** **

**Exhibit 10.20**

 

**AMENDEDAND RESTATED LOAN AGREEMENT**

 

 

Dated as of December 4, 2003

 

 

Between

 

 

**ROSESPE 1, LP,**

as Borrower

 

 

and

 

 

**BANKOF AMERICA, N.A.,**

as Lender

 

 

 

----

 

**TABLEOF 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; TITLE INSURANCE; 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.                    | CONDEMNATION                                     |   |
| SECTION  4.16.                    | UTILITIES  AND PUBLIC ACCESS; PARKING            |   |
| SECTION  4.17.                    | SEPARATE  LOTS                                   |   |
| SECTION  4.18.                    | ASSESSMENTS                                      |   |
| SECTION  4.19.                    | INSURANCE                                        |   |
| SECTION  4.20.                    | USE  OF PROPERTY                                 |   |
| SECTION  4.21.                    | CERTIFICATE  OF OCCUPANCY; LICENSES              |   |
| SECTION  4.22.                    | FLOOD  ZONE                                      |   |
| SECTION  4.23.                    | PHYSICAL  CONDITION                              |   |
| SECTION  4.24.                    | BOUNDARIES                                       |   |
| SECTION  4.25.                    | LEASES  AND RENT ROLL                            |   |
| SECTION  4.26.                    | FILING  AND RECORDING TAXES                      |   |
| SECTION  4.27.                    | MANAGEMENT  AGREEMENT                            |   |
| SECTION  4.28.                    | ILLEGAL  ACTIVITY                                |   |
| SECTION  4.29.                    | CONSTRUCTION  EXPENSES                           |   |
| SECTION  4.30.                    | PERSONAL  PROPERTY                               |   |
| SECTION  4.31.                    | TAXES                                            |   |
| SECTION  4.32.                    | PERMITTED  ENCUMBRANCES                          |   |
| SECTION  4.33.                    | FEDERAL  RESERVE REGULATIONS                     |   |
| SECTION  4.34.                    | INVESTMENT  COMPANY ACT                          |   |
| SECTION  4.35.                    | RECIPROCAL  EASEMENT AGREEMENTS                  |   |
| SECTION  4.36.                    | NO  CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE |   |
| SECTION  4.37.                    | INTELLECTUAL  PROPERTY                           |   |
| SECTION  4.38.                    | SURVEY                                           |   |
| SECTION  4.39.                    | EMBARGOED  PERSON                                |   |
| SECTION  4.40.                    | PATRIOT  ACT                                     |   |
| SECTION  4.41.                    | FRANCHISE  AGREEMENTS.                           |   |
| SECTION  4.42.                    | GROUND  LEASE REPRESENTATIONS                    |   |
| SECTION  4.43.                    | 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                                      |   |

 

ii

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| SECTION  5.22.                                                | FRANCHISE  AGREEMENTS                         |   |
|---------------------------------------------------------------|-----------------------------------------------|--------|
| SECTION  5.23.                                                | GROUND  LEASE                                 |   |
| SECTION  5.24.                                                | INTEREST  RATE CAP AGREEMENT                  |   |
| SECTION  5.25.                                                | MANAGER  OF FLINT PROPERTY                    |   |
| SECTION  5.26.                                                | CONSOLIDATED  TANGIBLE NET WORTH              |   |
|                                                          |                                          |   |
| **ARTICLE  6 ENTITY COVENANTS**                               |                                          |
|                                                          |                                          |   |
| 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**                                  |                                          |
|                                                          |                                          |   |
| SECTION  9.1.                                                 | REQUIRED  REPAIRS                             |   |
| SECTION  9.2.                                                 | REPLACEMENTS                                  |   |
| SECTION  9.3.                                                 | INTENTIONALLY  OMITTED                        |   |
| SECTION  9.4.                                                 | REQUIRED  WORK                                |   |
| SECTION  9.5.                                                 | RELEASE  OF RESERVE FUNDS                     |   |
| SECTION  9.6.                                                 | TAX  AND INSURANCE RESERVE FUNDS              |   |
| SECTION  9.7.                                                 | EXCESS  CASH RESERVE                          |   |
| SECTION  9.8.                                                 | OPERATING  EXPENSES; EXTRAORDINARY EXPENSES   |   |
| SECTION  9.9.                                                 | RESERVE  FUNDS GENERALLY                      |   |
| SECTION 9.10.                                                 | GROUND RENT RESERVE FUNDS.                    |   |
| SECTION  9.11.                                                | LEASE  ENHANCEMENT FUNDS                      |   |
|                                                          |                                          |   |
| **ARTICLE  10 CASH MANAGEMENT**                               |                                          |
|                                                          |                                          |   |
| SECTION 10.1.                                                 | CASH MANAGEMENT AGREEMENT                     |   |
|                                                          |                                          |   |
| **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                               |   |

 

iii

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| **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  DELETED                                         |   |
|                               |                                                           |   |
| **ARTICLE  14 INDEMNIFICATIONS**   |                                                           |
|                               |                                                           |   |
| SECTION  14.1.                     | GENERAL  INDEMNIFICATION                                       |   |
| SECTION  14.2.                     | MORTGAGE  AND 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                                                        |   |
|                               |                                                           |   |
| **ARTICLE  17 FURTHER ASSURANCES** |                                                           |
|                               |                                                           |   |
| SECTION  17.1.                     | REPLACEMENT  DOCUMENTS                                         |   |
| SECTION  17.2.                     | RECORDING  OF MORTGAGE, ETC.                                   |   |
| 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                                        |   |
| SECTION  18.10.                    | GRADSKY  WAIVERS                                               |   |
|                               |                                                           |   |
| **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                                              |   |

 

iv

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| SECTION  20.11. | CROSS  COLLATERALIZATION   |   |
|-----------------|----------------------------|--------|
| SECTION  20.12. | TAX  DISCLOSURE            |   |
| SECTION  20.13. | MEZZANINE  LOAN AGREEMENTS |   |

 

v

----

 

**AMENDEDAND RESTATED LOAN AGREEMENT**

** **

THIS AMENDED AND RESTATEDLOAN AGREEMENT, dated as of December 4, 2003 (as amended, restated, replaced,supplemented or otherwise modified from time to time, this “**Agreement**”),between BANK OF AMERICA, N.A., a national banking association, having anaddress at Bank of America Corporate Center, 214 North Tryon Street, Charlotte,North Carolina 28255 (together with its successors and/or assigns, “**Lender**”)and ROSE SPE 1, LP, a Delaware limited partnership having an address at 450South Orange Avenue, Orlando, Florida 32801-3336 (together with its successorsand/or assigns, “**Borrower**”).

 

**RECITALS:**

** **

WHEREAS, Lender, in itscapacity as administrative agent for certain named lenders, including Banc ofAmerica Bridge, LLC (Lender and such named lenders, collectively “**Original Lenders**”)previously made a loan (the “**Bridge Loan**”) to RFS Partnership, L.P. andRFS Financing Partnership, L.P., collectively, as borrower (collectively, “**OriginalBorrowers”**), evidenced by, among other things, (a) a certain Note inthe maximum principal amount of $320,000,000.00 (as amended, modified, and ineffect from time to time, the “**Bridge Note**”) and (b) a certain CreditAgreement (as amended, modified and in effect from time to time, the “**CreditAgreement**”);

 

WHEREAS, the Bridge Loanwas secured by Original Borrowers’ interest in certain properties, including,but not limited to the Properties (as defined below);

 

WHEREAS, on even dateherewith Bridge Lender and Original Borrowers entered into that certain Amendedand Restated Renewal Promissory Note in the amount of $130,000,000 (as the samemay be amended, restated, replaced, supplemented or otherwise modified fromtime to time, the “**Note**”), which amended and restated theBridge Note in its entirety.

 

WHEREAS, (a) as evidencedby certain deeds of even date herewith, each Original Borrower transferred toBorrower all of its right, title and interest in and to each Property, subjectto the lien of the applicable Mortgage (as defined below), and (b) inconnection therewith as evidenced by, among other things, a certain Multi-StateLoan Assignment, Assumption and Modification Agreement, (the “**LoanModification Agreement**”) of even date herewith, each OriginalBorrower agreed to assign to Borrower and Borrower agreed to assume theobligations of Original Borrowers with respect to the Bridge Loan, the Amendedand Restated Loan, the Credit Agreement, the Mortgages and the other documentsevidencing the Bridge Loan (the Amended and Restated Note, the CreditAgreement, the Mortgages and all other documents evidencing the Bridge Loan,collectively, the “**Bridge Loan Documents**”);

 

WHEREAS, Original Lendersassigned all of their right, title and interest in and to the Bridge Loan, theAmended and Restated Note, the Credit Agreement, the Mortgages and the otherBridge Loan Documents to Lender; and

 

----

 

WHEREAS, Borrower andLender have agreed to amend and restate the terms of the Bridge Loan and theBridge Loan Documents pursuant to the terms set forth herein and in the otherLoan Documents (as defined below).

 

# **ARTICLE 1**DEFINITIONS; PRINCIPLES OF CONSTRUCTION

# ** **

Section 1.1.        DEFINITIONS

##  

For all purposes of thisAgreement, except as otherwise expressly required or unless the context clearlyindicates a contrary intent:

 

“**Acceptable Accountant**”shall mean a “Big Four” accounting firm or other independent certified publicaccountant acceptable to Lender.

 

“**Acceptable Counterparty**”shall mean any counterparty to the Rate Cap that has and shall maintain, untilthe 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 themeaning set forth in Section 6.1(c) hereof.

 

“**Additional Replacement**”shall have the meaning set forth in Section 9.5(g) hereof.

 

“**Additional Required Repair**”shall have the meaning set forth in Section 9.5(f) hereof.

 

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

 

“**Affiliated Lessee**”shall mean, individually or collectively, as the context may require, anyoperating lessee under an Operating Lease, which is an Affiliate of Borrowerand which qualifies as a special purpose entity as defined from time to time bythe Rating Agencies, provided that such operating lessee shall be selected inaccordance with the terms hereof.  As ofthe date hereof, the term Affiliated Lessee shall refer to CNL Rose SPE TenantCorp., a Delaware corporation, the current operating lessee of each Propertyother 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 whichis an Affiliate of Borrower or Borrower Principal.

 

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

 

2

----

 

“**Agent**” shall mean Bankof America, N.A. or any successor Eligible Institution acting as Agent underthe Cash Management Agreement.

 

“**Allocated Loan Amount**”shall mean a certain portion of the original principal amount of the Noteallocated, solely for the purposes of performing certain calculationshereunder, to each Property, as the same shall be reduced by (a) ratableapplication of payments of principal made under and in accordance with theterms of this Agreement and the Note, determined based on the Allocated LoanPercentage and/or (b) deemed reductions attributable to any partial prepayment madein connection with a release of a Property pursuant to the provisions ofSection 2.4(c)(ii) hereof or in connection with a permitted partialprepayment occurring in connection with a Casualty or Condemnation.  The Allocated Loan Amounts shall at all timesequal the then outstanding principal balance of the Note.  The Initial Allocated Loan Amounts are setforth on Schedule A hereto.

 

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

 

“**ALTA**” shall meanAmerican Land Title Association, or any successor thereto.

 

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

 

“**Annex**” shall have themeaning set forth in Section 4.40 hereof.

 

“**Annual Budget**” shallmean, individually or collectively, as the context may require, the operatingbudgets, including all planned capital expenditures, for each Property approvedby Lender in accordance with Section 5.11(a)(iv) hereof for the applicablecalendar year or other period.

 

“**Assignment of Management Agreement**”shall mean, individually or collectively, as the context may require, eachAssignment and Subordination of Management Agreement and Consent of Managerand/or other similar agreement (including, without limitation, anysubordination, non-disturbance and attornment agreement) executed in connectionwith each Management Agreement, by and among Lender, Borrower, the applicableOperating Lessee and the applicable Manager, as the same may be amended,restated, replaced, supplemented or otherwise modified from time to time.

 

“**Award**” shall mean anycompensation paid by any Governmental Authority in connection with aCondemnation in respect of all or any part of any Property.

 

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

 

**“Borrower Principal Obligations”**shallhave the meaning set forth in Section 18.10(c) hereof.

 

3

----

 

“**Breakage Costs**” shallhave the meaning set forth in Section 2.3(f)(v) herein.

 

“**Bridge Loan**” shallhave the meaning set forth in the Recitals hereto.

 

“**Business Day**” shallmean any day other than (i) a Saturday or a Sunday or (ii) a day on whichfederally insured depository institutions in the States of New York or NorthCarolina or the state in which the offices of the Lender’s servicer and thetrustee in the Securitization are located are authorized or obligated by law,governmental decree or executive order to be closed, except that when used withrespect to the determination of LIBOR, “Business Day” shall be a day on whichcommercial banks are open for international business (including dealings inU.S. Dollar deposits) in London, England.

 

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

 

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

 

“**Casualty**” shall havethe meaning set forth in Section 8.2.

 

“**Closing Date**” shallmean the date of the funding of the Loan.

 

“**Collateral Assignment of InterestRate Cap**” shall mean that certain Collateral Assignment ofInterest Rate Cap Agreement, dated as of the date hereof, executed by Borrowerin connection with the Loan for the benefit of Lender, as the same may beamended, restated, replaced, supplemented or otherwise modified from time totime.

