose SPE Tenant Corp.; (b) an entity which is an Affiliate of
Mortgage Borrower, including, any then existing Affiliated Lessee, provided
that (i) no Default or Event of Default shall exist hereunder, (ii) in the
instance of an entity which is then an Affiliated Lessee, such entity is not
then in default beyond any applicable notice or cure period under any Operating
Lease, Franchise Agreement or Management Agreement to which it is a party,
(iii) such entity shall be a “special purpose entity” containing (A) the same
special purpose entity covenants as set forth in CNL Rose SPE Tenant Corp.’s
organizational documents as the same shall exist as of the Closing Date, and
(B) such other special purpose entity covenants or provisions as may then be
required by the Rating Agencies, (iv) Mortgage Lender shall have first received
a substantive non-consolidation opinion with respect to the appointment of such
entity as successor lessee under any Operating Lease and (v) a Qualified
Manager shall be managing each related Property pursuant to a Management
Agreement in form acceptable to Lender and Mortgage Lender or (c) a hotel
operating company which at the time of its engagement as Operating Lessee (i)
shall be (or when considered together with any Affiliate thereof, shall be)
operating and controlling full-service hotels having an aggregate of at least
2,500 rooms and 20 hotel properties similar to the Properties, exclusive of
rooms located on any Property and the Properties, (ii) shall be approved by (A)
Lender (such approval not to be unreasonably withheld) and (B) Mortgage Lender
in accordance with the terms of the Mortgage Loan Agreement and (iii) for which
Mortgage Lender shall have received written confirmation from the Rating
Agencies that the appointment of such operating lessee shall not result in a
downgrade, withdrawal or qualification of the initial, or if higher, then
current ratings issued in connection with a Securitization, or if a
Securitization has not occurred, any ratings to be assigned in connection with
a Securitization.


 


“Qualified
Manager” shall mean a reputable and experienced professional
management organization (a) which manages, together with its Affiliates,
full-service hotels, having in aggregate at least 2,500 rooms and 20 hotel
properties similar to the Properties, exclusive of rooms located on any
Property and the Properties, (b) approved by (i) Lender (which approval by
Lender shall not be unreasonably withheld) 
and (ii) Mortgage Lender in accordance with the terms of the Mortgage
Loan Agreement and (c) for which Mortgage Lender shall have received (i)
written confirmation from the Rating Agencies that the employment of such
manager will not result in a downgrade, withdrawal or qualification of the
initial, or if higher, then current ratings issued in connection with a
Securitization, or if a Securitization has not occurred, any ratings to be
assigned in connection with a Securitization, and (ii) with respect to any
Affiliated Manager, a substantive non-consolidation opinion.


 


“Rate Cap”
shall mean an interest rate cap with a termination date no earlier than the end
of the Interest Period in which the initial Maturity Date occurs, entered into
with Bank of America, N.A. or an Acceptable Counterparty with a notional amount
equal to the Loan for the term of the Loan and a LIBOR strike price not greater
than seven percent (7.0%); provided, however, if the provider of
any Rate Cap (including, but not limited to, Bank of America, N.A.) ceases to
be an Acceptable Counterparty, Borrower shall obtain a replacement Rate Cap
from an Acceptable Counterparty within ten (10) Business Days of receipt of
notice from Lender or Borrower’s obtaining knowledge that the then current
counterparty under such Rate Cap is no longer an Acceptable Counterparty; until
such time as a replacement provider is obtained in accordance with the above
provisions, the current provider will continue to perform its obligations under
the Rate Cap; and provided, further, any replacement Rate Cap
shall be


 


16

















 


accompanied by legal opinions regarding the Rate Cap, in form and
substance acceptable to Lender, including, without limitation opinions with
respect to (i) enforceability, (ii) payment priority, (iii) choice of law and
(iv) enforcement of judgments. 
Furthermore, each Rate Cap shall provide for (i) the calculation of
interest, (ii) the determination of the interest rate, (iii) the modification
of the Interest Period and (iv) the distribution of payments thereunder to be
identical to the definition of Interest Period set forth herein.


 


“Rating
Agencies” shall mean each of S&P, Moody’s and Fitch, or any
other nationally-recognized statistical rating agency which has been approved
by Lender, provided that from and after the Securitization Date, such term
shall only refer to the nationally-recognized statistical rating agency(ies)
rating the securities offered in connection with the Securitization.


 


“REA”
shall mean, collectively or individually, as the context may require, any
“construction, operation and reciprocal easement agreement” or similar
agreement (including any “separate agreement” or other agreement between
Mortgage Borrower and one or more other parties to an REA with respect to such
REA) affecting any Property or portion thereof.


 


“Release”
shall have the meaning set forth in Section 12.5 hereof.


 


“Release
Price” shall mean 120% times the then Allocated Loan Amount of
the Property(ies) being released.


 


“Rent Roll”
shall have the meaning set forth in the Mortgage Loan Agreement.


 


“Rents”
shall have the meaning set forth in the Mortgage.


 


“Replacement
Rate Cap” shall mean an interest rate cap from an Acceptable
Counterparty with terms identical to the Rate Cap.


 


“Reserve
Percentage” shall mean, with respect to any day of any Interest
Period, that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal Reserve System (or
any successor), for determining the maximum reserve requirement (including
basic, supplemental, emergency, special and marginal reserves) generally
applicable to financial institutions regulated by the Federal Reserve Board
comparable in size and type to Lender in respect of “Eurocurrency liabilities”
(or in respect of any other category of liabilities which includes deposits by
reference to which the interest rate on the Loan is determined), whether or not
Lender has any Eurocurrency liabilities or such requirement otherwise in fact
applies to Lender.  The LIBOR Rate shall
be adjusted automatically as of the effective date of each change in the
Reserve Percentage.  As of the date
hereof, the Reserve Percentage is zero, however, there can be no assurance as
to what such amount may be in the future.


 


“Restoration”
shall mean, following the occurrence of a Casualty or a Condemnation which is
of a type necessitating the repair of any Property, the completion of the
repair and restoration of such Property as nearly as possible to the condition
such Property was in immediately prior to such Casualty or Condemnation, with such
alterations as may be reasonably approved by Lender.


 


17

















 


“Restoration
Consultant” shall have the meaning set forth in
Section 8.4(b)(iii) hereof.


 


“Restoration
Retainage” shall have the meaning set forth in
Section 8.4(b)(iv) hereof.


 


“Restricted
Party” shall have the meaning set forth in Section 7.1
hereof.


 


“Sale or
Pledge” shall have the meaning set forth in Section 7.1
hereof.


 


“Securities”
shall have the meaning set forth in Section 13.1 hereof.


 


“Securities
Act” shall mean the Securities Act of 1933, as amended.


 


“Securities
Liabilities” shall have the meaning set forth in
Section 13.5 hereof.


 


“Securitization”
shall have the meaning set forth in Section 13.1 hereof.


 


“Securitization
Closing Date” shall have the meaning set forth in the Mortgage
Loan Agreement.


 


“Selected
Day” means the fifteenth (15th) day of each calendar month or
such other date as determined by the Lender pursuant to Section 2.2(d)
hereof.


 


“SPE
Component Entity” shall have the meaning set forth in
Section 6.1(b) hereof.


 


“Special
Member” shall have the meaning set forth in Section 6.1(c).


 


“Standard
Statements” shall have the meaning set forth in
Section 5.11(c)(i)(A) hereof.


 


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


 


“State”
shall mean the state or states in which any Property or any part thereof is
located.


 


“Static
LIBOR Rate” shall have the meaning set forth in
Section 2.2(b) hereof.


 


“Static
LIBOR Rate Loan” shall have the meaning set forth in
Section 2.3(f)(iii) hereof.


 


“Subordination
and Attornment Agreement” shall mean for each Operating Lease
with an Affiliated Lessee, a Subordination and Attornment Agreement between
Lender and the Affiliated Lessee, acceptable to Lender in accordance with the
terms of this Agreement as the same may be amended, modified and in effect from
time to time.


 


“Subordination,
Non-Disturbance and Attornment Agreement” shall mean with
respect to the Operating Leases between Borrower and any Non-Affiliated Lessee,
a Subordination, Non-Disturbance and Attornment Agreement, between Lender and
the applicable Non-Affiliated Lessee, acceptable to Lender in accordance with
the terms of this Agreement as the same may be amended, modified and in effect
from time to time.


 


18

















 


“Subordination
of Management Agreement/Estoppel” shall mean, individually or
collectively, as the context may require, (i) for the Interstate Properties and
Hilton Properties (each as defined in the Mortgage Loan Agreement), each
Subordination and Attornment Agreement executed in connection with each
Management Agreement, by and among Lender, Borrower, Mortgage Borrower, the
Affiliated Lessee and the applicable Manager and (ii) for the Marriott
Properties (as defined in the Mortgage Loan Agreement), each Manager Estoppel
by the applicable Manager for the benefit of Lender, in each case as the same
may be amended, restated, replaced, supplemented or otherwise modified in
accordance with the terms hereof.


 


“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company, or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or
both, by such Person.


 


“Syndication”
shall have the meaning set forth in Section 13.1 hereof.


 


“Taxes”
shall mean all real estate and personal property taxes, assessments, water
rates or sewer rents, now or hereafter levied or assessed or imposed against
any Property (or any part thereof) or the Collateral (or any part thereof).


 


“Tenant”
shall mean any Person (including, but not limited to, any Operating Lessee)
leasing, subleasing or otherwise occupying any portion of a Property under a
Lease or other occupancy agreement with Mortgage Borrower or Operating Lessee.


 


“Title
Insurance Policy” shall have the meaning set forth in the
Mortgage Loan Agreement.


 


“Tribunal”
shall mean any state, commonwealth, federal, foreign, territorial or other
court or governmental department, commission, board, bureau, district,
authority, agency, central bank, or instrumentality, or any arbitration
authority.


 


“UCC”
or “Uniform
Commercial Code” shall mean the Uniform Commercial Code as in
effect in the State of New York.


 


“Underwriter
Group” shall have the meaning set forth in Section 13.5(b)
hereof.


 


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 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.


 


19

















 


ARTICLE 2

GENERAL TERMS


 


Section 2.1.                                   LOAN
COMMITMENT; DISBURSEMENT TO BORROWER


 


(a)                                  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.


 


(b)                                 Borrower
may request and receive only one borrowing in respect of the Loan and any
amount borrowed and repaid in respect of the Loan may not be reborrowed.


 


(c)                                  The
Loan shall be evidenced by the Note and secured by the Pledge Agreement and the
other Loan Documents.


 


(d)                                 Borrower
shall use the proceeds of the Loan to (i) make an equity contribution to the
Mortgage Borrower in order to cause the Mortgage Borrower to use such amounts for
any use permitted pursuant to Section 2.1(d) of the Mortgage Loan
Agreement, (ii) pay costs and expenses incurred in connection with the closing
of the Loan, as approved by Lender, and (iii) distribute the balance, if any,
to its partners.


 


Section 2.2.                                   INTEREST
RATE


 


(a)                                  Note
Rate.  The outstanding principal
balance of the Loan shall bear interest at the Note Rate.  Except as otherwise set forth in this
Agreement, interest shall be paid in arrears.


 


(b)                                 Unavailability
of LIBOR Rate.  In the event that Lender
shall have determined (which determination shall be conclusive and binding upon
Borrower absent manifest error) that by reason of circumstances affecting the
interbank eurodollar market, adequate and reasonable means do not exist for
ascertaining the LIBOR Rate, then Lender shall forthwith give notice by
telephone of such determination, confirmed in writing, to Borrower at least one
(1) Business Day prior to the last day of the related Interest Period. If such
notice is given, the Note Rate, commencing with the first (1st) day of the next
succeeding Interest Period, shall be the LIBOR Rate in effect for the most
recent Interest Period (the “Static LIBOR Rate”).


 


If, pursuant to
the terms of this Agreement, the Loan has been converted to the Static LIBOR
Rate and Lender shall determine (which determination shall be conclusive and
binding upon Borrower absent manifest error) that the event(s) or
circumstance(s) which resulted in such conversion shall no longer be
applicable, Lender shall give notice thereof to Borrower, and the Static LIBOR
Rate shall convert to the LIBOR Rate effective on the first day of the next
succeeding Interest Period. Notwithstanding any provision of this Agreement to
the contrary, in no event shall Borrower have the right to elect to convert
from the LIBOR Rate to the Static LIBOR Rate.


 


(c)                                  Computations
and Determinations.  All interest
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed during an Interest Period.  Lender shall determine each interest rate applicable to the Debt
in accordance with this Agreement and its determination thereof shall be
conclusive in the absence of manifest error. 
The books and records of Lender shall be prima facie evidence of all
sums owing to Lender from


 


20

















 


time to time under this
Agreement, but the failure to record any such information shall not limit or
affect the obligations of Borrower under the Loan Documents.


 


(d)                                 Selected
Day.  Prior to a Securitization,
Lender may in its sole discretion change the day of the month that will
constitute the Selected Day.


 


(e)                                  Default
Rate.  Any principal of, and to the
extent permitted by applicable law, any interest on the Note, and any other sum
payable hereunder, which is not paid when due shall bear interest from the date
due and payable until paid, payable on demand, at a rate per annum (the
“Default Rate”) equal to the Note Rate plus four percent (4%).


 


(f)                                    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 balance 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
balance due hereunder at a rate in excess of the Maximum Legal Rate, the LIBOR
Rate, the Static 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
hereunder.  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.                                   LOAN
PAYMENTS


 


(a)                                  Payments.  Borrower agrees to pay sums under the Note
in installments as follows:


 


(i)                                     a
payment on the Closing Date of all interest that will accrue on the principal
amount of the Note during the Interim Interest Period;


 


(ii)                                  a
payment on each Payment Date of interest equal to the Monthly Payment Amount
and any other interest that has or will accrue hereunder during the Interest
Period in which such Payment Date occurs; and


 


(iii)                               the
outstanding principal amount and all interest thereon (including interest
through the end of the Interest Period in which the Maturity Date occurs) shall
be due and payable on the Payment Date occurring in December, 2006 (the “Maturity
Date”), unless the Maturity Date is extended pursuant to
Section 2.3(b) below.


 


(b)                                 Extension
of the Maturity Date.  Borrower
shall have the option to extend the term of the Loan beyond the initial
Maturity Date for two (2) successive terms (each, an “Extension Option”) of one (1)
year each to (x) the Payment Date occurring in December, 2007 and (y) the
Payment Date occurring in December, 2008 (each such date, the “Extended


 


21

















 


Maturity Date”), respectively, and, as to
each Extension Option, upon satisfaction of the following terms and conditions:


 


(i)                                     no
Event of Default shall have occurred and be continuing at the time the
applicable Extension Option is exercised and on the date that the applicable
extension term is commenced;


 


(ii)                                  Borrower
shall notify Lender of its irrevocable election to extend the Maturity Date as
aforesaid not earlier than three (3) months, and no later than one (1) month,
prior to the then applicable Maturity Date;


 


(iii)                               Borrower
shall obtain and deliver to Lender prior to exercise of such Extension Option,
one or more Replacement Rate Caps, which Replacement Rate Caps shall be
effective commencing on the first day of such Extension Option and shall have a
maturity date not earlier than the end of the Interest Period in which the
applicable Extended Maturity Date shall occur;


 


(iv)                              in
connection with each Extension Option, Borrower shall have delivered to Lender
together with its notice pursuant to subsection (b) of this
Section 2.3 and as of the commencement of the applicable Extension Option,
an Officer’s Certificate in form acceptable to the Lender (A) certifying that
each of the representations and warranties of Borrower contained in the Loan
Documents is true, complete and correct in all material respects as of the date
of such Officer’s Certificate to the extent such representations and warranties
are not matters which by their nature can no longer be true and correct as a
result of the passage of time or (B) specifying any exceptions to such
representations and warranties as may be acceptable to Lender in its
discretion.


 


(v)                                 in
connection with the exercise of each Extension Option, Borrower shall have paid
to Lender the Extension Fee; and


 


(vi)                              Mortgage
Borrower shall have exercised its right to extend the term of the Mortgage Loan
pursuant to Section 2.3(b) of the Mortgage Loan Agreement and the Mortgage
Loan shall have been extended by the Mortgage Lender.


 


All references in
this Agreement and in the other Loan Documents to the Maturity Date shall mean
the applicable Extended Maturity Date in the event the applicable Extension
Option is exercised.


 


(c)                                  Payments
after Default.  (i) Upon the
occurrence and during the continuance of an Event of Default, 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, and (ii) subject to the rights of Mortgage Lender and the
terms of the Cash Management Agreement, upon (A) the occurrence and during the
continuance of a monetary Event of Default or an Event of Default under
Section 11.1(f) hereof or (B) the occurrence of nay other Event of Default
with respect to which Lender has accelerated the Loan, Lender shall be entitled
to receive and Borrower shall pay to Lender all cash flow from the Properties,
such amount to be applied by Lender to the payment of the Debt in such order as
Lender shall determine in its sole discretion, including, without limitation,
alternating applications thereof


 


22

















 


between interest and
principal.  Interest at the Default Rate
shall be computed from the occurrence of the Event of Default until the earlier
of (x) the actual receipt and collection of the Debt (or that portion thereof
that is then due) and (y) the cure of such Event of Default.  To the extent permitted by applicable law,
interest at the Default Rate shall be added to the Debt, shall itself accrue
interest at the same rate as the Loan and shall be secured by the Pledge
Agreement.  This paragraph shall not be
construed as an agreement or privilege to extend the date of the payment of the
Debt, nor as a waiver of any other right or remedy accruing to Lender by reason
of the occurrence of any Event of Default; the acceptance of any payment from
Borrower shall not be deemed to cure or constitute a waiver of any Event of
Default; and Lender retains its rights under this Agreement to accelerate and
to continue to demand payment of the Debt upon the happening of and during the
continuance any Event of Default, despite any payment by Borrower to Lender.


 


(d)                                 Late
Payment Charge.  If any principal or
interest payment is not paid by Borrower on or before three (3) Business Days
after the date on which it is due, Borrower shall pay to Lender upon demand an
amount equal to the lesser of five percent (5%) of such unpaid sum or the
maximum amount permitted by applicable law 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 the
Pledge Agreement and the other Loan Documents to the extent permitted by
applicable law.


 


(e)                                  Method
and Place of Payment.  Each payment
by Borrower hereunder or under the Note shall be payable at P.O. Box 515228,
Los Angeles, California 90051-6528, Attn: 
Commercial Mortgage Loan Servicing #1777, or at such other place as the
Lender may designate from time to time in writing, on the date such payment is
due, to Lender by deposit to such account as Lender may designate by written
notice to Borrower.  Each payment by
Borrower hereunder or under the Note shall be made in funds settled through the
New York Clearing House Interbank Payments System or other funds immediately
available to Lender by 2:00 p.m., New York City time, on the date such payment
is due, to Lender by deposit to such account as Lender may designate by written
notice to Borrower.  Whenever any payment
hereunder or under the Note shall be stated to be due on a day which is not a
Business Day, such payment shall be made on the first Business Day preceding
such scheduled due date. Notwithstanding the foregoing, amounts due under the
Loan Documents shall be deemed paid so long as there is sufficient money in the
Cash Management Account for payment of such amounts pursuant to the Cash
Management Agreement and Lender’s access to such money has not been constrained
or constricted in any manner.


 


(f)                                    Additional
Payment Provisions.


 


(i)                                     If
at any time after the date hereof, Lender (which shall include, for purposes of
this Section, any corporation controlling Lender) reasonably determines that
due to the adoption or modification of any Legal Requirement regarding
taxation, Lender’s required levels of reserves, deposits, Federal Deposit
Insurance Corporation insurance or capital (including any allocation of capital
requirements or conditions), or similar requirements, or any interpretation or
administration thereof by any Tribunal or compliance of Lender with any of such
requirements, has or would have the effect of (a) increasing Lender’s costs
relating to the Loan, or (b) reducing the yield or rate of return


 


23

















 


of Lender on the
Loan, to a level below that which Lender could have achieved but for the
adoption or modification of any such Legal Requirements, Borrower shall, within
fifteen (15) days of any request by Lender, pay to Lender such additional
amounts as (in Lender’s sole judgment, after good faith and reasonable
computation) will compensate Lender for such increase in costs or reduction in
yield or rate of return of Lender (a “Consequential Loss”).  No failure by Lender to immediately demand
payment of any additional amounts payable hereunder shall constitute a waiver
of Lender’s right to demand payment of such amounts at any subsequent
time.  Nothing herein contained shall be
construed or so operate as to require Borrower to pay any interest, fees, costs
or charges greater than is permitted by applicable Law.


 


(ii)                                  All
payments made by Borrower hereunder shall be made free and clear of, and
without reduction for or on account of, income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions, reserves or withholdings imposed,
levied, collected, withheld or assessed by any Governmental Authorities, which
are imposed, enacted or become effective on or after the date hereof (such
non-excluded taxes being referred to collectively as “Foreign Taxes”), excluding
income and franchise taxes of the United States of America or any political
subdivision or taxing authority thereof or therein.  If any Foreign Taxes are required to be withheld from any amounts
payable to Lender hereunder and such Foreign Taxes are not a result of
activities of Lender unrelated to the Loan or Borrower, the amounts so payable
to Lender shall be increased to the extent necessary to yield to Lender (after
payment of all Foreign Taxes) interest or any such other amounts payable
hereunder at the rate or in the amounts specified hereunder. Whenever any
Foreign Tax is payable pursuant to applicable law by Borrower, as promptly as
possible thereafter, Borrower shall send to Lender an original official
receipt, if available, or certified copy thereof showing payment of such
Foreign Tax. Borrower hereby indemnifies Lender for any incremental taxes,
interest or penalties that may become payable by Lender which may result from
any failure by Borrower to pay any such Foreign Tax when due to the appropriate
taxing authority of which Lender shall have provided Borrower with prior
written notice, if possible, or any failure by Borrower to remit to Lender the
required receipts or other required documentary evidence. Lender’s inability to
notify Borrower of any such Foreign Tax in accordance with the immediately
preceding sentence shall in no way relieve Borrower of its obligations under
this Section 2.3(f)(ii).


 


(iii)                               If
any requirement of law or any change therein or in the interpretation or
application thereof, shall hereafter make it unlawful for Lender to make or
maintain a Loan with the Note Rate being based on LIBOR as contemplated
hereunder, (i) the obligation of Lender hereunder to make such Loan based on
LIBOR or to convert the Loan from the Static LIBOR Rate to the LIBOR Rate shall
be canceled forthwith and (ii) any outstanding LIBOR Loan shall be converted
automatically to a loan bearing interest at the Static LIBOR Rate (the “Static LIBOR
Rate Loan”) on the next succeeding Payment Date or within such
earlier period as required by law. 
Borrower hereby agrees promptly to pay Lender, upon demand, any
additional amounts necessary to compensate Lender for any costs incurred by
Lender in making any conversion in accordance with this Agreement, including,
without limitation, any interest or fees payable by Lender to lenders of funds
obtained by it in order to make or maintain the LIBOR Loan hereunder.


 


24

















 


If Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.3(f)(iii),
Lender shall provide Borrower with not less than ninety (90) days written
notice specifying in reasonable detail the event by reason of which it has
become so entitled and the additional amount required to fully compensate
Lender for such additional costs. 
Lender’s notice of such costs, as certified to Borrower, shall be
conclusive absent manifest error.


 


(iv)                              In
the event that any change in any requirement of law or in the interpretation or
application thereof, or compliance by Lender with any request or directive
(whether or not having the force of law) hereafter issued from any central bank
or other Governmental Authority:


 


(A)                              shall
hereafter impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of Lender
which is not otherwise included in the determination of the LIBOR Rate
hereunder;


 


(B)                                shall
hereafter have the effect of reducing the rate of return on Lender’s capital as
a consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance (taking into
consideration Lender’s policies with respect to capital adequacy) by any amount
deemed by Lender to be material; or


 


(C)                                shall
hereafter impose on Lender any other condition and the result of any of the
foregoing is to increase the cost to Lender of making, renewing or maintaining
loans or extensions of credit or to reduce any amount receivable hereunder;


 


then, in any such
case, Borrower shall promptly pay Lender, upon demand, any additional amounts
necessary to compensate Lender for such additional cost or reduced amount
receivable which Lender deems to be material as determined by Lender. If Lender
becomes entitled to claim any additional amounts pursuant to this
Section 2.3(f)(iv), Lender shall provide Borrower with not less than ninety
(90) days written notice specifying in reasonable detail the event by reason of
which it has become so entitled and the additional amount required to fully
compensate Lender for such additional cost or reduced amount. A certificate as
to any additional costs or amounts payable pursuant to the foregoing sentence
submitted by Lender to Borrower shall be conclusive in the absence of manifest
error. This provision shall survive payment of the Note and the satisfaction of
all other obligations of Borrower under this Agreement and the Loan Documents.


 


(v)                                 Borrower
agrees to indemnify Lender and to hold Lender harmless from any loss or expense
which Lender sustains or incurs as a consequence of (i) any default by Borrower
in payment of the principal of or interest on a LIBOR Loan, including, without
limitation, any such loss or expense arising from interest or fees payable by
Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan
hereunder,


 


25

















 


(ii) any
prepayment (whether voluntary or mandatory) of the LIBOR Loan that did not
include all interest which had accrued (or would have accrued) at the Note Rate
through the end of the related Interest Period, including, without limitation,
such loss or expense arising from interest or fees payable by Lender to lenders
of funds obtained by it in order to maintain the LIBOR Loan hereunder, and
(iii) the conversion (for any reason whatsoever, whether voluntary or
involuntary) of the Note Rate from the LIBOR Rate to the Static LIBOR Rate with
respect to any portion of the outstanding principal amount of the Loan then
bearing interest at the LIBOR Rate on a date other than the Payment Date
immediately following the last day of an Interest Period, including, without
limitation, such loss or expenses arising from interest or fees payable by
Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan
hereunder (the amounts referred to in clauses (i), (ii) and (iii) are herein
referred to collectively as the “Breakage Costs”).  This provision shall survive payment of the Note in full and the
satisfaction of all other obligations of Borrower under this Agreement and the
other Loan Documents.


 


(vi)                              Lender
shall not be entitled to claim compensation pursuant to this
Section 2.3(f) for any Foreign Taxes, increased cost or reduction in
amounts received or receivable hereunder, or any reduced rate of return, which
was incurred or which accrued more than one hundred eighty (180) days before
the date Lender notified Borrower of the change in law or other circumstance on
which such claim of compensation is based and delivered to Borrower a written
statement setting forth in reasonable detail the basis for calculating the
additional amounts owed to Lender under this Section 2.3(f), which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.


 


(vii)                           Within
fifteen (15) days after request by Lender (or at the time of any prepayment),
Borrower shall pay to Lender such amount or amounts as will compensate Lender
for any loss, cost, expense, penalty, claim or liability, including any loss
incurred in obtaining, prepaying, liquidating or employing deposits or other
funds from third parties and any loss of yield, as determined by Lender in its
judgment reasonably exercised, incurred by it with respect to the Loan as a
result of the payment or prepayment of any amount on a date other than the date
such amount is required or permitted to be paid or prepaid; provided that
Lender delivers to Borrower a certificate as to the amounts of such costs
described herein, which certificate shall be conclusive in the absence of
manifest error.  Lender shall have no
obligation to purchase, sell and/or match funds in connection with the funding
or maintaining of the Loan or any portion thereof.  The obligations of Borrower under this Section shall survive
any termination of the Loan Documents and payment of the Note and shall not be
waived by any delay by Lender in seeking such compensation.


 


(viii)                        All
payments made by Borrower  hereunder or
under the other Loan Documents shall be made irrespective of, and without any
deduction for, any setoff, defense or counterclaims.


 


(ix)                                Remittances
in payment of any part of the Loan in less than the required amount in
immediately available U.S. funds shall not, regardless of any receipt or credit
issued therefor, constitute payment until the required amount is actually
received by the holder hereof in immediately available U.S. funds and shall be
made and accepted subject


 


26

















 


to the condition
that any check or draft may be handled for collection in accordance with the
practices of the collecting bank or banks.


 


Section 2.4.                                   PREPAYMENTS.


 


(a)                                  Voluntary
Prepayments.  Except as otherwise
expressly provided herein and in Section 2.4(c) hereof, Borrower shall not
have the right to prepay the Loan in whole or in part prior to the initial
Maturity Date. Any partial prepayment shall be applied to the last payments of
principal due under the Loan and shall reduce the outstanding principal balance
of the Loan for purposes of computing the Monthly Payment Amount.


 


(b)                                 Lockout.  The Loan shall only be prepayable after the
expiration of the Lockout Period.


 


(c)                                  Payments
After the Lockout Period.


 


(i)                                     Full
Prepayment.


 


(A)                              At
any time after the expiration of the Lockout Period other than during the time
period in any month from and including the day after the Payment Date through
and including the day prior to the Determination Date, Borrower may prepay the
Loan in whole but not in part at any time upon not less than thirty (30) days
prior written notice to Lender.  Any
such prepayment shall include (A) in the event the prepayment occurs at any time
during the period after the Payment Date occurring in June, 2005 through and
including the Payment Date occurring in December, 2005, a prepayment premium in
the amount of 1.75% of the then principal amount of the Loan, (B) all amounts
required to be paid by Borrower under Section 2.4(c)(iii) hereof and (C)
all other amounts owing by Borrower to Lender under this Agreement and the
other Loan Documents, including, without limitation, any Breakage Costs
incurred by Lender.


 


(B)                                In
addition to the foregoing requirements for a full prepayment of the Loan, prior
to Lender’s obligation to accept a prepayment pursuant to the foregoing
Section 2.4(c)(i)(A) Borrower shall have paid (or cause to be paid) any
amounts required to be paid under Section 2.4(c)(i) of the Mortgage Loan
Agreement to Mortgage Lender in connection with the full prepayment of the
Mortgage Loan, provided that, the requirements set forth in this
Section 2.4(c)(i)(B) shall not apply in the event (1) (x) such prepayment
is sourced solely from the funds of Mezzanine Borrower or any of its Affiliates
(other than Mortgage Borrower or any SPE Component Entity (as defined in the
Mortgage Loan Agreement)) and such funds are not derived from any of the
Properties or any other collateral for the Mortgage Loan (it being understood
and agreed that the Mezzanine Borrower shall in any event be entitled to apply
to any such prepayment of the Mezzanine Loan funds sourced or derived from any
of the Properties or any other collateral for the Mortgage  Loan to the extent the same have previously
been distributed to the Mezzanine Borrower provided such distribution was not
in violation of the Mortgage Loan Documents) (provided that


 


27

















 


the foregoing is
subject to Sections 544 and 548 of Title 11 of the United States Code) and (y)
no Default or Event of Default shall then exist under the Mortgage Loan
Documents or (2) Mortgage Lender shall agree in a writing addressed to Lender
to such prepayment in full of the Mezzanine Loan.


 


(ii)                                  Partial
Prepayment.  Provided no Event of
Default shall have occurred and is then continuing, commencing on the day after
the expiration of the Lockout Period, and upon giving Lender at least thirty
(30) days (but not more than ninety (90) days) prior written notice, which said
notice can be given prior to the expiration of the Lockout Period in connection
with the prepayment to occur following the Lockout Period, Borrower may
voluntarily prepay a portion of the Loan on a Payment Date provided such
prepayment is being made in connection with a partial prepayment of the
Mortgage Loan and the release of a Property pursuant to Section 2.4(c)(ii)
of the Mortgage Loan Agreement and the Mortgage Loan Borrower has complied with
all of the terms and conditions of Section 2.4(c)(ii) of the Mortgage Loan
Agreement, and provided Borrower satisfies the following release conditions:


 


(A)                              Borrower
shall provide Lender with prior written notice specifying (1) the Payment Date
on which Borrower intends to make the partial prepayment (“Release Date”) and (2) the
Property proposed to be released from the Lien of the related Mortgage (the “Release
Property”)


 


(B)                                Borrower
shall pay to Lender (i) the applicable Release Price, (ii) all amounts payable
under Section 2.4(c)(iii) below in connection with the accompanying
prepayment of the Loan, and (iii) any and all expenses incurred by Lender in
connection with any such release, including, but not limited to, reasonable
attorney’s fees and expenses, as required under clause (F) below;


 


(C)                                Borrower
shall pay in the event the prepayment occurs at any time during the period
after the Lockout Period through and including the Payment Date occurring in
December, 2005, a prepayment premium in the amount of 1.75% of the applicable
Release Price;


 


(D)                               Borrower
shall have delivered to Lender written confirmation that Rate Cap in the
aggregate notional amount of no less than the principal balance of the Loan as
prepaid shall remain in full force and effect after the proposed prepayment;


 


(E)                                 Borrower
shall deliver to Lender such other documents, instruments, opinions and
certificates as Lender may reasonably request;


 


(F)                                 Borrower
shall pay all out-of-pocket costs and expenses of Lender incurred in connection
with the proposed prepayment, including Lender’s reasonable attorneys’ fees and
expenses; and


 


(G)                                Without
limiting the generality of any of the provisions contained herein, Borrower
shall have paid any amounts required to be paid to Mortgage Lender in
connection with the release of the Release Property.