 

“**Condemnation**” shallmean a temporary or permanent taking by any Governmental Authority as theresult, in lieu or in anticipation, of the exercise of the right ofcondemnation or eminent domain, of all or any part of any Property, or anyinterest therein or right accruing thereto, including any right of accessthereto 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**” shallhave the meaning set forth in Section 2.3(f)(i).

 

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

 

“**Control**” shall havethe meaning set forth in Section 7.1 hereof.

 

“**Creditors Rights Laws**”shall mean with respect to any Person any existing or future law of anyjurisdiction, domestic or foreign, relating to bankruptcy, insolvency,reorganization,

 

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conservatorship, arrangement, adjustment, winding-up,liquidation, dissolution, composition or other relief with respect to its debtsor debtors.

 

“**Debt**” shall mean theoutstanding principal amount set forth in, and evidenced by, this Agreement andthe Note together with all interest accrued and unpaid thereon and all othersums due to Lender in respect of the Loan under the Note, this Agreement, theMortgages or any other Loan Document.

 

“**Debt Service**” shallmean, with respect to any particular period of time, scheduled principal and/orinterest payments under the Note.

 

“**Debt Service Coverage Ratio**”shall mean, as of any date of determination, for the immediately precedingtwelve (12) calendar month period, the ratio, as determined by Lender, of (a)Net Operating Income to (b) the aggregate amount of Debt Service and MezzanineDebt Service which would be due for the same period based on the principalamount of the Loan and the Mezzanine Loan outstanding as of the date of suchdetermination and calculated at a mortgage constant equal to (i) ten percent(10%) for purposes of determining if an Excess Cash Flow Sweep Period hasoccurred and/or remains in effect and (ii) for all other purposes ten and one-quarterpercent (10.25%).

 

“**Default**” shall meanthe 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 ofDefault.

 

“**Default Rate**” shallmean, with respect to the Loan, a rate per annum equal to the lesser of (a) themaximum rate permitted by applicable law, or (b) four percent (4%) above theNote Rate.

 

“**Determination Date**”shall mean (a) with respect to any Interest Period prior to the Interest Periodwithin which the Securitization Closing Date occurs, two (2) Business Daysprior to the start of the applicable Interest Period; (b) with respect to theInterest Period within which the Securitization Closing Date occurs, (i) forthat portion of such Interest Period which ends on the day prior to theSecuritization Closing Date, the date that is two (2) Business Days prior tothe start of such Interest Period, and (ii) for the remaining portion of suchInterest Period which commences on the Securitization Closing Date, the datethat 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.

 

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

 

“**Doubletree Replacement ReserveAccount**” shall have the meaning set forth in Section 9.2(b)hereof.

 

“**Eligible Account**”shall mean a separate and identifiable account from all other funds held by theholding institution that is either (a) an account or accounts maintained with afederal or state chartered depository institution or trust company whichcomplies with the definition of

 

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Eligible Institution or (b) a segregated trust accountor accounts maintained with a federal or state chartered depository institutionor trust company acting in its fiduciary capacity which, in the case of a statechartered depository institution or trust company, is subject to regulationssubstantially similar to 12 C.F.R. §9.10(b), having in either case a combinedcapital and surplus of at least $50,000,000 and subject to supervision orexamination 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 companyinsured by the Federal Deposit Insurance Corporation, the short term unsecureddebt obligations or commercial paper of which are rated at least “A-1+” byS&P, “P-1” by Moody’s and “F-1+” by Fitch in the case of accounts in whichfunds are held for thirty (30) days or less (or, in the case of accounts inwhich funds are held for more than thirty (30) days, the long term unsecureddebt obligations of which are rated at least “AA” by Fitch and S&P and“Aa2” by Moody’s).

 

“**Embargoed Person**”shall the meaning set forth in Section 4.39.

 

“**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 theEmployee Retirement Income Security Act of 1974, as amended from time to timeand any successor statutes thereto and applicable regulations issued pursuantthereto in temporary or final form.

 

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

 

“**Excess Cash**” shallmean an amount equal to all funds remaining in the Cash Management Account oneach Payment Date following the disbursements and application of funds pursuantto the terms of the Cash Management Agreement.

 

**“Excess Cash Flow Sweep Period**” shallmean the period commencing on the date upon which (i) an Event of Defaultoccurs or (ii) at any time the Debt Service Coverage Ratio (based on a ten(10.00%) mortgage constant, as detailed in the definition of the term DebtService Coverage Ratio) is less than or equal to 1.10 to 1.00, and ending onthe date all sums are permitted to be released from the Excess Cash FlowReserve Account pursuant to Section 9.7 hereof.

 

“**Excess Cash Reserve Account**”shall have the meaning set forth in Section 9.7 hereof.

 

“**Excess Cash Reserve Funds**”shall have the meaning set forth in Section 9.7 hereof.

 

“**Exchange Act**” shallmean the Securities and Exchange Act of 1934, as amended.

 

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

 

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

 

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

 

“**Extraordinary Expense**”shall mean an operating expense or capital expenditure with respect to anyProperty that (i) is not set forth on the Annual Budget and (ii) is not subjectto payment by withdrawals from the Replacement Reserve Account.  If Borrower requests the disbursement of anyExtraordinary Expense, Borrower shall deliver promptly to Lender with suchrequest a reasonably detailed explanation of such proposed ExtraordinaryExpense for the approval of Lender.

 

“**Extraordinary Expense Reserve Account**”shall have the meaning set forth in Section 9.8(b) hereof.

 

“**Extraordinary Expense Reserve Funds**”shall have the meaning set forth in Section 9.8(b) hereof.

 

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

 

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

 

“**Fitch**” shall meanFitch, Inc.

 

“**Flagstone**” shall havethe meaning set forth in Schedule B hereof.

 

“**Flint Property**” shallhave the meaning set forth in Schedule B hereof.

 

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

 

“**Franchise Agreement**”shall mean, individually or collectively, as the context may require, eachfranchise or similar agreement entered into by and between the applicableOperating Lessee and Franchisor pursuant to which the Operating Lessee ispermitted to operate the applicable Property under the “flag” or other tradename that is the subject thereof, as the same may be amended, restated,replaced, supplemented or otherwise modified in accordance with the termshereof; provided that, as long as the Non-Affiliated Lessee leases the MiamiLakes Property or the Miami Airport West Property, as to each such Property,the term “Franchise Agreement” shall exclude any franchise or similar agreemententered into by such Operating Lessee.

 

**“Franchisor”** shall mean,individually or collectively, as the context may require, each franchisor undera Franchise Agreement.  As of the datehereof, each Franchisor of each Property is set forth on Schedule B attachedhereto.  No replacement or substituteFranchisor shall be selected, approved or consented to by Borrower orAffiliated Lessee other than in accordance with the terms hereof.

 

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“**GAAP**” shall meangenerally accepted accounting principles in the United States of America as ofthe date of the applicable financial report.

 

“**Governmental Authority**”shall mean any court, board, agency, department, commission, office or otherauthority of any nature whatsoever for any governmental unit (federal, state,county, municipal, city, town, special district or otherwise) whether now orhereafter 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, theterms of which were amended and evidenced of record by that certain Memorandumand Amendment to Ground Lease Agreement dated as of June 20, 1988 and recordedin Book 730, Page 289 of the Office of the Recorder of Deeds for new CastleCounty, Delaware, between Commonwealth Trust Company, trustee for the ChopinTrust and RFP Group, Inc., as assigned under Assignment of Lease from RFPGroup, Inc. to RFS Partnership, L.P. dated October 14, 1994 and recorded inDeed Book 1824, Page 196 and further assigned by that certain assignment by RFSPartnership, L.P. to Borrower, and as amended by that certain Ground LeaseEstoppel and Agreement by Northtowne, Inc., as successor trustee for ChopinTrust, and Borrower and agreed and consented to by the National Life InsuranceCompany of Vermont all with respect to the “Wilmington Newark Property” (asdefined on Schedule A) (such Ground Lease, the “**Wilmington Ground Lease**”) and(b) Lease between Shively Masonic Lodge No. 951, F. & A.M. by and throughits 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, Page873 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 Leasedated November 27, 1984 and recorded in Deed Book 5463, page 861 in theaforesaid 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 085in the same clerk’s office and which was further assigned by RFS Partnership,L.P. to Borrower, under Assignment and Assumption of Ground Lease dated as ofand recorded promptly following the date hereof, all with respect to the“Louisville Southwest Property” (as defined on Schedule A) (such Ground Lease,the “**LouisvilleSouthwest Ground Lease”)**.

 

“**Ground Rent**” means allamounts payable to the landlords under each Ground Lease.

 

“**Ground Rent Monthly Deposit”**shall have the meaning set forth in Section 9.10 hereof.

 

“**Ground Rent Reserve Funds**”shall have the meaning set forth in Section 9.10 hereof.

 

“**Ground Rent Reserve Account**”shall have the meaning set forth in Section 9.10 hereof.

 

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

 

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“**Hilton**” shall mean,individually or collectively, as the context shall require, Promus Hotels,Inc., and with respect to the “San Diego Del Mar Property”, (as defined inSchedule A), DT Management, Inc.

 

“**Hilton Managed Properties**”shall mean as each Property managed by Hilton pursuant to a ManagementAgreement in effect as of the Closing Date and approved by Lender.

 

“**Hilton Replacement Reserve Agreement**”shall have the meaning set forth in Section 9.2(b) hereof.

 

“**Improvements**” shallhave the meaning set forth in the granting clause of each Mortgage.

 

“**Indemnified Parties**”shall mean (a) Lender, (b) any prior owner or holder of the Loan orParticipations 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 partialinterest in the Loan for the benefit of any Investor or other third party, (f)any receiver  or other fiduciaryappointed in a foreclosure or other Creditors Rights Laws proceeding, (g) anyofficers, directors, shareholders, partners, members, employees, agents,servants, representatives, contractors, subcontractors, Affiliates orsubsidiaries of any and all of the foregoing, and (h) the heirs, legalrepresentatives, successors and assigns of any and all of the foregoing(including, without limitation, any successors by merger, consolidation oracquisition of all or a substantial portion of the Indemnified Parties’ assetsand business), in all cases whether during the term of the Loan or as part ofor following a foreclosure of any or all of the Mortgages.

 

**“Independent Director”**shall havethe meaning set forth in Section 6.4.

 

“**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 assetsthat are considered to be intangible assets under GAAP, including customerlists, goodwill, computer software, copyrights, trade names, trademarks,patents, franchises, licenses, unamortized deferred charges, unamortized debtdiscount, and capitalized research and development costs.

 

“**Intercreditor Agreement**”shall mean the Intercreditor Agreement, to be dated as of the date of the loanagreement evidencing the Mezzanine Loan, by and between Lender and MezzanineLender.

 

“**Interest Period**” shallmean (a) with respect to the initial period for the accrual of interest dueunder this Agreement, the Interim Interest Period, and (b) with respect to theFirst Payment Date and each Payment Date thereafter, the period from andincluding the Selected Day immediately preceding the applicable Payment Datethrough but excluding the Selected Day next occurring after the applicablePayment Date.  Notwithstanding theforegoing clause (b), if the Lender so elects at any time, the “InterestPeriod” shall be the calendar month preceding each Payment Date.

 

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

 

“**Internal Revenue Code**”shall mean the Internal Revenue Code of 1986, as amended, as it may be furtheramended from time to time, and any successor statutes thereto, and applicableU.S. Department of Treasury regulations issued pursuant thereto in temporary orfinal form.

 

“**Interstate**” shall meanInterstate Management Company, L.L.C.

 

“**Interstate Managed Properties**”shall mean each Property managed by Interstate pursuant to a ManagementAgreement in effect as of the Closing Date and approved by Lender and shallinclude the Flint Property regardless of whether it is managed by Interstate orFlagstone.

 

“**Interstate Replacement ReserveAccount**” shall have the meaning set forth in Section 9.2(b)hereof.

 

“**Investor**” shall havethe meaning set forth in Section 13.3 hereof.

 

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

 

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

 

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

 

“**Lease Enhancement Account**”shall have the meaning set forth in Section 9.11 hereof.

 

“**Lease Enhancement Funds**”shall have the meaning set forth in Section 9.11 hereof.

 

“**Legal Requirements**”shall mean all statutes, laws, rules, orders, regulations, ordinances,judgments, decrees and injunctions of Governmental Authorities affecting anyProperty or any part thereof, or the construction, use, alteration or operationthereof, 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, eitherof record or known to Borrower, at any time in force affecting any Property orany part thereof, including, without limitation, any which may (a) requirerepairs, modifications or alterations in or to any Property or any partthereof, or (b) in any way materially limit the use and enjoyment thereof forhotel and related uses.

 

“**Letter of Credit**”  shall mean an irrevocable, unconditional,transferable, clean sight draft letter of credit acceptable to Lender and theRating Agencies (either an evergreen letter of credit or one which does notexpire until at least (a) thirty (30) Business Days after the Maturity Date, asthe same may be extended or (b) such other applicable date in the event of aLetter of Credit delivered pursuant to the provisions of Section 5.21,Section 9.6, Section 9.10 or Section 9.11 

 

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hereof) in favor of Lender and entitling Lender todraw thereon in New York, New York issued by a domestic Eligible Institution orthe U.S. agency or branch of a foreign Eligible Institution.  If at any time the bank issuing the Letterof Credit shall cease to be an Eligible Institution, Lender shall have the rightto immediately draw down the Letter of Credit in full and apply the proceedsthereof in accordance with the terms hereof.

 

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

 

(a)           the rate for deposits in U.S.Dollars, for a period equal to one month, which appears on the Telerate Page3750 as of 11:00 a.m., London time, on the related Determination Date;provided, however, if Telerate is unavailable, the rate shall be as specifiedon Reuters Screen LIBOR Page or, more than one rate is specified on ReutersScreen LIBOR Page, the LIBOR Rate shall be the arithmetic mean of allrates.  Lender shall determine the LIBORRate for each Interest Period and Selected Day and the determination of theLIBOR Rate by Lender shall be binding upon Borrower absent manifest error, by

 

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

 

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

 

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

 

“**LIBOR Margin**” shallmean 1.89%.

 

“**LIBOR Rate**” shall meanthe sum of (i) LIBOR plus (ii) the LIBOR Margin.

 

“**Lien**” shall mean anymortgage, deed of trust, lien, pledge, hypothecation, assignment, securityinterest, or any other encumbrance, charge or transfer of, on or affectingBorrower, 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 theforegoing, the filing of any financing statement, and mechanic’s, materialmen’sand other similar liens and encumbrances.

 

“**LLC Agreement**” shallhave the meaning set forth in Section 6.1(c) hereof.

 

“**Loan**” shall mean theloan made by Lender to Borrower pursuant to this Agreement.

 

“**Loan Documents**” shallmean, collectively, this Agreement, the Note, the Mortgages, each Assignment ofManagement Agreement, the Cash Management Agreement, the Collateral Assignmentof Interest Rate Cap, each Subordination, Non-Disturbance and AttornmentAgreement, each Subordination, Attornment and Security Agreement and any andall other documents, agreements and certificates executed and/or delivered inconnection with the Loan,

 

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

 

“**Lockout Period**” shallmean the period commencing on the date hereof through and including the PaymentDate occurring in June, 2005.

 

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

 

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

 

“**Louisville Property**”has the meaning set forth on Schedule B attached hereto.

 

“**Major Lease**” shall meanas to any Property (i) any Lease which, individually or when aggregated withall 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 NetOperating Income, or (B) demises 5,000 square feet or more of such Property’sgross leasable area, (ii) any Lease which contains any option, offer, right offirst refusal or other similar entitlement to acquire all or any portion of anyProperty, or (iii) any instrument guaranteeing or providing credit support forany Lease meeting the requirements of (i) or (ii) above.  Without limiting any of the foregoing, eachOperating Lease shall be considered a Major Lease for all purposes hereunder.

 

“**Management Agreement**”shall mean, individually or collectively, as the context may require, eachmanagement agreement entered into by and between the Operating Lessee andManager, in form and substance reasonably acceptable to Lender, pursuant towhich each Manager is to provide management and other services with respect tothe 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 LakesProperty or the Miami Airport West Property, as to each such Property, the term“Management Agreement” shall exclude any management agreement entered into bysuch Operating Lessee.

 

“**Manager**” shall mean,individually or collectively, as the context may require, each manager of aProperty under the terms of a Management Agreement.  As of the date hereof, each Manager of each Property is set forthon Schedule B attached hereto.  Noreplacement or substitute Manager shall be selected other than in accordancewith the terms hereof.

 

“**Manager Replacement Reserve Account**”shall have the meaning set forth in Section 9.2(b).

 

“**Manager Replacement Reserve MonthlyDeposit**” shall have the meaning set forth inSection 9.2(b).

 

“**Marriott**” shall mean,individually or collectively, as the context shall require, Residence Inn ByMarriott, Inc. and Towneplace Management Corporation.

 

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“**Marriott Managed Property**”shall mean each Property managed by Marriott pursuant to a Management Agreementin effect as of the Closing Date and approved by Lender.

 

“**Marriott Management Agreement**”shall mean each Management Agreement in effect as of the Closing Date betweenAffiliated Lessee and Marriott, as amended by the Marriott Pooling Agreement,as the same may be amended, restated, replaced, supplemented or otherwisemodified in accordance with the terms hereof.

 

“**Marriott Pooling Agreement**”shall mean that certain Pooling Agreement dated as of October 10, 2003 by andamong Residence Inn By Marriott, Inc., Towneplace Management Corporation, RFSPartnership, L.P., RFS Financing Partnership, L.P. and CNL Rose SPE TenantCorp. with respect to the Marriott Managed Properties, the interests of RFSPartnership, L.P. and RFS Financing Partnership, L.P. in which have beenassigned to Borrower as of the date hereof, as the same may be amended,restated, replaced, supplemented or otherwise modified in accordance with theterms hereof.

 

“**Marriott Replacement Reserve Account**”shall have the meaning set forth in Section 9.2(b) hereof.

 

“**Maturity Date**” shallmean the Payment Date occurring in December, 2006, as such date may be extendedpursuant to Section 2.3(b) hereof.

 

“**Maximum Legal Rate**”shall mean the maximum nonusurious interest rate, if any, that at any time orfrom time to time may be contracted for, taken, reserved, charged or receivedon the indebtedness evidenced by the Note and as provided for herein or theother Loan Documents, under the laws of such state or states whose laws areheld by any court of competent jurisdiction to govern the interest rateprovisions of the Loan.

 

“**Member**” shall have themeaning set forth in Section 6.1(c) hereof.

 

“**Mezzanine Debt Service**”shall mean, with respect to any particular period of time, scheduled principaland/or interest payments under the Mezzanine Loan.

 

“**Mezzanine Borrower**”shall mean Rose Mezzanine SPE 1, LP, a Delaware limited partnership.

 

“**Mezzanine Lender**”shall mean the entity making the Mezzanine Loan.

 

“**Mezzanine Loan**” shallmean that certain mezzanine loan in the original principal amount of$35,000,000.00 to Rose Mezzanine SPE, LP, the limited partner of Borrower andsole member of Rose SPE 1 GP, LLC, the general partner of Borrower.

 

“**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.

 

“**Moody’s**” shall meanMoody’s Investor Services, Inc.

 

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

 

“**Mortgage**” shall mean,collectively, each first priority mortgage/deed of trust/deed to secure debtand security agreement encumbering the applicable Property(ies), originallyexecuted and delivered by the applicable Original Borrowers to the OriginalLenders as security for the Bridge Loan and (a) assigned by (i) the OriginalLenders to Lender and (ii) the applicable Original Borrower to Borrowerpursuant to the Loan Modification Agreement and (b) further modified by theLoan Modification Agreement and/or certain amendments of even date herewith, asthe same may be further amended, restated, replaced, supplemented or otherwisemodified from time to time.  “**Mortgage**”means any of the Mortgages.

 

“**Net Operating Income**”shall mean, with respect to any period of time, the amount obtained bysubtracting Operating Expenses from Operating Income, as such amount may beadjusted by Lender in its good faith discretion based on Lender’s currentunderwriting standards and any underwriting standards then in use by any of theRating Agencies, including without limitation, adjustments for vacancyallowance.

 

“**Net Proceeds**” shallhave 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 lesseeunder an Operating Lease, which is not an Affiliate of Borrower, provided thatsuch operating lessee shall be selected in accordance with the termshereof.  As of the date hereof, the termNon-Affiliated Lessee shall refer to Landcom Hospitality Management, Inc., inits capacity as the lessee of (a) the Miami Lakes Property and (b) the MiamiAirport West Property.

 

“**Note**” shall have themeaning set forth in the Recitals hereto.

 

“**Note Rate**” shall mean(a) with respect to the Interim Interest Period, an interest rate per annumequal to 3.060%; and (b) with respect to each Interest Period thereafter,through and including the Interest Period in which the Maturity Date orExtended Maturity Date, as applicable, shall occur, an interest rate per annumequal to (i) the LIBOR Rate (in all cases where clause (ii) below does notapply), or (ii) the Static LIBOR Rate, to the extent provided in accordancewith the provisions of Section 2.2(b).

 

“**OFAC**” shall have themeaning set forth in Section 4.40 hereof.

 

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

 

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

 

“**Operating Expenses**”shall mean, with respect to any period of time, the total of all expensesactually paid or payable, computed in accordance with GAAP, of whatever kindrelating to the operation, maintenance and management of each Property,including without limitation, utilities, ordinary repairs and maintenance,Insurance Premiums, Ground Rent, license and franchise fees, Taxes and OtherCharges, advertising expenses, payroll and related taxes, computer processingcharges, management fees equal to the greater of four percent (4%) of theOperating Income of each Property and the management fees actually paid undereach Management Agreement, operational equipment or other lease payments asapproved 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 toeach Property, without duplication of any other item identified above, allpayments required to be made pursuant to any Franchise Agreement and/orManagement Agreement, *but specifically excluding*depreciationand amortization, income taxes, Debt Service, any incentive fees due under theManagement Agreement, any item of expense that in accordance with GAAP shouldbe capitalized but only to the extent the same would qualify for funding fromthe Reserve Accounts, any item of expense that would otherwise be covered bythe provisions hereof but which is paid by any Tenant (other than any AffiliatedLessee) under such Tenant’s Lease or other agreement, and deposits into theReserve Accounts.

 

“**Operating Expense Reserve Account**”shall have the meaning set forth in Section 9.8 hereof.

 

“**Operating Expense Reserve Funds**”shall have the meaning set forth in Section 9.8 hereof.

 

“**Operating Income**”shall mean, with respect to any period of time, all income, computed inaccordance with GAAP, derived from the ownership and operation of  each Property from whatever source, *including*,but not limited to, Rents, utility charges, escalations, forfeited securitydeposits, 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 beaccounted for by Borrower to any Governmental Authority, refunds anduncollectible accounts, sales of furniture, fixtures and equipment, interestincome from any source other than the escrow accounts, Reserve Accounts or otheraccounts required pursuant to the Loan Documents, Insurance Proceeds (otherthan business interruption or other loss of income insurance), Awards,percentage rents, unforfeited security deposits, utility and other similardeposits, income from tenants not paying rent, income from tenants inbankruptcy, non-recurring or extraordinary income, including, withoutlimitation lease termination payments, and any disbursements to Borrower fromthe Reserve Funds.

 

“**Operating Lease**” shallmean, individually or collectively, as the context may require, the operatinglease or similar agreement entered into by and between Borrower and theapplicable Operating Lessee, which governs the operation of one of more of theProperties as the same may be amended, restated, replaced, supplemented ormodified from time to time, in accordance with the terms hereof.

 

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“**Operating Lessee**”shall mean, individually or collectively, as the context may require,Affiliated Lessee and Non-Affiliated Lessee, together with any substitutes orreplacements determined in accordance with the terms hereof.

 

“**Other Charges**” shallmean all ground rents, maintenance charges, impositions other than Taxes, andany other charges, including, without limitation, vault charges and licensefees 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 partthereof.

 

**“Other Replacement Reserve Account**”shall have the meaning set forth in Section 9.2(b) hereof.

 

“**Other Replacement Reserve MonthlyDeposit**” shall have the meaning set forth inSection 9.2(b).

 

“**Participations**” shallhave 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 inaccordance with GAAP.

 

“**Patriot Act**” shallhave the meaning set forth in Section 4.40 hereof.

 

“**Payment Date**” shallmean 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 theLoan Documents, (b) all Liens, encumbrances and other matters disclosed in theTitle Insurance Policy, (c) Liens, if any, for Taxes imposed by anyGovernmental Authority not yet due or delinquent, (d) such other title andsurvey exceptions as Lender has approved or may approve in writing in Lender’sreasonable discretion, and (e) such other easements reasonably created byBorrower in the ordinary course of business which do not have (and are notanticipated to have) a material adverse affect on the value, use, operation orenjoyment of the applicable Property as a hotel of a similar type as the hotelsituated on such Property as of the Closing Date or on the ability of Borrowerto perform its obligations (including its payment obligations under thisAgreement, the Note and the other Loan Documents).