 


28

















 


(iii)                               Prepayments
in General.  All payments and
prepayments of the Loan, whether voluntary, involuntary, at the Maturity Date
or otherwise (but exclusive of prepayments made pursuant to Section 2.4(d)
hereof) shall include in the event that any such repayment or prepayment is
made on a day other than a Payment Date, a sum equal to the amount of interest
which would have accrued under this Agreement through the end of the Interest
Period in which the next Payment Date occurs. 
For purposes of this Agreement, an involuntary prepayment shall be
deemed to include, but not be limited to, a prepayment of the Loan in
connection with or following the Lender’s acceleration of the outstanding
balance of the Loan.


 


(d)                                 Insurance
and Condemnation Proceeds; Excess Interest.  Notwithstanding any other provision herein to the contrary, and
provided no Default exists, Borrower shall not be required to pay any
prepayment premium in connection with any prepayment occurring solely as a result
of (i) the application of Insurance Proceeds or Condemnation Proceeds pursuant
to the terms of the Loan Documents, or (ii) the application of any interest in
excess of the maximum rate permitted by applicable law to the reduction of the
Loan.


 


(e)                                  Prepayments
Prior to the Lockout Period.  If,
during the Lockout Period, payment of all or any part of the Debt is tendered
by Borrower or otherwise recovered by Lender, such tender or recovery shall be
(a) made on the next occurring Payment Date together with the Debt Service then
due and (b) deemed a voluntary prepayment by Borrower in violation of the
prohibition against prepayment set forth in this Section 2.4 and Borrower
shall pay, in addition to the Debt being repaid and the accompanying Debt Service
payment, (x) an amount equal to the Lockout Yield Maintenance Premium and (y)
the accrued and unpaid interest calculated for the full Interest Period in
which such voluntary prepayment occurs.


 


(f)                                    Application
of Payments.  All voluntary and
involuntary prepayments on the Note shall be applied, to the extent thereof, to
accrued but unpaid interest on the amount prepaid, to the remaining principal
amount, and any other sums due and unpaid to Lender in connection with the
Loan, in such manner and order as Lender may elect in its sole and absolute
discretion, including, but not limited to, application to principal
installments in inverse order of maturity. 
Following the occurrence of an Event of Default, any payment made on the
Note shall be applied to accrued but unpaid interest, late charges, accrued
fees, the unpaid principal amount of the Note, and any other sums due and
unpaid to Lender in connection with the Loan, in such manner and order as
Lender may elect in its sole and absolute discretion.


 


(g)                                 Liquidation
Events.


 


(i)                                     In
the event of (A) any Casualty to any Property or any material portion thereof,
(B) any Condemnation of any Property or any material portion thereof,
(C) any transfer of any Property in connection with a realization thereon
following a Mortgage Event of Default, including, without limitation, a
foreclosure sale, or (D) any refinancing of any Property or the Mortgage
Loan (each, a “Liquidation Event”), Borrower shall cause the related
Net Liquidation Proceeds After Debt Service to be deposited directly into an
Eligible Account with Lender (the “Mezzanine Debt Service Account”).  On each date on which Lender actually
receives a distribution of Net Liquidation Proceeds After Debt Service,
Borrower shall prepay the outstanding principal balance of the Note in an


 


29

















 


amount equal to
one hundred percent (100%) of such Net Liquidation Proceeds After Debt Service,
together with interest which actually accrued on such amount through the next
Payment Date, but without the payment of 
a prepayment fee or penalty.  Any
amounts of Net Liquidation Proceeds After Debt Service in excess of the Debt
shall be paid to Borrower.  Any
prepayment received by Lender pursuant to this Section 2.4(g)(i) on a date
other than a Payment Date shall be held by Lender as collateral security for
the Loan in an interest bearing account, with such interest accruing to the
benefit of Borrower, and shall be applied by Lender on the next Payment Date.


 


(ii)                                  Borrower
shall notify Lender of any Liquidation Event no later than one (1) Business Day
following the first date on which Borrower has knowledge of such event.  Borrower shall be deemed to have knowledge
of (i) a sale (other than a foreclosure sale) of any Property on the date
on which a contract of sale for such sale is entered into, and all other
contingencies, if any, contained therein have been satisfied and/or waived, and
a foreclosure sale, on the date notice of such foreclosure sale is given, and
(ii) a refinancing of any Property, on the date on which a commitment for
such refinancing has been entered into, and all other contingencies, if any,
contained therein have been satisfied and/or waived.  The provisions of this Section 2.4(g)(ii) shall not be
construed to contravene in any manner the restrictions and other provisions
regarding refinancing of the Mortgage Loan or the Sale or Pledge of any
Property set forth in this Agreement and the other Loan Documents.


 


(h)                                 Prepayment
of the Mortgage Loan.  Subject to
the provisions of Section 5.33 hereof, in the event that the Mortgage Loan
is paid in full at any time prior to the then Maturity Date of the Loan, the
Debt shall then be immediately due and payable regardless of the Maturity Date
of the Loan.


 


ARTICLE 3

CONDITIONS PRECEDENT


 


The obligation of
Lender to make the Loan hereunder is subject to the fulfillment by Borrower or
waiver by Lender of the following conditions precedent no later than the
Closing Date.


 


Section 3.1.                                   REPRESENTATIONS
AND WARRANTIES; COMPLIANCE WITH CONDITIONS


 


The
representations and warranties of Borrower and Affiliated Lessee 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 Lender shall have determined that no Default or an
Event of Default shall have occurred and be continuing nor will any Default or
Event of Default occur immediately following the Closing Date; 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.


 


30

















 


Section 3.2.                                   DELIVERY
OF LOAN DOCUMENTS; REPORTS; LEASES


 


(a)                                  Pledge
Agreement, Loan Agreement and Note. 
Lender shall have received from Borrower a fully executed and
acknowledged counterparts of the Pledge Agreement and evidence that the Uniform
Commercial Code financing statements have been delivered to the title company
for recording and/or filing, in the reasonable judgment of Lender, so as to
effectively create upon such recording and/or filing valid and enforceable
Liens upon the Collateral, of first priority, in favor of Lender (or such other
trustee as may be required or desired under local law).  Lender shall have also received from
Borrower and Borrower Principal, the applicable Operating Lessee and Manager,
as applicable, fully executed counterparts of this Agreement, the Note, each
Subordination, Non-Disturbance and Attornment Agreement, each Subordination and
Attornment Agreement, and each Subordination of Management Agreement/Estoppel
and all other Loan Documents.


 


(b)                                 Intentionally
deleted.


 


(c)                                  Intentionally
deleted.


 


(d)                                 Insurance.  Lender shall have received copies of the
Policies required hereunder or other evidence of insurance, satisfactory to
Lender in its sole discretion, and evidence of the payment of all Insurance
Premiums payable for the existing policy period.


 


(e)                                  Environmental
Reports.  Lender shall have received
an Environmental Report in respect of each Property satisfactory to Lender (or
an acceptable update and reliance letter relating to the applicable
Environmental Report delivered to Bridge Lender in connection with the Bridge
Loan).


 


(f)                                    Intentionally
deleted.


 


(g)                                 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 Collateral, and Lender shall have received
satisfactory evidence thereof.


 


(h)                                 Lien
Searches.  Borrower shall have
delivered to Lender certified search results pertaining to the Borrower,
Borrower Principal, Mortgage Borrower, Mortgage Borrower GP, Affiliated Lessee
and such other Persons or any SPE Component Entity as reasonably required by
Lender for state and federal tax liens, bankruptcy, judgment, litigation and
state and local UCC filings.


 


Section 3.3.                                   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 at Lender’s written request, Lender shall have received
and approved certified copies thereof.


 


31

















 


Section 3.4.                                   ORGANIZATIONAL
DOCUMENTS


 


On or before the
Closing Date, Borrower shall deliver or cause to be delivered to Lender (a)
copies certified by Borrower of all organizational documentation related to
Borrower, Borrower Principal, Mortgage Borrower, Mortgage Borrower GP and each
SPE Component Entity which must be acceptable to Lender in its sole discretion,
and (b) such other evidence of the formation, structure, existence, good
standing and/or qualification to do business of the Borrower, Borrower
Principal and each SPE Component Entity, as Lender may request in its sole
discretion, including, without limitation, good standing or existence
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.


 


Section 3.5.                                   OPINIONS
OF BORROWER’S COUNSEL


 


Lender shall have
received opinions of Borrower’s counsel (a) with respect to non-consolidation
issues, (b) with respect to due execution, authority, enforceability of the
Loan Documents and such other matters as Lender may require, and (c) with
respect to the perfection of Lender’s security interest in the Collateral, all
such opinions in form, scope and substance satisfactory to Lender and Lender’s
counsel in their sole discretion.  In
addition, Borrower shall deliver to Lender on the Closing Date an opinion
letter from Borrower’s counsel relating to Lender’s security interest in the
Collateral being perfected by delivery of certificates evidencing the equity
interests or by the filing of the UCC-1 Financing Statement with the Secretary
of State of Delaware.


 


Section 3.6.                                   ANNUAL
BUDGET


 


Borrower shall
have delivered, and Lender shall have approved, the Annual Budget with respect
to the Properties for the current fiscal year, a copy of which is attached as
Exhibit A hereto.


 


Section 3.7.                                   TAXES
AND OTHER CHARGES


 


Mortgage Borrower
shall have paid all Taxes and Other Charges which are due and payable
(including any in arrears) relating to each Property, which amounts may be
funded with proceeds of the Mortgage Loan and the Loan.


 


Section 3.8.                                   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.


 


32

















 


Section 3.9.                                   PAYMENTS


 


All payments,
deposits or escrows 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.


 


Section 3.10.                             TRANSACTION
COSTS


 


Except as
otherwise expressly provided herein, Borrower shall have paid or reimbursed
Lender for all out of pocket expenses in connection with the underwriting,
negotiation, and closing of the Loan, including title insurance premiums and
other title company charges; recording, registration, filing and similar fees,
taxes and charges; transfer, mortgage, deed, stamp or documentary taxes or
similar fees or charges; costs of third-party reports, including without
limitation, environmental studies, credit reports, seismic reports, engineer’s
reports, appraisals and surveys; underwriting and origination expenses;
Securitization expenses; and all actual, reasonable legal fees and expenses charged
by counsel to Lender.


 


Section 3.11.                             NO
MATERIAL ADVERSE CHANGE


 


There shall have
been no material adverse change in the financial condition or business
condition of any Property, Mortgage Borrower, Mortgage Borrower GP, Borrower,
Borrower Principal, Operating Lessee, any SPE Component Entity, any Manager or
any other person or party contributing to the operating income and operations
of any Property since the date of the most recent financial statements and/or
other information delivered to Lender. 
The income and expenses of each Property, the occupancy and leases
thereof, and all other features of the transaction shall be as represented to
Lender without material adverse change. 
Neither Mortgage Borrower, Mortgage Borrower GP, Borrower, Borrower
Principal, any Operating Lessee, any SPE Component Entity nor any Manager shall
be the subject of any bankruptcy, reorganization, or insolvency proceeding.


 


Section 3.12.                             OPERATING
LEASES


 


Lender shall have
received (i) a certified copy of each Operating Lease, (ii) copies of the fully
executed estoppels from the applicable Operating Lessee of each Property
delivered to Mortgage Lender pursuant to the Mortgage Loan Agreement, and (iii)
fully executed counterparts signed by Mortgage Borrower, Borrower and the applicable
Operating Lessee of a Subordination, Non-Disturbance and Attornment Agreement,
with respect to the Operating Leases of the Miami Lakes Property and the Miami
Airport West Property, and a Subordination and Attornment Agreement, with
respect to each of the remaining Operating Leases.


 


Section 3.13.                             LEASES;
RENT ROLLS


 


Lender shall have
received a Rent Roll or summary of all Leases affecting any Property (other
than Operating Leases, which are addressed in Section 3.12), which shall
be satisfactory in form and substance to Lender.


 


33

















 


Section 3.14.                             TENANT
ESTOPPELS


 


Lender shall have
received copies of each executed tenant estoppel letter delivered to Mortgage
Lender pursuant to the Mortgage Loan Agreement.


 


Section 3.15.                             REA
ESTOPPELS


 


Borrower shall
have delivered to Lender copies of each executed REA estoppel letter delivered
to Mortgage Lender, from each party to any REA with respect to any Property, as
required by Mortgage Lender pursuant to the Mortgage Loan Agreement.


 


Section 3.16.                             SUBORDINATION
AND ATTORNMENT


 


Borrower shall
have delivered to Lender copies of any and all executed instruments delivered
to Mortgage Lender subordinating to the applicable Mortgage certain of the
Leases (other than the Operating Leases, which are addressed in
Section 3.12) affecting each Property, to the extent required by Mortgage
Lender pursuant to the Mortgage Loan Agreement.


 


Section 3.17.                             TAX
LOT


 


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


 


Section 3.18.                             PHYSICAL
CONDITIONS REPORT; PIP REPORT


 


Lender shall have
received copies of (a) the Physical Conditions Report with respect to each
Property, delivered to Lender pursuant to the Mortgage Loan Documents, and (b)
any PIP Reports issued with respect to any Property, delivered to Mortgage
Lender pursuant to the Mortgage Loan Agreement.


 


Section 3.19.                             MANAGEMENT
AGREEMENT


 


Lender shall have
received a certified copy of each Management Agreement with respect to each
Property subject to a Management Agreement, each of which shall be satisfactory
in form and substance to Lender.


 


Section 3.20.                             APPRAISAL


 


Lender shall have
received an appraisal of each Property, which shall be satisfactory in form and
substance to Lender.  Lender hereby
acknowledges (a) receipt of appraisals with respect to each Property, as
delivered to Bank of America, N.A. in connection with the  Bridge Loan and (b) that each such appraisal
together with any reliance letter which Lender may require in its reasonable
discretion shall be deemed acceptable for all purpose under this
Section 3.20 absent any material adverse change to the applicable Property
from and after the date of such appraisal.


 


34



















 


Section 3.21.          FINANCIAL STATEMENTS


 


Lender shall have
received financial statements and related information in form and substance
satisfactory to Lender and in compliance with any Legal Requirements
promulgated by the Securities and Exchange Commission, including, without
limitation, (a) operating statement as of September 30, 2003 with respect to
each Property, for the year-to-date 2003, and (b) audited financial statements
by an Acceptable Accountant with respect to RFS Partnership, L.P. (the prior
direct/indirect owner of each Property) for the years 2002, 2001, 2000 and
1999, in all instances the same shall be accompanied by an unqualified opinion
of such Acceptable Accountant that such statements have been prepared in
accordance with GAAP applied on a consistent basis.


 


Section 3.22.          NET OPERATING INCOME


 


The annual Net Operating
Income for all the Properties shall not be less than $20,000,000.00 as
determined by Lender in its sole discretion pursuant to its standard
underwriting procedures for loans which are consummated by Lender for the
purpose of any Securitization.


 


Section 3.23.          FRANCHISE AGREEMENTS


 


Lender shall have
received (i) a certified copy of each Franchise Agreement with respect to each
Property (other than those previously disclosed to Lender for which there is no
Franchise Agreement, only a Management Agreement), and (ii) a franchisor
estoppel/comfort letter executed by each Franchisor under each Franchise
Agreement, in form and substance reasonably satisfactory to Lender.


 


Section
3.24.          GROUND LEASE


 


Lender shall have received (a) a certified copy of
each Ground Lease and (b) copies of the fully executed ground lessor estoppel
from the ground lessor under the Wilmington Ground Lease and the fully executed
ground lessor estoppel from the Borrower with respect to the Louisville
Southwest Agreement.


 


Section 3.25.          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.


 


ARTICLE 4

REPRESENTATIONS AND WARRANTIES


 


Borrower and, where
specifically indicated, each Borrower Principal, represents and warrants to
Lender as of the Closing Date that:


 


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Section 4.1.            ORGANIZATION


 


Each of Borrower,
Borrower Principal (when not an individual), Mortgage Borrower, Mortgage
Borrower GP and Affiliated Lessee (a) has been duly organized and is validly
existing and in good standing with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged, (b) is
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, (c) 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, and the
sole business of Borrower is the ownership, and management of the Mortgage
Borrower, and (d) in the case of Borrower, has full power, authority and legal
right to grant, bargain, sell, pledge, assign, warrant, transfer and convey the
Collateral pursuant to the terms of the Loan Documents, and in the case of
Borrower, Mortgage Borrower, each Borrower Principal and Affiliated Lessee, has
full power, authority and legal right to keep and observe all of the terms of
the Loan Documents and/or Mortgage Loan Documents  to which it is a party. 
Borrower and  Borrower Principal
represent and warrant that the chart attached hereto as Exhibit B sets forth an
accurate ownership structure of Borrower.


 


Section 4.2.            STATUS
OF BORROWER; AFFILIATED LESSEE


 


Borrower’s exact legal
name is correctly set forth on the first page of this Agreement, on the Pledge
Agreement and on any UCC-1 Financing Statements filed in connection with the
Loan.  Borrower is an organization of
the type specified on the first page of this Agreement.  Borrower is incorporated in or organized
under the laws of the state of Delaware. 
Borrower’s principal place of business and chief executive office, and
the place where each of Borrower  keeps
its books and records, including recorded data of any kind or nature,
regardless of the medium of recording, including software, writings, plans,
specifications and schematics, has been for the preceding four months (or, if
less, the entire period of the existence of Borrower) the address of Borrower
set forth on the first page of this Agreement. 
The organizational identification number, if any, assigned by the state
of incorporation or organization of  Borrower
is 3721072.


 


Section 4.3.            VALIDITY
OF DOCUMENTS


 


Borrower, Mortgage
Borrower, Affiliated Lessee, and Borrower Principal have taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
the other Loan Documents and the Mortgage Loan Documents to which they are
parties.  This Agreement, the other Loan
Documents and the Mortgage Loan Documents have been duly executed and delivered
by or on behalf of Borrower, Mortgage Borrower, Affiliated Lessee and  Borrower Principal, as applicable, and
constitute the legal, valid and binding obligations of Borrower, Mortgage
Borrower, Affiliated Lessee and Borrower Principal, as applicable, enforceable
against each, 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).


 


36

















 


Section 4.4.            NO CONFLICTS


 


The execution, delivery
and performance of this Agreement, the other Loan Documents and the Mortgage
Loan Documents to be executed by Borrower, Mortgage Borrower, Affiliated Lessee
and Borrower Principal, 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 or Mortgage Loan Documents) upon any of the property or assets of
Borrower, Mortgage Borrower, Affiliated Lessee or Borrower Principal pursuant
to the terms of any agreement or instrument to which Borrower, Mortgage
Borrower, Affiliated Lessee or Borrower Principal s a party or by which any of
Borrower’s, Mortgage Borrower’s, Affiliated Lessee’s or Borrower Principal’s
property or assets is subject, nor will such action result in any violation of
the provisions of any statute or any order, rule or regulation of any
Governmental Authority having jurisdiction over Borrower, Mortgage Borrower,
Affiliated Lessee or Borrower Principal or any of Borrower’s, Mortgage
Borrower’s, Affiliated Lessee’s or Borrower Principal’s properties or assets,
and any consent, approval, authorization, order, registration or qualification of
or with any Governmental Authority required for the execution, delivery and
performance by Borrower, Mortgage Borrower, Affiliated Lessee or Borrower
Principal of this Agreement, any of the other Loan Documents or any of the
Mortgage Loan Documents has been obtained and is in full force and effect.


 


Section 4.5.            LITIGATION


 


There are no actions,
suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending or, to Borrower’s or Borrower Principal’s
knowledge, threatened against or affecting Borrower, Mortgage Borrower,
Borrower Principal, any Operating Lessee, any Manager, the Collateral or any
Property, which actions, suits or proceedings, if determined against Borrower,
Mortgage Borrower, Borrower Principal, any Operating Lessee, any Manager, the
Collateral or any Property, would materially adversely affect the condition
(financial or otherwise) or business of Borrower, Mortgage Borrower, Borrower
Principal or Affiliated Lessee or the condition or ownership of the Collateral
or any Property (as applicable).


 


Section 4.6.            AGREEMENTS


 


None of Borrower,
Mortgage Borrower, Borrower Principal nor any Affiliated Lessee is a party to
any agreement or instrument or subject to any restriction which would
materially and adversely affect Borrower, Mortgage Borrower, Borrower
Principal, Affiliated Lessee, the Collateral or any Property, or Borrower’s,
Mortgage Borrower’s, Borrower Principal’s or Affiliated Lessee’s business,
properties or assets, operations or condition, financial or otherwise.  None of Borrower, Mortgage Borrower,
Borrower Principal nor Affiliated Lessee is in default in any material 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, Mortgage Borrower, Borrower Principal, Affiliated Lessee
or the Collateral is bound.  None of
Borrower, Mortgage Borrower, Borrower Principal or Affiliated Lessee has any
material financial obligation under any agreement or instrument to which
Borrower, Mortgage Borrower, Borrower Principal or Affiliated Lessee is a party
or by which Borrower, Mortgage


 


37

















 


Borrower, Borrower Principal, Affiliated Lessee or the
Collateral is otherwise bound, other than (a) obligations incurred in the
ordinary course of the operation of the Collateral and (b) its applicable
obligations under the Loan Documents or the Mortgage Loan Documents.


 


Section 4.7.            SOLVENCY


 


Neither Borrower nor
Borrower Principal has (a) entered into the transaction or executed the Note
(if applicable), this Agreement or any other Loan Documents to which any such
Person is a party, with the actual intent to hinder, delay or defraud any creditor
and (b) received reasonably equivalent value in exchange for their respective
obligations under such Loan Documents. 
Giving effect to the Loan, the fair saleable value of the assets of each
of Borrower, and Borrower Principal exceeds and will, immediately following the
making of the Loan, exceed the total liabilities of each of Borrower and
Borrower Principal, including, without limitation, subordinated, unliquidated,
disputed and contingent liabilities.  No
petition in bankruptcy has been filed against Borrower, Mortgage Borrower,
Borrower Principal, Affiliated Lessee or any SPE Component Entity (if any) in
the last ten (10) years, and neither Borrower, Mortgage Borrower, Borrower
Principal, Affiliated Lessee nor any SPE Component Entity in the last ten (10)
years has made an assignment for the benefit of creditors or taken advantage of
any Creditors Rights Laws.  Neither
Borrower, Mortgage Borrower, Borrower Principal, Affiliated Lessee nor any SPE
Component Entity (if any) is contemplating either the filing of a petition by
it under any Creditors Rights Laws or the liquidation of all or a major portion
of Borrower’s, Mortgage Borrower’s, Borrower Principal’s, SPE Component
Entity’s or Affiliated Lessee’s assets or property, and  Borrower has no knowledge of any Person
contemplating the filing of any such petition against Borrower, Mortgage
Borrower, Borrower Principal, Affiliated Lessee or any SPE Component Entity (if
any).


 


Section 4.8.            FULL AND ACCURATE DISCLOSURE


 


No statement of fact made
by or on behalf of Borrower, Mortgage Borrower, any SPE Component Entity (as
defined herein and in the Mortgage Loan Agreement), Borrower Principal or
Affiliated Lessee in this Agreement or in any of the other Loan Documents or in
any other document or certificate delivered by or on behalf of Borrower,
Borrower Principal or Affiliated Lessee 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 material fact presently known to Borrower, Mortgage
Borrower, any SPE Component Entity (as defined herein and in the Mortgage Loan
Agreement), Borrower Principal or Affiliated Lessee which has not been
disclosed to Lender which adversely affects, nor as far as Borrower, Borrower
Principal or Affiliated Lessee can reasonably foresee, might adversely affect,
the Collateral or the business, operations or condition (financial or
otherwise) of Borrower, Borrower Principal or Affiliated Lessee.


 


Section 4.9.            NO PLAN ASSETS


 


Neither Borrower nor
Borrower Principal is an “employee benefit plan,” as defined in
Section 3(3) of ERISA, subject to Title I of ERISA, and none of the assets
of Borrower or Borrower Principal constitutes or will constitute “plan assets”
of one or more such plans within the meaning of 29 C.F.R.
Section 2510.3-101.  Neither
Borrower nor Borrower Principal is a


 


38

















 


“governmental plan” within the meaning of
Section 3(32) of ERISA, subject to state statutes regulating investment
of, and fiduciary obligations with respect to, governmental plans similar to
the provisions of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code currently in effect, which prohibit or otherwise restrict
the transactions contemplated by this Agreement.


 


Section 4.10.          NOT A FOREIGN PERSON


 


Neither Borrower nor
Borrower Principal is a “foreign person” within the meaning of §1445(f)(3) of
the Internal Revenue Code.


 


Section 4.11.          ENFORCEABILITY


 


The Loan Documents are not
subject to any right of rescission, set-off, counterclaim or defense by
Borrower or Borrower Principal, 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, and neither Borrower
nor Borrower Principal has asserted any right of rescission, set-off,
counterclaim or defense with respect thereto. 
No Default or Event of Default exists under or with respect to any Loan
Document.


 


Section 4.12.          BUSINESS PURPOSES


 


The Loan is solely for
the business purpose of Borrower, and is not for personal, family, household,
or agricultural purposes.


 


Section 4.13.          COMPLIANCE


 


Borrower, Mortgage
Borrower, Affiliated Lessee and each Property, and the use and operation
thereof, comply in all material respects with all Legal Requirements,
including, without limitation, building and zoning ordinances and codes and the
Americans with Disabilities Act. 
Borrower has no knowledge that any of such entities is in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority and Borrower has not received any written notice of any such default
or violation.  There has not been
committed by Borrower or, to Borrower’s knowledge, any other Person in
occupancy of or involved with the operation or use of any Property, any act or
omission affording any Governmental Authority the right of forfeiture as
against any Property or any part thereof or any monies paid in performance of Borrower’s
obligations under any of the Loan Documents.


 


Section 4.14.          FINANCIAL INFORMATION


 


All financial data,
including, without limitation, the balance sheets, statements of cash flow,
statements of income and operating expense and rent rolls, that have been
delivered to Lender in respect of Borrower, Borrower Principal, Mortgage
Borrower, Mortgage Borrower GP, Affiliated Lessee and/or the Properties (a) are
true, complete and correct in all material respects, (b) accurately represent
the financial condition of Borrower, Borrower Principal, Mortgage Borrower,
Mortgage Borrower GP, Affiliated Lessee or the Properties, as applicable, as of
the date of such reports, and (c) 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, Mortgage Borrower,
Mortgage


 


39

















 


 Borrower GP
nor Affiliated Lessee has any contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments that are known to Borrower and reasonably
likely to have a material adverse effect on any Property or the current and/or
intended operation thereof, except as referred to or reflected in said
financial statements.  Since the date of
such financial statements, there has been no materially adverse change in the
financial condition, operations or business of Borrower, Mortgage Borrower,
Mortgage Borrower GP, Borrower Principal or Affiliated Lessee from that set
forth in said financial statements.


 


Section 4.15.          ILLEGAL ACTIVITY


 


No portion of the
Collateral or any Property has been or will be purchased with proceeds of any
illegal activity, and no part of the proceeds of the Loan will be used in
connection with any illegal activity.


 


Section 4.16.          PERMITTED ENCUMBRANCES


 


None of the Permitted
Encumbrances, individually or in the aggregate, materially interferes with the
benefits of the security intended to be provided by the Mortgage Loan Documents
or Loan Documents, materially and adversely affects the value of any Property,
impairs the use or the operation of any Property or impairs Mortgage Borrower’s
or Borrower’s ability to pay its obligations in a timely manner.


 


Section 4.17.          FEDERAL RESERVE REGULATIONS


 


Borrower will use the
proceeds of the Loan for the purposes set forth in Section 2.1(d) hereof
and not for any illegal activity.  No
part of the proceeds of the Loan will be used for the purpose of purchasing or
acquiring any “margin stock” within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System or for any other purpose which would be
inconsistent with such Regulation U or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements or prohibited
by the terms and conditions of this Agreement or the other Loan Documents.


 


Section 4.18.          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
meaning 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.


 


Section 4.19.          NO CHANGE IN FACTS OR CIRCUMSTANCES;
DISCLOSURE


 


All information submitted
by Borrower, Mortgage Borrower or its agents to Lender and in all financial
statements, rent rolls, reports, certificates and other documents submitted in
connection with the Loan or in satisfaction of the terms thereof and all
statements of fact made by Borrower, Mortgage Borrower, Affiliated Lessee or
Borrower Principal  in this Agreement,
in


 


40

















 


any other Loan Document or in any Mortgage Loan
Document, are accurate, complete and correct in all material respects.  There has been no material adverse change in
any condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects or might materially and adversely
affect the Collateral, any Property or the business operations or the financial
condition of Borrower, Mortgage Borrower, Affiliated Lessee or Borrower
Principal.  Borrower has disclosed to
Lender all material facts and has not failed to disclose any material fact that
could cause any representation or warranty made herein to be materially
misleading.


 


Section
4.20.          SPECIAL PURPOSE ENTITY


 


Borrower, Mortgage
Borrower, and SPE Component Entity (as defined herein and in the Mortgage Loan
Agreement) (if any) meet all of the requirements of Article 6 hereof as of the
Closing Date in all material respects.


 


Section 4.21.          INTELLECTUAL PROPERTY


 


All trademarks, trade
names and service marks necessary to the business of Borrower as presently
conducted or as Borrower contemplates conducting its business are in good
standing and, to the extent of Borrower’s actual knowledge are uncontested.  Borrower has not knowingly infringed, is not
knowingly infringing, and has not received notice of infringement with respect
to asserted trademarks, trade names and service marks of others.  To Borrower’s knowledge, there is no infringement
by others of trademarks, trade names and service marks of Borrower.


 


Section 4.22.          EMBARGOED PERSON


 


As of the date hereof and
at all times throughout the term of the Loan, including after giving effect to
any transfers of interests permitted pursuant to the Loan Documents, (a) none
of the funds or other assets of Borrower or Borrower Principal constitute
property of, or are beneficially owned, directly or indirectly, by any person,
entity or government subject to trade restrictions under U.S. law, including
but not limited to, the International Emergency Economic Powers Act, 50 U.S.C.
§§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and
any Executive Orders or regulations promulgated thereunder with the result that
the investment in Borrower or Borrower Principal, as applicable (whether
directly or indirectly), is prohibited by law or the Loan made by Lender is in
violation of law (“Embargoed Person”); (b) no Embargoed Person
has any interest of any nature whatsoever in Borrower or Borrower Principal, as
applicable, with the result that the investment in Borrower or Borrower
Principal, as applicable (whether directly or indirectly), is prohibited by law
or the Loan is in violation of law; and (c) none of the funds of Borrower or
Borrower Principal, as applicable, have been derived from any unlawful activity
with the result that the investment in Borrower or Borrower Principal, as
applicable (whether directly or indirectly), is prohibited by law or the Loan
is in violation of law.