 

“**Permitted Investments**”shall mean to the extent available from Lender or Lender’s servicer fordeposits in the Reserve Accounts, any one or more of the following obligationsor securities acquired at a purchase price of not greater than par, includingthose issued by a servicer of the Loan, the trustee under any securitization orany of their respective Affiliates, payable on demand or having a maturity datenot later than the Business Day immediately prior to the date on which thefunds used to acquire such investment are required to be used under this Agreementand meeting one of the appropriate standards set forth below:

 

(a)           obligations of, or obligations fullyguaranteed as to payment of principal and interest by, the United States or anyagency or instrumentality thereof provided such obligations are backed by thefull faith and credit of the United States of America, including, without

 

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limitation, obligations of: the U.S. Treasury (alldirect or fully guaranteed obligations), the Farmers Home Administration(certificates of beneficial ownership), the General Services Administration(participation certificates), the U.S. Maritime Administration (guaranteedTitle XI financing), the Small Business Administration (guaranteedparticipation certificates and guaranteed pool certificates), the U.S.Department of Housing and Urban Development (local authority bonds) and theWashington Metropolitan Area Transit Authority (guaranteed transit bonds);provided, however, that the investments described in this clause must (i) havea predetermined fixed dollar of principal due at maturity that cannot vary orchange, (ii) be rated “AAA” or the equivalent by each of the Rating Agencies,(iii) if rated by S&P, must not have an “r” highlighter affixed to theirrating, (iv) if such investments have a variable rate of interest, suchinterest rate must be tied to a single interest rate index plus a fixed spread(if any) and must move proportionately with that index, and (v) suchinvestments must not be subject to liquidation prior to their maturity;

 

(b)           Federal Housing Administrationdebentures;

 

(c)           obligations of the following UnitedStates government sponsored agencies: Federal Home Loan Mortgage Corp. (debtobligations), the Farm Credit System (consolidated systemwide bonds and notes),the Federal Home Loan Banks (consolidated debt obligations), the FederalNational Mortgage Association (debt obligations), the Financing Corp. (debtobligations), and the Resolution Funding Corp. (debt obligations); *provided,however*, that the investments described in this clause must (i) havea predetermined fixed dollar of principal due at maturity that cannot vary orchange, (ii) if rated by S&P, must not have an “r” highlighter affixed totheir rating, (iii) if such investments have a variable rate of interest, suchinterest rate must be tied to a single interest rate index plus a fixed spread(if any) and must move proportionately with that index, and (iv) suchinvestments must not be subject to liquidation prior to their maturity;

 

(d)           federal funds, unsecured certificatesof deposit, time deposits, bankers’ acceptances and repurchase agreements withmaturities of not more than 365 days of any bank, the short term obligations ofwhich at all times are rated in the highest short term rating category by eachRating Agency (or, if not rated by all Rating Agencies, rated by at least oneRating Agency in the highest short term rating category and otherwiseacceptable to each other Rating Agency, as confirmed in writing that suchinvestment would not, in and of itself, result in a downgrade, qualification orwithdrawal of the initial, or, if higher, then current ratings assigned to theSecurities); provided, however, that the investments described in this clausemust (i) have a predetermined fixed dollar of principal due at maturity thatcannot vary or change, (ii) if rated by S&P, must not have an “r”highlighter affixed to their rating, (iii) if such investments have a variablerate of interest, such interest rate must be tied to a single interest rateindex plus a fixed spread (if any) and must move proportionately with thatindex, and (iv) such investments must not be subject to liquidation prior totheir maturity;

 

(e)           fully Federal Deposit InsuranceCorporation-insured demand and time deposits in, or certificates of deposit of,or bankers’ acceptances with maturities of not more than 365 days and issuedby, any bank or trust company, savings and loan association or savings bank,the short term obligations of which at all times are rated in the highest shortterm rating category by each Rating Agency (or, if not rated by all RatingAgencies, rated by at least one Rating Agency in the

 

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highest short term rating category and otherwiseacceptable to each other Rating Agency, as confirmed in writing that suchinvestment would not, in and of itself, result in a downgrade, qualification orwithdrawal of the initial, or, if higher, then current ratings assigned to theSecurities); provided, however, that the investments described in this clausemust (i) have a predetermined fixed dollar of principal due at maturity thatcannot vary or change, (ii) if rated by S&P, must not have an “r”highlighter affixed to their rating, (iii) if such investments have a variablerate of interest, such interest rate must be tied to a single interest rateindex plus a fixed spread (if any) and must move proportionately with thatindex, and (iv) such investments must not be subject to liquidation prior totheir maturity;

 

(f)            debt obligations with maturities ofnot more than 365 days and at all times rated by each Rating Agency (or, if notrated by all Rating Agencies, rated by at least one Rating Agency and otherwiseacceptable to each other Rating Agency, as confirmed in writing that suchinvestment would not, in and of itself, result in a downgrade, qualification orwithdrawal of the initial, or, if higher, then current ratings assigned to theSecurities) in its highest long-term unsecured rating category; provided,however, that the investments described in this clause must (i) have apredetermined fixed dollar of principal due at maturity that cannot vary orchange, (ii) if rated by S&P, must not have an “r” highlighter affixed totheir rating, (iii) if such investments have a variable rate of interest, suchinterest rate must be tied to a single interest rate index plus a fixed spread(if any) and must move proportionately with that index, and (iv) suchinvestments must not be subject to liquidation prior to their maturity;

 

(g)           commercial paper (including bothnon-interest-bearing discount obligations and interest-bearing obligationspayable on demand or on a specified date not more than one year after the dateof issuance thereof) with maturities of not more than 365 days and that at alltimes is rated by each Rating Agency (or, if not rated by all Rating Agencies,rated by at least one Rating Agency and otherwise acceptable to each otherRating Agency, as confirmed in writing that such investment would not, in andof itself, result in a downgrade, qualification or withdrawal of the initial,or, if higher, then current ratings assigned to the Securities) in its highestshort-term unsecured debt rating; provided, however, that the investmentsdescribed in this clause must (i) have a predetermined fixed dollar ofprincipal due at maturity that cannot vary or change, (ii) if rated by S&P,must not have an “r” highlighter affixed to their rating, (iii) if suchinvestments have a variable rate of interest, such interest rate must be tiedto a single interest rate index plus a fixed spread (if any) and must moveproportionately with that index, and (iv) such investments must not be subjectto liquidation prior to their maturity;

 

(h)           units of taxable money market fundsor mutual funds, with maturities of not more than 365 days and which funds areregulated investment companies, seek to maintain a constant net asset value pershare and invest solely in obligations backed by the full faith and credit ofthe United States, which funds have the highest rating available from eachRating Agency (or, if not rated by all Rating Agencies, rated by at least oneRating Agency and otherwise acceptable to each other Rating Agency, asconfirmed in writing that such investment would not, in and of itself, resultin a downgrade, qualification or withdrawal of the initial, or, if higher, thencurrent ratings assigned to the Securities) for money market funds or mutualfunds; and

 

(i)            any other security, obligation orinvestment which has been approved as a Permitted Investment in writing by (i)Lender and (ii) each Rating Agency, as evidenced by a

 

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written confirmation that the designation of suchsecurity, obligation or investment as a Permitted Investment will not, in andof itself, result in a downgrade, qualification or withdrawal of the initial,or, if higher, then current ratings assigned to the Securities by such RatingAgency;

 

*provided, however*, that no obligation orsecurity shall be a Permitted Investment if (A) such obligation or securityevidences a right to receive only interest payments, (B) the right to receiveprincipal and interest payments on such obligation or security are derived froman underlying investment that provides a yield to maturity in excess of onehundred twenty percent (120%) of the yield to maturity at par of suchunderlying investment or (C) such obligation or security has a remaining termto maturity in excess of one (1) year.

 

“**Person**” shall mean anyindividual, corporation, partnership, joint venture, limited liability company,estate, trust, unincorporated association, any federal, state, county ormunicipal government or any bureau, department or agency thereof and anyfiduciary 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 prepared by a company reasonably satisfactory to Lenderregarding the physical condition of each Property, satisfactory in form andsubstance to Lender in its reasonable discretion (the form  of reports accepted by Lender as of theClosing Date shall be presumed to be in acceptable form for reports to besubmitted thereafter in accordance with the terms hereof).

 

 “**PIP Report**” shall mean any propertyimprovement 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 berequired under the applicable Franchise Agreement or Management Agreement.

 

“**PIP Reserve Account**”shall have the meaning set forth in Section 9.2(c) hereof.

 

“**PIP Reserve Funds**”shall have the meaning set forth in Section 9.2(c) hereof.

 

“**PIP Reserve Monthly Deposit**”shall have the meaning set forth in Section 9.2(c) hereof.

 

“**Policies**” shall havethe meaning specified in Section 8.1(b) hereof.

 

“**Policy**” shall have themeaning specified in Section 8.1(b) hereof.

 

“**Prohibited Transfer**”shall have the meaning set forth in Section 7.2(a) hereof.

 

“**Properties**” shall meaneach parcel of real property (or leasehold interest in real property demisedunder either Ground Lease, as the case may be), the Improvements thereon and allPersonal Property owned by Borrower and encumbered by the Mortgages, togetherwith all rights pertaining to such property and Improvements, as moreparticularly described in the

 

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granting clause of the Mortgages and referred totherein as the “Property”.  “**Property**”means any of the Properties.

 

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

 

**“Qualified Lessee”**shall mean (a)CNL Rose SPE Tenant Corp.; (b) an entity which is an Affiliate of Borrower,including, any then existing Affiliated Lessee, provided that (i) no Default orEvent of Default shall exist hereunder, (ii) in the instance of an entity whichis then an Affiliated Lessee, such entity is not then in default beyond anyapplicable notice or cure period under any Operating Lease, Franchise Agreementor Management Agreement to which it is a party, (iii) such entity shall be a“special purpose entity” containing (A) the same special purpose entitycovenants as set forth in CNL Rose SPE Tenant Corp.’s organizational documentsas the same shall exist as of the Closing Date, and (B) such other specialpurpose entity covenants or provisions as may then be required by the RatingAgencies, (iv) Lender shall have first received a substantive non-consolidationopinion with respect to the appointment of such entity as successor lesseeunder any Operating Lease and (v) a Qualified Manager shall be managing eachrelated Property pursuant to a Management Agreement in form acceptable toLender or (c) a hotel operating company which at the time of its engagement asOperating Lessee (i) shall be (or when considered together with any Affiliatethereof, shall be) operating and controlling full-service hotels having anaggregate of at least 2,500 rooms and 20 hotel properties similar to theProperties, exclusive of rooms located on any Property and the Properties, (ii)shall be approved by Lender, which approval shall not be unreasonably withheldand (iii) for which Lender shall have received written confirmation from theRating Agencies that the appointment of such operating lessee shall not resultin a downgrade, withdrawal or qualification of the initial, or if higher, thencurrent ratings issued in connection with a Securitization, or if aSecuritization has not occurred, any ratings to be assigned in connection witha Securitization.

 

“**Qualified Manager**”shall mean a reputable and experienced professional management organization (a)which manages, together with its Affiliates, full-service hotels, having inaggregate at least 2,500 rooms and 20 hotel properties similar to theProperties, exclusive of rooms located on any Property and the Properties and(b) approved by Lender, which approval shall not have been unreasonably withheldand for which Lender shall have received (i) written confirmation from theRating Agencies that the employment of such manager will not result in adowngrade, withdrawal or qualification of the initial, or if higher, thencurrent ratings issued in connection with a Securitization, or if aSecuritization has not occurred, any ratings to be assigned in connection witha Securitization, and (ii) with respect to any Affiliated Manager, asubstantive non-consolidation opinion.

 

“**Rate Cap**” shall meanan interest rate cap with a termination date no earlier than the end of theInterest Period in which the initial Maturity Date occurs, entered into withBank of America, N.A. or an Acceptable Counterparty with a notional amountequal to the Loan for the term of the Loan and a LIBOR strike price not greaterthan seven percent (7.0 %); provided, however, if the provider ofany Rate Cap (including, but not limited to, Bank of America, N.A.) ceases tobe an Acceptable Counterparty, Borrower shall obtain a replacement Rate Capfrom an Acceptable Counterparty within ten (10) Business Days of receipt ofnotice from Lender or Borrower’s obtaining knowledge that the then currentcounterparty under such Rate Cap is no longer an Acceptable Counterparty; untilsuch time as a replacement provider is obtained in

 

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accordance with the above provisions, the currentprovider will continue to perform its obligations under the Rate Cap; and provided,further, any replacement Rate Cap shall be accompanied by legal opinionsregarding the Rate Cap, in form and substance acceptable to Lender, including,without limitation opinions with respect to (i) enforceability, (ii) paymentpriority, (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 ofpayments thereunder to be identical to the definition of Interest Period setforth herein.

 

“**Rating Agencies**” shallmean each of S&P, Moody’s and Fitch, or any other nationally-recognizedstatistical rating agency which has been approved by Lender, provided that fromand after the Securitization Date, such term shall only refer to thenationally-recognized statistical rating agency(ies) rating the securitiesoffered 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 (includingany “separate agreement” or other agreement between Borrower and one or moreother parties to an REA with respect to such REA) affecting any Property orportion thereof.

 

“**Release**” shall havethe meaning set forth in Section 12.5 hereof.

 

“**Release Price”**shallmean 120% times the then Allocated Loan Amount of the Property(ies) beingreleased.

 

 “**REMIC Trust**” shall mean a “real estatemortgage investment conduit” (within the meaning of Section 860D, orapplicable successor provisions, of the Code) that holds the Note.

 

“**Rent Roll**” shall havethe meaning set forth in Section 4.25 hereof.

 

“**Rents**” shall have themeaning set forth in the Mortgages.

 

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

 

“**Replacement Reserve Account**”shall have the meaning set forth in Section 9.2(b) hereof.

 

“**Replacement Reserve Funds**”shall have the meaning set forth in Section 9.2(b) hereof.

 

“**Replacement Reserve Monthly Deposit**”shall have the meaning set forth in Section 9.2(b) hereof.

 

“**Replacements**” shallhave the meaning set forth in Section 9.2(a) hereof.

 

“**Required PIP Replacements**”shall have the meaning set forth in Section 9.2(c) hereof.

 

“**Required Repair Account**”shall have the meaning set forth in Section 9.1(b) hereof.

 

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“**Required Repair Funds**”shall have the meaning set forth in Section 9.1(b) hereof.

 

“**Required Repairs**”shall have the meaning set forth in Section 9.1(a) hereof.

 

“**Required Work**” shallhave the meaning set forth in Section 9.4 hereof.

 

“**Reserve Accounts**”shall mean the Tax and Insurance Reserve Account, the Replacement ReserveAccount, the Required Repair Account, the Excess Cash Reserve Account (ifapplicable), Operating Expense Account, the Extraordinary Expense ReserveAccount,****GroundRent Reserve Account, Lease Enhancement Account, the PIP Reserve Account andany other escrow account established by the Loan Documents.

 

“**Reserve Funds**” shallmean the Tax and Insurance Reserve Funds, the Replacement Reserve Funds, theRequired Repair Funds, the Ground Rent Reserve Funds, the Excess Cash ReserveFunds (if applicable), the Operating Expense Reserve Funds, the ExtraordinaryExpense Reserve Funds, the Lease Enhancement Funds, the PIP Reserve Funds andany other escrow funds established by the Loan Documents.

 

“**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 theBoard of Governors of the Federal Reserve System (or any successor), fordetermining the maximum reserve requirement (including basic, supplemental,emergency, special and marginal reserves) generally applicable to financialinstitutions regulated by the Federal Reserve Board comparable in size and typeto Lender in respect of “Eurocurrency liabilities” (or in respect of any othercategory of liabilities which includes deposits by reference to which theinterest rate on the Loan is determined), whether or not Lender has anyEurocurrency liabilities or such requirement otherwise in fact applies toLender.  The LIBOR Rate shall beadjusted automatically as of the effective date of each change in the ReservePercentage.  As of the date hereof, theReserve Percentage is zero, however, there can be no assurance as to what suchamount may be in the future.

 

“**Restoration**” shallmean, following the occurrence of a Casualty or a Condemnation which is of a typenecessitating the repair of any Property, the completion of the repair andrestoration of such Property as nearly as possible to the condition suchProperty was in immediately prior to such Casualty or Condemnation, with suchalterations as may be reasonably approved by Lender.

 

“**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**” shallhave the meaning set forth in Section 7.1 hereof.

 

“**Securities**” shall havethe meaning set forth in Section 13.1 hereof.

 

“**Securities Act**” shallmean the Securities Act of 1933, as amended.

 

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

 

“**Securitization**” shallhave the meaning set forth in Section 13.1 hereof.

 

“**Securitization Closing Date**”shall mean a date selected by Lender in its sole discretion by providing notless than forty-eight (48) hours prior notice to Borrower.

 

“**Securitization Fee**”has the meaning set forth in Section 17.5 hereof.

 

“**Selected Day**” meansthe fifteenth (15th) day of each calendar month or such other date asdetermined 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**” shallhave the meaning set forth in Section 6.1(c) hereof.

 

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

 

“**S&P**” shall meanStandard & Poor’s Ratings Services, a division of The McGraw-HillCompanies, Inc.

 

“**State**” shall mean thestate 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, Attornment andSecurity Agreement**” shall mean for each Operating Lease with anAffiliated Lessee, a Subordination, Attornment and Security Agreement or othersimilar agreement among Lender, Borrower and the Affiliated Lessee, in the formacceptable to Lender, as the same may be amended, restated, replaced,supplemented or otherwise modified in accordance with the terms hereof.

 

“**Subordination, Non-Disturbance andAttornment Agreement**” shall mean with respect to the OperatingLeases between Borrower and any Non-Affiliated Lessee, a Subordination,Non-Disturbance and Attornment Agreement, by and among Lender, Borrower and theapplicable Non-Affiliated Lessee, in the form acceptable to Lender, as the samemay be amended, restated, replaced, supplemented or otherwise modified inaccordance with the terms hereof.

 

“**Subsidiary**” of aPerson means a corporation, partnership, joint venture, limited liabilitycompany, or other business entity of which a majority of the shares ofsecurities or other interests having ordinary voting power for the election ofdirectors or other governing body (other than securities or interests havingsuch power only by reason of the happening of a contingency) are at the timebeneficially owned, or the management of which is otherwise controlled,directly, or indirectly through one or more intermediaries, or both, by suchPerson.

 

“**Syndication**” shallhave the meaning set forth in Section 13.1 hereof.

 

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“**Tax and Insurance Reserve Funds**”shall have the meaning set forth in Section 9.6 hereof.

 

“**Tax and Insurance Reserve Account**”shall have the meaning set forth in Section 9.6 hereof.

 

“**Taxes**” shall mean allreal estate and personal property taxes, assessments, water rates or sewerrents, now or hereafter levied or assessed or imposed against any Property orpart thereof.

 

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

 

“**Title Insurance Policy**”shall mean individually or collectively, as the context shall require, eachALTA mortgagee title insurance policy issued with respect to each Property andinsuring the lien of the corresponding Mortgage.

 

“**Transferee**” shall havethe meaning set forth in Section 7.5 hereof.

 

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

 

“**UCC**” or “**UniformCommercial Code**” shall mean the Uniform Commercial Code as ineffect in the State where the applicable Property is located.

 

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

 

Section 1.2.        PRINCIPLES OF CONSTRUCTION

##  

All references tosections and schedules are to sections and schedules in or to this Agreementunless otherwise specified.  All uses ofthe word “including” shall mean “including, without limitation” unless the contextshall indicate otherwise.  Unlessotherwise specified, the words “hereof,” “herein” and “hereunder” and words ofsimilar import when used in this Agreement shall refer to this Agreement as awhole and not to any particular provision of this Agreement.  Unless otherwise specified, all meaningsattributed to defined terms herein shall be equally applicable to both thesingular and plural forms of the terms so defined.

 

# **ARTICLE 2**GENERAL TERMS

# ** **

Section 2.1.        LOAN COMMITMENT; DISBURSEMENT TOBORROWER

##  

### (a)           Subject to and upon the terms andconditions set forth herein, Lender hereby agrees to make and Borrower herebyagrees to accept the Loan on the Closing Date.

###  

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

###  

### (c)           The Loan shall be evidenced by theNote and secured by the Mortgages and the other Loan Documents.

###  

### (d)           Borrower shall use the proceeds ofthe Loan to (i) pay certain costs in connection with the financing of theProperties, (ii) make deposits into the Reserve Funds on the Closing Date inthe amounts provided herein, (iii) pay costs and expenses incurred inconnection with the closing of the Loan, as approved by Lender, (iv) fund anyworking capital requirements of the Properties, and (v) distribute the balance,if any, to its partners.

###  

Section 2.2.        INTEREST RATE

##  

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

###  

### (b)           Unavailability of LIBOR Rate.  In the event that Lender shall havedetermined (which determination shall be conclusive and binding upon Borrowerabsent manifest error) that by reason of circumstances affecting the interbankeurodollar market, adequate and reasonable means do not exist for ascertainingthe LIBOR Rate, then Lender shall forthwith give notice by telephone of suchdetermination, confirmed in writing, to Borrower at least one (1) Business Dayprior 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 succeedingInterest Period, shall be the LIBOR Rate in effect for the most recent InterestPeriod (the “**Static LIBOR Rate**”).

###  

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

 

### (c)           Computations and Determinations.  All interest shall be computed on the basisof a year of 360 days and paid for the actual number of days elapsed during anInterest Period.  Lender shall determineeach interest rate applicable to the Debt in accordance with this Agreement andits determination thereof shall be conclusive in the absence of manifesterror.  The books and records of Lendershall be prima facie evidence of all sums owing to Lender from time to timeunder this Agreement, but the failure to record any such information shall notlimit or affect the obligations of Borrower under the Loan Documents.

###  

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

###  

### (e)           Default Rate.  Any principal of, and to the extentpermitted by applicable law, any interest on the Note, and any other sumpayable hereunder, which is not paid when due shall bear

###  

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### interest from thedate 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 tothe express condition that at no time shall Borrower be obligated or requiredto pay interest on the principal balance of the Loan at a rate which couldsubject Lender to either civil or criminal liability as a result of being inexcess of the Maximum Legal Rate.  If,by the terms of this Agreement or the other Loan Documents, Borrower is at any timerequired or obligated to pay interest on the principal balance due hereunder ata rate in excess of the Maximum Legal Rate, the LIBOR Rate, the Static LIBORRate or the Default Rate, as the case may be, shall be deemed to be immediatelyreduced to the Maximum Legal Rate and all previous payments in excess of theMaximum Legal Rate shall be deemed to have been payments in reduction ofprincipal and not on account of the interest due hereunder.  All sums paid or agreed to be paid to Lenderfor 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 sothat the rate or amount of interest on account of the Loan does not exceed theMaximum Legal Rate of interest from time to time in effect and applicable tothe Loan for so long as the Loan is outstanding.

###  

Section 2.3.        LOAN PAYMENTS

##  

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

###  

#### (i)            a payment on the Closing Date of allinterest that will accrue on the principal amount of the Note during theInterim Interest Period;

####  

#### (ii)           a payment on each Payment Date ofinterest equal to the Monthly Payment Amount and any other interest that has orwill accrue hereunder during the Interest Period in which such Payment Dateoccurs; and

####  

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

####  

### (b)           Extension of the Maturity Date.  Borrower shall have the option to extend theterm 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 PaymentDate occurring in December, 2007 and (y) the Payment Date occurring inDecember, 2008 (each such date, the “**Extended Maturity Date**”), respectively,and, as to each Extension Option, upon satisfaction of the following terms andconditions:

###  

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

 

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#### (ii)           Borrower shall notify Lender of itsirrevocable election to extend the Maturity Date as aforesaid not earlier thanthree (3) months, and no later than one (1) month, prior to the then applicableMaturity Date;

####  

#### (iii)          Borrower shall obtain and deliver toLender prior to exercise of such Extension Option, one or more Replacement RateCaps, which Replacement Rate Caps shall be effective commencing on the firstday of such Extension Option and shall have a maturity date not earlier thanthe end of the Interest Period in which the applicable Extended Maturity Dateshall occur; and

####  

#### (iv)          in connection with each ExtensionOption, Borrower shall have delivered to Lender together with its noticepursuant to subsection (b) of this Section 2.3 and as of the commencementof the applicable Extension Option, an Officer’s Certificate in form acceptableto the Lender (A) certifying that each of the representations and warranties ofBorrower contained in the Loan Documents is true, complete and correct in allmaterial respects as of the date of such Officer’s Certificate to the extentsuch representations and warranties are not matters which by their nature canno 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 beacceptable to Lender in its discretion.

####  

All references in thisAgreement and in the other Loan Documents to the Maturity Date shall mean theapplicable Extended Maturity Date in the event the applicable Extension Optionis exercised.

 

### (c)           Payments after Default.  Upon the occurrence and during thecontinuance of an Event of Default, (i) interest on the outstanding principalbalance of the Loan and, to the extent permitted by law, overdue interest andother amounts due in respect of the Loan shall accrue at the Default Rate, and(ii) Lender shall be entitled to receive and Borrower shall pay to Lender allcash flow from the Properties in accordance with the terms of the CashManagement Agreement, such amount to be applied by Lender to the payment of theDebt in such order as Lender shall determine in its sole discretion, including,without limitation, alternating applications thereof between interest andprincipal.  Interest at the Default Rateshall be computed from the occurrence of the Event of Default until the earlierof (x) the actual receipt and collection of the Debt (or that portion thereofthat 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 accrueinterest at the same rate as the Loan and shall be secured by the Mortgages.  This paragraph shall not be construed as anagreement or privilege to extend the date of the payment of the Debt, nor as awaiver of any other right or remedy accruing to Lender by reason of theoccurrence of any Event of Default; the acceptance of any payment from Borrowershall not be deemed to cure or constitute a waiver of any Event of Default; andLender retains its rights under this Agreement to accelerate and to continue todemand payment of the Debt upon the happening of and during the continuance anyEvent of Default, despite any payment by Borrower to Lender.

###  

### (d)           Late Payment Charge.  If any principal or interest payment is notpaid by Borrower on or before three (3) Business Days after the date on whichit is due, Borrower shall pay to Lender upon demand an amount equal to thelesser of five percent (5%) of such unpaid sum or the maximum amount permittedby applicable law in order to defray the expense incurred

 

27

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### by Lender inhandling and processing such delinquent payment and to compensate Lender forthe loss of the use of such delinquent payment.  Any such amount shall be secured by the Mortgages and the otherLoan Documents to the extent permitted by applicable law.

###  

### (e)           Method and Place of Payment.  Each payment by Borrower hereunder or underthe Note shall be payable at P.O. Box 515228, Los Angeles, California90051-6528, Attn:  Commercial MortgageLoan Servicing #1777, or at such other place as the Lender may designate fromtime to time in writing, on the date such payment is due, to Lender by depositto such account as Lender may designate by written notice to Borrower.  Each payment by Borrower hereunder or underthe Note shall be made in funds settled through the New York Clearing HouseInterbank Payments System or other funds immediately available to Lender by2:00 p.m., New York City time, on the date such payment is due, to Lender bydeposit to such account as Lender may designate by written notice to Borrower.  Whenever any payment hereunder or under theNote shall be stated to be due on a day which is not a Business Day, suchpayment shall be made on the first Business Day preceding such scheduled duedate. Notwithstanding the foregoing, amounts due under the Loan Documents shallbe deemed paid so long as there is sufficient money in the Cash ManagementAccount for payment of such amounts pursuant to the Cash Management Agreementand Lender’s access to such money has not been constrained or constricted inany manner.