 


Section 4.23.          PATRIOT ACT


 


All capitalized words and
phrases and all defined terms used in the USA Patriot Act of 2001, 107 Public
Law 56 (October 26, 2001) and in other statutes and all orders, rules and


 


41

















 


regulations of the United States government and its
various executive departments, agencies and offices related to the subject
matter of the Patriot Act, including Executive Order 13224 effective September
24, 2001 (collectively referred to in this Section only as the “Patriot Act”)
and are incorporated into this Section. 
Each of Borrower and Borrower Principal hereby represents and warrants
that Borrower and Borrower Principal and each and every Person Affiliated with
Borrower and Borrower Principal or that to Borrower’s knowledge has an economic
interest in Borrower or Borrower Principal, or, to Borrower’s or Borrower
Principal’s knowledge, that has or will have an interest in the transaction
contemplated by this Agreement or in the Collateral or any Property or will
participate, in any manner whatsoever, in the Loan (excluding any holders of
publicly traded shares in CNL Hospitality Properties, Inc., a publicly traded
real estate investment trust), is:  (i)
not a “blocked” person listed in the Annex to Executive Order Nos. 12947, 13099
and 13224 and all modifications thereto or thereof (as used in this
Section only, the “Annex”); (ii) in full compliance with the
requirements of the Patriot Act and all other requirements contained in the
rules and regulations of the Office of Foreign Assets Control, Department of
the Treasury (as used in this Section only, “OFAC”); (iii) operated under
policies, procedures and practices, if any, that are in compliance with the
Patriot Act and available to Lender for Lender’s review and inspection during
normal business hours and upon reasonable prior notice; (iv) not in receipt of
any notice from the Secretary of State or the Attorney General of the United
States or any other department, agency or office of the United States claiming
a violation or possible violation of the Patriot Act; (v) not listed as a
Specially Designated Terrorist or as a “blocked” person on any lists maintained
by the OFAC pursuant to the Patriot Act or any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and regulations
of the OFAC issued pursuant to the Patriot Act or on any other list of
terrorists or terrorist organizations maintained pursuant to the Patriot Act;
(vi) not a person who has been determined by competent authority to be subject to
any of the prohibitions contained in the Patriot Act; and (vii) not owned or
controlled by or now acting and or will in the future act for or on behalf of
any person named in the Annex or any other list promulgated under the Patriot
Act or any other person who has been determined to be subject to the
prohibitions contained in the Patriot Act. 
Borrower covenants and agrees that in the event Borrower receives any
notice that Borrower Principal or Borrower (or any of their respective
beneficial owners or Affiliates or participants) become listed on the Annex or
any other list promulgated under the Patriot Act or is indicted, arraigned, or
custodially detained on charges involving money laundering or predicate crimes
to money laundering, Borrower shall immediately notify Lender.  It shall be an Event of Default hereunder if
Borrower, Borrower Principal, or any other party to any Loan Document becomes
listed on any list promulgated under the Patriot Act or is indicted, arraigned
or custodially detained on charges involving money laundering or predicate
crimes to money laundering.


 


Section 4.24.          MORTGAGE LOAN REPRESENTATIONS


 


All of the
representations and warranties contained in the Mortgage Loan Documents are
hereby incorporated into this Agreement and deemed made by Borrower hereunder
and are true and correct as of the Closing Date and shall remain incorporated
as they may have been waived, amended or otherwise modified by the Mortgage
Lender but without regard to whether the related Mortgage Loan Document has
been repaid, defeased or otherwise terminated, unless otherwise consented to in
writing by Lender.


 


42

















 


Section
4.25.          NO CONTRACTUAL OBLIGATIONS


 


Other than the Loan
Documents, the Borrower Partnership Agreement and the Mortgage Borrower
Partnership Agreement, as of the date of this Agreement, Borrower is not
subject to any Contractual Obligations and has not entered into any agreement,
instrument or undertaking by which it or its assets are bound, or has incurred
any indebtedness (other than the Loan), and prior to the date of this
Agreement, neither Borrower nor any of its Subsidiaries has entered into any
Contractual Obligation, or any agreement, instrument or undertaking by which it
or its assets are bound or incurred any indebtedness (other than the Loan or
the Mortgage Loan (as applicable)) except for such liabilities, which are
immaterial in the aggregate, that are incident to Borrower’s activities as a
member of the Mortgage Borrower or that are being satisfied in connection with
the funding of the Loan.


 


Section
4.26.          PLEDGED SECURITIES


 


There are no Liens on the
Pledged Securities (other than the Liens created by the Loan Documents).


 


Section 4.27.          TAXES


 


Mortgage Borrower,
Borrower, Borrower Principal and Affiliated Lessee have filed all federal,
state, county, municipal, and city income, personal property and other tax
returns required to have been filed by them and paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them.  Neither
Borrower, Mortgage Borrower, Borrower Principal nor Affiliated Lessee knows of
any basis for any additional assessment in respect of any such taxes and related
liabilities for prior years.


 


Section 4.28.          SURVIVAL; MISCELLANEOUS


 


Borrower agrees that,
unless expressly provided otherwise, all of the representations and warranties
of Borrower and of Borrower Principal set forth in this Agreement and in the
other Loan Documents shall survive for so long as any portion of the Debt
remains owing to Lender.  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.


 


ARTICLE 5

BORROWER COVENANTS


 


From the date hereof and
until repayment of the Debt in full and performance in full of all obligations
of Borrower under the Loan Documents or the earlier release of the Lien of the
Pledge Agreement (and all related obligations) in accordance with the terms of
this Agreement and the other Loan Documents, Borrower Principal (as to
Sections 5.11 and 5.33 only) and Borrower each hereby covenants and agrees
with Lender that:


 


43

















 


Section 5.1.            EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS


 


(a)           Borrower and Mortgage 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 and
comply with all Legal Requirements applicable to it, and each Property.  Borrower hereby covenants and agrees not to
commit, permit or suffer to exist any act or omission affording any Governmental
Authority the right of forfeiture as against the Collateral, any Property or
any part thereof or any monies paid in performance of Borrower’s obligations
under any of the Loan Documents. 
Borrower shall at all times cause Mortgage Borrower to maintain,
preserve and protect all franchises and trade names used by it, Affiliated
Lessee and any Affiliated Manager in connection with the operation of each
Property.  To the extent anything this
Article 5 or any other section of this Agreement requires Borrower to cause
Mortgage Borrower to take any action, such requirement shall require Borrower
to act solely in its capacity as an equity owner of Mortgage Borrower and
Mortgage Borrower SPE.


 


(b)           After prior written notice to Lender,
Borrower, at its own expense, may cause Mortgage Borrower to contest by
appropriate legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the Legal Requirements affecting any Property, provided
that (i) no Default or Event of Default has occurred and is continuing; (ii)
such proceeding shall be permitted under and be conducted in accordance with
the provisions of any other instrument to which Borrower, Mortgage Borrower or
the applicable Property is subject and shall not constitute a default thereunder;
(iii) neither such Property, any part thereof or interest therein, any of the
tenants or occupants thereof, including, but not limited to the applicable
Operating Lessee and Manager, nor Mortgage Borrower, nor Borrower shall be
affected in any material adverse way as a result of such proceeding; (iv)
non-compliance with the Legal Requirements shall not impose civil or criminal
liability on Borrower, Mortgage Borrower or Lender; (v) Borrower shall have
furnished, or shall have caused Mortgage Borrower to furnish, the security as
may be required in the proceeding or by Lender to ensure compliance by Borrower
and Mortgage Borrower with the Legal Requirements; and (vi) Borrower shall have
furnished, or shall have caused Mortgage Borrower to furnish, to Lender all
other items reasonably requested by Lender.


 


Section 5.2.            MAINTENANCE AND USE OF PROPERTY


 


Borrower shall cause
Mortgage Borrower to maintain each Property in a good and safe condition and
repair. The Improvements and the Personal Property shall not be removed,
demolished or other than in accordance with the provisions of
Section 5.21, materially altered (except for normal replacement of the
Personal Property) without the prior written consent of Lender.  If under applicable zoning provisions the use
of all or any portion of any Property is or shall become a nonconforming use,
Borrower will not cause or permit the nonconforming use to be discontinued or
the nonconforming Improvement to be abandoned without the express written
consent of Lender, such consent not to be unreasonably withheld.


 


Section 5.3.            WASTE


 


Borrower shall not commit
or suffer, and shall not cause Mortgage Borrower to commit or suffer, any waste
of any Property or make any change in the use of any Property which will in


 


44

















 


any way materially increase the risk of fire or other
hazard arising out of the operation of such Property, or take any action that
might invalidate or give cause for cancellation of any Policy, or do or permit
to be done thereon anything that may in any way impair the value of any
Property or the security for the Loan. 
Borrower will not, without the prior written consent of Lender, permit
any drilling or exploration for or extraction, removal, or production of any
minerals from the surface or the subsurface of any Property, regardless of the
depth thereof or the method of mining or extraction thereof.


 


Section 5.4.            TAXES AND OTHER CHARGES


 


(a)           Borrower shall cause Mortgage
Borrower to pay all Taxes and Other Charges now or hereafter levied or assessed
or imposed against any Property or any part thereof as the same become due and
payable; provided, however, Borrower’s obligation to cause Mortgage Borrower to
directly pay (or cause to be paid) Taxes shall be suspended for so long as
Mortgage Borrower complies with the terms and provisions of Section 9.6 of
the Mortgage Loan Agreement.  Borrower
shall cause Mortgage Borrower to furnish to Lender receipts for the payment of the
Taxes and the Other Charges prior to the date the same shall become delinquent
(provided, however, that Borrower is not required to cause Mortgage Borrower to
furnish such receipts for payment of Taxes in the event that such Taxes have
been paid by Mortgage Lender pursuant to Section 9.6 of the Mortgage Loan
Agreement).  Borrower shall cause
Mortgage Borrower to not suffer and shall promptly cause Mortgage Borrower to
pay or transfer to bond and in either instance discharge (or fully and
unconditionally release) any Lien or charge whatsoever which may be or become a
Lien or charge against any Property, and shall cause Mortgage Borrower to
promptly pay for (or cause to be paid for) all utility services provided to any
Property.


 


(b)           After prior written notice to Lender,
Borrower, at its own expense, may permit Mortgage Borrower to contest by
appropriate legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the amount or validity or application in whole or in
part of any Taxes or Other Charges, or any involuntary Lien or other charge,
provided that (i) no Default or Event of Default has occurred and remains
uncured; (ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower or
Mortgage Borrower is subject and shall not constitute a default thereunder and
such proceeding shall be conducted in accordance with all applicable Legal
Requirements; (iii) neither the applicable Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall cause Mortgage Borrower to promptly upon
final determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
contested Taxes or Other Charges from the applicable Property; and (vi)
Mortgage Borrower shall have furnished Mortgage Lender with such security as
may be required in the proceeding, or shall have delivered to Mortgage Lender
such reserve deposits or indemnification in lieu thereof as may be reasonably
requested by Mortgage Lender, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon (unless Mortgage
Borrower has paid all of the Taxes or Other Charges under protest).


 


45

















 


Section 5.5.            LITIGATION


 


Borrower shall give
prompt written notice to Lender of any litigation or governmental proceedings
pending or threatened in writing against Borrower, Borrower Principal, Mortgage
Borrower or Affiliated Lessee which might materially adversely affect
Borrower’s, Mortgage Borrower’s, Borrower Principal’s or Affiliated Lessee’s
condition (financial or otherwise) or business or any Property or the
Collateral.


 


Section 5.6.            ACCESS TO PROPERTY


 


Borrower shall cause
Mortgage Borrower to permit agents, representatives and employees of Lender to
inspect any Property or any part thereof at reasonable hours upon reasonable
advance notice.


 


Section 5.7.            NOTICE OF DEFAULT


 


Borrower shall promptly
advise Lender of any material adverse change in the condition (financial or
otherwise) of Borrower, Mortgage Borrower, Borrower Principal, Affiliated Lessee
or any Property or of the occurrence of any Default or Event of Default of
which Borrower has knowledge.


 


Section 5.8.            COOPERATE IN LEGAL PROCEEDINGS


 


Borrower shall at
Borrower’s expense cooperate fully with Lender with respect to any proceedings
before any court, board or other Governmental Authority which may in any way
affect the rights of Lender hereunder or any rights obtained by Lender under
any of the other Loan Documents and, in connection therewith, permit Lender, at
its election, to participate in any such proceedings.


 


Section 5.9.            PERFORMANCE BY BORROWER


 


Borrower shall in a
timely manner observe, perform and fulfill each and every covenant, term and
provision to be observed and performed by Borrower under this Agreement and the
other Loan Documents and any other agreement or instrument affecting or
pertaining to the Collateral and any amendments, modifications or changes
thereto.


 


Section 5.10.          AWARDS; INSURANCE PROCEEDS


 


Borrower shall, and shall
cause Mortgage Borrower and Affiliated Lessee to, cooperate with Lender in
obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully
or equitably payable in connection with any Property, and Lender shall be
reimbursed for any reasonable out-of-pocket expenses incurred in connection
therewith (including reasonable, actual attorneys’ fees and disbursements, and
the payment by Borrower of the expense of an appraisal on behalf of Lender in
case of a Casualty or Condemnation materially affecting any Property or any
material part thereof) out of such Awards or Insurance Proceeds.


 


46

















 


Section 5.11.          FINANCIAL REPORTING


 


(a)           Borrower and Borrower Principal
shall, and shall cause Mortgage Borrower to, keep adequate books and records of
account in accordance with GAAP, or in accordance with other methods acceptable
to Lender in its sole discretion, consistently applied and shall furnish or
cause to be furnished to Lender:


 


(i)            quarterly and annual certified rent
rolls signed and dated by Borrower and Mortgage Borrower, detailing the names
of all Tenants under Major Leases, the portion of the Improvements (in terms of
square footage) occupied by each such Tenant, the base rent, additional rent
and any other charges payable under each such Major Lease (including annual
store sales required to be reported by Tenant under any Lease), and the term of
each such Major Lease, including the commencement and expiration dates and any
tenant extension, expansion or renewal options, the extent to which any Tenant
is in default under any such Major Lease, and any other information as is
reasonably required by Lender, within forty-five (45) days after the end of
each fiscal quarter or ninety (90) days after the close of each fiscal year of
Borrower, as applicable;


 


(ii)           quarterly and annual operating
statements of each Property, prepared by Borrower or, if applicable, by Manager
in form reasonably acceptable to Lender and certified by Borrower and Mortgage
Borrower in the form required by Lender, detailing the revenues received, the
expenses incurred and the net operating income before and after debt service
(principal and interest) and major capital improvements for the period of
calculation and containing appropriate year-to-date information, within
forty-five (45) days after the end of each fiscal quarter or ninety (90) days
after the close of each fiscal year of Borrower, as applicable;


 


(iii)          quarterly and annual balance sheets,
profit and loss statements, statements of cash flows, and statements of change
in financial position of Borrower and Borrower Principal in the form required
by Lender (with the annual financial statements prepared and audited by an
Acceptable Accountant), together with a certificate by an authorized officer of
the general partner of Borrower Principal certifying as to Borrower Principal’s
then Consolidated Tangible Net Worth (which certificate shall be accompanied by
a description of the computation of such Consolidated Tangible Net Worth
reasonably acceptable to Lender), all within forty-five (45) days after the end
of each fiscal quarter or ninety (90) days after the close of each fiscal year
of Borrower and Borrower Principal, as applicable, as the case may be; and


 


(iv)          an Annual Budget in form reasonably
acceptable to Lender with respect to the operations of each Property, not later
than the later of (i) (5) Business Days after Borrower’s or any
Affiliate’s receipt thereof and (ii) thirty (30) days or in the instance
of each Marriott Managed Property (as defined in the Mortgage Loan Agreement)
fifteen (15) days prior to the commencement of each fiscal year of Borrower,
but in no event later than February 15th of any calendar
year.  In the event that Lender
reasonably objects to a proposed Annual Budget submitted by Borrower, Lender shall
advise Borrower of such objections within fifteen (15) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall promptly revise


 


47

















 


such Annual Budget and
resubmit the same to Lender.  Lender
shall advise Borrower of any reasonable objections to such revised Annual
Budget within ten (10) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall promptly
revise the same in accordance with the process described in this subsection
until Lender approves such Annual Budget. 
In the event Lender shall fail to respond in writing to any proposed
Annual Budget or revised Annual Budget within the above-stated time period,
Lender shall be deemed to have approved the same, provided that any proposed or
revised Annual Budget submitted to Lender pursuant to the terms hereof shall
state in bold face type, 16” font and all capital letters on the cover letter
accompanying each such (A) proposed Annual Budget “ATTACHED IS A PROPOSED
ANNUAL BUDGET FOR THE BELOW REFERENCED PROPERTY(IES), YOUR FAILURE TO RESPOND
IN WRITING TO THE UNDERSIGNED REGARDING THE SAME WITHIN FIFTEEN (15) DAYS OF
THE DATE OF YOUR RECEIPT OF SAID PROPOSED ANNUAL BUDGET, SHALL BE DEEMED TO
CONSTITUTE YOUR APPROVAL OF THE SAME” and (B) revised Annual Budget “ATTACHED
IS A REVISED ANNUAL BUDGET FOR THE BELOW REFERENCED PROPERTY(IES), YOUR FAILURE
TO RESPOND IN WRITING TO THE UNDERSIGNED REGARDING THE SAME WITHIN FIFTEEN (15)
DAYS OF THE DATE OF YOUR RECEIPT OF SAID REVISED ANNUAL BUDGET SHALL BE DEEMED
TO CONSTITUTE YOUR APPROVAL OF THE SAME”. 
Until such time that Lender approves a proposed or revised Annual
Budget, which approval shall not be unreasonably withheld, conditioned or
delayed, or is deemed to have approved the same, the most recent Annual Budget
with respect to such Property shall apply; provided that, such approved Annual
Budget shall be adjusted to reflect actual increases in Taxes, Insurance
Premiums, utilities expenses and other expenses under the applicable Management
Agreement, if any.


 


(b)           Upon request from Lender, Borrower
shall promptly furnish to Lender:


 


(i)            a property management report
regarding operating and financial performance for any Property, in reasonable
detail and certified by Borrower under penalty of perjury to be true and
complete, but no more frequently than quarterly;


 


(ii)           to the extent applicable, an
accounting of all security deposits held in connection with any Lease of any
part of any Property, including the name and identification number of the
accounts in which such security deposits are held, the name and address of the
financial institutions in which such security deposits are held and the name of
the Person to contact at such financial institution, along with any authority
or release necessary for Lender to obtain information regarding such accounts
directly from such financial institutions; and


 


(iii)          to the extent applicable, a report of
all letters of credit provided by any Tenant in connection with any Lease of
any part of any Property, including the account numbers of such letters of
credit, the names and addresses of the financial institutions that issued such
letters of credit and the names of the Persons to contact at such financial
institutions, along with any authority or release necessary for Lender to
obtain information regarding such letters of credit directly from such
financial institutions.


 


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(c)           Intentionally Omitted.


 


(d)           Borrower and Borrower Principal shall
furnish Lender (or cause Mortgage Borrower to furnish Lender) with such other
additional financial or management information (including state and federal tax
returns) as may, from time to time, be reasonably required by Lender in form
and substance satisfactory to Lender (including, without limitation, any
financial reports required to be delivered by any Tenant or any guarantor of
any Lease pursuant to the terms of such Lease), and shall furnish to Lender and
its agents convenient facilities for the examination and audit of any such
books and records.


 


(e)           All items requiring the certification
of Borrower or Mortgage Borrower shall, except where Borrower is an individual,
require a certificate executed by the general partner, managing member or chief
executive officer of Borrower or Mortgage Borrower, as applicable (and the same
rules shall apply to any sole shareholder, general partner or managing member
which is not an individual).


 


Section 5.12.          ESTOPPEL STATEMENT


 


(a)           After request by Lender, Borrower
shall within ten (10) Business Days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the rate of interest on the Note, (iii) the
unpaid principal amount of the Note, (iv) the date installments of interest
and/or principal were last paid, (v) any offsets or defenses to the payment of
the Debt, if any, and (vi) that the Note, this Agreement, the Pledge Agreement
and the other Loan Documents are valid, legal and binding obligations and have
not been modified or if modified, giving particulars of such modification.


 


(b)           Borrower shall use its best efforts
to deliver to Lender, promptly upon request, duly executed estoppel
certificates from (i) the applicable lessor under either Ground Lease pursuant
to the applicable terms and conditions of the applicable ground lease estoppel
and agreement executed in connection herewith, and (ii) any one or more Tenants
as required by Lender attesting to such facts regarding the related Lease as
Lender may require, including, but not limited to attestations that each Lease
covered thereby is in full force and effect with no defaults thereunder on the
part of any party, that none of the Rents have been paid more than one month in
advance, except as security, and that the Tenant claims no defense or offset
against the full and timely performance of its obligations under the Lease.


 


Section 5.13.          OPERATING LEASE; LEASING MATTERS


 


(a)           Borrower shall (or shall cause
Mortgage Borrower to) (i) promptly perform and observe all of the covenants
required to be performed and observed by it under the Operating Leases and do
all things necessary to preserve and to keep unimpaired its material rights
thereunder; (ii) promptly notify Lender of any material default under any
Operating Lease of which it is aware; (iii) promptly deliver to Lender a copy
of any notice of default or other material notice under any Operating Lease
delivered to any Operating Lessee by Mortgage Borrower; (iv) promptly give
notice to Lender of any notice or information that Mortgage Borrower receives
which indicates that an Operating Lessee is terminating its Operating Lease or
that any Operating Lessee is otherwise discontinuing its operation of the
applicable  Property;


 


49

















 


and (v) promptly
enforce the performance and observance of all of the material covenants
required to be performed and observed by the Operating Lessee under the
applicable Operating Lease.


 


(b)           If at any time after the occurrence
and during the continuance of an Event of Default Lender realizes on the
Collateral, Borrower shall (A) in the instance of an Operating Lease
between Mortgage Borrower and an Affiliated Lessee, cause Mortgage Borrower to
cooperate and not in any way hinder, delay 
or otherwise interfere with the termination of the applicable Operating
Lease in accordance with the terms of the applicable Subordination and
Attornment Agreement or (b) in the instance of an Operating Lease with a
Non-Affiliated Lessee, cause Mortgage Borrower to terminate such Operating
Lease to the extent permitted under the terms of such Operating Lease under and
in accordance with terms of the applicable Subordination, Non-Disturbance and
Attornment Agreement.


 


(c)           Borrower shall not, without the prior
written consent of Lender (which consent shall not be unreasonably withheld,
conditioned or delayed) permit or cause Mortgage Borrower to: (i) surrender,
terminate or cancel any Operating Lease or otherwise replace any Operating
Lessee or enter into any other operating lease with respect to any Property;
(ii) reduce or consent to the reduction of the term of any Operating Lease; or
(iii) enter into, renew, amend, modify, waive any provisions of , reduce Rents
under, or shorten the term of any Operating Lease.


 


(d)           Borrower shall (or shall cause
Mortgage Borrower to) ensure that any replacement Operating Lessee shall in all
events be a Qualified Lessee, and shall be a party to an Operating Lease
approved in writing by Lender, in its reasonable discretion and shall be
approved by Mortgage Lender in accordance with the Mortgage Loan Documents. In
addition, any new or replacement Operating Lessee (i) Affiliated with Borrower,
shall execute a form of Subordination and Attornment Agreement in form
substantially similar to the form delivered in connection with the closing of
the Loan and (ii) not Affiliated with Borrower, shall execute a of
Subordination and Attornment Agreement in form reasonably acceptable to Lender.


 


(e)           Other than any new or replacement
Operating Lease, Borrower may permit Mortgage Borrower to enter into a proposed
Lease (including the renewal or extension of an existing Lease (a “Renewal
Lease”)) (or cause or permit any Operating Lessee to enter into a
proposed Lease or Renewal Lease) without the prior written consent of Lender,
provided such proposed Lease or Renewal Lease (i) provides for rental rates and
terms comparable to existing local market rates and terms (taking into account
the type and quality of the tenant) as of the date such Lease is executed by
Mortgage Borrower or Operating Lessee, as the case may be (unless, in the case
of a Renewal Lease, the rent payable during such renewal, or a formula or other
method to compute such rent, is provided for or contemplated in the original
Lease), (ii) is an arm’s-length transaction with a bona fide, independent third
party tenant, (iii) does not have a materially adverse effect on the value
of the applicable Property taken as a whole, (iv) does not contain any
option, offer, right of first refusal, or other similar right to acquire all or
any portion of the applicable Property, (v) has a base term of less than fifteen
(15) years including options to renew, (vi) as to Major Leases, has no
rent, credits, free rents or concessions granted thereunder, and (vii) as
to Major Leases, is written on customary form of lease reasonably acceptable to
Lender.  All proposed Leases which do
not satisfy the requirements set forth in this subsection shall be subject to
the prior approval of Lender and its counsel, at Borrower’s expense.


 


50

















 


Borrower shall
promptly deliver to Lender copies of all Major Leases and to the extent
requested by Lender other Leases which are entered into pursuant to this
subsection together with Borrower’s certification that such Leases satisfy all
of the conditions of this Section.


 


(f)            Without limiting any other provision
contained herein, Borrower (i) shall (or shall cause Mortgage Borrower or the
applicable Operating Lessee to) observe and perform all the obligations imposed
upon the landlord under the Leases and shall not do or permit to be done
anything to impair the value of any of the Leases as security for the Debt;
(ii) shall cause Mortgage Borrower to promptly send copies to Lender of all
notices of default which Mortgage Borrower shall send or receive under any
Major Lease (and any other Lease to pursuant to any request made by Lender);
(iii) shall enforce (or cause or permit Mortgage Borrower or the applicable
Operating Lessee to enforce) all of the material terms, covenants and
conditions contained in the Leases upon the part of the tenant thereunder to be
observed or performed; (iv) shall not collect (or cause or permit Mortgage
Borrower or any Operating Lessee to collect) any of the Rents more than one (1)
month in advance (except security deposits shall not be deemed Rents collected
in advance); (v) shall not execute (or cause or permit Mortgage Borrower or any
Operating Lessee to execute) any other assignment of the landlord’s interest in
any of the Leases or the Rents; and (vi) shall not consent (or cause or permit
Mortgage Borrower or any Operating Lessee to consent) to any assignment of or
subletting under any Leases not in accordance with their terms, without the
prior written consent of Lender.


 


(g)           Notwithstanding any other provision
contained herein, other than with respect to a Major Lease (including, but not
limited to, any Operating Lease) Borrower may, without the prior written
consent of Lender, permit Mortgage Borrower to amend, modify or waive the
provisions of any Lease or terminate, reduce Rents under, accept a surrender of
space under, or shorten the term of, any Lease (including any guaranty, letter
of credit or other credit support with respect thereto) (or cause or permit
Mortgage Borrower or any Operating Lessee to do any of the foregoing) provided
that such action (taking into account, in the case of a termination, reduction
in rent, surrender of space or shortening of term, the planned alternative use
of the affected space) does not have a materially adverse effect on the value
of the applicable Property taken as a whole, and provided that such Lease, as
amended, modified or waived, is otherwise in compliance with the requirements
of this Agreement and any subordination agreement binding upon Lender with
respect to such Lease.  A termination of
a Lease (other than an Operating Lease) with a tenant who is in default beyond
applicable notice and grace periods shall not be considered an action which has
a materially adverse effect on the value of the applicable Property taken as a
whole.  Any amendment, modification,
waiver, termination, rent reduction, space surrender or term shortening which
does not satisfy the requirements set forth in this subsection shall be subject
to the prior approval of Lender and its counsel (not to be unreasonably
withheld), at Borrower’s expense. 
Borrower shall promptly deliver to Lender copies of amendments,
modifications and waivers for Major Leases (and any other Lease pursuant to any
request made by Lender) which are entered into pursuant to this subsection
together with Borrower’s certification that all conditions of this subsection
have been satisfied.


 


(h)           Notwithstanding anything contained
herein to the contrary, Borrower shall not permit Mortgage Borrower, without
the prior written consent of Lender to enter into, renew, extend, amend,
modify, waive any provisions of, terminate, reduce Rents under, accept a
surrender of space under, or shorten the term of any Major Lease (or in the
instance of a Major


 


51

















 


Lease other than
an Operating Lease, cause or permit the applicable Operating Lessee to do any
of the foregoing).


 


(i)            Notwithstanding anything contained
herein to the contrary, Borrower shall not, without the prior written consent
of Lender, cause Mortgage Borrower to enter into, renew, extend, amend, modify,
waive any provisions of, terminate, reduce Rents under, accept a surrender of
space under, or shorten the term of any Lease during a Excess Cash Flow Sweep
Period (as defined in the Mortgage Loan Agreement) (or cause or permit the
Mortgage Borrower to cause or permit the applicable Operating Lessee to do any
of the foregoing).


 


Section 5.14.          PROPERTY MANAGEMENT


 


(a)           Borrower shall cause Mortgage
Borrower or the applicable Operating Lessee to (i) promptly perform and observe
all of the covenants 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
default under the Management Agreement of which it is aware; (iii) promptly
deliver to Lender a copy of any notice of default or other material notice
received by Mortgage Borrower under the Management Agreement; (iv) promptly
give notice to Lender of any notice or information that Mortgage Borrower
receives which indicates that Manager is terminating the Management Agreement
or that Manager is otherwise discontinuing its management of the applicable
Property; and (v) promptly enforce the performance and observance of all of the
covenants required to be performed and observed by Manager under the Management
Agreement.


 


(b)           Subject to the rights of the Mortgage
Lender and the applicable provisions of the Mortgage Loan Documents, if at any
time, an event shall occur (i) under any Management Agreement which constitutes
a material monetary default by Manager as determined by Lender or a material
non-monetary default by Manager as determined by Lender which default
materially and adversely affects the value, use or operation of the Property or
the Borrower’s obligation to pay the Debt and permits Mortgage Borrower or
Operating Lessee to terminate the applicable Manager or (ii) under any
Subordination of Management Agreement/Estoppel permits Lender, Mortgage
Borrower or Operating Lessee to terminate the applicable Manager, Borrower
shall, at the request of Lender, cause Mortgage Borrower to promptly terminate
(or cause Operating Lessee to terminate) the applicable Management Agreement in
accordance with the terms (including the minimum time periods for termination)
of such Management Agreement and/or Subordination of Management
Agreement/Estoppel, and replace Manager with a Qualified Manager approved by
Lender on terms and conditions satisfactory to Lender, it being understood and
agreed that the management fee for such replacement manager shall not exceed
then prevailing market rates.  Without
limiting the foregoing, in the event any Subordination of Management
Agreement/Estoppel shall permit Lender to terminate the Management Agreement
directly, upon Lender’s election to so terminate any such Management Agreement,
Borrower shall reasonably cooperate and not in any way interfere with any act
by Lender’s to so terminate such Management Agreement.


 


(c)           Borrower shall not cause or permit
Mortgage Borrower to, without the prior written consent of Lender (which
consent shall not be unreasonably withheld, conditioned or delayed): (i)
surrender, terminate or cancel the Management Agreement or otherwise replace
any


 


52

















 


Manager or enter
into any other management agreement with respect to any Property (or cause or
permit the applicable Operating Lessee to do any of the foregoing); (ii) reduce
or consent to the reduction of the term of any Management Agreement (or cause
or permit the applicable Operating Lessee to do any of the foregoing); (iii)
increase or consent to the increase of the amount of any charges under any
Management Agreement (or cause or permit the applicable Operating Lessee to do
any of the foregoing); or (iv) otherwise modify, change, supplement, alter or
amend, or waive or release any of its rights and remedies under, any Management
Agreement in any material respect (or cause or permit the applicable Operating
Lessee to do any of the foregoing).


 


(d)           Borrower shall (or shall cause
Mortgage Borrower to) ensure that any replacement Manager shall in all events
be a Qualified Manager, and shall be a party to a Management Agreement approved
in writing by Lender, in its reasonable discretion.  Any new or replacement manager shall execute a form of
Subordination of Management Agreement/Estoppel as may be approved by Lender in
its reasonable discretion.


 


Section 5.15.          LIENS


 


Borrower shall not permit
Mortgage Borrower, without the prior written consent of Lender, to create,
incur, assume or suffer to exist any Lien on any portion of any Property or
permit any such action to be taken, except Permitted Encumbrances.  Borrower shall not incur, assume or suffer
to exist any Lien on any portion of the Collateral or permit any such action to
be taken.


 


Section 5.16.          DEBT CANCELLATION


 


Borrower shall not cancel
or otherwise forgive or release any claim or debt owed to Borrower by any
Person, except for adequate consideration and in the ordinary course of
Borrower’s business.  Borrower shall not
permit Mortgage Borrower to cancel or otherwise forgive or release any claim or
debt (other than termination of Leases in accordance hereunder) owed to
Mortgage Borrower by any person, except for adequate consideration and in the
ordinary course of Mortgage Borrower’s business.


 


Section 5.17.          ZONING


 


Borrower shall not permit
Mortgage Borrower to initiate or consent to any zoning reclassification of any
portion of any Property or seek any variance under any existing zoning
ordinance or use or permit the use of any portion of any Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior written consent of Lender.


 


Section 5.18.          ERISA


 


(a)           Borrower shall not engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by Lender of any of its rights under the Note, this
Agreement or the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.