###  

### (f)            Additional Payment Provisions.

###  

#### (i)            If at any time after the datehereof, Lender (which shall include, for purposes of this Section, anycorporation controlling Lender) reasonably determines that due to the adoptionor modification of any Legal Requirement regarding taxation, Lender’s requiredlevels of reserves, deposits, Federal Deposit Insurance Corporation insuranceor capital (including any allocation of capital requirements or conditions), orsimilar requirements, or any interpretation or administration thereof by anyTribunal or compliance of Lender with any of such requirements, has or wouldhave the effect of (a) increasing Lender’s costs relating to the Loan, or (b)reducing the yield or rate of return of Lender on the Loan, to a level belowthat which Lender could have achieved but for the adoption or modification ofany such Legal Requirements, Borrower shall, within fifteen (15) days of anyrequest by Lender, pay to Lender such additional amounts as (in Lender’s solejudgment, after good faith and reasonable computation) will compensate Lenderfor such increase in costs or reduction in yield or rate of return of Lender (a“**ConsequentialLoss**”).  No failure by Lenderto immediately demand payment of any additional amounts payable hereunder shallconstitute a waiver of Lender’s right to demand payment of such amounts at anysubsequent time.  Nothing hereincontained shall be construed or so operate as to require Borrower to pay anyinterest, fees, costs or charges greater than is permitted by applicable Law.

####  

#### (ii)           All payments made by Borrowerhereunder shall be made free and clear of, and without reduction for or onaccount of, income, stamp or other taxes, levies, imposts, duties, charges,fees, deductions, reserves or withholdings imposed, levied, collected, withheldor assessed by any Governmental Authorities, which are imposed, enacted orbecome effective on or after the date hereof (such non-excluded taxes beingreferred to collectively as “**Foreign Taxes**”), excluding income andfranchise taxes of the

 

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#### United States ofAmerica or any political subdivision or taxing authority thereof ortherein.  If any Foreign Taxes arerequired to be withheld from any amounts payable to Lender hereunder and suchForeign Taxes are not a result of activities of Lender unrelated to the Loan orBorrower, the amounts so payable to Lender shall be increased to the extentnecessary to yield to Lender (after payment of all Foreign Taxes) interest orany such other amounts payable hereunder at the rate or in the amountsspecified hereunder. Whenever any Foreign Tax is payable pursuant to applicablelaw by Borrower, as promptly as possible thereafter, Borrower shall send toLender an original official receipt, if available, or certified copy thereofshowing payment of such Foreign Tax. Borrower hereby indemnifies Lender for anyincremental taxes, interest or penalties that may become payable by Lenderwhich may result from any failure by Borrower to pay any such Foreign Tax whendue to the appropriate taxing authority of which Lender shall have providedBorrower with prior written notice, if possible, or any failure by Borrower toremit to Lender the required receipts or other required documentary evidence.Lender’s inability to notify Borrower of any such Foreign Tax in accordancewith the immediately preceding sentence shall in no way relieve Borrower of itsobligations under this Section 2.3(f)(ii).

####  

#### (iii)          If any requirement of law or anychange therein or in the interpretation or application thereof, shall hereaftermake it unlawful for Lender to make or maintain a Loan with the Note Rate beingbased on LIBOR as contemplated hereunder, (i) the obligation of Lenderhereunder to make such Loan based on LIBOR or to convert the Loan from theStatic LIBOR Rate to the LIBOR Rate shall be canceled forthwith and (ii) anyoutstanding LIBOR Loan shall be converted automatically to a loan bearinginterest at the Static LIBOR Rate (the “**Static LIBOR Rate Loan**”) on the nextsucceeding Payment Date or within such earlier period as required by law.  Borrower hereby agrees promptly to payLender, upon demand, any additional amounts necessary to compensate Lender forany costs incurred by Lender in making any conversion in accordance with thisAgreement, including, without limitation, any interest or fees payable byLender to lenders of funds obtained by it in order to make or maintain theLIBOR Loan hereunder.  If Lender becomesentitled to claim any additional amounts pursuant to this Section 2.3(f)(iii),Lender shall provide Borrower with not less than ninety (90) days writtennotice specifying in reasonable detail the event by reason of which it hasbecome so entitled and the additional amount required to fully compensateLender for such additional costs. Lender’s notice of such costs, as certified to Borrower, shall beconclusive absent manifest error.

####  

#### (iv)          In the event that any change in anyrequirement of law or in the interpretation or application thereof, orcompliance by Lender with any request or directive (whether or not having theforce of law) hereafter issued from any central bank or other GovernmentalAuthority:

####  

##### (A)          shall hereafter impose, modify or holdapplicable any reserve, special deposit, compulsory loan or similar requirementagainst assets held by, or deposits or other liabilities in or for the accountof, advances or loans by, or other credit extended by, or any other acquisitionof funds by, any office of Lender

#####  

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##### which is not otherwiseincluded in the determination of the LIBOR Rate hereunder;

#####  

##### (B)           shall hereafter have the effect ofreducing the rate of return on Lender’s capital as a consequence of itsobligations hereunder to a level below that which Lender could have achievedbut for such adoption, change or compliance (taking into consideration Lender’spolicies with respect to capital adequacy) by any amount deemed by Lender to bematerial; or

#####  

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

#####  

then, in any such case,Borrower shall promptly pay Lender, upon demand, any additional amountsnecessary to compensate Lender for such additional cost or reduced amountreceivable which Lender deems to be material as determined by Lender. If Lenderbecomes entitled to claim any additional amounts pursuant to thisSection 2.3(f)(iv), Lender shall provide Borrower with not less thanninety (90) days written notice specifying in reasonable detail the event byreason of which it has become so entitled and the additional amount required tofully compensate Lender for such additional cost or reduced amount. Acertificate as to any additional costs or amounts payable pursuant to theforegoing sentence submitted by Lender to Borrower shall be conclusive in theabsence of manifest error. This provision shall survive payment of the Note andthe satisfaction of all other obligations of Borrower under this Agreement andthe Loan Documents.

 

#### (v)           Borrower agrees to indemnify Lenderand to hold Lender harmless from any loss or expense which Lender sustains orincurs as a consequence of (i) any default by Borrower in payment of theprincipal of or interest on a LIBOR Loan, including, without limitation, anysuch loss or expense arising from interest or fees payable by Lender to lendersof funds obtained by it in order to maintain a LIBOR Loan hereunder, (ii) any prepayment(whether voluntary or mandatory) of the LIBOR Loan that did not include allinterest which had accrued (or would have accrued) at the Note Rate through theend of the related Interest Period, including, without limitation, such loss orexpense arising from interest or fees payable by Lender to lenders of fundsobtained by it in order to maintain the LIBOR Loan hereunder, and (iii) theconversion (for any reason whatsoever, whether voluntary or involuntary) of theNote Rate from the LIBOR Rate to the Static LIBOR Rate with respect to anyportion of the outstanding principal amount of the Loan then bearing interestat the LIBOR Rate on a date other than the Payment Date immediately followingthe last day of an Interest Period, including, without limitation, such loss orexpenses arising from interest or fees payable by Lender to lenders of fundsobtained by it in order to maintain a LIBOR Loan hereunder (the amountsreferred to in clauses (i), (ii) and (iii) are herein referred to collectivelyas the “**BreakageCosts**”).  This provisionshall survive payment of the Note in full and the satisfaction of all otherobligations of Borrower under this Agreement and the other Loan Documents.

 

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#### (vi)          Lender shall not be entitled to claimcompensation pursuant to this Section 2.3(f) for any Foreign Taxes,increased cost or reduction in amounts received or receivable hereunder, or anyreduced rate of return, which was incurred or which accrued more than onehundred eighty (180) days before the date Lender notified Borrower of thechange in law or other circumstance on which such claim of compensation isbased and delivered to Borrower a written statement setting forth in reasonabledetail the basis for calculating the additional amounts owed to Lender underthis Section 2.3(f), which statement shall be conclusive and binding uponall parties hereto absent manifest error.

####  

#### (vii)         Within fifteen (15) days after requestby Lender (or at the time of any prepayment), Borrower shall pay to Lender suchamount 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 partiesand any loss of yield, as determined by Lender in its judgment reasonablyexercised, incurred by it with respect to the Loan as a result of the paymentor prepayment of any amount on a date other than the date such amount isrequired or permitted to be paid or prepaid; provided that Lender delivers toBorrower a certificate as to the amounts of such costs described herein, whichcertificate 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 theLoan or any portion thereof.  Theobligations of Borrower under this Section shall survive any terminationof the Loan Documents and payment of the Note and shall not be waived by anydelay by Lender in seeking such compensation.

####  

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

####  

#### (ix)           Remittances in payment of any part ofthe Loan in less than the required amount in immediately available U.S. fundsshall not, regardless of any receipt or credit issued therefor, constitutepayment until the required amount is actually received by the holder hereof inimmediately available U.S. funds and shall be made and accepted subject to thecondition that any check or draft may be handled for collection in accordancewith the practices of the collecting bank or banks.

####  

Section 2.4.        PREPAYMENTS.

##  

### (a)           Voluntary Prepayments.  Except as otherwise expressly providedherein and in Section 2.4(c)(ii) hereof, Borrower shall not have the rightto prepay the Loan in whole or in part prior to the initial Maturity Date. Anypartial prepayment shall be applied to the last payments of principal due underthe Loan and shall reduce the outstanding principal balance of the Loan forpurposes of computing the Monthly Payment Amount.

###  

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

 

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### (c)           Payments After the Lockout Period.

###  

#### (i)            Full Prepayment.

####  

##### (A)          At any time after the expiration ofthe Lockout Period other than during the time period in any month from andincluding the day after the Payment Date through and including the day prior tothe Determination Date, Borrower may prepay the Loan in whole but not in partat any time upon not less than thirty (30) days prior written notice toLender.  Any such prepayment shallinclude (A) in the event the prepayment occurs at any time during the periodafter the Payment Date occurring in June, 2005 through and including thePayment Date occurring in December, 2005, a prepayment premium in the amount of1.75% of the then principal amount of the Loan, (B) all amounts required to bepaid by Borrower under Section 2.4(c)(iii) hereof and (C) all otheramounts owing by Borrower to Lender under this Agreement and the other LoanDocuments, including, without limitation, any Breakage Costs incurred byLender.

#####  

##### (B)           In addition to the foregoingrequirements for a full prepayment of the Loan, prior to Lender’s obligation toaccept a prepayment pursuant to the foregoing Section 2.4(c)(i)(A)Borrower shall have paid any amounts required to be paid underSection 2.4(c)(i) of the Mezzanine Loan Agreement to Mezzanine Lender inconnection with the full prepayment of the Mezzanine Loan.

#####  

#### (ii)           Partial Prepayment.  Provided no Event of Default shall haveoccurred and is then continuing, commencing on the day after the expiration ofthe Lockout Period, and upon giving Lender at least thirty (30) days (but notmore than ninety (90) days) prior written notice, which said notice can begiven prior to the expiration of the Lockout Period in connection with theprepayment to occur following the Lockout Period, Borrower may voluntarilyprepay a portion of the Loan on a Payment Date and obtain a release of aProperty from the Lien of the related Mortgage, provided Borrower satisfies thefollowing release conditions:

####  

##### (A)          Borrower shall provide Lender withprior written notice specifying (1) the Payment Date on which Borrower intendsto make the partial prepayment (“**Release Date**”) and (2) the Propertyproposed to be released from the Lien of the related Mortgage (the “**ReleaseProperty**”)

#####  

##### (B)           Borrower shall pay to Lender (i) theapplicable Release Price in connection with any such release, (ii) all amountspayable under Section 2.4(c)(iii) below in connection with theaccompanying prepayment of the Loan and any “curative”  partial prepayment permitted under clause(D) below, and (iii) any and all expenses incurred by Lender in connection withany such release, including, but not limited to, reasonable attorney’s fees andexpenses, as required under clause (J) below;

 

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

#####  

##### (D)          After giving effect to the release ofthe Lien of the Mortgage encumbering the Release Property, (i) the Debt ServiceCoverage Ratio shall be no less than the greater of (A) the Debt ServiceCoverage Ratio as of the Closing Date or (B) the Debt Service Coverage Ratioimmediately prior to such release, provided that in the event Borrower is notable to meet such Debt Service Coverage Ratio test, Borrower shall be entitledto “cure” the same by (1) pledging cash to Lender or delivering to Lender aLetter of Credit as additional security for the Loan, in which instance theamount of the Loan equal to the amount of such cash or the face value of theLetter of Credit, shall be disregarded for the purpose of determining the thenoutstanding principal balance of the Loan in connection with Lender’sdetermination of the Debt Service Coverage Ratio from and after the date ofsuch pledge, through the date on which such additional collateral is no longeravailable and/or any such Letter of Credit no longer meets the definitionalrequirements for a Letter of Credit as set forth in Article 1 hereof, or (2)prepaying so much of the Loan as is necessary to meet the above-stated DebtService Coverage Ratio test, provided that any such prepayment shall be accompaniedby any amounts due under Section 2.4(e) hereof in connection with theprepayment of such additional amounts;

#####  

##### (E)           In connection with clause (D) above,Borrower shall have delivered to Lender and the Rating Agencies (1) statementsof Net Operating Income and Debt Service and Mezzanine Debt Service (in bothcases assuming a mortgage constant equal to ten and one-quarter percent(10.25%)) (both on a consolidated basis and a separate basis with respect tothe Release Property) for the applicable measuring period and (2) based on theforegoing statements of Net Operating Income and Debt Service and MezzanineDebt Service, calculations of the Debt Service Coverage Ratio both with andwithout giving effect to the proposed release, and (3) calculations of the ratiosreferred to in clause (D) above, accompanied by an Officer’s Certificatestating that such statements, calculations and information are true, correctand complete in all material respects;

#####  

##### (F)           Borrower shall deliver to Lenderwritten confirmation from each of the applicable Rating Agencies that theproposed release will not result in the qualification, withdrawal or downgradeof any rating of any of the Securities;

#####  

##### (G)           Borrower shall have delivered toLender written confirmation that Rate Cap in the aggregate notional amount ofno less than the principal balance of the Loan as prepaid shall remain in fullforce and effect after the proposed release;

#####  

##### (H)          Borrower shall execute (a) amendmentsto the Loan Documents to the extent necessary (as determined by and reasonablyacceptable

 

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##### to Lender) and shallagree to corresponding adjustments of the reserves and escrow accounts withrespect to the remaining Properties as Lender shall reasonably determine and(b) amendments to the Operating Lease or any other document related to theRelease Property to the extent necessary (as determined by and reasonablyacceptable to Lender) to ensure that (i) such Operating Lease or otherdocument shall not continue to govern or relate to the Release Property and anyother Property which shall act as collateral for the Loan from and after thedate of the Release and (ii) the Affiliated Lessee will not be the tenantof such Release Property following the release of such Release Property fromthe Lien of the related Mortgage;

#####  

##### (I)            Borrower shall deliver to Lendersuch other documents, instruments, opinions and certificates as Lender mayreasonably request;

#####  

##### (J)            Borrower shall pay all out-of-pocketcosts and expenses of Lender incurred in connection with the proposed release,including Lender’s reasonable attorneys’ fees and expenses;

#####  

##### (K)          Borrower shall have distributed toMezzanine Borrower and Mezzanine Borrower shall have paid any amounts requiredto be paid under the Mezzanine Loan Agreement to Mezzanine Lender in connectionwith the release of the Release Property and shall have satisfied allconditions for the release of the Release Property set forth in the MezzanineLoan Documents;

#####  

##### (L)           Borrower shall submit to Lender forexecution, not less than fifteen (15) days prior to the date of the proposedrelease, a release of Lien (and related Loan Documents) for the ReleaseProperty.  Such release documentationshall be in form appropriate in the jurisdiction in which the Release Propertyis located and reasonably satisfactory to Lender.  In addition, Borrower shall provide all other documentationLender reasonably requires to be delivered by Borrower in connection with suchrelease;

#####  

##### (M)         Borrower shall provide Lender withevidence that the prepayment and release of the applicable Property is inconnection with (1) a bona fide arms length sale to a third party notAffiliated with Borrower, (2) a conveyance for other bona fide substantialbusiness purpose (other than any refinancing of a portion of the Loan)reasonably acceptable to Lender or (3) a conveyance of a Property in theinstance in which Lender does not make Insurance Proceeds or CondemnationProceeds, as the case may be, available for any restoration thereof and Borrowersatisfies all the conditions of this Section 2.4(c)(ii); and

#####  

##### (N)          Borrower shall deposit into the PIPReserve Account the amounts required by Lender pursuant to Section 9.2(c).

#####  

#### (iii)          Prepayments in General.  All payments and prepayments of the Loan,whether voluntary, involuntary, at the Maturity Date or otherwise (butexclusive of

####  

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#### prepayments made pursuantto Section 2.4(d) hereof) shall include in the event that any suchrepayment or prepayment is made on a day other than a Payment Date, a sum equalto the amount of interest which would have accrued under this Agreement throughthe end of the Interest Period in which the next Payment Date occurs.  For purposes of this Agreement, aninvoluntary prepayment shall be deemed to include, but not be limited to, aprepayment of the Loan in connection with or following the Lender’sacceleration of the outstanding balance of the Loan, whether or not theMortgage is satisfied or released by foreclosure (whether by power of sale orjudicial proceeding), deed in lieu of foreclosure or by other means, including,without limitation, repayment of the Loan by the Borrower or any other Personpursuant to any statutory or common law right of  redemption.

####  

### (d)           Insurance and CondemnationProceeds; Excess Interest. Notwithstanding any other provision herein to the contrary, and providedno Default exists, Borrower shall not be required to pay any prepayment premiumin connection with any prepayment occurring solely as a result of (i) theapplication of Insurance Proceeds or Condemnation Proceeds pursuant to theterms of the Loan Documents, or (ii) the application of any interest in excessof the maximum rate permitted by applicable law to the reduction of the Loan.  Without limiting any other rights containedherein, Borrower may obtain a release of a Property in accordance and uponcompliance with the provisions of Section 2.4(c)(ii), in the event inwhich such Property is affected by a Casualty or Condemnation and Lender, pursuantto the terms hereof, applies the Insurance Proceeds or Condemnation Proceedstoward repayment of the Debt.

###  

### (e)           Prepayments Prior to the LockoutPeriod.  If, during the LockoutPeriod, payment of all or any part of the Debt is tendered by Borrower orotherwise recovered by Lender, such tender or recovery shall be (a) made on thenext occurring Payment Date together with the Debt Service then due and (b)deemed a voluntary prepayment by Borrower in violation of the prohibitionagainst 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) theaccrued and unpaid interest calculated for the full Interest Period in whichsuch voluntary prepayment occurs.

###  

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

 

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**ARTICLE3****CONDITIONS PRECEDENT**

 

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

 

Section 3.1.        REPRESENTATIONS AND WARRANTIES;COMPLIANCE WITH CONDITIONS

 

The representations andwarranties of Borrower and Affiliated Lessee contained in this Agreement andthe other Loan Documents shall be true and correct in all material respects onand as of the Closing Date with the same effect as if made on and as of suchdate, and Lender shall have determined that no Default or an Event of Defaultshall have occurred and be continuing nor will any Default or Event of Defaultoccur immediately following the Closing Date; and Borrower shall be incompliance in all material respects with all terms and conditions set forth inthis Agreement and in each other Loan Document on its part to be observed orperformed.

 

Section 3.2.        DELIVERYOF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES

 

### (a)           Mortgage, Loan Agreement and Note.  Lender shall have received from Borrower afully executed and acknowledged counterpart of each Mortgage and evidence thatcounterparts of each Mortgage and Uniform Commercial Code financing statementshave been delivered to the title company for recording, in the reasonablejudgment of Lender, so as to effectively create upon such recording valid andenforceable Liens upon the Properties, of the requisite priority, in favor ofLender (or such other trustee as may be required or desired under local law),subject only to the Permitted Encumbrances and such other Liens as arepermitted pursuant to the Loan Documents. Lender shall have also received from Borrower, Borrower Principal, theapplicable Operating Lessee and Manager, as applicable, fully executedcounterparts of the Cash Management Agreement, this Agreement, the Note, eachSubordination, Non-Disturbance and Attornment Agreement, each Subordination,Attornment and Security Agreement, and each Assignment of Management Agreementand all other Loan Documents.

 

### (b)           Title Insurance.  Lender shall have received a Title InsurancePolicy with respect to each Property issued by a title company acceptable toLender and dated as of the Closing Date, with reinsurance and direct accessagreements acceptable to Lender.  Eachsuch Title Insurance Policy shall (i) provide coverage in the applicableAllocated Loan Amount with tie-in endorsements with respect to the otherProperties, provided that in the instance of any Property(ies) located in theState of New York or the State of Florida, no tie-in endorsement shall berequired and the coverage shall be limited to the aggregate Allocated LoanAmounts of such Property(ies) located in each such state, (ii) insure Lenderthat the Mortgage creates a valid lien on the Properties of the requisitepriority, free and clear of all exceptions from coverage other than PermittedEncumbrances and standard exceptions and exclusions from coverage (as modifiedby the terms of any endorsements), (iii) contain such endorsements andaffirmative coverages as Lender may reasonably request, and (iv) name Lender asthe insured.  Each Title

 

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### Insurance Policyshall be assignable.  Lender also shallhave received evidence that all premiums in respect of each Title InsurancePolicy have been paid.

 

### (c)           Survey.  Lender shall have received a current titlesurvey for each Property, certified to the title company and Lender and theirsuccessors and assigns, in form and content satisfactory to Lender and preparedby a professional and properly licensed land surveyor satisfactory to Lender inaccordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSMLand Title Surveys.  Each survey shallmeet the classification of an “Urban Survey” and the following additional itemsfrom the list of “Optional Survey Responsibilities and Specifications” (TableA) should be added to each survey:  2,3, 4, 6, 8, 9, 10, 11 and 13.  Each suchsurvey shall reflect the same legal description contained in the correspondingTitle Insurance Policy referred to in subsection (b) above and shall include,among other things, a metes and bounds description of the real propertycomprising part of each Property reasonably satisfactory to Lender.  The surveyor’s seal shall be affixed to eachsurvey and the surveyor shall provide a certification for each survey in formand substance acceptable to Lender. Notwithstanding the foregoing, Lender hereby acknowledges (i) receipt ofsurveys with respect to each Property, delivered to Bank of America, N.A. inconnection with the Bridge Loan and (ii) that absent any material adversechange to any Property from and after the date of such survey, each such surveyshall be deemed to be acceptable for all purposes hereunder.

 

### (d)           Insurance.  Lender shall have received copies of thePolicies required hereunder, satisfactory to Lender in its sole discretion, andevidence of the payment of all Insurance Premiums payable for the existingpolicy period.

 

### (e)           Environmental Reports.  Lender shall have received an EnvironmentalReport in respect of each Property satisfactory to Lender (or an acceptableupdate and reliance letter relating to the applicable Environmental Reportdelivered to Bridge Lender in connection with the Bridge Loan).

 

### (f)            Zoning/Building Code.  Lender shall have received evidence ofcompliance with zoning and building ordinances and codes with respect to eachProperty, including, without limitation, required certificates of occupancy,reasonably acceptable to Lender. Notwithstanding the foregoing, Lender hereby acknowledges (i) receipt ofevidence of compliance with zoning and building ordinances and codes withrespect to each Property in the form of zoning reports delivered to Bank ofAmerica, N.A. in connection with the Bridge Loan and (ii) that absent anymaterial adverse change to any Property from and after the date of such zoningreports, the same shall be deemed to be acceptable for all purposes hereunder.

 

### (g)           Encumbrances.  Borrower shall have taken or caused to betaken such actions in such a manner so that Lender has valid and perfectedfirst Liens as of the Closing Date on the Properties, subject only toapplicable Permitted Encumbrances and such other Liens as are permitted pursuantto the Loan Documents, and Lender shall have received satisfactory evidencethereof.

 

### (h)           Lien Searches.  Borrower shall have delivered to Lendercertified search results pertaining to the Borrower, Borrower Principal,Affiliated Lessee and such other Persons or any

 

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### SPE ComponentEntity 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 documentnot specifically referenced herein, but relating to the transactionscontemplated herein, shall have been duly authorized, executed and delivered byall parties thereto and at Lender’s written request, Lender shall have receivedand approved certified copies thereof.

 

Section 3.4.        ORGANIZATIONALDOCUMENTS

 

On or before the ClosingDate, Borrower shall deliver or cause to be delivered to Lender (a) copiescertified by Borrower of all organizational documentation related to Borrower,Affiliated Lessee, each SPE Component Entity and Borrower Principal which mustbe acceptable to Lender in its sole discretion, and (b) such other evidence ofthe formation, structure, existence, good standing and/or qualification to dobusiness of the Borrower, Affiliated Lessee, each SPE Component Entity andBorrower Principal, as Lender may request in its sole discretion, including,without limitation, good standing or existence certificates, qualifications todo business in the appropriate jurisdictions, resolutions authorizing theentering into of the Loan and incumbency certificates as may be requested byLender.

 

Section 3.5.        OPINIONSOF BORROWER’S COUNSEL

 

Lender shall havereceived opinions of Borrower’s counsel (a) with respect to non-consolidation issuesand (b) with respect to due execution, authority, enforceability of the LoanDocuments and such other matters as Lender may require, all such opinions inform, scope and substance satisfactory to Lender and Lender’s counsel in theirsole discretion.

 

Section 3.6.        ANNUALBUDGET

 

Borrower shall havedelivered, and Lender shall have approved, the Annual Budget for the currentfiscal year, a copy of which is attached as Exhibit A hereto.

 

Section 3.7.        TAXES AND OTHER CHARGES

 

Borrower shall have paidall Taxes and Other Charges which are due and payable (including any inarrears) relating to each Property, which amounts may be funded with proceedsof the Loan.

 

Section 3.8.        COMPLETIONOF PROCEEDINGS

 

All corporate and otherproceedings taken or to be taken in connection with the transactionscontemplated by this Agreement and other Loan Documents and all documentsincidental thereto shall be satisfactory in form and substance to Lender, andLender shall have received all such counterpart originals or certified copiesof such documents as Lender may reasonably request.

 

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Section 3.9.        PAYMENTS

 

All payments, deposits orescrows 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 havebeen paid.

 

Section 3.10.      TRANSACTIONCOSTS

 

Except as otherwiseexpressly provided herein, Borrower shall have paid or reimbursed Lender forall out of pocket expenses in connection with the underwriting, negotiation,Securitization and closing of the Loan, including title insurance premiums andother title company charges; recording, registration, filing and similar fees,taxes and charges; transfer, mortgage, deed, stamp or documentary taxes orsimilar fees or charges; costs of third-party reports, including withoutlimitation, environmental studies, credit reports, seismic reports, engineer’sreports, appraisals and surveys; underwriting and origination expenses;Securitization expenses; and all actual, reasonable legal fees and expensescharged by counsel to Lender.

 

Section 3.11.      NOMATERIAL ADVERSE CHANGE

 

There shall have been nomaterial adverse change in the financial condition or business condition of anyProperty, Borrower, Borrower Principal, Operating Lessee, any SPE ComponentEntity, any Manager or any other person or party contributing to the operatingincome and operations of any Property since the date of the most recentfinancial 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 transactionshall be as represented to Lender without material adverse change.  Neither Borrower nor Borrower Principal, anyOperating Lessee, any SPE Component Entity or any Manager shall be the subjectof any bankruptcy, reorganization, or insolvency proceeding.