 


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(b)           Borrower further covenants and agrees
to deliver to Lender such certifications or other evidence from time to time
throughout the term of the Loan, as requested by Lender in its sole discretion,
that (i) Borrower is not and does not maintain an “employee benefit plan” as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or
a “governmental plan” within the meaning of Section 3(3) of ERISA; (ii)
Borrower is not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more of the
following circumstances is true:


 


(A)          Equity interests in Borrower are
publicly offered securities, within the meaning of 29 C.F.R. §2510.3-101(b)(2);


 


(B)           Less than twenty-five percent (25%)
of each outstanding class of equity interests in Borrower are held by “benefit
plan investors” within the meaning of 29 C.F.R. §2510.3-101(f)(2); or


 


(C)           Borrower qualifies as an “operating
company” or a “real estate operating company” within the meaning of 29 C.F.R.
§2510.3-101(c) or (e).


 


Section 5.19.          NO JOINT ASSESSMENT


 


Borrower shall not permit
Mortgage Borrower to suffer, permit or initiate the joint assessment of any
Property with (a) any other real property constituting a tax lot separate from
such Property, or (b) any portion of such 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 Property.


 


Section 5.20.          RECIPROCAL EASEMENT AGREEMENTS


 


Borrower shall not permit
Mortgage Borrower to enter into, terminate or modify any REA without Lender’s
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed.  Borrower shall
cause Mortgage Borrower to enforce, comply with, and cause each of the parties
to each REA to comply with all of the material economic terms and conditions
contained in each REA.


 


Section 5.21.          ALTERATIONS


 


Lender’s prior approval
(which shall not be unreasonably withheld) shall be required in connection with
any alterations to any Improvements, exclusive of alterations to tenant spaces
required under any Lease, (a) that may have a material adverse effect on any
Property, (b) that are structural in nature or (c) that, together with any
other alterations undertaken at the same time (including any related
alterations, improvements or replacements), are reasonably anticipated to have
a cost in excess of the Alteration Threshold. 
If the total unpaid amounts incurred and to be incurred with respect to
such alterations to the Improvements shall at any time exceed the Alteration
Threshold, Borrower shall promptly deliver to Lender as security for the
payment of such amounts and as additional security for Borrower’s obligations
under the Loan Documents any of the following: (i) cash, (ii) direct non-callable
obligations of the United States of America or other obligations which are
“government securities” within the meaning of Section 2(a)(16) of the
Investment Company Act of 1940, to the extent acceptable to the applicable
Rating Agencies,


 


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(iii) other securities
acceptable to Lender and the Rating Agencies, (iv) Letter of Credit acceptable
to Lender and the Rating Agencies or (v) a completion bond, provided that such
completion bond is acceptable to the Lender and the Rating Agencies.  Such security shall be in an amount equal to
the excess of the total unpaid amounts incurred and to be incurred with respect
to such alterations to the Improvements over the Alteration Threshold.


 


 


Section 5.22.          FRANCHISE AGREEMENTS.


 


(a)           Borrower shall ensure that each
Property (other than any Property for which with Lender’s consent there is no
Franchise Agreement in place) shall be operated under the terms and conditions
of the applicable Franchise Agreement. 
Borrower shall cause Mortgage Borrower or the applicable Operating
Lessee to (i) pay all sums required to be paid by the franchisee under each
Franchise Agreement, (ii) diligently perform, observe and enforce all of the
terms, covenants and conditions of each Franchise Agreement on the part of the
franchisee thereunder to be performed, observed and enforced to the end that
all things shall be done which are necessary to keep unimpaired the rights of
said franchisee under each Franchise Agreement, (iii) promptly notify Lender of
the giving of any notice to Mortgage Borrower and/or Operating Lessee of any
default by the franchisee in the performance or observance of any of the terms,
covenants or conditions of any Franchise Agreement on the part of the
franchisee thereunder to be performed and observed and deliver to Lender a true
copy of each such notice, and (iv) promptly deliver to Lender a copy of each
financial statement, business plan, capital expenditure plan, notice of default
under the Franchise Agreement, report regarding operations of the related
Property, estimates of any monetary nature and any other items reasonably
requested by Lender, in each case received by Borrower, Mortgage Borrower or
Affiliated Lessee under any Franchise Agreement.


 


(b)           Subject to the rights of the Mortgage
Lender, Borrower shall not cause or permit Mortgage Borrower or any Operating
Lessee to, without the prior consent of the Lender, surrender any Franchise
Agreement or terminate or cancel any Franchise Agreement or modify, change, supplement,
alter or amend any Franchise Agreement, in any respect, either orally or in
writing.


 


(c)           If any franchisee shall default in
the performance or observance of any material term, covenant or condition of
any Franchise Agreement on the part of the franchisee thereunder to be
performed or observed, then, without limiting the generality of the other
provisions of this Agreement, and without waiving or releasing Borrower from
any of its obligations hereunder and subject to the rights of the Mortgage Lender,
Lender shall have the right, but shall be under no obligation, to pay any sums
and to perform any act or take any action as may be appropriate to cause all
the terms, covenants and conditions of such Franchise Agreement on the part of
the franchisee to be performed or observed to be promptly performed or observed
on behalf of Mortgage Borrower, to the end that the rights of said franchisee
(and/or Mortgage Borrower and/or Operating Lessee) in, to and under such
Franchise Agreement shall be kept unimpaired and free from default.  Any such amounts so advanced by Lender
together with interest thereon from the date expended by Lender at the Default
Rate shall be part of the Debt, and Borrower shall immediately repay such
amounts to Lender upon demand.  Pursuant
to the terms of the applicable Subordination Non-Disturbance Attornment
Agreement, Subordination and Attornment Agreement and/or Subordination of
Management Agreement/Estoppel, Lender and


 


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any person
designated by Lender shall have, and are hereby granted, the right to enter
upon the applicable Property at any time and from time to time for the purpose
of taking any such action.  If any
Franchisor shall deliver to Lender a copy of any notice sent to Mortgage
Borrower, Borrower and/or Operating Lessee of any default under any Franchise
Agreement, such notice shall constitute full protection to Lender for any
action taken or omitted to be taken by Lender in good faith, in reliance
thereon.


 


(d)           Subject to the rights of the Mortgage
Lender, Borrower shall cause the Mortgage Borrower or the applicable Operating
Lessee to exercise each individual option, if any, to extend or renew the term
of each Franchise Agreement upon demand by Lender made at any time within
ninety (90) days prior to the last day upon which any such option may be
exercised, and Borrower hereby expressly authorizes and appoints Lender as its
attorney-in-fact to exercise (or cause the applicable Operating Lessee to
exercise) any such option in the name of and upon behalf of Mortgage Borrower
should Borrower fail to cause the Mortgage Borrower to do so, which power of
attorney shall be irrevocable and shall be deemed to be coupled with an
interest.


 


(e)           Any sums expended by Lender pursuant
to this Section shall bear interest at the Default Rate from the date such cost
is incurred to the date of payment to Lender, shall be deemed to constitute a
portion of the Debt , shall be secured by the lien of the Pledge Agreement and
the other Loan Documents and shall be immediately due and payable upon demand
by Lender therefor.


 


(f)            Borrower shall (or shall cause
Mortgage Borrower to), promptly upon request of Lender, use its diligent best
efforts to obtain and deliver (or cause to be delivered) an estoppel
certificate from each Franchisor stating that (i) each applicable Franchise
Agreement is in full force and effect and has not been modified, amended or
assigned, (ii) neither such Franchisor nor the franchisee named thereunder is
in default under any of the terms, covenants or provisions of each applicable
Franchise Agreement and such Franchisor knows of no event which, but for the
passage of time or the giving of notice or both, would constitute an event of
default under each applicable Franchise Agreement, (iii) neither such
Franchisor nor the franchisee thereunder has commenced any action or given or
received any notice for the purpose of terminating any applicable Franchise
Agreement and (iv) all sums due and payable to such Franchisor under each applicable
Franchise Agreement have been paid in full.


 


(g)           Upon the termination of any Franchise
Agreement, Borrower shall (or shall cause Mortgage Borrower or Operating Lessee
to) promptly enter into a new Franchise Agreement with a replacement
Franchisor, which shall deliver a comfort or similar letter to and in favor of
Lender, all upon terms and conditions acceptable to Lender in its discretion.


 


Section 5.23.          GROUND LEASE


 


(a)           With respect to each Ground Lease,
Borrower shall cause Mortgage Borrower to (i) subject to Section 9.10, pay
all rents, additional rents and other sums required to be paid by Mortgage
Borrower, as tenant under and pursuant to the provisions of the Ground Lease,
(ii) diligently perform and observe all of the terms, covenants and conditions
of the Ground Lease on the part of Mortgage Borrower, as tenant thereunder,
(iii) promptly notify Lender of the giving of any notice by the landlord under
the Ground Lease to Mortgage Borrower of any default by


 


56

















 


Mortgage Borrower,
as tenant thereunder, and deliver to Lender a true copy of each such notice
within five (5) Business Days of receipt and (iv) promptly notify Lender of any
bankruptcy, reorganization or insolvency of the landlord under the Ground Lease
or of any notice thereof, and deliver to Lender a true copy of such notice
within five (5) Business Days of Mortgage Borrower’s receipt.  Mortgage Borrower shall not, without the
prior written consent of Lender, surrender the leasehold estate created by the
Ground Lease or terminate or cancel the Ground Lease or modify, change,
supplement, alter or amend the Ground Lease, either orally or in writing, and
if Mortgage Borrower shall default in the performance or observance of any
term, covenant or condition of the Ground Lease on the part of Mortgage
Borrower, as tenant thereunder, and shall fail to cure the same prior to the
expiration of any applicable cure period provided thereunder, Lender (subject
to the rights of Mortgage Lender) shall have the right, but shall be under no
obligation, to pay any sums and to perform any act or take any action as may be
appropriate to cause all of the terms, covenants and conditions of the Ground
Lease on the part of Mortgage Borrower to be performed or observed on behalf of
Mortgage Borrower, to the end that the rights of Mortgage Borrower in, to and
under the Ground Lease shall be kept unimpaired and free from default.  If the landlord under the Ground Lease shall
deliver to Lender a copy of any notice of default under the Ground Lease, such
notice shall constitute full protection to Lender for any action taken or
omitted to be taken by Lender, in good faith, in reliance thereon.  Mortgage Borrower shall exercise each
individual option, if any, to extend or renew the term of the Ground Lease upon
demand by Lender made at any time within ninety (90) days prior to the last day
upon which any such option may be exercised, and Mortgage Borrower hereby
expressly authorizes and appoints Lender its attorney-in-fact to exercise any
such option in the name of and upon behalf of Mortgage Borrower should Mortgage
Borrower fail to do so, which power of attorney shall be irrevocable and shall
be deemed to be coupled with an interest.


 


(b)           Other than as permitted by this Agreement,
notwithstanding anything contained in either Ground Lease to the contrary,
Borrower shall not cause or permit Mortgage Borrower to further sublet any
portion of applicable Property subject to such Ground Lease (other than as
permitted pursuant to the applicable terms and conditions hereof) without prior
written consent of Lender.  In addition,
(i) any such sublease shall not terminate or be terminable by the lessee
thereunder, including, but not limited to, in the event of any action for the
foreclosure of the Security Instrument (unless a judgment is obtained therein
against such sublessee); and (ii) in the event that the Ground Lease is
terminated as aforesaid, the sublessee under the sublease shall attorn to the
lessor under the Ground Lease or to the purchaser at the sale of the applicable
Property on such foreclosure, as the case may be.  In the event that any portion of the applicable Property shall be
sublet pursuant to the terms of this subsection, such sublease shall be deemed
to be included in the applicable Property.


 


Section 5.24.          INTEREST RATE CAP AGREEMENT


 


(a)           Prior to or contemporaneously with
the Closing Date, Borrower shall have obtained the Rate Cap, which shall
continue until the end of the Interest Period in which the Maturity Date of the
Loan shall occur and have a notional amount which shall not at any time be less
than the outstanding principal balance of the Loan.  The Rate Cap shall be maintained throughout the term of the Loan
with an Acceptable Counterparty.  If the
provider of the Rate Cap or any Replacement Rate Cap ceases to be an Acceptable
Counterparty, Borrower shall


 


57

















 


obtain a
Replacement Rate Cap at Borrower’s sole cost and expense within ten (10) days
of receipt of notice from Lender or Borrower’s obtaining knowledge that the
provider is no longer an Acceptable Counterparty.


 


(b)           Borrower shall collaterally assign to
Lender pursuant to the Collateral Assignment of Interest Rate Cap Agreement all
of its right, title and interest to receive any and all payments under the Rate
Cap or any Replacement Rate Cap (and any related guarantee, if any) and shall
deliver to Lender counterparts of such Collateral Assignment of Interest Rate
Cap Agreement executed by the Borrower and by the Acceptable Counterparty and
notify the Acceptable Counterparty of such collateral assignment (either in
such Rate Cap or by separate instrument). 
At such time as the Loan is repaid in full, all of Lender’s right, title
and interest in the Rate Cap and any Replacement Rate Cap shall terminate and
Lender shall execute and deliver at Borrower’s sole cost and expense, such
documents as may be required to evidence Lender’s release of the Rate Cap and
any Replacement Rate Cap and to notify the Acceptable Counterparty of such
release.


 


(c)           Borrower shall comply with all of its
obligations under the terms and provisions of the Rate Cap and any Replacement
Rate Cap.  All amounts paid by the
Acceptable Counterparty under the Rate Cap to Borrower or Lender shall be
deposited immediately into an account designated by Lender.  Provided no Event of Default shall then
exist, to the extent any funds actually received in such account when combined
with funds actually received by and due Mezzanine Lender under this Agreement,
the other Loan Documents and the Intercreditor Agreement, exceed amounts then
due Lender under this Agreement and the other Loan Documents, such excess shall
be distributed to Borrower.  Borrower
shall take all actions reasonably requested by Lender to enforce Lender’s
rights under the Rate Cap and any Replacement Rate Cap in the event of a
default by the Acceptable Counterparty and shall not waive, amend or otherwise
modify any of its rights thereunder.


 


(d)           In the event that Borrower fails to purchase
and deliver to Lender the Rate Cap or any Replacement Rate Cap as and when
required hereunder, or fails to maintain such agreement in accordance with the
terms and provisions of this Agreement, Lender may purchase the Rate Cap or any
Replacement Rate Cap, as applicable, and the cost incurred by Lender in
purchasing the Rate Cap or any Replacement Rate Cap, as applicable, 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 reimbursed by Borrower
to Lender.


 


(e)           In connection with the Rate Cap and
any Replacement Rate Cap, Borrower shall obtain and deliver to Lender an
opinion from counsel (which counsel may be in house counsel for the Acceptable
Counterparty) for the Acceptable Counterparty (upon which Lender and its
successors and assigns may rely) which shall provide, in relevant part, that:


 


(i)            the Acceptable Counterparty is duly
organized, validly existing, and in good standing under the laws of its jurisdiction
of incorporation and has the organizational power and authority to execute and
deliver, and to perform its obligations under, the Rate Cap or the Replacement
Rate Cap, as applicable;


 


58

















 


(ii)           the execution and delivery of the
Rate Cap or the Replacement Rate Cap, as applicable, by the Acceptable
Counterparty, and any other agreement which the Acceptable Counterparty has
executed and delivered pursuant thereto, and the performance of its obligations
thereunder have been and remain duly authorized by all necessary action and do
not contravene any provision of its certificate of incorporation or by laws (or
equivalent organizational documents) or any law, regulation or contractual
restriction binding on or affecting it or its property;


 


(iii)          all consents, authorizations and
approvals required for the execution and delivery by the Acceptable
Counterparty of the Rate Cap or the Replacement Rate Cap, as applicable, and
any other agreement which the Acceptable Counterparty has executed and
delivered pursuant thereto, and the performance of its obligations thereunder
have been obtained and remain in full force and effect, all conditions thereof
have been duly complied with, and no other action by, and no notice to or
filing with any governmental authority or regulatory body is required for such
execution, delivery or performance; and


 


(iv)          the Rate Cap or the Replacement Cap,
as applicable, and any other agreement which the Acceptable Counterparty has
executed and delivered pursuant thereto, has been duly executed and delivered
by the Acceptable Counterparty and constitutes the legal, valid and binding
obligation of the Acceptable Counterparty, enforceable against the Acceptable
Counterparty in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights 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).


 


Section
5.25.          NOTICES


 


Borrower shall give
notice, or cause notice to be given, to Lender promptly upon the occurrence of:


 


(a)           any Event of Default, or a Default or
Event of Default under the Mortgage Loan Documents;


 


(b)           any material default or event of
default under any Contractual Obligation of Borrower, or, to the knowledge of
Borrower, Mortgage Borrower, or Borrower Principal that could reasonably be
expected to have a material adverse effect on Borrower, the ability of Borrower
to perform under the Loan Documents or the rights and remedies of Lender under
the Loan Documents;


 


(c)           any litigation or proceeding
affecting Borrower, or, to the knowledge of Borrower, affecting any of Mortgage
Borrower or Borrower Principal, in which the amount involved in each case is
$100,000.00 or more and not fully covered by insurance, or in which injunctive
or similar relief is sought; or


 


(d)           a change in the business, operations,
property or financial or other condition or prospects of Borrower, or, to the
knowledge of Borrower, Mortgage Borrower or Borrower Principal which could
reasonably be expected to have a material adverse effect on Borrower,


 


59

















 


the ability of
Borrower to perform under the Loan Documents or the rights and remedies of
Lender under the Loan Documents.


 


Section 5.26.          CURING


 


Lender shall have the
right, but shall not have the obligation, to exercise Borrower’s rights under
the Mortgage Borrower Partnership Agreement (a) to cure a Default or Event of
Default under the Mortgage Loan, and (b) to satisfy any Liens, claims or
judgments against any Property (except for Liens permitted by the Mortgage Loan
Documents), in the case of either (a) or (b), unless Borrower or Mortgage
Borrower shall be diligently pursuing remedies to cure to Lender’s sole
satisfaction.  Borrower shall reimburse
Lender on demand for any and all costs incurred by Lender in connection with
curing any such Default or Event of Default under the Mortgage Loan or
satisfying any Liens, claims or judgments against any Property.


 


Section 5.27.          SPECIAL
DISTRIBUTIONS


 


On each date on which
amounts are required to be paid to Lender under any of the Loan Documents,
Borrower shall exercise its rights under the Mortgage Borrower Partnership Agreement
to cause Mortgage Borrower (to the extent of any and all available cash after
payment of all amounts due under or required to be paid pursuant to the
Mortgage Loan Documents) to make to Borrower a distribution in an aggregate
amount such that Lender shall receive the amount required to be paid to Lender
on such date, after consideration of all amounts  (a) to be paid to Lender under the Cash Management Agreement on
such date (and actually received by Lender on such date) and (b) any other
amounts actually received by Lender (and due Lender under the Intercreditor
Agreement) as of such date.  Nothing
contained herein shall in any way modify (or be deemed to modify) any other
obligation of Borrower hereunder, including, but not limited to any other payment
obligations of Borrower hereunder.


 


Section 5.28.          LIMITATION ON SECURITIES ISSUANCES


 


None of Borrower or any
of its subsidiaries shall issue any membership interests or other securities,
other than those that have been issued as of the Closing Date.


 


Section 5.29.          LIMITATIONS ON DISTRIBUTIONS


 


Following (a) the
occurrence and during the continuance of a monetary Event of Default, (b) the
occurrence and during the continuance of an Event of Default under Section
11.1(f) hereof or (c) the occurrence of any other Event of Default with respect
to which Lender has accelerated the Loan, Borrower shall not make any
distributions to its members.


 


Section 5.30.          OTHER LIMITATIONS


 


Prior to the payment in
full of the Debt, neither Borrower nor any of its Subsidiaries shall, nor
permit Mortgage Borrower to, without the prior written consent of Lender (which
may be furnished or withheld at its sole and absolute discretion, except as
otherwise provided herein), give its consent or approval to any of the
following actions or items:


 


(a)           except as expressly permitted
pursuant to and in accordance with the terms hereof (including, without
limitation, the provisions of Section 5.34 hereof, with respect to a refinance


 


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of the Mortgage
Loan, and the provisions of Section 2.4(c)(ii) hereof, with respect to the
Release of a Property) (i) any refinance of the Mortgage Loan, (ii) any
prepayment in full of the Mortgage Loan, (iii) any Transfer or Release of a
Property or any portion thereof, or (iv) any action in connection with or in
furtherance of the foregoing;


 


(b)           except as expressly permitted
pursuant to and in accordance with the terms hereof, creating, incurring,
assuming or suffering to exist any additional Liens on any portion of the
Properties except for Permitted Encumbrances;


 


(c)           any modification, amendment,
consolidation, spread, restatement, waiver or termination of any of the
Mortgage Loan Documents;


 


(d)           approve the terms of any Annual
Budget (unless pursuant to and in accordance with the provisions of Section
5.11(a)(iv));


 


(e)           the distribution to the partners,
members or shareholders of Mortgage Borrower of property other than cash;


 


(f)            except as set forth in an approved
Annual Budget or as permitted under the Mortgage Loan Documents, any (i)
improvement, renovation or refurbishment of all or any part of a Property to a
materially higher standard or level than that of comparable properties in the
same market segment and in the same geographical area as such Property, (ii)
removal, demolition or material alteration of the improvements or equipment on
a Property or (iii) material increase in the square footage or gross leasable
area of the improvements on a Property if a material portion of any of the
expenses in connection therewith are paid or incurred by Mortgage Borrower;
provided that Mezzanine Lender will not unreasonably withhold, delay or
condition its consent to any such actions to the extent the same are to be
funded in full by an additional capital contribution to Borrower;


 


(g)           any material change in the method of
conduct of the business of Mortgage Borrower or Borrower or any of its
subsidiaries, such consent to be given in the reasonable discretion of the
Lender;


 


(h)           the settlement of any claim against Mortgage
Borrower or Borrower or any of its Subsidiaries, other than (i) any settlement
provided for in an Approved Annual Budget or (ii) a fully insured third party
claim, in any amount greater than $100,000 (in the case of Borrower or Mortgage
Borrower), such consent to be given in the sole discretion of the Lender; or


 


(i)            except as required by the Loan
Documents or the Mortgage Loan Documents, any determination to restore a
Property after a Casualty or Condemnation, except to the extent funded solely
from additional capital contributions to Borrower.


 


Section 5.31.          CONTRACTUAL
OBLIGATIONS


 


Other than the Loan
Documents, the Borrower Partnership Agreement (and the initial membership
interests in Borrower issued pursuant thereto), the Mortgage Loan Documents and
the Mortgage Borrower Partnership Agreement, neither Borrower nor any of its
assets shall be subject to any Contractual Obligations, and Borrower shall not
enter into any agreement,


 


61

















 


instrument or undertaking by which it or its assets
are bound, except for such liabilities, not material in the aggregate, that are
incidental to its activities as a limited partner or regular member, as
applicable, of Mortgage Borrower.


 


Section 5.32.          MANAGER OF FLINT PROPERTY


 


The initial Manager of
the Flint Property as of the Closing Date is Flagstone.  Borrower anticipates entering into with
Interstate a new Management Agreement (“Flint Interstate Management Agreement”) in
the exact same form as the form in place on the Closing Date with Interstate on
the other Interstate Properties.  On or
before February 15, 2004, Borrower shall provide Lender with a copy of the
executed Flint Interstate Management Agreement as well as the Subordination of
Management Agreement/Estoppel in the form delivered on the Closing Date and
executed by Interstate for the other Interstate Managed Properties.


 


Section 5.33.          CONSOLIDATED
TANGIBLE NET WORTH


 


Borrower Principal shall
not permit the Consolidated Tangible Net Worth of Borrower Principal and its
Subsidiaries on a consolidated basis at any time to be less than the sum of
$150,000,000.00 plus the cost basis of the Properties subject to the Lien of
the Mortgage at such time as set forth on Schedule I hereto minus the aggregate
then outstanding principal balance of the Loan and Mortgage Loan.


 


Section 5.34.          REFINANCING


 


Borrower shall not consent to or permit a refinancing
of the Mortgage Loan unless it obtains the prior written consent of Lender,
which consent may be withheld in the event (a) Lender shall determine in its
sole and absolute discretion that the terms of such new mortgage loan are not
at least equivalent to the terms of the Mortgage Loan, (b) without limiting the
foregoing, (i) the principal balance of the new mortgage loan shall in no event
exceed the principal balance of the Mortgage Loan on the date of the
refinancing, (ii) the new mortgage loan shall have an interest rate that is no
higher than the then current interest rate for the Mortgage Loan, as determined
by Lender in its sole discretion (and shall provide for an interest rate cap
agreement substantially identical to the Rate Cap), (iii) the new mortgage loan
shall have an amortization schedule that provides for repayment in monthly
installments each of which is no greater than the monthly principal payments
due under the Mortgage Note , (iv) the new mortgage loan shall have a maturity
date that is no earlier than that provided for under the Mortgage Loan at the
time of the closing thereof, as such maturity date may be extended pursuant to
the Mortgage Loan Agreement, and (v) the terms of the new mortgage loan shall
permit the Loan, (c) the new mortgage lender shall refuse to enter into an
intercreditor agreement with Lender no less favorable to Lender (as determined
in Lender’s sole and absolute discretion) than the Intercreditor Agreement, (d)
Borrower shall fail to execute and deliver such amendments to this Agreement
and the other Loan Documents as Lender may determine necessary to preserve all
rights granted Lender under this Agreement and the other Loan Documents, (e)
Borrower shall fail to deliver to Lender such settlement statements, pay-off
letters, opinions and other documentation as Lender shall request in connection
with such refinancing, or (f) Borrower shall fail to pay all costs and expenses
incurred by Lender (including, but not limited to, attorneys’ fees) in
connection with such refinancing.


 


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ARTICLE 6

ENTITY COVENANTS


 


Section 6.1.            SINGLE PURPOSE ENTITY/SEPARATENESS


 


Until the Debt has been
paid in full, Borrower represents, warrants and covenants as follows (provided,
however, any Borrower covenant that it will cause Mortgage Borrower to take any
action shall be deemed to mean that the Borrower shall act in Borrower’s
capacity as an equity owner of Mortgage Borrower and Mortgage Borrower GP):


 


(a)           Borrower has not and will not and
will not permit Mortgage Borrower or SPE Component Entity thereof to:


 


(i)            with respect to (x) Borrower, engage
in any business or activity other than the ownership of the Pledged Securities
and the Collateral and any activities incidental thereto and (y) Mortgage
Borrower, engage in any business or activity other than the ownership,
operation and maintenance of the Properties, and activities incidental thereto;


 


(ii)           with respect to (x) Borrower acquire
any assets other than (A) the Pledged Securities and the Collateral and (B)
such incidental Personal Property as may be necessary for the operation of the
Pledged Securities and the Collateral (y) Mortgage Borrower acquire or own any
assets other than (A) the Properties, and (B) such incidental Personal Property
as may be necessary for the operation of each Property;


 


(iii)          merge into or consolidate with any
Person, or dissolve, terminate, liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change its legal
structure, without the prior written consent of Lender and after a
Securitization written confirmation from each of the applicable Rating Agencies
that the same shall not result in the qualification, withdrawal or downgrade of
the initial, or if higher, then current ratings issued in connection with a
Securitization;


 


(iv)          fail to observe all organizational
formalities, or fail to preserve its existence as an entity duly organized,
validly existing and in good standing (if applicable) under the applicable
Legal Requirements of the jurisdiction of its organization or formation, or
amend, modify, terminate or fail to comply with the provisions of its
organizational documents;


 


(v)           own any subsidiary, or make any
investment in, any Person, without the prior written consent of Lender and
after a Securitization written confirmation from each of the applicable Rating
Agencies that said ownership or investment shall not result in the
qualification, withdrawal or downgrade of the initial, or if higher, then
current ratings issued in connection with a Securitization;


 


(vi)          commingle its assets with the assets
of any other Person;


 


(vii)         with respect to (x) Borrower , incur
any debt, secured or unsecured, direct or contingent (including guaranteeing
any obligation), other than (A) the Debt, (B) trade


 


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and operational
indebtedness incurred in the ordinary course of business with trade creditors
(including obligations in respect of alterations, replacements and capital
improvements permitted under the Loan Documents), provided such indebtedness is
(1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable
terms and conditions, and (4) due not more than sixty (60) days past the date
incurred and paid on or prior to such date, and/or (C) financing leases and
purchase money indebtedness incurred in the ordinary course of business
relating to Personal Property on commercially reasonable terms and conditions;
provided however, the aggregate amount of the indebtedness described in (B) and
(C) shall , when combined with any similar indebtedness then held by the
Affiliated Lessee, not exceed at any time five percent (5%) of the outstanding
principal amount of the Note; and (y) Mortgage Borrower or any SPE Component
Entity thereof, incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than as permitted under the
Mortgage Loan Documents;


 


(viii)        fail to maintain its records, books of
account, bank accounts, financial statements, accounting records and other
entity documents separate and apart from those of any other Person; except that
Borrower’s and Mortgage Borrower’s financial position, assets, liabilities, net
worth and operating results may be included in the consolidated financial
statements of an Affiliate, provided that such consolidated financial
statements clearly and conspicuously identify the Borrower as a separate legal
entity;


 


(ix)           enter into any contract or agreement
with any general partner, member, shareholder, principal, guarantor of the
obligations of Borrower or of Mortgage Borrower, or any Affiliate of the
foregoing, except upon terms and conditions that are intrinsically fair,
commercially reasonable and substantially similar to those that would be
available on an arm’s-length basis with unaffiliated third parties;


 


(x)            maintain its assets in such a manner
that it will be costly or difficult to segregate, ascertain or identify its
individual assets from those of any other Person;


 


(xi)           except as otherwise expressly
permitted by the Loan Documents, assume or guaranty the debts of any other
Person (other than any commercially reasonable guaranty of any Affiliated
Lessee’s obligations under any Franchise Agreement or Management Agreement
consented to by Lender), hold itself out to be responsible for the debts of any
other Person, or otherwise pledge its assets for the benefit of any other
Person or hold out its credit as being available to satisfy the obligations of
any other Person;


 


(xii)          make any loans or advances to any
Person, without the prior written consent of Lender and after a Securitization
written confirmation from each of the applicable Rating Agencies that the same
shall not result in the qualification, withdrawal or downgrade of the initial,
or if higher, then current ratings issued in connection with a Securitization;


 


(xiii)         fail to file its own tax returns or
fail to file a consolidated tax return on which Borrower (and as applicable,
Mortgage Borrower and any SPE Component Entity


 


64

















 


thereof) is identified as
a separate entity from all other Persons, or which otherwise complies with or
if necessary is promptly amended to comply with all applicable Rating Agency
requirements;


 


(xiv)        fail either to hold itself out to the
public as a legal entity separate and distinct from any other Person or to
conduct its business solely in its own name or fail to correct any known
misunderstanding regarding its separate identity;


 


(xv)         fail to maintain adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;


 


(xvi)        if it is a partnership or limited
liability company, without the unanimous written consent of all of its partners
or members, as applicable, and the written consent of 100% of the directors or
managers as applicable, of each SPE Component Entity (if any), including,
without limitation, each Independent Director, (a) file or consent to the
filing of any petition, either voluntary or involuntary, to take advantage of
any Creditors Rights Laws, (b) seek or consent to the appointment of a
receiver, liquidator or any similar official, (c) take any action that might
cause such entity to become insolvent, or (d) make an assignment for the
benefit of creditors;


 


(xvii)       fail to allocate shared expenses
(including, without limitation, shared office space and services performed by
an employee of an Affiliate) among the Persons sharing such expenses and to use
separate stationery, invoices and checks;


 


(xviii)      (A) fail to remain solvent or (B) fail to
pay its own liabilities (including, without limitation, salaries of its own
employees) only from its own funds;


 


(xix)         acquire obligations or securities of
its partners, members, shareholders or other Affiliates, as applicable;


 


(xx)          violate or cause to be violated the
assumptions made with respect to Borrower and its principals in any opinion
letter pertaining to substantive consolidation delivered to Lender in
connection with the Loan;


 


(xxi)         fail to maintain a sufficient number of
employees in light of its contemplated business operations; or


 


(xxii)        form, acquire, or hold any subsidiary
(other than Mortgage Borrower and Mortgage Borrower GP).


 


(b)           If Borrower is a partnership or
limited liability company which is not a single member limited liability
company, each general partner in the case of a general partnership, each
general partner in the case of a limited partnership, or the managing member in
the case of a limited liability company (each an “SPE Component Entity”) of
Borrower, as applicable, shall be a corporation or a single member Delaware
limited liability company (which shall comply with all additional provisions
contained herein with respect to Delaware limited liability companies) whose
sole asset is its interest in Borrower. 
Each SPE Component Entity (i) will at all times


 


65

















 


comply with each of the covenants, terms and
provisions contained in Section 6.1(a)(iii) - (vi) and (viii) - (xxi), as
if such representation, warranty or covenant was made directly by such SPE Component
Entity; (ii) will not engage in any business or activity other than owning an
interest in Borrower; (iii) will not acquire or own any assets other than its
partnership, membership, or other equity interest in Borrower; (iv) will not
incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation); and (v) will cause Borrower to comply with the
provisions of this Section 6.1 and Section 6.4.  Prior to the withdrawal or the
disassociation of any SPE Component Entity from Borrower, Borrower shall
immediately appoint a new general partner or managing member whose articles of
incorporation (or other applicable formation and entity documentation) are
substantially similar to those of such SPE Component Entity and, if an opinion
letter pertaining to substantive consolidation was required at closing, deliver
a new opinion letter acceptable to Lender and the Rating Agencies with respect
to the new SPE Component Entity and its equity owners.  Notwithstanding the foregoing, to the extent
Borrower is a single member Delaware limited liability company, so long as
Borrower maintains such formation status, no SPE Component Entity shall be
required.


 


(c)           In the event Borrower is a single
member Delaware limited liability company, the limited liability company
agreement of Borrower (the “LLC Agreement”) shall provide that (i) upon
the occurrence of any event that causes the sole member of Borrower (“Member”)
to cease to be the member of Borrower (other than (A) upon an assignment by Member
of all of its limited liability company interest in Borrower and the admission
of the transferee in accordance with the Loan Documents and the LLC Agreement,
or (B) the resignation of Member and the admission of an additional member of
Borrower in accordance with the terms of the Loan Documents and the LLC
Agreement), any person acting as Independent Director of Borrower shall,
without any action of any other Person and simultaneously with the Member
ceasing to be the member of Borrower, automatically be admitted to Borrower as
a member thereof (“Special Member”) and shall continue
Borrower without dissolution and (ii) Special Member may not resign from
Borrower or transfer its rights as Special Member unless (A) a successor
Special Member has been admitted to Borrower as Special Member in accordance
with requirements of Delaware law and (B) such successor Special Member has
also accepted its appointment as an Independent Director.  The LLC Agreement shall further provide that
(i) Special Member shall automatically cease to be a member of Borrower upon
the admission to Borrower of a substitute Member, (ii) Special Member
shall be a member of Borrower that has no interest in the profits, losses and
capital of Borrower and has no right to receive any distributions of Borrower
assets, (iii) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the “Act”), Special Member shall not be required
to make any capital contributions to Borrower and shall not receive a limited
liability company interest in Borrower, (iv) Special Member, in its capacity as
Special Member, may not bind Borrower and (v) except as required by any
mandatory provision of the Act, Special Member, in its capacity as Special
Member, shall have no right to vote on, approve or otherwise consent to any
action by, or matter relating to, Borrower, including, without limitation, the
merger, consolidation or conversion of Borrower; provided, however, such
prohibition shall not limit the obligations of Special Member, in its capacity as
Independent Director, to vote on such matters required by the Loan Documents or
the LLC Agreement.  In order to
implement the admission to Borrower of Special Member, Special Member shall
execute a counterpart to the LLC Agreement. 
Prior to its admission to Borrower as Special Member, Special Member
shall not be a member of Borrower.


 


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Upon the occurrence of
any event that causes the Member to cease to be a member of Borrower, to the
fullest extent permitted by law, the personal representative of Member shall,
within ninety (90) days after the occurrence of the event that terminated the
continued membership of Member in Borrower, agree in writing (i) to continue
Borrower and (ii) to the admission of the personal representative or its
nominee or designee, as the case may be, as a substitute member of Borrower,
effective as of the occurrence of the event that terminated the continued
membership of Member of Borrower in Borrower. 
Any action initiated by or brought against Member or Special Member
under any Creditors Rights Laws shall not cause Member or Special Member to
cease to be a member of Borrower and upon the occurrence of such an event, the
business of Borrower shall continue without dissolution.  The LLC Agreement shall provide that each of
Member and Special Member waives any right it might have to agree in writing to
dissolve Borrower upon the occurrence of any action initiated by or brought
against Member or Special Member under any Creditors Rights Laws, or the
occurrence of an event that causes Member or Special Member to cease to be a
member of Borrower.


 


Section 6.2.            CHANGE OF NAME, IDENTITY OR STRUCTURE


 


Borrower shall not change
or permit to be changed (a) Borrower’s name, (b) Borrower’s identity (including
its trade name or names), (c) Borrower’s principal place of business set forth
on the first page of this Agreement, (d) the corporate, partnership or other
organizational structure of Borrower, Borrower Principal, Mortgage Borrower or
SPE Component Entity (if any), (e) Borrower’s state of organization, or (f)
Borrower’s organizational identification number, without in each case notifying
Lender of such change in writing at least thirty (30) days prior to the
effective date of such change and, in the case of a change in Borrower’s
structure, without first obtaining the prior written consent of Lender.  In addition, Borrower shall not change or
permit to be changed any organizational documents of Borrower or any SPE
Component Entity (if any) if such change would adversely impact the covenants
set forth in Section 6.1 and Section 6.4 hereof.  Borrower authorizes Lender to file any
financing statement or financing statement amendment required by Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein.  At the request
of Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which Borrower intends to operate each Property,
and representing and warranting that Borrower does business under no other
trade name with respect to such Property. 
If Borrower does not now have an organizational identification number
and later obtains one, or if the organizational identification number assigned
to Borrower subsequently changes, Borrower shall promptly notify Lender of such
organizational identification number or change.


 


Section 6.3.            BUSINESS AND OPERATIONS


 


(a)           Borrower will qualify to do business
and will remain in good standing under the laws of the applicable State as and
to the extent the same are required for the ownership, maintenance, management
and operation of the Pledged Securities and the Collateral.  Borrower shall not enter into any line of
business other than the ownership of the Pledged Securities and the Collateral,
or make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than
the continuance of its present business.


 


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(b)           Borrower will cause Mortgage Borrower
to qualify to do business and to remain in good standing under the laws of each
State as and to the extent the same are required for the ownership,
maintenance, management and operation of the Property.  Borrower shall not permit Mortgage Borrower
to enter into any line of business other than the ownership of the Property, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than
the continuance of its present business.


 


Section 6.4.            INDEPENDENT DIRECTOR


 


(a)           The organizational documents of each
SPE Component Entity (if any) shall provide that at all times there shall be,
and Borrower shall cause there to be, at least two duly appointed members of
the board of directors, board of managers or equivalent governing board (each
an “Independent
Director”) of such SPE Component Entity reasonably satisfactory to
Lender each of whom are not at the time of such individual’s initial
appointment, and shall not have been at any time during the preceding five (5)
years, and shall not be at any time while serving as an Independent Director of
such SPE Component Entity, either (i) a shareholder (or other equity owner) of,
or an officer, director, partner, manager, member (other than as a Special
Member in the case of a single member Delaware limited liability company, or in
the instance in which such Independent Director is an employee, representative
or officer of a corporate service company which in the ordinary course of
business serves as Independent Director for an Affiliate of Borrower other than
any Affiliate which has a direct interest in Borrower, Affiliated Lessee or any
of Borrower’s constituent entities), employee, attorney or counsel of,
Borrower, such SPE Component Entity or any of 
their respective shareholders, partners, members, subsidiaries or
Affiliates; (ii) a customer or creditor of, or supplier to, Borrower or any of
its respective shareholders, partners, members, subsidiaries or Affiliates who
derives any of its purchases or revenue from its activities with Borrower or
such SPE Component Entity or any Affiliate of any of them; (iii) a Person who
Controls or is under common Control with any such shareholder, officer,
director, partner, manager, member, employee, supplier, creditor or customer;
or (iv) a member of the immediate family of any such shareholder, officer,
director, partner, manager, member, employee, supplier, creditor or customer.


 


(b)           The organizational documents of each
SPE Component Entity (if any) shall provide that the board of directors, board
of managers or equivalent governing board of such SPE Component Entity shall
not take any action which, under the terms of any certificate of incorporation,
certificate of formation, limited liability company agreement, by-laws, similar
entity governance document or any voting trust agreement with respect to any
common stock, requires an unanimous vote of the board of directors of such SPE
Component Entity of Borrower unless at the time of such action there shall be
at least two members of the board of directors who are Independent
Directors.  Such SPE Component Entity
will not, without the unanimous written consent of its board of directors, board
of managers or other equivalent governing board including each Independent
Director, on behalf of itself or Borrower, (i) file or consent to the filing of
any petition, either voluntary or involuntary, to take advantage of any
applicable Creditors Rights Laws; (ii) seek or consent to the appointment of a
receiver, liquidator or any similar official; (iii) take any action that might
cause such entity to become insolvent; or (iv) make an assignment for the
benefit of creditors.


 


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ARTICLE 7

NO SALE OR ENCUMBRANCE


 


Section 7.1.            TRANSFER DEFINITIONS


 


For purposes of this
Article 7 an “Affiliated Manager” shall mean any managing agent in which
Borrower, Mortgage Borrower, Affiliated Lessee, Borrower Principal, any SPE
Component Entity (if any) or any Affiliate of such entities has, directly or
indirectly, any legal, beneficial or economic interest; “Control” shall mean the power
to direct the management and policies of a Restricted Party, directly or
indirectly, whether through the ownership of voting securities or other
beneficial interests, by contract or otherwise; “Restricted Party” shall mean
Borrower, Mortgage Borrower, Affiliated Lessee, Borrower Principal, any SPE
Component Entity (if any), any Affiliated Manager, or any shareholder, partner,
member or non-member manager, or any direct or indirect legal or beneficial
owner of Borrower, Mortgage Borrower, Affiliated Lessee, Borrower Principal,
any SPE Component Entity (if any), any Affiliated Manager or any non-member
manager; and a “Sale or Pledge” shall mean a voluntary or involuntary sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of
any options with respect to, or any other transfer or disposition of (directly
or indirectly, voluntarily or involuntarily, by operation of law or otherwise,
and whether or not for consideration or of record) of a legal or beneficial
interest.


 


Section 7.2.            NO SALE/ENCUMBRANCE


 


(a)           Borrower shall not cause or permit a
Sale or Pledge of the Collateral or any Property or any part thereof or any
legal or beneficial interest therein held by Borrower nor permit a Sale or
Pledge of an interest in any Restricted Party (in each case, a “Prohibited
Transfer”), other than pursuant to Leases of space in the
Improvements to Tenants in accordance with the provisions of Section 5.13,
without the prior written consent of Lender. 
Nothing set forth herein shall or shall be deemed to prohibit the sale
of publicly traded shares in CNL Hospitality Properties, Inc.


 


(b)           A Prohibited Transfer shall include,
but not be limited to, (i) an installment sales agreement wherein Mortgage
Borrower agrees to sell any Property or any part thereof for a price to be paid
in installments; (ii) other than an Operating Lease, an agreement by Mortgage
Borrower leasing all or a substantial part of any Property for other than
actual occupancy by a Tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Mortgage Borrower’s right, title and
interest in and to any Leases or any Rents; (iii) if a Restricted Party is a
corporation, any merger, consolidation or Sale or Pledge of such corporation’s
stock or the creation or issuance of new stock in one or a series of
transactions; (iv) if a Restricted Party is a limited or general partnership or
joint venture, any merger or consolidation or the change, removal, resignation
or addition of a general partner or the Sale or Pledge of the partnership
interest of any general or limited partner or any profits or proceeds relating
to such partnership interests or the creation or issuance of new partnership
interests; (v) if a Restricted Party is a limited liability company, any merger
or consolidation or the change, removal, resignation or addition of a managing
member or non-member manager (or if no managing member, any member) or the Sale
or Pledge of the membership interest of any member or any profits or proceeds
relating to such membership interest; (vi) if a Restricted Party


 


69

















 


is a trust or
nominee trust, any merger, consolidation or the Sale or Pledge of the legal or
beneficial interest in a Restricted Party or the creation or issuance of new
legal or beneficial interests; or (vii) the removal of Manager, the acceptance
by Borrower of the resignation of Manager when such Manager was not entitled
under the applicable Management Agreement to resign or the resignation of the
Manager in collusion with the Borrower, in each case other than in accordance with
Section 5.14.


 


Section 7.3.            PERMITTED TRANSFERS


 


Notwithstanding the
provisions of Section 7.2, the following transfers shall not be deemed to
be a Prohibited Transfer:  (a) a
transfer by devise or descent or by operation of law upon the death of a member,
partner or shareholder of a Restricted Party; (b) the transfer, in one or a
series of transactions, of not more than forty-nine percent (49%) of the stock,
limited partnership interests or non-managing membership interests (as the case
may be) in a Restricted Party (other than a transfer or issuance of any
interests in the Mortgage Borrower or the Mortgage Borrower GP which shall be a
Prohibited Transfer); provided, however, no such transfers shall result in a
change in Control in the Restricted Party or change in control of any Property,
and as a condition to each such transfer, Lender shall receive not less than
thirty (30) days prior written notice of such proposed transfer; (c) the
pledge by Borrower of its interest in Mortgage Borrower and Borrower its
interest in Mortgage Borrower GP pursuant to the Pledge Agreement; (d) a
transfer permitted under the Intercreditor Agreement; (e) a transfer in a
transaction (including, without limitation, a merger or consolidation) whereby
CNL Rose Acquisition Corp., CNL Rose GP Corp. or CNL Hospitality Properties,
Inc. transfer their interests in Borrower Principal provided that following
such transaction a majority of the interests in Borrower Principal continue to
be owned, directly or indirectly, by CNL Hospitality Properties, Inc. and CNL
Hospitality Properties, Inc. shall continue to Control Borrower Principal; or
(f) other than as to Borrower Principal or any of Borrower Principal’s
Subsidiaries any transaction, including, without limitation, a merger or consolidation
involving a Restricted Party, whereby, immediately following such transaction
(i) a majority of the ownership interests in such Restricted Party are owned,
directly or indirectly, by Persons who owned, directly or indirectly, a
majority of the ownership interests of such Restricted Party immediately prior
to such transaction, and (ii) as to any entity other than CNL Hospitality
Properties, Inc., there is no resulting change in Control. Notwithstanding the
foregoing, any transfer that results in any Person owning in excess of
forty-nine percent (49%) of the ownership interest in a Restricted Party other
than a transfer permitted under the Intercreditor Agreement or a transfer
permitted under items (e) or (f) above, shall comply with the requirements of
Section 7.4 hereof.


 


Section 7.4.            LENDER’S RIGHTS


 


All expenses incurred by
Lender shall be payable by Borrower whether or not Lender consents to the
Prohibited Transfer.  Lender shall not
be required to demonstrate any actual impairment of its security or any
increased risk of default hereunder in order to declare the Debt immediately
due and payable upon a Prohibited Transfer made without Lender’s consent. This
provision shall apply to each and every Prohibited Transfer, whether or not
Lender has consented to any previous Prohibited Transfer.  Notwithstanding anything to the contrary
contained in this Section 7.4, in the event a substantive
non-consolidation opinion was delivered to Lender and the Rating Agencies in
connection with the closing of the Loan, and if any Sale or Pledge permitted


 


70

















 


under this Article 7 results in any Person and its
Affiliates owning in excess of forty-nine percent (49%) of the ownership
interests in a Restricted Party, Borrower shall, prior to such transfer, and in
addition to any other requirement for Lender consent contained herein, deliver
a revised substantive non-consolidation opinion to Lender reflecting such
Prohibited Transfer, which opinion shall be in form, scope and substance
acceptable in all respects to Lender and the Rating Agencies.


 


Section 7.5.            ASSUMPTION


 


Borrower and Lender
acknowledge and agree that no transfer of all of the Collateral or of all the
Properties to, and the related assumption of the Loan or Mortgage Loan,
respectively, by, any Person shall be permitted under this Agreement.


 


ARTICLE 8

INSURANCE; CASUALTY; CONDEMNATION; RESTORATION


 


Section 8.1.            INSURANCE


 


(a)           Borrower shall cause Mortgage
Borrower to obtain and maintain, at all times insurance for Mortgage Borrower
and for each Property required by the Mortgage Lender, and if for any reason
not being provided, Borrower shall cause Mortgage Borrower to provide at least
the following coverages for each Property:


 


(i)            comprehensive “all risk” insurance
on the Improvements and the Personal Property, in each case (A) in an amount
equal to one hundred percent (100%) of the “Full Replacement Cost,” which for
purposes of this Agreement shall mean actual replacement value (exclusive of
costs of excavations, foundations, underground utilities and footings) with a
waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of $50,000 for all such
insurance coverage; and (D)  if any of
the Improvements or the use of such Property shall at any time constitute legal
non-conforming structures or uses, providing coverage for contingent liability
from Operation of Building Laws, Demolition Costs and Increased Cost of
Construction Endorsements and containing an “Ordinance or Law Coverage” or
“Enforcement” endorsement.  In addition,
Borrower shall obtain: (y) if any portion of the Improvements is currently or
at any time in the future located in a 
“special flood hazard area” designated by the Federal Emergency
Management Agency, flood hazard insurance in an amount equal to the maximum
amount of such insurance available under the National Flood Insurance Act of
1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance
Reform Act of 1994, as each may be amended; and (z) earthquake insurance in
amounts and in form and substance reasonably satisfactory to Lender in the
event such Property is located in an area with a high degree of seismic risk,
provided that the insurance pursuant to clauses (y) and (z) hereof shall be on
terms consistent with the comprehensive all risk insurance policy required
under this subsection (i);


 


(ii)           Commercial General Liability insurance
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about such


 


71

















 


Property, including “Dram
Shop” or other liquor liability coverage if alcoholic beverages are sold from
or may be consumed at such Property, with such insurance (A) to be on the
so-called “occurrence” form with a general aggregate limit of not less than
$2,000,000 and a per occurrence limit of not less than $1,000,000; (B) to
continue at not less than the aforesaid limit until required to be changed by
Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations; (3) independent
contractors; (4) blanket contractual liability; and (5) contractual liability
covering the indemnities contained in clauses (a) through (e) and (f) in
Section 14.01 hereof to the extent the same is available;


 


(iii)          loss of rents insurance or business
income insurance, as applicable, (A) with loss payable to Lender; (B) covering
all risks required to be covered by the insurance provided for in subsection
(i) above; and (C) which provides that after the physical loss to the Improvements
and Personal Property occurs, the loss of rents or income, as applicable, will
be insured until completion of Restoration or the expiration of eighteen (18)
months, whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) which contains an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it
was at prior to the loss, or the expiration of six (6) months from the date
that such Property is repaired or replaced and operations are resumed,
whichever first occurs, and notwithstanding that the policy may expire prior to
the end of such period.  The amount of
such loss of rents or business income insurance, as applicable, shall be
determined prior to the date hereof and at least once each year thereafter
based on Borrower’s reasonable estimate of the gross income from such Property
for the succeeding period of coverage required above.  Subject to the rights of the Mortgage Lender under the Mortgage
Loan Agreement, all proceeds payable to Lender pursuant to this subsection shall
be held by Lender and shall be applied to the obligations secured by the Loan
Documents from time to time due and payable hereunder and under the Note;
provided, however, that nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the obligations secured by the Loan
Documents on the respective dates of payment provided for in the Note, this
Agreement and the other Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such loss of rents or business income
insurance, as applicable;


 


(iv)          at all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements, and only if such Property coverage form does not otherwise apply,
(A) owner’s contingent or protective liability insurance covering claims not
covered by or under the terms or provisions of the above mentioned commercial
general liability insurance policy; and (B) the insurance provided for in
subsection (i) above written in a so-called Builder’s Risk Completed Value form
(1) on a non-reporting basis, (2) against “all risks” insured against pursuant
to subsection (i) above, (3) including permission to occupy such Property, and
(4) with an agreed amount endorsement waiving co-insurance provisions;


 


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(v)           workers’ compensation, subject to the
statutory limits of the State, and employer’s liability insurance in respect of
any work or operations on or about such Property, or in connection with such
Property or its operation (if applicable);


 


(vi)          comprehensive boiler and machinery
insurance, if applicable, in amounts as shall be reasonably required by Lender
on terms consistent with the commercial property insurance policy required
under subsection (i) above;


 


(vii)         excess liability insurance in an amount
not less than $50,000,000 per occurrence on terms consistent with the
commercial general liability insurance required under subsection (ii) above or
as otherwise approved by Lender;


 


(viii)        sinkhole and mine subsidence insurance,
if required, and if such Property is located in an “earthquake prone zone” as
determined by the U.S. Geological Survey, earthquake insurance in an amount not
less than the probable maximum loss, all as determined by a recognized
engineering firm acceptable to and approved by Lender, less any applicable
deductibles, including business interruption coverage in an amount not less
than that set forth in clause (iii) above;


 


(ix)           a blanket fidelity bond and errors
and omissions insurance coverage insuring against losses resulting from
dishonest or fraudulent acts committed by (A) Borrower’s personnel; (B) any
employees of outside firms that provide appraisal, legal, data processing or
other services for Borrower or (C) temporary contract employees or student interns;


 


(x)            motor vehicle liability coverage for
all owned and non-owned vehicles, including rented and leased vehicles
containing minimum limits per occurrence, including umbrella coverage, of One
Million and No/100 Dollars ($1,000,000)


 


(xi)           environmental insurance for the
Louisville Property in form acceptable to Lender for an initial term of two
years past the initial Maturity Date and, if Borrower extends the Maturity Date
in accordance with Section 2.3(b) hereof, for each Extended Maturity Date,
for two years from each such Extended Maturity Date; and


 


(xii)          upon sixty (60) days’ written notice,
such other reasonable insurance and in such reasonable amounts as Lender from
time to time may reasonably request against such other insurable hazards which
at the time are commonly insured against for property similar to such Property
located in or around the region in which such Property is located.


 


With respect to the
Policies required to be maintained pursuant to clauses (i), (iii) and (iv)
above, Borrower shall maintain insurance coverage against Losses resulting from
acts of terrorism.


 


(b)           All insurance provided for in
Section 8.1(a) shall be obtained under valid and enforceable policies
(collectively, the “Policies” or in the singular, the “Policy”),
and shall be subject to the approval of Lender as to insurance companies,
amounts, deductibles, loss payees and insureds.  The Policies shall be issued by financially sound and responsible
insurance companies authorized to do business in the State and having a claims
paying ability rating of “A”


 


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or better by
S&P (or such other ratings approved by Lender) and a general policy rating
of “A” or better and a financial class of VIII or better by A.M. Best Company, Inc.  To the extent such Policies are not
available as of the Closing Date, Borrower shall deliver to Lender certified
copies of all Policies or other evidence of insurance reasonably acceptable to
Lender not later than thirty (30) days after the Closing Date.  Not less than ten (10) days prior to the
expiration dates of the Policies theretofore furnished to Lender, renewal
Policies or other evidence of insurance reasonably acceptable to Lender
accompanied by evidence satisfactory to Lender of payment of the premiums due
thereunder (the “Insurance Premiums”) shall be delivered by Borrower to Lender.


 


(c)           Any blanket insurance Policy shall
specifically allocate to each Property the amount of coverage from time to time
required hereunder and shall otherwise provide the same protection as would a
separate Policy insuring only the applicable Property in compliance with the
provisions of Section 8.1(a).


 


(d)           All Policies provided for or
contemplated by Section 8.1(a), except for the Policy referenced in
Section 8.1(a)(v), shall name Mortgage Borrower as the insured, Lender as
a “Named Insured” and Mortgage Lender as an additional insured, as their
interests may appear, and in the case of property damage, boiler and machinery,
flood and earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Mortgage Lender and Lender
providing that the loss thereunder shall be payable to Mortgage Lender, as
mortgagee and loss payee.


 


(e)           All Policies provided for in
Section 8.1(a) shall contain clauses or endorsements to the effect that:


 


(i)            except as may otherwise prohibited
by applicable law, no act or negligence of Mortgage Borrower, or anyone acting
for Mortgage Borrower, or of any Tenant or other occupant, or failure to comply
with the provisions of any Policy, which might otherwise result in a forfeiture
of the insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned;


 


(ii)           the Policies shall not be materially
changed (other than to increase the coverage provided thereby) or canceled
without at least thirty (30) days’ prior written notice to Lender and any other
party named therein as an additional insured;


 


(iii)          the issuers thereof shall give written
notice to Lender if the Policies have not been renewed thirty (30) days prior
to its expiration;


 


(iv)          Lender shall not be liable for any
Insurance Premiums thereon or subject to any assessments thereunder; and


 


(v)           the Policies described in
clauses (i), (iii) and (vi) above do not contain an exclusion for acts of
terror or similar acts of sabotage.


 


(f)            If at any time Lender is not in
receipt of written evidence that all insurance required hereunder is in full
force and effect, Lender shall have the right, without notice to Borrower, to
take such action as Lender deems necessary to protect its interest in the
applicable


 


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Property,
including, without limitation, obtaining such insurance coverage as Lender in
its sole discretion deems appropriate. 
All premiums incurred by Lender in connection with such action or in
obtaining such insurance and keeping it in effect shall be paid by Borrower to
Lender upon demand and, until paid, shall be secured by the Mortgage and shall
bear interest at the Default Rate.


 


(g)           Subject to the prior right of the
Mortgage Lender under the Mortgage Loan Agreement to receive any payments paid
under the Policy described in Section 8.1(a)(xi), Borrower shall cause
such payments to be paid to Lender.


 


Section 8.2.            CASUALTY


 


If any Property shall be
damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”),
Borrower shall give prompt notice of such damage to Lender to the extent
required hereunder and shall cause Mortgage Borrower to promptly commence and
diligently prosecute the Restoration of such Property in accordance with
Section 8.4 hereof and Section 8.4 of the Mortgage Loan Agreement,
whether or not Mortgage Lender or Lender makes any Net Proceeds available
pursuant to said Section 8.4. 
Borrower shall cause Mortgage Borrower to pay all costs of such
Restoration whether or not such costs are covered by insurance.


 


Section 8.3.            CONDEMNATION


 


Borrower shall promptly
give Lender notice of the actual or threatened commencement of any proceeding
for the Condemnation of any Property of which Borrower has knowledge and shall
cause Mortgage Borrower to deliver to Lender copies of any and all papers
served in connection with such proceedings. 
Subject to the rights of Mortgage Lender under the Mortgage Loan
Agreement, Lender may participate in any such proceedings, and Borrower shall
from time to time deliver to Lender all instruments requested by it to permit
such participation.  Borrower shall
cause Mortgage Borrower to, at its expense, diligently prosecute any such
proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.  Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. 
Lender shall not be limited to the interest paid on the Award by the
condemning authority but shall be entitled to receive out of the Award interest
at the rate or rates provided herein or in the Note.  If any Property or any portion thereof is taken by a condemning
authority, Borrower shall promptly commence and diligently prosecute the
Restoration of such Property and otherwise comply with the provisions of
Section 8.4 hereof and Section 8.4 of the Mortgage Loan Agreement,
whether or not Lender or Mortgage Lender makes any Net Proceeds available
pursuant to Section 8.4 hereof or Section 8.4 of the Mortgage Loan
Agreement (as applicable).  Subject to
the terms and provisions of the Mortgage Loan Documents, to the extent Lender
is entitled to receive any Award as Net Liquidation Proceeds after Debt Service
pursuant to the terms hereof, if the Collateral is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the


 


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Note shall have been sought, recovered or denied, to
receive the Award, or a portion thereof sufficient to pay the Debt.


 


Section 8.4.            RESTORATION


 


Subject to the rights of
Mortgage Lender and the obligations of Mortgage Borrower and the Mortgage Loan
Documents and only to the extent the Mortgage Loan is not outstanding and has
been paid in full, the following provisions shall apply in connection with any
Restoration of a Property:


 


(a)           If the costs of completing the Restoration
shall be less than five percent (5%) of the Allocated Loan Amount with respect
to the affected Property, the Net Proceeds will be disbursed by Lender to
Borrower or Mortgage Borrower upon receipt, provided that all of the conditions
set forth in Section 8.4(b)(i) below are each met and Borrower delivers to
Lender a written undertaking to expeditiously commence and to satisfactorily
complete with due diligence the Restoration in accordance with the terms of the
Mortgage Loan Agreement.


 


(b)           If the costs of completing the
Restoration are equal to or greater than five percent (5%) of the Allocated
Loan Amount with respect to the affected Property, Lender shall make the Net
Proceeds available for the Restoration in accordance with the provisions of this
Section 8.4.  The term “Net Proceeds”
for purposes of this Section 8.4 shall mean: (1) the net amount of all
insurance proceeds received by Lender pursuant to Section 8.1(a)(i), (iv),
(vi) and (vii) as a result of a Casualty, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel fees), if
any, in collecting the same (“Insurance Proceeds”), or (2) the net amount
of the Award as a result of a Condemnation, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel fees), if
any, in collecting the same (“Condemnation Proceeds”), whichever the case
may be.


 


(i)            The Net Proceeds shall be made
available to Borrower or Mortgage Borrower for Restoration provided that each
of the following conditions are met:


 


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


 


(B)           (1) in the event the Net Proceeds are
Insurance Proceeds, less than ten percent (10%) of the aggregate fair market
value of the Improvements at all the Properties (immediately prior to the
applicable Casualty) has been damaged, destroyed or rendered unusable as a
result of a Casualty or (2) in the event the Net Proceeds are Condemnation
Proceeds, less than ten percent (10%) of the land constituting the affected
Property is taken, such land is located along the perimeter or periphery of the
affected Property, and no portion of the Improvements is located on such land;


 


(C)           the Operating Leases of the affected
Property in effect as of the date of the occurrence of such Casualty or
Condemnation, whichever the case may be, and each other Major Lease, if any, in
effect as of such date shall remain in full force and effect during and after
the completion of the Restoration without abatement of rent beyond the time
required for Restoration;


 


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(D)          Borrower shall commence or cause
Mortgage Borrower to commence the Restoration as soon as reasonably practicable
(but in no event later than ninety (90) days after such Casualty or
Condemnation, whichever the case may be, occurs) and shall diligently pursue
the same to satisfactory completion;


 


(E)           Lender shall be satisfied that any
operating deficits, including all scheduled payments of principal and interest
under the Note, which will be incurred with respect to the affected Property as
a result of the occurrence of any such Casualty or Condemnation, whichever the
case may be, will be covered out of the insurance coverage referred to in
Section 8.1(a)(iii) above;


 


(F)           Lender shall be satisfied that the
Restoration will be completed on or before the earliest to occur of (1) six (6)
months prior to the Maturity Date, (2) the earliest date required for such
completion under the terms of any Leases (including, without limitation, any
Ground Lease) or material agreements affecting the affected Property, (3) such
time as may be required under applicable zoning law, ordinance, rule or
regulation, or (4) the expiration of the insurance coverage referred to in
Section 8.1(a)(iii);


 


(G)           the affected Property and the use
thereof after the Restoration will be in compliance with and permitted under
all Legal Requirements;


 


(H)          the Restoration shall be done and
completed by Borrower or Mortgage Borrower in an expeditious and diligent
fashion and in compliance with all applicable Legal Requirements;


 


(I)            such Casualty or Condemnation, as
applicable, does not result in the loss of access to the affected Property or
the Improvements;


 


(J)            Borrower shall deliver, or cause to
be delivered, to Lender a signed detailed budget approved in writing by
Mortgage Borrower’s architect or engineer stating the entire cost of completing
the Restoration, which budget shall be acceptable to Lender; and


 


(K)          the Net Proceeds together with any
cash or cash equivalent deposited by Borrower or Mortgage Borrower with Lender
are sufficient in Lender’s reasonable judgment to cover the cost of the
Restoration.


 


(ii)           The Net Proceeds shall be held by
Lender until disbursements commence, and, until disbursed in accordance with
the provisions of this Section 8.4, shall constitute additional security
for the Debt and other obligations under the Loan Documents.  The Net Proceeds shall be disbursed by
Lender to, or as directed by, Borrower or Mortgage Borrower from time to time
during the course of the Restoration, upon receipt of evidence satisfactory to
Lender that (A) all the conditions precedent to such advance, including those
set forth in Section 8.4(b)(i), have been satisfied, (B) all materials
installed and work and labor performed (except to the extent that they are to
be paid for out of the requested disbursement) in connection with the related
Restoration item have been paid for in full, and (C) there exist no notices of
pendency, stop orders, mechanic’s


 


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or materialman’s liens or
notices of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the affected Property which have not either been fully
bonded to the satisfaction of Lender and discharged of record or in the
alternative fully insured to the satisfaction of Lender by the title company
issuing the Title Insurance Policy. 
Notwithstanding the foregoing, Insurance Proceeds from the Policies
required to be maintained by Borrower or Mortgage Borrower pursuant to
Section 8.1(a)(iii) shall be controlled by Lender at all times, shall not
be subject to the provisions of this Section 8.4 and shall be used solely
for the payment of the obligations under the Loan Documents and Operating
Expenses.


 


(iii)          All plans and specifications required
in connection with the Restoration shall be subject to prior review and
acceptance in all respects by Lender and by an independent consulting engineer
selected by Lender (the “Restoration Consultant”).  Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in
connection with the Restoration.  The
identity of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts in excess of $100,000 under which they
have been engaged, shall be subject to prior review and acceptance by Lender
and the Restoration Consultant.  All
costs and expenses incurred by Lender in connection with making the Net Proceeds
available for the Restoration, including, without limitation, reasonable
counsel fees and disbursements and the Restoration Consultant’s fees, shall be
paid by Borrower or Mortgage Borrower.


 


(iv)          In no event shall Lender be obligated
to make disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of the
Restoration, as certified by the Restoration Consultant, minus the Restoration
Retainage.  The term “Restoration
Retainage” shall mean an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Restoration Consultant, until the Restoration has been completed.  The Restoration Retainage shall be reduced
to five percent (5%) of the costs incurred upon receipt by Lender of
satisfactory evidence that fifty percent (50%) of the Restoration has been
completed.  The Restoration Retainage
shall in no event, and notwithstanding anything to the contrary set forth above
in this Section 8.4(b), be less than the amount actually held back by
Borrower or Mortgage Borrower from contractors, subcontractors and materialmen
engaged in the Restoration.  The
Restoration Retainage shall not be released until the Restoration Consultant
certifies to Lender that the Restoration has been completed in accordance with
the provisions of this Section 8.4(b) and that all approvals necessary for
the re-occupancy and use of the affected Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence satisfactory
to Lender that the costs of the Restoration have been paid in full or will be
paid in full out of the Restoration Retainage; provided, however, that Lender
will release the portion of the Restoration Retainage being held with respect
to any contractor, subcontractor or


 


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materialman engaged in
the Restoration as of the date upon which the Restoration Consultant certifies
to Lender that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, the
contractor, subcontractor or materialman delivers the lien waivers and evidence
of payment in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender.  If required by Lender, the release of any such portion of the
Restoration Retainage shall be approved by the surety company, if any, which
has issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.


 


(v)           Lender shall not be obligated to make
disbursements of the Net Proceeds more frequently than once every calendar
month.


 


(vi)          If at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the reasonable opinion of Lender in
consultation with the Restoration Consultant, be sufficient to pay in full the
balance of the costs which are estimated by the Restoration Consultant to be
incurred in connection with the completion of the Restoration, Borrower or
Mortgage Borrower shall deposit without duplication the deficiency (the “Net Proceeds
Deficiency”) with Lender, before any further disbursement of the Net
Proceeds shall be made.  The Net
Proceeds Deficiency, if any, deposited with Lender shall be held by Lender in
an interest bearing account (with interest credited to Borrower) and shall be
disbursed for costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net Proceeds, and until
so disbursed pursuant to this Section 8.4(b) shall constitute additional
security for the Debt and other obligations under the Loan Documents.


 


(vii)         The excess, if any, of the Net Proceeds
and the remaining balance, if any, of the Net Proceeds Deficiency deposited
with Lender after the Restoration Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of this
Section 8.4(b), and the receipt by Lender of evidence satisfactory to
Lender that all costs incurred in connection with the Restoration have been
paid in full, shall be remitted by Lender to Borrower (or as directed by
Borrower), provided no Event of Default shall have occurred and shall be
continuing under the Note, this Agreement or any of the other Loan Documents.


 


(c)           All Net Proceeds not required (i) to
be made available for the Restoration or (ii) to be returned to Borrower as
excess Net Proceeds pursuant to Section 8.4(b)(vii) may (x) be retained
and applied by Lender toward the payment of the Debt whether or not then due as
an involuntary partial prepayment thereof, or, (y) at the sole discretion of
Lender, the same may be paid, either in whole or in part, to Borrower for such
purposes and upon such conditions as Lender shall designate.


 


(d)           Notwithstanding anything herein to
the contrary, in the event that the Property is being restored by Mortgage
Borrower pursuant to the Mortgage Loan Documents, Lender shall agree to the
release of the Net Proceeds for Restoration of the Property pursuant to the
terms and provisions of the Mortgage Loan Documents, subject to Lender’s rights
to receive and approve in its discretion all deliverables set forth in this
Section 8.4.


 


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ARTICLE 9

RESERVE FUNDS


 


Borrower shall cause
Mortgage Borrower to comply with all of its obligations under Article 9 of the
Mortgage Loan Agreement. 
Notwithstanding anything to the contrary contained in this Agreement, if
at any time and for any reason (including, without limitation, the satisfaction
of the Mortgage Loan), Mortgage Borrower is no longer maintaining any of the
Reserve Accounts required to be maintained by Mortgage Borrower in accordance
with the terms of the Mortgage Loan Documents, (i) Borrower shall be required
to promptly establish and maintain with Lender and for the benefit of Lender
reserves in replacement and substitution thereof, which substitute reserves
shall be subject to all of the same terms and conditions applicable under the
Mortgage Loan Documents with respect to the Reserve Account being replaced
(including, but not limited to, Article 10 of the Mortgage Loan Agreement
relating to cash management and Borrower shall, and shall cause Mortgage
Borrower to, executed a cash management agreement in form substantially similar
to the Cash Management Agreement) and (ii) to the extent not prohibited by
Mortgage Lender under the Mortgage Loan Documents, Borrower shall or shall
cause Mortgage Lender to remit to Lender any funds from Reserve Accounts that
were remaining in such reserves at the time of the termination of such reserves
for the purpose of funding the equivalent substitute reserves.


 


ARTICLE 10

CASH MANAGEMENT


 


Borrower and Lender
acknowledge and agree that all Rents and other income from the Property payable
to Borrower or Mortgage Borrower will be deposited and disbursed in accordance
with the terms of the Cash Management Agreement.  Notwithstanding anything to the contrary contained in this
Agreement, if at any time and for any reason (including, without limitation,
the satisfaction of the Mortgage Loan), Mortgage Borrower is no longer
maintaining the accounts established pursuant to the Cash Management Agreement
or if the Cash Management Agreement is no longer in full force and effect,
Borrower shall promptly enter into a substitute cash management agreement with
such other depository institution as Lender shall direct, or an agent selected
by Borrower and reasonably acceptable to Lender and, if the Loan is
securitized, acceptable to the Rating Agencies, which such agent shall be an
Eligible Institution on substantially the same terms as the agreements entered
into as of the date hereof in connection with the related Mortgage Loan.


 


ARTICLE 11

EVENTS OF DEFAULT; REMEDIES


 


Section 11.1.          EVENT
OF DEFAULT


 


The occurrence of any one
or more of the following events shall constitute an “Event of Default”:


 


(a)           if any portion of the Debt is not
paid on or prior to the date the same is due or if the entire Debt is not paid
on or before the Maturity Date; provided, however, Borrower shall not be in
default so long as there is sufficient money in the Cash Management Account for
payment


 


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of all amounts then due and payable (including any deposits into
Mortgage Reserve Accounts) and Lender’s access to such money has not been
constrained or constricted in any manner;


 


(b)           except as otherwise expressly
provided in the Loan Documents, if any of the Taxes or Other Charges (including
Ground Rents as defined in the Mortgage Loan Agreement) are not paid when the
same are due and payable, unless there is sufficient money in the Tax and
Insurance Reserve Account or (as defined in the Mortgage Loan Agreement) Ground
Rent Reserve Account (as defined in the Mortgage Loan Agreement), as applicable
for payment of amounts then due and payable and Lender’s access to such money
has not been constrained or restricted in any manner;


 


(c)           if the Policies are not kept in full
force and effect, or if certified copies of the Policies are not delivered to
Lender as provided in Section 8.1;


 


(d)           if Borrower breaches any covenant
with respect to Borrower, Mortgage Borrower, Mortgage Borrower GP or any SPE
Component Entity (if any) contained in (i) Article 6 and Borrower shall within
fifteen (15) days of the earlier of Borrower’s knowledge or notice of such
breach, fail to cure the same and deliver an updated non-consolidation opinion
acknowledging such breach in form and substance acceptable to Lender or (ii) any
covenant contained in Article 7 hereof;


 


(e)           if any representation or warranty of,
or with respect to, Borrower, Mortgage Borrower, Affiliated Lessee, Borrower
Principal, any SPE Component Entity, or any member, general partner, principal
or beneficial owner of any of the foregoing, made herein, in any other Loan
Document, or in any certificate, report, financial statement or other
instrument or document furnished to Lender at the time of the closing of the
Loan or during the term of the Loan shall have been false or misleading in any
material respect when made;


 


(f)            if (i) Borrower, any managing member
or general partner of Borrower, Mortgage Borrower, Operating Lessee, Borrower
Principal or any SPE Component Entity (if any) shall commence any case, proceeding
or other action (A) under any Creditors Rights Laws, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate it a bankrupt
or insolvent, or seeking reorganization, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or Borrower, Mortgage Borrower,
Operating Lessee, any managing member or general partner of Borrower, Mortgage
Borrower, Operating Lessee, Borrower Principal, or any SPE Component Entity (if
any) shall make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against Borrower, Mortgage Borrower, Operating Lessee,
any managing member or general partner of Borrower, Mortgage Borrower,
Operating Lessee, Borrower Principal, or any SPE Component Entity (if any) any
case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unbonded for a
period of ninety (90) days; or (iii) there shall be commenced against Borrower,
Mortgage Borrower, Operating Lessee, any managing member or general partner of
Borrower, Mortgage Borrower, Operating Lessee, Borrower Principal, or any SPE
Component Entity (if any) any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of any order
for any such relief which


 


81

















 


shall not have been vacated, discharged, or stayed or bonded pending
appeal within ninety (90) days from the entry thereof; or (iv) Borrower,
Mortgage Borrower, Operating Lessee, any managing member or general partner of
Borrower, Mortgage Borrower, Operating Lessee, Borrower Principal, or any SPE
Component Entity (if any) shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Borrower, Mortgage Borrower,
Operating Lessee, any managing member or general partner of Borrower, Mortgage
Borrower, Operating Lessee, Borrower Principal, or any SPE Component Entity (if
any) shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due;


 


(g)           if Borrower shall be in default
beyond applicable notice and grace periods under any other pledge or other
security agreement covering any part of the Collateral, whether it be superior
or junior in lien to the Pledge Agreement;


 


(h)           if Mortgage Borrower shall be in
default beyond applicable notice and grace periods under any mortgage, deed of
trust, deed to secure debt of other security agreement covering any party of
any Property;


 


(i)            if any Property becomes subject to
any mechanic’s, materialman’s or other Lien other than a Lien for any Taxes or
Other Charges not then due and payable and such Lien shall remain undischarged
of record (by payment, bonding or otherwise) for a period of sixty (60) days,
or if any portion of the Collateral becomes subject to any Lien and such Lien
shall remain undischarged of record (by payment, bonding or otherwise) for a
period of fifteen (15) days;


 


(j)            if any federal tax lien is filed
against Borrower, any member or general partner of Borrower, Mortgage Borrower,
Affiliated Lessee, Borrower Principal, or any SPE Component Entity (if any) or
any Property and same is not discharged of record within (a) fifteen (15) days
after the same is filed in the instance of a lien filed against Mortgage
Borrower or Mortgage Borrower’s general partner or (b) thirty (30) days after
same is filed in the instance of a lien filed against any of the other above
stated entities;


 


(k)           if a judgment is filed against the
Borrower in excess of $100,000 which judgment is not covered by insurance
proceeds and is not vacated or discharged within 30 days;


 


(l)            if any default occurs under any
guaranty or indemnity executed in connection herewith and such default
continues after the expiration of applicable grace periods, if any;


 


(m)          if Borrower shall cause Mortgage
Borrower to permit any event within Mortgage Borrower’s control to occur that
would cause any REA to terminate without notice or action by any party thereto
or would entitle any party to terminate any REA and the term thereof by giving
notice to Mortgage Borrower; or any REA shall be surrendered, terminated or
canceled for any reason or under any circumstance whatsoever except as provided
for in such REA; or any term of any REA shall be modified or supplemented
without Lender’s prior written consent; or Borrower shall fail to cause
Mortgage Borrower, within ten (10) Business Days after demand by Lender, to
exercise Mortgage Borrower’s option to renew or extend the term of any REA or
shall fail or neglect to pursue diligently all actions necessary to exercise
such renewal rights pursuant to such REA except as provided for in such REA and
the same shall have (or shall be reasonably


 


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expected to have) a material and adverse affect on the value, use,
operation or enjoyment of the applicable Property as a hotel of a similar type
as the hotel situated on such Property as of the Closing Date or on the ability
of Borrower to perform its obligations (including its payment obligations under
this Agreement, the Note and the other Loan Documents);


 


(n)           if Borrower breaches any of its
covenants contained in Section 5.24;


 


(o)           if a default has occurred and is
continuing beyond any applicable cure period under any Franchise Agreement or
Management Agreement, which entitles such Franchisor or Manager, as the case
may be, to terminate or cancel such Franchise Agreement or Management
Agreement;


 


(p)           if Borrower shall breach any of the
material terms of:


 


(i)            Section 2.4(g) (Payments upon a
Liquidation Event);


 


(ii)           Intentionally Omitted;


 


(iii)          Section 5.25 (Notices), to the extent
such default shall continue for a period of five (5) days after Lender’s notice
thereof to Borrower;


 


(iv)          Section 5.27 (Special
Distributions);


 


(v)           Section 5.28 (Limitations on
Securities Issuances);


 


(vi)          Section 5.29 (Limitations on
Distributions);


 


(vii)         Section 5.30 (Other Limitations);


 


(viii)        Section 5.31 (Contractual
Obligations); or


 


(ix)           Section 5.34 (Refinancing);


 


(q)           if Borrower shall cause Mortgage
Borrower, without Lender’s consent, to modify, amend, terminate or cancel (or
to permit or direct Operating Lessee to modify, amend, terminate or cancel) any
Franchise Agreement or to operate any Property under the name of any hotel
chain or system other than the name such Property is operated under as of the
date hereof


 


(r)            if Borrower shall cause Mortgage
Borrower, without Lender’s consent, to modify, amend, terminate or cancel (or
to permit or direct any Affiliated Lessee to modify, amend, terminate or
cancel) any Management Agreement;


 


(s)           if any Affiliated Lessee is in
default beyond any applicable notice or cure period under the applicable
Operating Lease;


 


(t)            if any Affiliated Lessee shall
default in the performance or observance of the obligations under the
applicable Subordination and Attornment Agreement beyond any applicable notice
or cure period set forth therein or (b) an “Event of Default” shall occur under


 


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any Subordination, Attornment and Security Agreement (as defined in the
Mortgage Loan Agreement);


 


(u)           if there shall occur any default by
Mortgage Borrower, as tenant under either Ground Lease, in the observance or
performance of any term, covenant or condition of the applicable Ground Lease
on the part of Mortgage Borrower to be observed or performed and said default
is not cured following the expiration of any applicable grace and notice
periods therein provided, or if the leasehold estate created by the applicable
Ground Lease shall be surrendered or if the applicable Ground Lease shall cease
to be in full force and effect or the applicable Ground Lease shall be
terminated or canceled for any reason or under any circumstances whatsoever, or
if any of the terms, covenants or conditions of the applicable Ground Lease
shall in any manner be modified, changed, supplemented, altered, or amended
without the consent of Lender;


 


(v)           if Borrower Principal breaches its
covenant set forth in Section 5.33 unless within five (5) days of written
notice from Lender, CNL Hospitality Properties, Inc. executes this Agreement
assuming all obligations of Borrower Principal hereunder and in connection
therewith provides Lender with a corporate and enforceability opinion with
respect to such execution and the obligations so assumed, all acceptable to
Lender in its reasonable discretion;


 


(w)          if Borrower shall continue to be in
default under any other term, covenant or condition of this Agreement or any of
the Loan Documents for more than ten (10) days after notice from Lender to
Borrower in the case of any default which can be cured by the payment of a sum
of money or for thirty (30) days after notice from Lender to Borrower in the
case of any other default, provided that if such default cannot reasonably be
cured within such thirty (30) day period and Borrower shall have commenced to
cure such default within such thirty (30) day period and thereafter diligently
and expeditiously proceeds to cure the same, such thirty (30) day period shall
be extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall be
for a period in excess of sixty (60) days; or


 


(x)            if a Mortgage Loan Event of Default
occurs.


 


Section 11.2.          REMEDIES


 


(a)           Upon the occurrence of an Event of
Default (other than an Event of Default described in Section 11.1(f)
above) and at any time thereafter during the continuance of such Event of
Default Lender may, 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, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower and in the Collateral,
including, without limitation, declaring the Debt to be immediately due and
payable, and Lender may enforce or avail itself of any or all rights or remedies
provided in the Loan Documents and may exercise all the rights and remedies of
a secured party under the UCC, as adopted and enacted by the State of New York,
against Borrower and the Collateral (or any portion thereof), including,
without limitation, all rights or remedies available at law or in equity; and
upon any Event of Default described in Section 11.1(f) above, the Debt and
all other obligations of Borrower hereunder and under the other Loan Documents
shall immediately and


 


84

















 


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.


 


(b)           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 Debt
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
Collateral.  Any such actions taken by
Lender shall be cumulative and concurrent and may be pursued independently,
singularly, 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.


 


ARTICLE 12

ENVIRONMENTAL PROVISIONS


 


Section 12.1.          ENVIRONMENTAL
REPRESENTATIONS AND WARRANTIES


 


Borrower represents and
warrants, based upon an Environmental Report of each Property and information
that Borrower knows or should reasonably have known, and subject to all matters
disclosed in the Environmental Reports delivered pursuant to the provisions of
(or referenced in) Section 3.2(e) hereof that:  (a) there are no Hazardous Materials or underground storage tanks
in, on, or under any Property, except those that are both (i) in compliance
with Environmental Laws and with permits issued pursuant thereto (if such
permits are required), if any, and (ii) either (A) in the case of Hazardous
Materials, in amounts not in excess of that necessary to operate such Property
for the purposes set forth herein or (B) fully disclosed to and approved by
Lender in writing pursuant to an Environmental Report; (b) there are no past,
present or threatened Releases of Hazardous Materials in violation of any
Environmental Law or which would require remediation by a Governmental
Authority in, on, under or from any Property except as described in the
Environmental Report; (c) there is no threat of any Release of Hazardous
Materials migrating to any Property except as described in the Environmental
Report; (d) there is no past or present non-compliance with Environmental Laws,
or with permits issued pursuant thereto, in connection with any Property except
as described in the Environmental Report; (e) Borrower does not know of, and
has not received, any written or oral notice or other communication from any
Person relating to Hazardous Materials in, on, under or from any Property; and
(f) Borrower has truthfully and fully provided to Lender, in writing, any and
all information relating to environmental conditions in, on, under or from such
Property known to Borrower or contained in Borrower’s files and records,
including but not limited to any reports relating to Hazardous Materials in,
on, under or migrating to or from such Property and/or to the environmental
condition of such Property.


 


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Section 12.2.          ENVIRONMENTAL
COVENANTS


 


Borrower covenants and
agrees that so long as Mortgage Borrower owns, manages, is in possession of, or
otherwise controls the operation of the Properties (but not any time after the
date on which Lender (or any purchaser at a foreclosure sale) actually acquires
title to the equity interest of Borrower in Mortgage Borrower and Mortgage
Borrower’s general partner):  (a)
all uses and operations on or of each Property, whether by Mortgage Borrower or
any other Person, shall be in compliance in all material respects with all
Environmental Laws and permits issued pursuant thereto; (b) there shall be no
Releases of Hazardous Materials in, on, under or from any Property; (c) there
shall be no Hazardous Materials in, on, or under any Property, except those
that are both (i) in compliance with all Environmental Laws and with permits
issued pursuant thereto, if and to the extent required, and (ii) (A) in amounts
not in excess of that necessary to operate any Property for the purposes set
forth herein or (B) fully disclosed to and approved by Lender in writing; (d)
cause Mortgage Borrower to keep each Property free and clear of all
Environmental Liens; (e) cause Mortgage Borrower to, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to
Section 12.4 below, including but not limited to providing all relevant
information and making knowledgeable persons available for interviews; (f)
Borrower shall cause Mortgage Borrower to, at its sole cost and expense,
perform any environmental site assessment or other investigation of
environmental conditions in connection with each Property, pursuant to any
reasonable written request of Lender, upon Lender’s reasonable belief that such
Property is not in full compliance with all Environmental Laws, and share with
Lender the reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof;
(g) Borrower shall cause Mortgage Borrower to, at its sole cost and expense,
comply with all reasonable written requests of Lender to (i) reasonably
effectuate remediation of any Hazardous Materials in, on, under or from such
Property; and (ii) comply with any Environmental Law; (h) Borrower shall cause
Mortgage Borrower not to allow any tenant or other user of any Property to
violate any Environmental Law; and (i) Borrower shall cause Mortgage Borrower
to immediately notify Lender in writing after it has become aware of (A) any
presence or Release or threatened Release of Hazardous Materials in, on, under,
from or migrating towards any Property; (B) any non-compliance with any
Environmental Laws related in any way to any Property; (C) any actual or
potential Environmental Lien against any Property; (D) any required or proposed
remediation of environmental conditions relating to any Property; and (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but not limited to a Governmental
Authority) relating in any way to Hazardous Materials.  Any failure of Borrower to cause Mortgage
Borrower to perform such obligations pursuant to this Section 12.2 shall
constitute bad faith waste with respect to the Properties.


 


Section 12.3.          LENDER’S
RIGHTS


 


Lender and any other
Person designated by Lender, including but not limited to any representative of
a Governmental Authority, and any environmental consultant, and any receiver
appointed by any court of competent jurisdiction, shall have the right, but not
the obligation, to enter upon any Property at all reasonable times to assess
any and all aspects of the environmental condition of each Property and its
use, including but not limited to conducting any environmental assessment or
audit (the scope of which shall be determined in Lender’s reasonable
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and conducting


 


86

















 


other invasive testing. 
Borrower shall cooperate with and provide access to Lender and any such
person or entity designated by Lender.


 


Section 12.4.          OPERATIONS
AND MAINTENANCE PROGRAMS


 


If recommended by the
Environmental Report or any other environmental assessment or audit of any
Property,  Borrower shall cause Mortgage
Borrower to establish and comply with an operations and maintenance program
with respect to any such Property, in form and substance reasonably acceptable
to Lender, prepared by an environmental consultant reasonably acceptable to
Lender, which program shall address any asbestos-containing material or lead
based paint that may now or in the future be detected at or on any such
Property.  Without limiting the
generality of the preceding sentence, Lender may require (a) periodic notices
or reports to Lender in form, substance and at such intervals as Lender may
specify, (b) an amendment to such operations and maintenance program to address
changing circumstances, laws or other matters, (c) at Borrower’s sole expense,
supplemental examination of any such Property by consultants specified by
Lender, (d) access to each Property by Lender, its agents or servicer, to
review and assess the environmental condition of each Property and Borrower’s
compliance with any operations and maintenance program, and (e) variation of
the operations and maintenance program in response to the reports provided by
any such consultants.


 


Section 12.5.          ENVIRONMENTAL
DEFINITIONS


 


“Environmental Law” means any
present and future federal, state and local laws, statutes, ordinances, rules,
regulations, standards, policies and other government directives or
requirements, as well as common law, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act and the
Resource Conservation and Recovery Act, that apply to Borrower or any Property
and relate to Hazardous Materials or protection of human health or the
environment.  “Environmental Liens” means
all Liens and other encumbrances imposed pursuant to any Environmental Law,
whether due to any act or omission of Borrower or any other Person.  “Environmental Report” means the written
reports resulting from the environmental site assessments of any Property
delivered to Lender in connection with the Loan.  “Hazardous Materials” shall mean petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and
oil; explosives, flammable materials; radioactive materials; polychlorinated
biphenyls and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on any Property is prohibited by
any federal, state or local authority; any substance that requires special
handling; and any other material or substance now or in the future defined as a
“hazardous substance,” “hazardous material”, “hazardous waste”, “toxic
substance”, “toxic pollutant”, “contaminant”, or “pollutant” within the meaning
of any Environmental Law.  “Release”
of any Hazardous Materials includes but is not limited to any release, deposit,
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Materials.


 


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Section 12.6.          INDEMNIFICATION


 


(a)           Borrower and Borrower Principal
covenant and agree at their sole cost and expense, to protect, defend,
indemnify, release and hold Indemnified Parties harmless from and against any
and all Losses imposed upon or incurred by or asserted against any Indemnified
Parties and directly or indirectly arising out of or in any way relating to any
one or more of the following:  (i) any
presence of any Hazardous Materials in, on, above, or under any Property; (ii)
any past, present or threatened Release of Hazardous Materials in, on, above,
under or from any Property; (iii) any activity by Borrower or Mortgage
Borrower, any Person Affiliated with Borrower or Mortgage Borrower, and any Tenant
or other user of any Property in connection with any actual, proposed or
threatened use, treatment, storage, holding, existence, disposition or other
Release, generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
any Property of any Hazardous Materials at any time located in, under, on or
above any Property or any actual or proposed remediation of any Hazardous
Materials at any time located in, under, on or above any Property, whether or
not such remediation is voluntary or pursuant to court or administrative order,
including but not limited to any removal, remedial or corrective action; (iv)
any past, present or threatened non-compliance or violations of any Environmental
Laws (or permits issued pursuant to any Environmental Law) in connection with
any Property or operations thereon, including but not limited to any failure by
Borrower or Mortgage Borrower, any person or entity Affiliated with Borrower or
Mortgage Borrower, and any tenant or other user of any Property to comply with
any order of any Governmental Authority in connection with any Environmental
Laws; (v) the imposition, recording or filing or the threatened imposition,
recording or filing of any Environmental Lien encumbering any Property; (vi)
any acts of Borrower or Mortgage Borrower, any person or entity Affiliated with
Borrower or Mortgage Borrower, and any tenant or other user of any Property in
(A) arranging for disposal or treatment, or arranging with a transporter for
transport for disposal or treatment, of Hazardous Materials at any facility or
incineration vessel containing such or similar Hazardous Materials or (B)
accepting any Hazardous Materials for transport to disposal or treatment facilities,
incineration vessels or sites from which there is a Release, or a threatened
Release of any Hazardous Substance which causes the incurrence of costs for
remediation; and (vii) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to this Agreement relating to
environmental matters.


 


(b)           Upon written request by any
Indemnified Party, Borrower and Borrower Principal shall defend same (if
requested by any Indemnified Party, in the name of the Indemnified Party) by
attorneys and other professionals reasonably approved by the Indemnified
Parties.  Notwithstanding the foregoing,
any Indemnified Parties may, in their sole discretion, engage their own attorneys
and other professionals to defend or assist them, and, at the option of
Indemnified Parties, their attorneys shall control the resolution of any claim
or proceeding.  Upon demand, Borrower
and Borrower Principal shall pay or, in the sole discretion of the Indemnified
Parties, reimburse, the Indemnified Parties for the payment of reasonable fees
and disbursements of attorneys, engineers, environmental consultants,
laboratories and other professionals in connection therewith.


 


(c)           Notwithstanding the foregoing,
Borrower shall have no liability for any Losses imposed upon or incurred by or
asserted against any Indemnified Parties and described in


 


88

















 


subsection (a) above to the extent that Borrower can conclusively prove
both that such Losses were caused solely by actions, conditions or events that
first occurred after the date that Lender (or any purchaser at a foreclosure
sale) actually acquired title to the equity interest of Borrower in Mortgage
Borrower and Mortgage Borrower’s general partner and that such Losses
were not caused by the direct or indirect actions of Borrower, Borrower
Principal, or any partner, member, principal, officer, director, trustee or
manager of Borrower or Borrower Principal or any employee, agent, contractor or
Affiliate of Borrower or Borrower Principal (other than Mortgage Borrower to
the extent arising after the Foreclosure Date (as defined in Section
15.1(e))).  The obligations and liabilities
of Borrower and Borrower Principal under this Section 12.6 shall fully
survive indefinitely notwithstanding any termination, satisfaction or
assignment of the Pledge Agreement.


 


ARTICLE 13

SECONDARY MARKET


 


Section 13.1.          TRANSFER
OF LOAN


 


Lender may, at any time,
sell, transfer or assign the Loan Documents, or grant participations therein (“Participations”)
or syndicate the Loan (“Syndication”) or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest
in a rated or unrated public offering or private placement (“Securities”)
(a Syndication or the issuance of Participations and/or Securities, a “Securitization”).


 


Section 13.2.          DELEGATION
OF SERVICING


 


At the option of Lender,
the Loan may be serviced by a servicer/trustee selected by Lender and Lender may
delegate all or any portion of its responsibilities under this Agreement and
the other Loan Documents to such servicer/trustee pursuant to a servicing
agreement between Lender and such servicer/trustee.


 


Section 13.3.          DISSEMINATION
OF INFORMATION


 


Lender may forward to
each purchaser, transferee, assignee, or servicer of, and each participant, or
investor in, the Loan, or any Participations and/or Securities or any of their
respective successors (collectively, the “Investor”) or any Rating Agency rating the
Loan, or any Participations and/or Securities, each prospective Investor, and
any organization maintaining databases on the underwriting and performance of
commercial mortgage loans, all documents and information which Lender now has
or may hereafter acquire relating to the Debt and to Borrower, any managing
member or general partner thereof, Mortgage Borrower, Borrower Principal, any
SPE Component Entity (as defined herein and in the Mortgage Loan Agreement) (if
any) and any Property, including financial statements, whether furnished by
Borrower or otherwise, as Lender determines necessary or desirable.  Borrower irrevocably waives any and all
rights it may have under applicable Legal Requirements to prohibit such
disclosure, including but not limited to any right of privacy.


 


89

















 


Section 13.4.          COOPERATION


 


Borrower and Borrower
Principal agree to cooperate with Lender in connection with any sale or
transfer of the Loan, Syndication or any Participation and/or Securities
created pursuant to this Article 13.  At
the request of the holder of the Note and, to the extent not already required
to be provided by Borrower under this Agreement, Borrower and Borrower
Principal shall take such reasonable actions for the benefit of, and use
reasonable efforts to provide information not in the possession of the holder
of the Note in order to satisfy the market standards (which may include such
holder’s delivery of information with respect to Borrower, Mortgage Borrower, Borrower
Principal, the Collateral and the Property to any Investor or prospective
Investor) to which the holder of the Note customarily adheres or which may be
reasonably required in the marketplace or by the Rating Agencies in connection
with such sales or transfers, including, without limitation, to:


 


(a)           provide or cause the Mortgage
Borrower to provide, (i) updated financial, budget and other information
(including, but not limited to, updated Rent Rolls meeting the requirements set
forth in Section 5.11(a)(i) hereof and operating statements for each Property
meeting the requirements set forth in Section 5.11(a)(ii) hereof) with respect
to each Property, Borrower, Mortgage Borrower, Borrower Principal and Manager
and (ii) modifications and/or updates to the appraisals, market studies,
environmental reviews and reports and engineering reports of any Property
obtained in connection with the making of the Loan (all of the foregoing being
referred to as the “Provided Information”), together, if
customary, with appropriate verification and/or consents of the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys acceptable to Lender and the Rating Agencies;


 


(b)           make reasonable changes to the
organizational documents of Borrower, Mortgage Borrower or any SPE Component
Entity and their respective principals, including, but not limited to, changes
to the ownership structure of Borrower as may be necessary to create a second
Borrower acceptable to Lender in its reasonable discretion;


 


(c)           Intentionally Omitted;


 


(d)           permit site inspections, appraisals,
market studies and other due diligence investigations of any Property, as may
be reasonably requested by the holder of the Note or the Rating Agencies or as
may be necessary or appropriate in connection with the Securitization;


 


(e)           make the representations and
warranties with respect to any or all Properties, the Collateral, the Borrower,
Mortgage Borrower, Borrower Principal and the Loan Documents as are made in the
Loan Documents and such other representations and warranties as may be
reasonably requested by the holder of the Note or the Rating Agencies;


 


(f)            execute such amendments to the Loan
Documents as may be requested by the holder of the Note or the Rating Agencies
or otherwise to effect the Securitization including, without limitation,
bifurcation of the Loan into two or more components and/or separate notes
and/or creating a senior/subordinate note structure and/or additional mezzanine
note components and/or adjusting the relative loan amounts of the Loan and the
Mortgage Loan; provided, however, that Borrower shall not be required to modify
or amend any Loan Document if such


 


90

















 


modification or amendment would (i) change the interest rate or the
stated maturity, except in connection with a bifurcation of the Loan which may
result in varying LIBOR Rates for each component thereof, but which shall have
the same weighted average coupon of the LIBOR Rate that existed immediately
prior to such modification, or (ii) in the reasonable judgment of Borrower,
modify or amend any other material economic term of the Loan, or (iii) in the
reasonable judgment of Borrower, materially increase Borrower’s obligations and
liabilities under the Loan Documents;


 


(g)           deliver to Lender and/or any Rating
Agency, (i) one or more certificates executed by an officer of the Borrower
certifying as to the accuracy, as of the closing date of the Securitization, of
all representations made by Borrower in the Loan Documents as of the Closing
Date in all relevant jurisdictions or, if such representations are no longer
accurate, certifying as to what modifications to the representations would be
required to make such representations accurate as of the closing date of the
Securitization, and (ii) certificates of the relevant Governmental Authorities
in all relevant jurisdictions indicating the good standing and qualification of
Borrower as of the date of the closing date of the Securitization;


 


(h)           have reasonably appropriate personnel
participate in a bank meeting and/or presentation for the Rating Agencies or
Investors; and


 


(i)            cooperate with and assist Lender in
obtaining ratings of the Securities from two (2) or more of the Rating
Agencies.


 


Upon Lender’s
modification the Selected Day pursuant to the terms of Section 2.2(d)
above, Borrower and Borrower Principal shall promptly deliver to Lender such
modifications to the Rate Cap and the Collateral Assignment of Interest Rate
Cap reasonably required by Lender as result of such designation.


 


Borrower shall not be
responsible for any costs and expenses incurred by Borrower or Lender in
connection with Borrower’s complying with the requests and requirements made
under this Section 13.4 (including, without limitation, the fees and
expenses of the Rating Agencies).


 


In the event that
Borrower requests any consent or approval hereunder and the provisions of this
Agreement or any Loan Documents require the receipt of written confirmation
from each Rating Agency with respect to the rating on the Securities, or, in
accordance with the terms of the transaction documents relating to a
Securitization, such a rating confirmation is required in order for the consent
of Lender to be given, Borrower shall pay all of the costs and expenses of
Lender, Lender’s servicer and each Rating Agency in connection therewith, and,
if applicable, shall pay any fees imposed by any Rating Agency as a condition
to the delivery of such confirmation.


 


Section 13.5.          SECURITIZATION
INDEMNIFICATION


 


(a)           Borrower and Borrower Principal
understand that certain of the Provided Information may be included in
disclosure documents in connection with the Securitization, including, without
limitation, a prospectus, prospectus supplement, offering memorandum or private
placement memorandum (each, a “Disclosure Document”) and may also be included
in filings with the Securities and Exchange Commission pursuant to the
Securities Act or the


 


91

















 


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, Borrower and Borrower Principal will cooperate with the
holder of the Note in updating the Disclosure Document by providing all current
information necessary to keep the Disclosure Document accurate and complete in
all material respects.


 


(b)           Borrower and Borrower Principal agree
in connection with each of (i) a preliminary and a final offering memorandum or
private placement memorandum or similar document (including any Investor or
Rating Agency “term sheets” or presentations relating to any Property, the
Collateral and/or the Loan) or (ii) a preliminary and final prospectus or
prospectus supplement, as applicable, (A) that Borrower and Borrower
Principal will provide a certificate certifying that Borrower and Borrower
Principal have carefully examined such memorandum or prospectus or other
document (including any Investor or Rating Agency “term sheets” or
presentations relating to any Property, the Collateral and/or the Loan), as
applicable, including without limitation, the sections entitled “Special
Considerations,” and/or “Risk Factors,” and “Certain Legal Aspects of the
Mortgage Loan,” or similar sections, and all sections relating to Borrower,
Borrower Principal, Manager, their Affiliates, the Loan, the Loan Documents,
the Collateral, and any Property, and any risks or special considerations
relating thereto, and that, to the best of Borrower’s knowledge, such sections
(and any other sections reasonably requested) do not 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, and (B) that Borrower will provide
an indemnification certificate (1) indemnifying Lender (and for purposes
of this Section 13.5, Lender hereunder shall include its officers and
directors) and the Affiliate of Lender that (i) has filed the registration
statement, if any, relating to the Securitization and/or (ii) which is acting
as issuer, depositor, sponsor and/or a similar capacity with respect to the
Securitization (any Person described in (i) or (ii), an “Issuer Person”), and
each director and officer of any Issuer Person, and each Person or entity who
controls any Issuer Person within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively, the “Issuer Group”),
and each Person which is acting as an underwriter, manager, placement agent,
initial purchaser or similar capacity with respect to the Securitization, each
of its directors and officers and each Person who controls any such Person
within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act (collectively, the “Underwriter Group”) for any Losses to
which Lender, the Issuer Group or the Underwriter Group may become subject
insofar as the Losses arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact which is in fact untrue contained
in such sections (including any Investor or Rating Agency “term sheets” or presentations
relating to any Property and/or the Loan) or arise out of or are based upon the
omission or alleged omission which is in fact an omission to state therein a
material fact required to be stated in such sections (including any Investor or
Rating Agency “term sheets” or presentations relating to any Property, the
Collateral and/or the Loan) or necessary in order to make the statements in
such sections (including any Investor or Rating Agency “term sheets” or
presentations relating to any Property and/or the Loan) or in light of the
circumstances under which they were made, not misleading (collectively the
“Securities Liabilities”) and (2) agreeing to reimburse Lender, the Issuer
Group and the Underwriter Group for any legal or other expenses reasonably
incurred by Lender and Issuer Group in connection with investigating or
defending the Securities Liabilities; provided, however, that Borrower will be
liable in any such case under


 


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clauses (1) or (2) above only to the extent that any such Securities
Liabilities arise out of or is based upon any such untrue statement or omission
made therein in reliance upon and in conformity with information furnished to
Lender or any member of the Issuer Group or Underwriter Group by or on behalf
of Borrower or Borrower Principal with respect to the Borrower, Mortgage
Borrower, Borrower Principal, Affiliated Lessee, the Property and/or the Loan
in connection with the preparation of the memorandum or prospectus or other
document (including any Investor or Rating Agency “term sheets” or
presentations relating to any Property and/or the Loan) or in connection with
the underwriting of the Loan, including, without limitation, financial
statements of Borrower or Borrower Principal, operating statements, rent rolls,
environmental site assessment reports and Property condition reports with
respect to any Property.  This indemnity
agreement will be in addition to any liability which Borrower may otherwise
have.  Moreover, the indemnification
provided for in Clauses (1) and (2) above shall be effective whether or not
certificate described in (A) above is provided and shall be applicable based on
information previously provided by Borrower and Borrower Principal or their
Affiliates if Borrower or Borrower Principal do not provide the indemnification
certificate.


 


(c)           In connection with filings under the
Exchange Act or any information provided to holders of Securities on an ongoing
basis, Borrower agrees to indemnify (i) Lender, the Issuer Group and the
Underwriter Group for Losses to which Lender, the Issuer Group or the
Underwriter Group may become subject insofar as the Securities Liabilities
arise out of or are based upon the omission or alleged omission which is in
fact an omission to state in the Provided Information a material fact required
to be stated in the Provided Information in order to make the statements in the
Provided Information, in light of the circumstances under which they were made
not misleading and (ii) reimburse Lender, the Issuer Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Issuer
Group or the Underwriter Group in connection with defending or investigating
the Securities Liabilities.


 


(d)           Promptly after receipt by an
indemnified party under this Section 13.5 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 Section 13.5, 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 Section 13.5 the indemnifying party shall be responsible for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
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 additional to 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


 


93

















 


behalf of such indemnified party or parties.  The indemnifying party shall not be liable for the expenses of
more than one such separate counsel unless an indemnified party shall have
reasonably concluded that there may be legal defenses available to it that are
different from or additional to those available to another indemnified party.


 


(e)           In order to provide for just and
equitable contribution in circumstances in which the indemnity agreements
provided for in  Section 13.5(c) or
Section 13.5(d) is or are for any reason held to be unenforceable by an
indemnified party in respect of any losses, claims, damages or liabilities (or
action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 13.5(c) or Section 13.5(d), the
indemnifying party shall contribute to the amount paid or payable by the indemnified
party as a result of such losses, claims, damages or liabilities (or action in
respect thereof); 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 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 indemnified party’s, Borrower’s and Borrower Principal’s
relative knowledge and access to information concerning the matter with respect
to which claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances.  Lender and
Borrower hereby agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.


 


(f)            The liabilities and obligations of
Borrower, Borrower Principal and Lender under this Section 13.5 shall
survive the satisfaction of this Agreement and the satisfaction and discharge
of the Debt.


 


Section 13.6.          INTENTIONALLY
OMITTED.


 


ARTICLE 14

INDEMNIFICATIONS


 


Section 14.1.          GENERAL
INDEMNIFICATION


 


Borrower shall indemnify,
defend and hold harmless the Indemnified Parties from and against any and all
Losses imposed upon or incurred by or asserted against any Indemnified Parties
and directly or indirectly arising out of or in any way relating to any one or
more of the following: (a) any accident, injury to or death of persons or loss
of or damage to property occurring in, on or about any Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (b) any use, nonuse or condition in, on or
about any Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (c) performance
of any labor or services or the furnishing of any materials or other property
in respect of any Property or any part thereof; (d) any failure of any Property
or the Collateral to be in compliance with any Applicable Legal Requirements;
(e) any and all claims and demands whatsoever which may be asserted against
Lender by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants, or agreements contained in
any Lease; (f) the holding or investing of the Mortgage Reserve Accounts or the
performance of the Required Work, Additional Required


 


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Repairs or Additional Replacements (all as defined in the Mortgage Loan
Agreement), or (g) the payment of any commission, charge or brokerage fee to
anyone which may be payable in connection with the funding of the Loan
(collectively, the “Indemnified Liabilities”); provided,
however, that Borrower shall not have any obligation to Lender hereunder to the
extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender.  To the extent that the undertaking to indemnify, defend and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion that
it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Lender.


 


Section 14.2.          INTANGIBLE
TAX INDEMNIFICATION


 


Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any tax on the making of
the Pledge Agreement, the Note or any of the other Loan Documents, but
excluding any income, franchise or other similar taxes.


 


Section 14.3.          ERISA
INDEMNIFICATION


 


Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses (including, without
limitation, reasonable attorneys’ fees and costs incurred in the investigation,
defense, and settlement of Losses incurred in correcting any prohibited transaction
or in the sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender’s sole
discretion) that Lender may incur, directly or indirectly, as a result of a
default under Section 4.8 or Section 5.18 of this Agreement.


 


Section 14.4.          SURVIVAL


 


The obligations and
liabilities of Borrower under this Article 14 shall fully survive indefinitely
notwithstanding any termination, satisfaction or assignment of the Pledge
Agreement.


 


ARTICLE 15

EXCULPATION


 


Section 15.1.          EXCULPATION


 


(a)           Subject to the qualifications below,
Lender shall not enforce the liability and obligation of Borrower or Borrower
Principal, as applicable, to perform and observe the obligations contained
herein or in the other Loan Documents by any action or proceeding wherein a
money judgment shall be sought against Borrower, except that Lender may bring
action under the UCC, an action for specific performance or any other
appropriate action or proceeding to enable Lender to enforce and realize upon
this Agreement, the Note, the Pledge Agreement and the other Loan Documents,
and the interest in the Collateral and any other collateral given to Lender
created by this Agreement, the Note, the Pledge Agreement and the other Loan Documents;
provided, however, that, except as specifically provided herein, any


 


95

















 


judgment in any such action or proceeding shall be enforceable against
Borrower or Borrower Principal, as applicable, only to the extent of Borrower’s
or Borrower Principal’s interest in the Collateral and in any other collateral
given to Lender.  Lender, by accepting
this Agreement, the Note, the Pledge Agreement and the other Loan Documents,
agrees that it shall not, except as otherwise provided in this
Section 15.1, sue for, seek or demand any deficiency judgment against any
Borrower, its members, partners, shareholders, officers or directors or
Borrower Principal or its members, partners, shareholders, officers or directors
in any such action or proceeding, under or by reason of or under or in
connection with this Agreement, the Note, the Pledge Agreement or the other
Loan Documents.  The provisions of this
Section 15.1 shall not, however, (i) constitute a waiver, release or
impairment of any obligation evidenced or secured by this Agreement, the Note,
the Pledge Agreement or the other Loan Documents; (ii) impair the right of
Lender to name Borrower or Borrower Principal as a party defendant in any
action or suit for judicial foreclosure and sale under this Agreement and the
Pledge Agreement; (iii) affect the validity or enforceability of any indemnity
(including, without limitation, those contained in the Article 12 and in
Section 13.5 and Article 14 of this Agreement), guaranty, master lease or
similar instrument made in connection with this Agreement, the Note, the Pledge
Agreement and the other Loan Documents; (iv) impair the right of Lender to
obtain the appointment of a receiver; (v) impair the enforcement of the assignment
of leases provisions contained in the Pledge Agreement; (vi) impair the right
of Lender to obtain a deficiency judgment or other judgment on the Note against
Borrower or Borrower Principal if necessary to obtain any Insurance Proceeds or
Awards to which Lender would otherwise be entitled under this Agreement; or
(vii) impair the right of Lender to enforce its rights under the
Indemnity; provided however, Lender shall only enforce such judgment to the
extent of the Insurance Proceeds and/or Awards.


 


(b)           Notwithstanding the provisions of
this Section 15.1 to the contrary, Borrower and Borrower Principal shall
be personally liable to Lender on a joint and several basis for Losses due to:


 


(i)            fraud or intentional
misrepresentation by Borrower, Mortgage Borrower, Borrower Principal or any
other Affiliate of Borrower, Mortgage Borrower or Borrower Principal in
connection with the execution and the delivery of this Agreement, the Note, the
Pledge Agreement, the Mortgage Note, the Mortgage Loan Agreement, the Security
Instrument and any of the other Loan Documents or the Mortgage Loan Documents,
or any certificate, report, financial statement or other instrument or document
furnished to Lender at the time of the closing of the Loan or during the term
of the Loan;


 


(ii)           Mortgage Borrower’s or Borrower’s
misapplication or misappropriation of Rents received by Mortgage Borrower or
Borrower, after the occurrence of an Event of Default;


 


(iii)          Mortgage Borrower’s or Borrower’s
misapplication or misappropriation of tenant security deposits or Rents
collected in advance;


 


(iv)          the misapplication or misappropriation
of Insurance Proceeds or Awards;


 


96

















 


(v)           Borrower’s or Mortgage Borrower’s
failure to pay Taxes or Other Charges (except to the extent that sums
sufficient to pay such amounts have been deposited in escrow with Mortgage
Lender pursuant to the terms of the Mortgage Loan Agreement and there exists no
impediment to Mortgage Lender’s utilization thereof), charges for labor or
materials or other charges that can create liens on any property beyond any
applicable notice and each cure period specified herein and in the Mortgage
Loan Agreement;


 


(vi)          Borrower’s or Mortgage Borrower’s
failure to return or to reimburse Lender for all Personal Property taken from
the Property by or on behalf of Mortgage Borrower or Borrower and not replaced
with Personal Property of the same utility and of the same or greater value;


 


(vii)         any act of actual waste or arson by
Borrower or Mortgage Borrower or any principal, Affiliate, member of general
partner of either such party or by Borrower Principal, any principal,
affiliate, member of general partner thereof;


 


(viii)        the misappropriation by Mortgage
Borrower or Borrower of any Net Liquidation Proceeds or other amounts due to
Lender;


 


(ix)           any breach of any representation,
warranty or covenant contained in Sections 4(f), (g) and/or (h) of the Pledge
Agreement;


 


(x)            any violation of the environmental
covenants contained in Article 12 of this Agreement;


 


(xi)           Borrower’s or Mortgage Borrower’s
gross negligence or willful misconduct;


 


(xii)          the failure by Borrower to pay
directly to Lender any distributions from Mortgage Borrower as required by the
Loan Documents, following and during the continuance of an Event of Default; or


 


(xiii)         Mortgage Borrower or any Affiliated
Lessee shall take any action of any kind or nature whatsoever, either directly
or indirectly to oppose, impede, obstruct, challenge, hinder, frustrate, enjoin
or otherwise interfere with (A) any termination of any Operating Lease
with any Affiliated Lessee, (B) the Mortgage Borrower (in full substitution of
the applicable Affiliated Lessee) being deemed the “Owner” under the Management
Agreements, (C) the execution, delivery or effectiveness of a replacement
Management Agreement directly between the Mortgage Borrower and the applicable
Manager or (D)  any payment or other transfer by Manager of funds which
would otherwise be paid to any Affiliated Lessee under any Operating Lease directly
to Mortgage Borrower, in each case after or as a result of the automatic
termination of the applicable Operating Lease pursuant to the applicable
Subordination and Attornment Agreement, or shall, either directly or
indirectly, cause or permit any other person to take any action which, if taken
by such Affiliated Lessee would constitute an event described in this
Section 15.1(b)(xiii).


 


97

















 


(c)           Notwithstanding the foregoing, the
agreement of Lender not to pursue recourse liability as set forth in subsection
(a) above SHALL BECOME NULL AND VOID and shall be of no further force and
effect and the Debt shall become fully recourse to Borrower and Borrower
Principal; jointly and severally, in the event (i) of a breach by Borrower or
SPE Component Entity of any of the covenants set forth in Article 6 of this
Agreement (other than the covenants set forth in Sections 6.1(xv) and 6.1
(xviii) hereof) or a breach by Affiliated Lessee of any of the covenants set forth
in Section 6 of the Subordination and Attornment Agreement (other than the
covenants set forth in Sections 6(o) and 6(q) of the Subordination and
Attornment Agreement), in all events except to the extent that any such breach
was inadvertent, immaterial and is promptly cured, (ii) of a breach of any of
the covenants set forth in Article 7 hereof, or (iii) the Property, the
Collateral or any part thereof shall become an asset in (A) a voluntary
bankruptcy or insolvency proceeding of Mortgage Borrower, Borrower, Affiliated
Lessee or Borrower Principal, or (B) an involuntary bankruptcy or insolvency
proceeding of Mortgage Borrower, Borrower, Affiliated Lessee or Borrower
Principal in connection with which Mortgage Borrower, Borrower, Affiliated
Lessee, Borrower Principal, SPE Component Entity or any Affiliate of any of the
foregoing has or have colluded in any way with the creditors commencing or
filing such proceeding and such proceeding is not dismissed in ninety (90)
days.


 


(d)           Nothing herein shall be deemed to be
a waiver of any right which Lender may have under Section 506(a), 506(b),
1111(b) or any other provision of the U.S. Bankruptcy Code to file a claim for
the full amount of the indebtedness secured by the Pledge Agreement or to
require that all collateral shall continue to secure all of the indebtedness
owing to Lender in accordance with this Agreement, the Note, the Pledge
Agreement or the other Loan Documents.


 


(e)           Notwithstanding the foregoing,
Borrower and Borrower Principal shall have no liability for any Losses under
Section 15.1(b) (other than 15.1(b)(i)), or recourse liability as a result of
any action, of Mortgage Borrower or Mortgage Borrower’s general partner
described in Section 15.1(c)(iii) (any such event, a “Recourse Event”), to the extent
that a court finally determines, after the exhaustion of all applicable appeal
periods, both that (i) such Losses were caused solely by, or such Recourse
Event relates solely to, actions of Mortgage Borrower or Mortgage Borrower’s
general partners taken or conditions or events conclusively proven to have
first occurred after the date that Lender (or any purchaser at a foreclosure
sale) actually acquired title to the equity interest of Borrower in Mortgage
Borrower and Mortgage Borrower’s general partner (such date, the “Foreclosure
Date”), and (ii) such Losses were not, or Recourse Event was not,
caused by (A) the direct or indirect actions or failures to act of Borrower,
Borrower Principal or any Affiliate of Borrower or Borrower Principal, or any
partner, member, principal, officer, director, trustee or manager of Borrower
or Borrower Principal or any Affiliate of Borrower or Borrower Principal or any
employee, agent or contractor of Borrower, Borrower Principal or any Affiliate
of Borrower or Borrower Principal (other than Mortgage Borrower or Mortgage
Borrower’s general partner to the extent conclusively proven to have first
arisen after the Foreclosure Date), or (B) by any other actions, conditions,
occurrence or circumstance giving rise to liability under Section 15.1(b)
occurring or existing prior to the Foreclosure Date.  Without limiting any other provision contained herein, Borrower
and Borrower Principal hereby agree that the foregoing shall not excuse Borrower
or Borrower Principal from any liability for any Losses or recourse liability
relating to the actions or failure to act of Borrower, Borrower Principal or
any employee, agent, contractor or Affiliate of Borrower or Borrower Principal
(other than Mortgage Borrower or Mortgage Borrower’s general partner to the
extent


 


98

















 


conclusively proven to have first arisen after the Foreclosure Date)
which relate to any act or failure to act arising after the Foreclosure
Date.  Nothing contained in this Section
15.1(c) shall in any way limit, alter or otherwise modify (a) Borrower or
Borrower Principal’s liability for Losses due to the events described in
Section 15.1(b)(xii) hereof or (b) the terms and conditions of, and the
obligations of Borrower Principal under the Indemnity.


 


ARTICLE 16

NOTICES


 


Section 16.1.          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 overnight
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, or by (c) telecopier (with answer back acknowledged
provided an additional notice is given pursuant to subsection (b) above),
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:

  	
   

  	
  Fleet National Bank

  
	
   

  	
   

  	
  Structured Real Estate

  
	
   

  	
   

  	
  100 Federal Street

  
	
   

  	
   

  	
  MA DE 10009A

  
	
   

  	
   

  	
  Boston, Massachusetts 02110

  
	
   

  	
   

  	
  Attention: 
  James B. McLaughlin

  
	
   

  	
   

  	
  Facsimile No.: (617) 434-7108

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  McKenna Long & Aldridge LLP

  
	
   

  	
   

  	
  303 Peachtree Street, Suite 5300

  
	
   

  	
   

  	
  Atlanta, Georgia 30308

  
	
   

  	
   

  	
  Attention: 
  William Timmons, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (404) 527-4198

  
	
   

  	
   

  	
   

  
	
  If to Borrower:

  	
   

  	
  c/o CNL Hospitality Properties

  
	
   

  	
   

  	
  450 South Orange Avenue, 12th Floor

  
	
   

  	
   

  	
  Orlando, Florida 32801-3336

  
	
   

  	
   

  	
  Attention: 
  Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile No.: (407) 650-1085

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

  
	
   

  	
   

  	
  215 North Eola Drive

  
	
   

  	
   

  	
  Orlando, Florida 32801-3336

  
	
   

  	
   

  	
  Attention: 
  Richard J. Fildes, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (407) 843-4444

  



 


99

















 


	
  If to Borrower

  	
   

  	
   

  
	
  Principal:

  	
   

  	
  CNL Hospitality Properties

  
	
   

  	
   

  	
  450 South Orange Avenue, 12th Floor

  
	
   

  	
   

  	
  Orlando, Florida 32810-3336

  
	
   

  	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile No.: (407) 650-1085

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

  
	
   

  	
   

  	
  215 North Eola Drive

  
	
   

  	
   

  	
  Orlando, Florida 32801-3336

  
	
   

  	
   

  	
  Attention: 
  Richard J. Fildes, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (407) 843-4444

  



 


A notice shall be deemed to have been given:  in the case of hand delivery, at the time of delivery; in the
case of registered or certified mail, when delivered or the first attempted
delivery on a Business Day; or in the case of expedited prepaid delivery and
telecopy, upon the first attempted delivery on a Business Day.


 


ARTICLE 17

FURTHER ASSURANCES


 


Section 17.1.          REPLACEMENT
DOCUMENTS


 


Upon receipt of an
affidavit of an officer of Lender as to the loss, theft, destruction or
mutilation of the Note or any other Loan Document which is not of public
record, and, in the case of any such mutilation, upon surrender and
cancellation of such Note or other Loan Document, Borrower will issue, in lieu
thereof, a replacement Note or other Loan Document, dated the date of such
lost, stolen, destroyed or mutilated Note or other Loan Document in the same
principal amount thereof and otherwise of like tenor.


 


Section 17.2.          INTENTIONALLY
OMITTED


 


Section 17.3.          FURTHER ACTS, ETC.


 


Borrower will, at the
cost of Borrower, and without expense to Lender, do, execute, acknowledge and
deliver all and every further acts, deeds, conveyances, deeds of trust,
mortgages, assignments, security agreements, control agreements, notices of
assignments, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender any Property and rights hereby
mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged,
assigned, warranted and transferred or intended now or hereafter so to be, or
which Borrower may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intention or facilitating the performance of
the terms of this Agreement or for filing or registering the Pledge Agreement,
or for complying with all Legal Requirements. 
Borrower, on demand, will execute and deliver, and in the event it shall
fail to so execute and deliver, hereby authorizes Lender to execute in the name
of Borrower or without the signature of Borrower to the extent Lender may
lawfully do so, one or more financing statements and financing statement
amendments to


 


100

















 


evidence more effectively, perfect and maintain the priority of the
security interest of Lender in any Property. 
Borrower grants to Lender an irrevocable power of attorney coupled with
an interest for the purpose of exercising and perfecting any and all rights and
remedies available to Lender at law and in equity, including without
limitation, such rights and remedies available to Lender pursuant to this
Section 17.3.


 


Section 17.4.          CHANGES
IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS


 


(a)           If any law is enacted or adopted or
amended after the date of this Agreement which deducts the Debt from the value
of the Property or the Collateral for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or Lender’s interest in any
Property or the Collateral (other than taxes imposed on Lender’s receipt of
amounts payable hereunder), Borrower will pay the tax, with interest and
penalties thereon, if any.  If Lender is
advised by counsel chosen by it that the payment of tax by Borrower would be
unlawful or taxable to Lender or unenforceable or provide the basis for a
defense of usury then Lender shall have the option by written notice of not
less than one hundred twenty (120) days to declare the Debt immediately due and
payable.


 


(b)           Borrower will not claim or demand or
be entitled to any credit or credits on account of the Debt for any part of the
Taxes or Other Charges assessed against any Property or the Collateral, or any
part thereof, and no deduction shall otherwise be made or claimed from the
assessed value of any Property or the Collateral, or any part thereof, for real
estate tax purposes by reason of the Mortgage, the Pledge Agreement or the
Debt.  If such claim, credit or
deduction shall be required by law, Lender shall have the option, by written
notice of not less than one hundred twenty (120) days, to declare the Debt
immediately due and payable.


 


If at any time the United
States of America, any State thereof or any subdivision of any such State shall
require revenue or other stamps to be affixed to the Note, the Pledge
Agreement, or any of the other Loan Documents or impose any other tax or charge
on the same, Borrower will pay for the same, with interest and penalties
thereon, if any.


 


Section 17.5.          EXPENSES


 


Borrower covenants and
agrees to pay or, if Borrower fails to pay, to reimburse, Lender within ten
(10) days of receipt of written notice from Lender for all reasonable costs and
expenses (including reasonable, actual attorneys’ fees and disbursements and
the allocated costs of internal legal services and all actual disbursements of
internal counsel) reasonably incurred by Lender in accordance with this
Agreement in connection with (a) the preparation, negotiation, execution and
delivery of this Agreement, the Pledge 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 as to any legal matters
arising under this Agreement or the other Loan Documents with respect to any
Property or the Collateral); (b) any default by Borrower in Borrower’s ongoing
performance of and compliance with Borrower’s respective agreements and
covenants contained in this Agreement, the Pledge Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including, without limitation, confirming compliance with environmental and
insurance requirements; (c) following a request


 


101

















 


by Borrower, Lender’s ongoing performance and compliance with all
agreements and conditions contained in this Agreement, the Pledge Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (d) 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
requested by Lender; (e) securing Borrower’s compliance with any requests made
pursuant to the provisions of this Agreement; (f) the filing and recording fees
and expenses, 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, the Pledge Agreement and the other Loan Documents; (g)
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 Collateral, or any other security given for the Loan; and (h)
enforcing any obligations of or collecting any payments due from Borrower under
this Agreement, the other Loan Documents or with respect to any 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; provided, however, that Borrower shall
not be liable for the payment of any such costs and expenses to the extent the
same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender.


 


ARTICLE 18

WAIVERS


 


Section 18.1.          REMEDIES
CUMULATIVE; WAIVERS


 


The rights, powers and
remedies of Lender under this Agreement shall be cumulative and not exclusive
of any other right, power or remedy which Lender may have against Borrower or
Borrower Principal 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 singularly,
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 shall not be construed to be a waiver of any subsequent
Default or Event of Default by Borrower or to impair any remedy, right or power
consequent thereon.


 


Section 18.2.          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, nor consent to any
departure by Borrower 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


 


102

















 


entitle Borrower to any other or future notice or demand in the same,
similar or other circumstances.


 


Section 18.3.          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 18.4.          TRIAL
BY JURY


 


BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREES
NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES
ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM
OR OTHER ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE.  EACH OF
LENDER, BORROWER PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
BORROWER, BORROWER PRINCIPAL AND LENDER.


 


Section 18.5.          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.


 


103

















 


Section 18.6.          REMEDIES
OF BORROWER


 


In the event that a claim
or adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower’s sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment.  The parties
hereto agree that any action or proceeding to determine whether Lender has
acted reasonably shall be determined by an action seeking declaratory
judgment.  Lender agrees that, in such
event, it shall cooperate in expediting any action seeking injunctive relief or
declaratory judgment.


 


Section 18.7.          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, Mortgage Borrower,
Borrower’s partners and others with interests in Borrower or Mortgage Borrower,
the Collateral and of any 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 Collateral for the collection of the
Debt without any prior or different resort for collection or of the right of
Lender to the payment of the Debt out of the net proceeds of the Collateral in
preference to every other claimant whatsoever.


 


Section 18.8.          WAIVER
OF STATUTE OF LIMITATIONS


 


Borrower hereby expressly
waives and releases, to the fullest extent permitted by law, the pleading of
any statute of limitations as a defense to payment of the Debt or performance
of its Other Obligations.


 


Section 18.9.          WAIVER
OF COUNTERCLAIM


 


Borrower hereby waives
the right to assert a counterclaim, other than a compulsory counterclaim, in
any action or proceeding brought against it by Lender or its agents.


 


ARTICLE 19

GOVERNING LAW


 


Section 19.1.          CHOICE
OF LAW


 


This Agreement shall be
deemed to be a contract entered into pursuant to the laws of the State of New
York and shall in all respects be governed, construed, applied and enforced in
accordance with the laws of the State of New York.


 


Section 19.2.          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


 


104

















 


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 19.3.          PREFERENCES


 


Lender shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any portion of the obligations of Borrower
hereunder.  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 Creditors Rights Laws, 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.


 


ARTICLE 20

MISCELLANEOUS


 


Section 20.1.          SURVIVAL


 


This Agreement and all
covenants, 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 Debt 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 legal representatives, 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 legal representatives,
successors and assigns of Lender.


 


Section 20.2.          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 20.3.          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.


 


105

















 


Section 20.4.          COST
OF ENFORCEMENT


 


In the event (a) that the
Pledge Agreement is foreclosed in whole or in part, (b) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Mortgage
Borrower or Borrower or any of its constituent Persons or an assignment by
Mortgage Borrower or Borrower or any of its constituent Persons for the benefit
of its creditors, or (c) Lender exercises any of its other remedies under this
Agreement or any of the other Loan Documents pursuant to its rights under any
Loan Document, Borrower shall be chargeable with and agrees to pay all costs of
collection and defense, including 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.


 


Section 20.5.          SCHEDULES
INCORPORATED


 


The 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 20.6.          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 20.7.          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 Collateral other than that of secured party, pledge 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.  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.


 


106

















 


(c)           The general partners, members,
principals and (if Borrower is a trust) beneficial owners of Borrower are
experienced in the ownership and operation of properties similar to any
Property and the Collateral, and Borrower and Lender are relying solely upon
such expertise and business plan in connection with the ownership and operation
of any Property and the Collateral. 
Borrower is not relying on Lender’s expertise, business acumen or advice
in connection with any Property or the Collateral.


 


(d)           Notwithstanding anything to the
contrary contained herein, Lender is not undertaking the performance of (i) any
obligations under the Leases; or (ii) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits,
trademarks, licenses and other documents.


 


(e)           By accepting or approving anything
required to be observed, performed or fulfilled or to be given to Lender
pursuant to this Agreement, the Pledge Agreement, the Note or the other Loan
Documents, including, without limitation, any officer’s certificate, balance
sheet, statement of profit and loss or other financial statement, survey,
appraisal, or insurance policy, Lender shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, the legality or effectiveness of
same, and such acceptance or approval thereof shall not constitute any warranty
or affirmation with respect thereto by Lender.


 


(f)            Borrower recognizes and acknowledges
that in accepting this Agreement, the Note, the Pledge Agreement and the other
Loan Documents, Lender is expressly and primarily relying on the truth and
accuracy of the representations and warranties set forth in Article 4 of this
Agreement without any obligation to investigate any Property or the Collateral
and notwithstanding any investigation of any Property or the Collateral by Lender;
that such reliance existed on the part of Lender prior to the date hereof, that
the warranties and representations are a material inducement to Lender in
making the Loan; and that Lender would not be willing to make the Loan and
accept this Agreement, the Note, the Pledge Agreement and the other Loan
Documents in the absence of the warranties and representations as set forth in
Article 4 of this Agreement.


 


Section 20.8.          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, Lender, or any
of its Affiliates shall be subject to the prior written approval of Lender, not
to be unreasonably withheld.  Lender
shall be permitted to make any news, releases, publicity or advertising by
Lender or its Affiliates through any media intended to reach the general public
which refers to the Loan, the Collateral, any Property, Mortgage Borrower,
Affiliated Lessee, Borrower, Borrower Principal and their respective Affiliates
without the approval of Borrower or any such Persons.  Borrower also agrees that Lender may share any information
pertaining to the Loan with its Affiliates, in connection with the sale or
transfer of the Loan or any Participations and/or Securities created.


 


107

















 


Section 20.9.          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 20.10.        ENTIRE
AGREEMENT


 


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 between
Borrower and Lender are superseded by the terms of this Agreement and the other
Loan Documents.


 


Section 20.11.        TAX
DISCLOSURE


 


Notwithstanding anything
herein to the contrary, except as reasonably necessary to comply with
applicable securities laws, each party (and each employee, representative or
other agent of each party) hereto may disclose to any and all persons, without
limitation of any kind, any information with respect to the United States
federal income “tax treatment” and “tax structure” (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to such parties (or their representatives)
relating to such tax treatment and tax structure; provided that with
respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transaction as
well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to the United States federal income
tax treatment or tax structure of the transactions contemplated hereby.


 


108

















 


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:

  
	
   

  	
   

  
	
   

  	
  ROSE MEZZANINE SPE, LP, a Delaware limited
  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Rose Mezzanine SPE 1 GP, LLC, a Delaware limited
  liability company, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Paul H. Williams

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER PRINCIPAL:

  
	
   

  	
   

  
	
   

  	
  Acknowledged and agreed to with respect to its
  obligations set forth in Article 4, Section 5.11, Section 5.33,
  Section 12.6, Article 13, Article 15 and Article 18 hereof:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RFS PARTNERSHIP, L.P., a Tennessee limited
  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CNL Rose GP CORP., a Delaware corporation, its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Paul H. Williams

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  
					



 

















 


	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  FLEET NATIONAL BANK, a national banking association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					



 


[Signature Page 2 of 2 to
the Mezzanine Loan Agreement]


 

















 


EXHIBIT A


 


Annual Budget


 

















 


EXHIBIT B


 


Borrower Equity Ownership
Structure


 


Exhibit B to Loan Agreement

ROSE SPE Structure for
CMBS (26 Pool)


 


~~
 ~~


 


HI Phoenix Chandler, AZ; HOM Phoenix Chandler, AZ; HI Sedona, AZ; RI
Sacramento/Cal Expo, CA; DT San Diego Del Mar, CA; HI Denver SW Lakewood, CO;
RI Wilmington/Newark, DE;  HI Ft.
Lauderdale/Cypress, FL;  TPS Miami Airport
West, FL;  TPS Miami Lakes, FL;  RI Orlando International Drive, FL; HOL Crystal
Lake, IL;  HOL Louisville Southwest, KY;
RI Ann Arbor, MI;  CY Flint, MI;  HI Minneapolis Minnetonka, MN;  HI Hattiesburg, MS;  HI Lincoln Airport I-80, NE;  RI Fishkill, NY;  HI Oklahoma City Airport, OK; 
HI Tulsa, OK;  RI Warwick, RI; RI
Ft. Worth River Plaza, TX; TPS Fort Worth Southwest, TX;  HI Laredo, TX;  and  RI Tyler, TX


 


	
  

  



 


v.3.03  11-5-2003


 


CONFIDENTIALITY
NOTICE:  The information contained
herein is confidential and intended only for the use of CNL Hospitality
Properties, Inc. or it’s affiliates and legal counsel.  If the reader is not the intended recipient,
you are hereby notified that any dissemination, distribution or copying of this
information is strictly prohibited.


 

















 


SCHEDULE A


 


Properties and Initial Allocated Loan Amounts and Percentages


 


	
  Property

  	
   

  	
  Initial
  Allocated

  Loan Amount

  	
   

  	
  Initial
  Allocated

  Loan Percentage

  	
   

  
	
  Hampton Inn Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  $

  	
  620,000

  	
   

  	
  1.8

  	
  %

  
	
  Homewood Suites Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  $

  	
  700,000

  	
   

  	
  2.0

  	
  %

  
	
  Hampton Inn Sedona Sedona, Arizona

  	
   

  	
  $

  	
  630,000

  	
   

  	
  1.8

  	
  %

  
	
  Residence Inn

  Sacramento/Cal Expo Sacramento, California

  	
   

  	
  $

  	
  2,650,000

  	
   

  	
  7.6

  	
  %

  
	
  Doubletree Hotel San Diego Del Mar

  San Diego, California

  	
   

  	
  $

  	
  1,960,000

  	
   

  	
  5.6

  	
  %

  
	
  Hampton Inn

  Denver SW Lakewood Lakewood, Colorado

  	
   

  	
  $

  	
  400,000

  	
   

  	
  1.1

  	
  %

  
	
  Residence Inn

  Wilmington/Newark (the “Wilmington

  Newark Property”)

  Wilmington, Delaware

  	
   

  	
  $

  	
  2,000,000

  	
   

  	
  5.7

  	
  %

  
	
  Hampton Inn Ft. Lauderdale-Cypress Creek

  Ft. Lauderdale, Florida

  	
   

  	
  $

  	
  750,000

  	
   

  	
  2.1

  	
  %

  
	
  Towne Place Suites

  Miami Airport West (the “Miami Airport

  West Property”) Miami, Florida

  	
   

  	
  $

  	
  800,000

  	
   

  	
  2.3

  	
  %

  
	
  Towne Place Suites Miami Lakes

  (The “Miami Lakes Property”)

  Miami, Florida

  	
   

  	
  $

  	
  800,000

  	
   

  	
  2.3

  	
  %

  
	
  Residence Inn by Marriott International Drive

  Orlando, Florida

  	
   

  	
  $

  	
  2,020,000

  	
   

  	
  5.8

  	
  %

  
	
  Holiday Inn Crystal Lake Crystal Lake,

  Illinois

  	
   

  	
  $

  	
  2,270,000

  	
   

  	
  6.5

  	
  %

  
	
  Holiday Inn Southwest Louisville (the

  “Louisville Southwest Property”) Louisville,

  Kentucky

  	
   

  	
  $

  	
  1,300,000

  	
   

  	
  3.7

  	
  %

  
	
  Residence Inn Ann Arbor Ann
  Arbor,

  Michigan

  	
   

  	
  $

  	
  1,175,000

  	
   

  	
  3.4

  	
  %

  
	
  Courtyard Flint

  Flint, Michigan (the “Flint Property”)

  	
   

  	
  $

  	
  1,076,000

  	
   

  	
  3.1

  	
  %

  
	
  Hampton Inn

  Minneapolis Minnetonka

  Minnetonka, Minnesota

  	
   

  	
  $

  	
  370,000

  	
   

  	
  1.1

  	
  %

  
	
  Hampton Inn Hattiesburg

  Hattiesburg, Mississippi

  	
   

  	
  $

  	
  1,240,000

  	
   

  	
  3.5

  	
  %

  



 

















 


	
  Property

  	
   

  	
  Initial
  Allocated

  Loan Amount

  	
   

  	
  Initial
  Allocated

  Loan Percentage

  	
   

  
	
  Hampton Inn Lincoln

  Airport I-80

  Lincoln, Nebraska

  	
   

  	
  $

  	
  883,000

  	
   

  	
  2.5

  	
  %

  
	
  Residence Inn Fishkill

  Fishkill, New York

  	
   

  	
  $

  	
  3,906,000

  	
   

  	
  11.2

  	
  %

  
	
  Hampton Inn Oklahoma City-Airport I-40

  Oklahoma City, Oklahoma

  	
   

  	
  $

  	
  1,139,000

  	
   

  	
  3.3

  	
  %

  
	
  Hampton Inn Tulsa

  Tulsa, Oklahoma

  	
   

  	
  $

  	
  800,000

  	
   

  	
  2.3

  	
  %

  
	
  Residence Inn Warwick

  Warwick, Rhode Island

  	
   

  	
  $

  	
  1,700,000

  	
   

  	
  4.9

  	
  %

  
	
  Ft. Worth Towne Place Suites-Southwest

  Ft. Worth, Texas

  	
   

  	
  $

  	
  938,000

  	
   

  	
  2.7

  	
  %

  
	
  Residence Inn - Ft. Worth River Plaza

  Ft. Worth, Texas

  	
   

  	
  $

  	
  1,950,000

  	
   

  	
  5.6

  	
  %

  
	
  Hampton Inn - Laredo

  Laredo, Texas

  	
   

  	
  $

  	
  1,820,000

  	
   

  	
  5.2

  	
  %

  
	
  Residence Inns Tyler

  Tyler, Texas

  	
   

  	
  $

  	
  1,103,000

  	
   

  	
  3.2

  	
  %

  



 

















 


SCHEDULE
B


 


Initial Property Manager and Franchisor


 


	
  Property

  	
   

  	
  Initial
  Property Manager

  	
   

  	
  Initial
  Franchisor

  	
   

  
	
  Hampton Inn Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  Promus Hotel, Inc.

  (“Promus”)

  	
   

  	
  Promus

  	
   

  
	
  Homewood Suites Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Hampton Inn Sedona

  Sedona, Arizona

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inn Sacramento/Cal Expo

  Sacramento, California

  	
   

  	
  Residence Inn by
  Marriott,

  Inc. (“Residence Inn”)

  	
   

  	
  N/A

  	
   

  
	
  Doubletree Hotel San Diego Del Mar

  San Diego, California

  	
   

  	
  DT Management, Inc.

  	
   

  	
  Double Tree Hotel

  Systems, Inc.

  	
   

  
	
  Hampton Inn

  Denver SW Lakewood

  Lakewood, Colorado

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inn

  Wilmington/Newark

  Wilmington, Delaware

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Hampton Inn Ft. Lauderdale-Cypress

  Creek

  Ft. Lauderdale, Florida

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Towne Place Suites

  Miami Airport West (the “Miami Airport

  West Property”)

  Miami, Florida(1)

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  Towne Place Suites

  Miami Lakes

  (the “Miami Lakes Property”)

  Miami, Florida(1)

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  Residence Inn by Marriott International

  Drive

  Orlando, Florida

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Holiday Inn Crystal Lake

  Crystal Lake, Illinois

  	
   

  	
  Interstate Management

  Company, LLC (“Interstate”)

  	
   

  	
  Holiday Hospitality

  Franchising, Inc.

  (“Holiday”)

  	
   

  



 












(1) With respect to the Miami Airport West Property and the Miami Lakes
Property, such Properties are leased to the Non-Affiliated Lessee which may or
may not have entered into management agreements and/or franchise agreements for
such Properties.


 

















 


	
  Property

  	
   

  	
  Initial
  Property Manager

  	
   

  	
  Initial
  Franchisor

  	
   

  
	
  Holiday Inn Southwest Louisville

  Louisville, Kentucky (“Louisville

  Property”)

  	
   

  	
  Interstate

  	
   

  	
  Holiday

  	
   

  
	
  Residence Inn Ann Arbor

  Ann Arbor, Michigan

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Courtyard Flint

  Flint, Michigan (the “Flint Property”)

  	
   

  	
  Flagstone/Interstate(2)

  	
   

  	
  Marriott

  International, Inc.

  	
   

  
	
  Hampton Inn Minneapolis
  Minnetonka

  Minnetonka, Minnesota

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Hampton Inn Hattiesburg

  Hattiesburg, Mississippi

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Hampton Inn Lincoln Airport I-80

  Lincoln, Nebraska

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inn Fishkill

  Fishkill, New York

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Hampton Inn Oklahoma City-Airport I-40

  Oklahoma City, Oklahoma

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Hampton Inn Tulsa

  Tulsa, Oklahoma

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inn Warwick

  Warwick, Rhode Island

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Ft. Worth Towne Place Suites-Southwest

  Ft. Worth, Texas

  	
   

  	
  Towne Place Management

  Corporation (“Towne Place”)

  	
   

  	
  N/A

  	
   

  
	
  Residence Inn - Ft. Worth River Plaza

  Ft. Worth, Texas

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Hampton Inn - Laredo

  Laredo, Texas

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inns Tyler

  Tyler, Texas

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  



 












(2) On the Closing Date the Initial Manager is Flagstone Hospitality
Management LLC, a Tennessee limited liability company (“Flagstone”).  Borrower anticipates entering into a new
Management Agreement in the exact same form as the ones with Interstate for the
other Interstate Properties in effect on the Closing Date with Interstate on or
before February 15, 2004.


 

















 


SCHEDULE I


 


COST BASIS OF PROPERTIES


 


	
   

  	
   

  	
  Property Name

  	
   

  	
  Brand

  	
   

  	
  Total

  Assigned

  Value (from

  Purch.

  Accounting)

  	
   

  	
  Land

  	
   

  	
  FF&E

  	
   

  	
  Automobiles

  	
   

  	
  Renovations

  (Building)

  	
   

  	
  Building

  	
   

  	
  Total

  Purchase

  Acctg NBV

  at 7/10/03

  	
   

  
	
  CMBS

  	
   

  	
  Flint

  	
   

  	
  Courtyard

  	
   

  	
  9,769,249

  	
   

  	
  963,479

  	
   

  	
  155,919

  	
   

  	
  4,397

  	
   

  	
  —

  	
   

  	
  8,645,454

  	
   

  	
  9,769,249

  	
   

  
	
  CMBS

  	
   

  	
  San Diego Del Mar

  	
   

  	
  Doubletree

  	
   

  	
  23,284,953

  	
   

  	
  1,896,074

  	
   

  	
  1,628,247

  	
   

  	
  —

  	
   

  	
  8,268

  	
   

  	
  19,752,364

  	
   

  	
  23,284,953

  	
   

  
	
  CMBS

  	
   

  	
  Phoenix Chandler

  	
   

  	
  Hampton Inn

  	
   

  	
  7,773,222

  	
   

  	
  737,860

  	
   

  	
  213,707

  	
   

  	
  —

  	
   

  	
  3,107

  	
   

  	
  6,818,548

  	
   

  	
  7,773,222

  	
   

  
	
  CMBS

  	
   

  	
  Sedona

  	
   

  	
  Hampton Inn

  	
   

  	
  6,028,695

  	
   

  	
  1,469,150

  	
   

  	
  152,093

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  4,407,451

  	
   

  	
  6,028,695

  	
   

  
	
  CMBS

  	
   

  	
  Denver SW Lakewood

  	
   

  	
  Hampton Inn

  	
   

  	
  11,273,212

  	
   

  	
  745,794

  	
   

  	
  471,465

  	
   

  	
  —

  	
   

  	
  600,356

  	
   

  	
  9,455,597

  	
   

  	
  11,273,212

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Lauderdale/Cypress

  	
   

  	
  Hampton Inn

  	
   

  	
  10,045,221

  	
   

  	
  931,111

  	
   

  	
  712,839

  	
   

  	
  12,627

  	
   

  	
  8,642

  	
   

  	
  8,380,002

  	
   

  	
  10,045,221

  	
   

  
	
  CMBS

  	
   

  	
  Minneapolis Minnetonka

  	
   

  	
  Hampton Inn

  	
   

  	
  9,872,521

  	
   

  	
  959,038

  	
   

  	
  274,303

  	
   

  	
  —

  	
   

  	
  698,277

  	
   

  	
  7,940,904

  	
   

  	
  9,872,521

  	
   

  
	
  CMBS

  	
   

  	
  Hattiesburg

  	
   

  	
  Hampton Inn

  	
   

  	
  11,259,326

  	
   

  	
  467,529

  	
   

  	
  559,715

  	
   

  	
  —

  	
   

  	
  8,152

  	
   

  	
  10,223,930

  	
   

  	
  11,259,326

  	
   

  
	
  CMBS

  	
   

  	
  Lincoln Airport I-80

  	
   

  	
  Hampton Inn

  	
   

  	
  8,407,611

  	
   

  	
  609,820

  	
   

  	
  190,586

  	
   

  	
  13,636

  	
   

  	
  698,320

  	
   

  	
  6,895,250

  	
   

  	
  8,407,611

  	
   

  
	
  CMBS

  	
   

  	
  Oklahoma City Airport

  	
   

  	
  Hampton Inn

  	
   

  	
  10,230,938

  	
   

  	
  847,150

  	
   

  	
  736,519

  	
   

  	
  13,845

  	
   

  	
  13,337

  	
   

  	
  8,620,088

  	
   

  	
  10,230,938

  	
   

  
	
  CMBS

  	
   

  	
  Tulsa

  	
   

  	
  Hampton Inn

  	
   

  	
  11,001,578

  	
   

  	
  589,738

  	
   

  	
  370,253

  	
   

  	
  —

  	
   

  	
  1,047,440

  	
   

  	
  8,994,147

  	
   

  	
  11,001,578

  	
   

  
	
  CMBS

  	
   

  	
  Laredo

  	
   

  	
  Hampton Inn

  	
   

  	
  9,300,920

  	
   

  	
  532,909

  	
   

  	
  354,727

  	
   

  	
  —

  	
   

  	
  7,439

  	
   

  	
  8,405,845

  	
   

  	
  9,300,920

  	
   

  
	
  CMBS

  	
   

  	
  Crystal Lake

  	
   

  	
  Holiday Inn

  	
   

  	
  19,784,530

  	
   

  	
  2,852,273

  	
   

  	
  1,727,477

  	
   

  	
  —

  	
   

  	
  (3,027

  	
  )

  	
  15,207,807

  	
   

  	
  19,784,530

  	
   

  
	
  CMBS

  	
   

  	
  Louisville Southwest

  	
   

  	
  Holiday Inn

  	
   

  	
  12,741,593

  	
   

  	
  881,392

  	
   

  	
  1,172,623

  	
   

  	
  11,866

  	
   

  	
  25,338

  	
   

  	
  10,650,374

  	
   

  	
  12,741,593

  	
   

  
	
  CMBS

  	
   

  	
  Phoenix Chandler

  	
   

  	
  Homewood Suites

  	
   

  	
  8,205,405

  	
   

  	
  905,563

  	
   

  	
  536,048

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  6,763,794

  	
   

  	
  8,205,405

  	
   

  
	
  CMBS

  	
   

  	
  Sacramento/Cal Expo

  	
   

  	
  Residence Inn

  	
   

  	
  18,481,558

  	
   

  	
  1,919,923

  	
   

  	
  1,617,702

  	
   

  	
  —

  	
   

  	
  1,201,158

  	
   

  	
  13,742,775

  	
   

  	
  18,481,558

  	
   

  
	
  CMBS

  	
   

  	
  Wilmington/Newark

  	
   

  	
  Residence Inn

  	
   

  	
  12,293,398

  	
   

  	
  —

  	
   

  	
  392,365

  	
   

  	
  13,481

  	
   

  	
  9,477

  	
   

  	
  11,878,075

  	
   

  	
  12,293,398

  	
   

  
	
  CMBS

  	
   

  	
  Orlando International Drive

  	
   

  	
  Residence Inn

  	
   

  	
  15,968,213

  	
   

  	
  1,434,506

  	
   

  	
  1,617,897

  	
   

  	
  —

  	
   

  	
  5,255

  	
   

  	
  12,910,555

  	
   

  	
  15,968,213

  	
   

  
	
  CMBS

  	
   

  	
  Ann Arbor

  	
   

  	
  Residence Inn

  	
   

  	
  10,974,675

  	
   

  	
  921,516

  	
   

  	
  868,776

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  9,184,383

  	
   

  	
  10,974,675

  	
   

  
	
  CMBS

  	
   

  	
  Fishkill

  	
   

  	
  Residence Inn

  	
   

  	
  15,215,711

  	
   

  	
  2,093,959

  	
   

  	
  477,646

  	
   

  	
  —

  	
   

  	
  1,670,850

  	
   

  	
  10,973,257

  	
   

  	
  15,215,711

  	
   

  
	
  CMBS

  	
   

  	
  Warwick

  	
   

  	
  Residence Inn

  	
   

  	
  10,147,626

  	
   

  	
  1,745,317

  	
   

  	
  543,968

  	
   

  	
  11,021

  	
   

  	
  3,032

  	
   

  	
  7,844,288

  	
   

  	
  10,147,626

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Worth River Plaza

  	
   

  	
  Residence Inn

  	
   

  	
  13,075,233

  	
   

  	
  1,928,207

  	
   

  	
  720,221

  	
   

  	
  —

  	
   

  	
  6,398

  	
   

  	
  10,420,407

  	
   

  	
  13,075,233

  	
   

  
	
  CMBS

  	
   

  	
  Tyler

  	
   

  	
  Residence Inn

  	
   

  	
  12,071,622

  	
   

  	
  788,783

  	
   

  	
  657,806

  	
   

  	
  —

  	
   

  	
  103,007

  	
   

  	
  10,522,027

  	
   

  	
  12,071,622

  	
   

  
	
  CMBS

  	
   

  	
  Miami Airport West

  	
   

  	
  TownePlace Suites

  	
   

  	
  8,518,695

  	
   

  	
  831,129

  	
   

  	
  380,010

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  7,307,556

  	
   

  	
  8,518,695

  	
   

  
	
  CMBS

  	
   

  	
  Miami Lakes

  	
   

  	
  TownePlace Suites

  	
   

  	
  8,470,964

  	
   

  	
  780,479

  	
   

  	
  374,080

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  7,316,405

  	
   

  	
  8,470,964

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Worth Southwest

  	
   

  	
  TownePlace Suites

  	
   

  	
  8,532,580

  	
   

  	
  835,181

  	
   

  	
  447,378

  	
   

  	
  —

  	
   

  	
  37,091

  	
   

  	
  7,212,930

  	
   

  	
  8,532,580

  	
   

  
	
   

  	
   

  	
  Total CMBS Properties

  	
   

  	
   

  	
   

  	
  302,729,251

  	
   

  	
  28,667,879

  	
   

  	
  17,354,370

  	
   

  	
  80,873

  	
   

  	
  6,151,917

  	
   

  	
  250,474,213

  	
   

  	
  302,729,251

  	
   

  



 


	
   

  	
   

  	
   

  	
   

  	
  Depreciation
  7/10/03 through 9/30/03

  	
   

  	
  Net Book
  Value as of 9/30/03

  	
   

  
	
   

  	
   

  	
  Property Name

  	
   

  	
  Land

  	
   

  	
  FF&E

  (Including

  Autos)

  	
   

  	
  Buildings

  (Including

  Renovations)

  	
   

  	
  Land

  	
   

  	
  FF&E
  (Including

  Autos)

  	
   

  	
  Buildings

  (Including

  Renovations)

  	
   

  	
  Total

  	
   

  
	
  CMBS

  	
   

  	
  Flint

  	
   

  	
  —

  	
   

  	
  (5,208

  	
  )

  	
  (49,149

  	
  )

  	
  963,479

  	
   

  	
  155,108

  	
   

  	
  8,596,305

  	
   

  	
  9,714,892

  	
   

  
	
  CMBS

  	
   

  	
  San Diego Del Mar

  	
   

  	
  —

  	
   

  	
  (52,894

  	
  )

  	
  (112,338

  	
  )

  	
  1,896,074

  	
   

  	
  1,575,353

  	
   

  	
  19,648,294

  	
   

  	
  23,119,721

  	
   

  
	
  CMBS

  	
   

  	
  Phoenix Chandler

  	
   

  	
  —

  	
   

  	
  (6,942

  	
  )

  	
  (38,781

  	
  )

  	
  737,860

  	
   

  	
  206,765

  	
   

  	
  6,782,875

  	
   

  	
  7,727,499

  	
   

  
	
  CMBS

  	
   

  	
  Sedona

  	
   

  	
  —

  	
   

  	
  (4,941

  	
  )

  	
  (25,056

  	
  )

  	
  1,469,150

  	
   

  	
  147,152

  	
   

  	
  4,382,395

  	
   

  	
  5,998,698

  	
   

  
	
  CMBS

  	
   

  	
  Denver SW Lakewood

  	
   

  	
  —

  	
   

  	
  (15,316

  	
  )

  	
  (57,167

  	
  )

  	
  745,794

  	
   

  	
  456,149

  	
   

  	
  9,998,786

  	
   

  	
  11,200,728

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Lauderdale/Cypress

  	
   

  	
  —

  	
   

  	
  (23,567

  	
  )

  	
  (47,689

  	
  )

  	
  931,111

  	
   

  	
  701,899

  	
   

  	
  8,340,955

  	
   

  	
  9,973,965

  	
   

  
	
  CMBS

  	
   

  	
  Minneapolis Minnetonka

  	
   

  	
  —

  	
   

  	
  (8,911

  	
  )

  	
  (49,113

  	
  )

  	
  959,038

  	
   

  	
  265,392

  	
   

  	
  8,590,068

  	
   

  	
  9,814,498

  	
   

  
	
  CMBS

  	
   

  	
  Hattiesburg

  	
   

  	
  —

  	
   

  	
  (18,183

  	
  )

  	
  (58,169

  	
  )

  	
  467,529

  	
   

  	
  541,532

  	
   

  	
  10,173,913

  	
   

  	
  11,182,975

  	
   

  
	
  CMBS

  	
   

  	
  Lincoln Airport I-80

  	
   

  	
  —

  	
   

  	
  (6,634

  	
  )

  	
  (43,169

  	
  )

  	
  609,820

  	
   

  	
  197,588

  	
   

  	
  7,550,401

  	
   

  	
  8,357,808

  	
   

  
	
  CMBS

  	
   

  	
  Oklahoma City Airport

  	
   

  	
  —

  	
   

  	
  (24,376

  	
  )

  	
  (49,080

  	
  )

  	
  847,150

  	
   

  	
  725,988

  	
   

  	
  8,584,344

  	
   

  	
  10,157,482

  	
   

  
	
  CMBS

  	
   

  	
  Tulsa

  	
   

  	
  —

  	
   

  	
  (12,028

  	
  )

  	
  (57,086

  	
  )

  	
  589,738

  	
   

  	
  358,225

  	
   

  	
  9,984,502

  	
   

  	
  10,932,465

  	
   

  
	
  CMBS

  	
   

  	
  Laredo

  	
   

  	
  —

  	
   

  	
  (11,523

  	
  )

  	
  (47,829

  	
  )

  	
  532,909

  	
   

  	
  343,204

  	
   

  	
  8,365,455

  	
   

  	
  9,241,568

  	
   

  
	
  CMBS

  	
   

  	
  Crystal Lake

  	
   

  	
  —

  	
   

  	
  (56,118

  	
  )

  	
  (86,438

  	
  )

  	
  2,852,273

  	
   

  	
  1,671,359

  	
   

  	
  15,118,342

  	
   

  	
  19,641,974

  	
   

  
	
  CMBS

  	
   

  	
  Louisville Southwest

  	
   

  	
  —

  	
   

  	
  (38,479

  	
  )

  	
  (60,691

  	
  )

  	
  881,392

  	
   

  	
  1,146,010

  	
   

  	
  10,615,021

  	
   

  	
  12,642,424

  	
   

  
	
  CMBS

  	
   

  	
  Phoenix Chandler

  	
   

  	
  —

  	
   

  	
  (17,414

  	
  )

  	
  (38,452

  	
  )

  	
  905,563

  	
   

  	
  518,634

  	
   

  	
  6,725,343

  	
   

  	
  8,149,540

  	
   

  
	
  CMBS

  	
   

  	
  Sacramento/Cal Expo

  	
   

  	
  —

  	
   

  	
  (52,552

  	
  )

  	
  (84,955

  	
  )

  	
  1,919,923

  	
   

  	
  1,565,150

  	
   

  	
  14,858,978

  	
   

  	
  18,344,051

  	
   

  
	
  CMBS

  	
   

  	
  Wilmington/Newark

  	
   

  	
  —

  	
   

  	
  (13,184

  	
  )

  	
  (67,580

  	
  )

  	
  —

  	
   

  	
  392,662

  	
   

  	
  11,819,972

  	
   

  	
  12,212,634

  	
   

  
	
  CMBS

  	
   

  	
  Orlando International Drive

  	
   

  	
  —

  	
   

  	
  (52,558

  	
  )

  	
  (73,425

  	
  )

  	
  1,434,506

  	
   

  	
  1,565,339

  	
   

  	
  12,842,385

  	
   

  	
  15,842,230

  	
   

  
	
  CMBS

  	
   

  	
  Ann Arbor

  	
   

  	
  —

  	
   

  	
  (28,222

  	
  )

  	
  (52,213

  	
  )

  	
  921,516

  	
   

  	
  840,554

  	
   

  	
  9,132,171

  	
   

  	
  10,894,240

  	
   

  
	
  CMBS

  	
   

  	
  Fishkill

  	
   

  	
  —

  	
   

  	
  (15,516

  	
  )

  	
  (71,881

  	
  )

  	
  2,093,959

  	
   

  	
  462,130

  	
   

  	
  12,572,226

  	
   

  	
  15,128,314

  	
   

  
	
  CMBS

  	
   

  	
  Warwick

  	
   

  	
  —

  	
   

  	
  (18,029

  	
  )

  	
  (44,611

  	
  )

  	
  1,745,317

  	
   

  	
  536,960

  	
   

  	
  7,802,708

  	
   

  	
  10,084,986

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Worth River Plaza

  	
   

  	
  —

  	
   

  	
  (23,397

  	
  )

  	
  (59,276

  	
  )

  	
  1,928,207

  	
   

  	
  696,824

  	
   

  	
  10,367,530

  	
   

  	
  12,992,561

  	
   

  
	
  CMBS

  	
   

  	
  Tyler

  	
   

  	
  —

  	
   

  	
  (21,369

  	
  )

  	
  (60,403

  	
  )

  	
  788,783

  	
   

  	
  636,437

  	
   

  	
  10,564,631

  	
   

  	
  11,989,851

  	
   

  
	
  CMBS

  	
   

  	
  Miami Airport West

  	
   

  	
  —

  	
   

  	
  (12,345

  	
  )

  	
  (41,543

  	
  )

  	
  831,129

  	
   

  	
  367,665

  	
   

  	
  7,266,013

  	
   

  	
  8,464,807

  	
   

  
	
  CMBS

  	
   

  	
  Miami Lakes

  	
   

  	
  —

  	
   

  	
  (12,152

  	
  )

  	
  (41,593

  	
  )

  	
  780,479

  	
   

  	
  361,928

  	
   

  	
  7,274,811

  	
   

  	
  8,417,218

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Worth Southwest

  	
   

  	
  —

  	
   

  	
  (14,533

  	
  )

  	
  (41,216

  	
  )

  	
  835,181

  	
   

  	
  432,845

  	
   

  	
  7,208,805

  	
   

  	
  8,476,831

  	
   

  
	
   

  	
   

  	
  Total CMBS Properties

  	
   

  	
  —

  	
   

  	
  (566,389

  	
  )

  	
  (1,458,902

  	
  )

  	
  28,667,879

  	
   

  	
  16,868,854

  	
   

  	
  255,167,228

  	
   

  	
  300,703,960