 

Section 3.12.      OPERATINGLEASES

 

Lender shall havereceived (i) a certified copy of each Operating Lease, (ii) fully executed estoppelsfrom the applicable Operating Lessee of each Property, and (iii) fully executedcounterparts signed by Borrower and the applicable Operating Lessee of aSubordination, Non-Disturbance and Attornment Agreement, with respect to theOperating Leases of the Miami Lakes Property and the Miami Airport WestProperty, and a Subordination, Attornment and Security Agreement, with respectto each of the remaining Operating Leases, in all instances in form andsubstance acceptable to Lender.

 

Section 3.13.      LEASES;RENT ROLLS

 

Lender shall havereceived abstracts of all Leases affecting any Property (other than OperatingLeases, which are addressed in Section 3.12), which shall be satisfactoryin form and substance to Lender.  Lendershall have received a current certified rent roll of each Property, which shallinclude, but not be limited to, Operating Leases and Rents payable thereunder,reasonably satisfactory in form and substance to Lender.

 

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Section 3.14.      TENANTESTOPPELS

 

Lender shall havereceived an executed tenant estoppel letter, which shall be in form andsubstance satisfactory to Lender, from such Tenants (in addition to theOperating Lessees) as Lender shall require.

 

Section 3.15.      REAESTOPPELS

 

Borrower shall havedelivered to Lender an executed REA estoppel letter, which shall be in form andsubstance satisfactory to Lender, from each party to any REA with respect toany Property.

 

Section 3.16.      SUBORDINATION AND ATTORNMENT

 

Borrower shall have deliveredto Lender executed instruments acceptable to Lender subordinating to theapplicable Mortgage all of the Leases (other than the Operating Leases, whichare addressed in Section 3.12) affecting each Property, to the extentdesignated by Lender.  Lender herebyagrees to provide upon request a reasonable and customary non-disturbanceagreement as a condition to receipt of any such subordination agreement.

 

Section 3.17.      TAX LOT

 

Lender shall havereceived evidence that each Property constitutes one (1) or more separate taxlots, which evidence shall be reasonably satisfactory in form and substance toLender.

 

Section 3.18.      PHYSICAL CONDITIONS REPORT; PIP REPORT

 

Lender shall havereceived (a) a Physical Conditions Report with respect to each Property, each suchreport shall be reasonably satisfactory in form and substance to Lender, and(b) any PIP Reports issued with respect to any Property.

 

Section 3.19.      MANAGEMENTAGREEMENT

 

Lender shall havereceived a certified copy of each Management Agreement with respect to eachProperty, each of which shall be satisfactory in form and substance to Lender.

 

Section 3.20.      APPRAISAL

 

Lender shall havereceived an appraisal of each Property, which shall be satisfactory in form andsubstance to Lender.  Lender hereby acknowledges(a) receipt of appraisals with respect to each Property, as delivered to Bankof America, N.A. in connection with the Bridge Loan and (b) that each such appraisal together with any relianceletter which Lender may require in its reasonable discretion shall be deemedacceptable for all purpose under this Section 3.20 absent any materialadverse change to the applicable Property from and after the date of suchappraisal.

 

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Section 3.21.      FINANCIAL STATEMENTS

 

Lender shall havereceived financial statements and related information in form and substancesatisfactory to Lender and in compliance with any Legal Requirementspromulgated by the Securities and Exchange Commission, including, withoutlimitation, (a) operating statement as of September 30, 2003 with respect toeach Property, for the year-to-date 2003, and (b) audited financial statementsby an Acceptable Accountant with respect to RFS Partnership, L.P. (the priordirect/indirect owner of each Property) for the years 2002, 2001, 2000 and1999, in all instances the same shall be accompanied by an unqualified opinionof such Acceptable Accountant that such statements have been prepared inaccordance with GAAP applied on a consistent basis.

 

Section 3.22.      NET OPERATING INCOME

 

The annual Net OperatingIncome for all the Properties shall not be less than $20,000,000.00 asdetermined by Lender in its sole discretion pursuant to its standardunderwriting procedures for loans which are consummated by Lender for thepurpose of any Securitization.

 

Section 3.23.      FRANCHISE AGREEMENTS

 

Lender shall havereceived (i) a certified copy of each Franchise Agreement with respect to eachProperty (other than those previously disclosed to Lender for which there is noFranchise Agreement, only a Management Agreement), and (ii) a franchisorestoppel/comfort letter executed by each Franchisor under each FranchiseAgreement, in form and substance reasonably satisfactory to Lender.

 

Section 3.24.      GROUND LEASE

 

Lender shall have received (a) a certified copy of each Ground Leaseand (b) a fully executed ground lessor estoppel from the ground lessor underthe Wilmington Ground Lease and an executed ground lessor estoppel from theBorrower with respect to the Louisville Southwest Ground Lease, each of whichshall be in form and substance reasonably satisfactory to Lender.

 

Section 3.25.      FURTHER DOCUMENTS

 

Lender or its counselshall have received such other and further approvals, opinions, documents andinformation as Lender or its counsel may have reasonably requested includingthe Loan Documents in form and substance satisfactory to Lender and itscounsel.

 

**ARTICLE4****REPRESENTATIONS AND WARRANTIES**

 

Borrower and, wherespecifically indicated, each Borrower Principal and Affiliated Lesseerepresents 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) and Affiliated Lessee (a) has beenduly organized and is validly existing and in good standing with requisitepower and authority to own its properties and to transact the businesses inwhich it is now engaged, (b) is duly qualified to do business and is in goodstanding in each jurisdiction where it is required to be so qualified inconnection with its properties, businesses and operations, (c) possesses allrights, licenses, permits and authorizations, governmental or otherwise,necessary to entitle it to own its properties and to transact the businesses inwhich it is now engaged, and the sole business of (i) Borrower is theownership, management and operation of the Properties and (ii) AffiliatedLessee is to act as lessee of certain of the Properties and manage and operatethe same under and in accordance with the terms of the applicable OperatingLease, and (d) in the case of Borrower, has full power, authority and legalright to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer andconvey the Properties pursuant to the terms of the Loan Documents, and in thecase of Borrower, each Borrower Principal and Affiliated Lessee, has fullpower, authority and legal right to keep and observe all of the terms of theLoan Documents to which it is a party. Borrower, each Borrower Principal and Affiliated Lessee represent andwarrant that the chart attached hereto as Exhibit B sets forth an accuratelisting of the direct and indirect owners of the equity interests in Borrower,Affiliated Lessee, each SPE Component Entity (if any) and each BorrowerPrincipal (when not an individual).

 

Section 4.2.        STATUS OF BORROWER; AFFILIATED LESSEE

 

Borrower’s exact legalname is correctly set forth on the first page of this Agreement, on eachMortgage and on any UCC-1 Financing Statements filed in connection with theLoan.  Affiliated Lessee’s exact legalname is correctly set forth in all Loan Documents to which it is a party.  Borrower is an organization of the typespecified on the first page of this Agreement and Affiliated Lessee is acorporation.  Each of Borrower andAffiliated Lessee is incorporated in or organized under the laws of the stateof Delaware.  Each of Borrower’s andAffiliated Lessee’s  principal place ofbusiness and chief executive office, and the place where each of Borrower and AffiliatedLessee keeps their respective books and records, including recorded data of anykind or nature, regardless of the medium of recording, including software,writings, plans, specifications and schematics, has been for the preceding fourmonths (or, if less, the entire period of the existence of Borrower and/orAffiliated Lessee) the address of Borrower set forth on the first page of thisAgreement.  The organizationalidentification number, if any, assigned by the state of incorporation ororganization of (a) Borrower is 3721068 and (b) Affiliated Lessee is 370194.

 

Section 4.3.        VALIDITY OF DOCUMENTS

 

Borrower, each BorrowerPrincipal and Affiliated Lessee have taken all necessary action to authorizethe execution, delivery and performance of this Agreement and the other LoanDocuments to which they are parties. This Agreement and such other Loan Documents have been duly executed anddelivered by or on behalf of Borrower, each Borrower Principal and AffiliatedLessee, as applicable, and constitute the legal, valid and binding obligationsof Borrower, each Borrower Principal and Affiliated Lessee, as applicable,enforceable against each, as applicable, in accordance with their respectiveterms, subject only to applicable

 

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bankruptcy, insolvency and similar laws affectingrights of creditors generally, and subject, as to enforceability, to generalprinciples of equity (regardless of whether enforcement is sought in aproceeding in equity or at law).

 

Section 4.4.        NO CONFLICTS

 

The execution, deliveryand performance of this Agreement and the other Loan Documents to be executedby Borrower, each Borrower Principal and/or Affiliated Lessee will not conflictwith or result in a breach of any of the terms or provisions of, or constitutea default under, or result in the creation or imposition of any lien, charge orencumbrance (other than pursuant to the Loan Documents) upon any of theproperty or assets of Borrower, Borrower Principal or Affiliated Lessee pursuantto the terms of any agreement or instrument to which Borrower, BorrowerPrincipal or Affiliated Lessee is a party or by which any of Borrower’s,Borrower Principal’s or Affiliated Lessee’s property or assets is subject, norwill such action result in any violation of the provisions of any statute orany order, rule or regulation of any Governmental Authority having jurisdictionover Borrower, Borrower Principal or Affiliated Lessee or any of Borrower’s,Borrower Principal’s or Affiliated Lessee’s properties or assets, and anyconsent, approval, authorization, order, registration or qualification of orwith any Governmental Authority required for the execution, delivery andperformance by Borrower, Borrower Principal or Affiliated Lessee of this Agreementor any of the other Loan Documents has been obtained and is in full force andeffect.

 

Section 4.5.        LITIGATION

 

There are no actions,suits or proceedings at law or in equity by or before any GovernmentalAuthority or other agency now pending or, to Borrower’s, Borrower Principal’sor Affiliated Lessee’s knowledge, threatened against or affecting Borrower,Borrower Principal, any Operating Lessee, any Manager or any Property, whichactions, suits or proceedings, if determined against Borrower, BorrowerPrincipal, any Operating Lessee, any Manager or any Property, would materiallyadversely affect the condition (financial or otherwise) or business ofBorrower, Borrower Principal or Affiliated Lessee or the condition or ownershipof any Property.

 

Section 4.6.        AGREEMENTS

 

Neither Borrower nor anyAffiliated Lessee is a party to any agreement or instrument or subject to anyrestriction which would materially and adversely affect Borrower, AffiliatedLessee or any Property, or Borrower’s or Affiliated Lessee’s business,properties or assets, operations or condition, financial or otherwise.  Neither Borrower nor Affiliated Lessee is indefault in any material respect in the performance, observance or fulfillmentof any of the obligations, covenants or conditions contained in any agreementor instrument to which either is a party or by which Borrower, AffiliatedLessee or any Property is bound. Neither Borrower nor Affiliated Lessee has any material financialobligation under any agreement or instrument to which Borrower or AffiliatedLessee is a party or by which Borrower, Affiliated Lessee or any Property isotherwise bound, other than (a) obligations incurred in the ordinary course ofthe operation of each Property and (b) obligations under the Loan Documents.

 

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Section 4.7.        SOLVENCY

 

Neither Borrower,Borrower Principal nor Affiliated Lessee has (a) entered into the transactionor executed the Note (if applicable), this Agreement or any other LoanDocuments to which any such Person is a party, with the actual intent tohinder, delay or defraud any creditor and (b) received reasonably equivalentvalue in exchange for their respective obligations under such LoanDocuments.  Giving effect to the Loan,the fair saleable value of the assets of each of Borrower, each BorrowerPrincipal and Affiliated Lessee exceeds and will, immediately following themaking of the Loan, exceed the total liabilities of each of Borrower, eachBorrower Principal and Affiliated Lessee, including, without limitation,subordinated, unliquidated, disputed and contingent liabilities.  No petition in bankruptcy has been filedagainst Borrower, Borrower Principal, Affiliated Lessee or any SPE Component Entity(if any) in the last ten (10) years, and neither Borrower nor BorrowerPrincipal, 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 ofany Creditors Rights Laws.  NeitherBorrower nor Borrower Principal, Affiliated Lessee or any SPE Component Entity(if any) is contemplating either the filing of a petition by it under anyCreditors Rights Laws or the liquidation of all or a major portion ofBorrower’s, Affiliated Lessee’s or SPE Component Entity’s assets or property,and neither Borrower nor Affiliated Lessee has any knowledge of any Personcontemplating the filing of any such petition against Borrower, BorrowerPrincipal, Affiliated Lessee or any SPE Component Entity (if any).

 

Section 4.8.        FULL AND ACCURATE DISCLOSURE

 

No statement of fact madeby or on behalf of Borrower, Borrower Principal, any SPE Component Entity orAffiliated Lessee in this Agreement or in any of the other Loan Documents or inany other document or certificate delivered by or on behalf of Borrower,Borrower Principal or Affiliated Lessee contains any untrue statement of amaterial fact or omits to state any material fact necessary to make statementscontained herein or therein not misleading. There is no material fact presently known to Borrower, BorrowerPrincipal, any SPE Component Entity or Affiliated Lessee which has not beendisclosed to Lender which adversely affects, nor as far as Borrower, BorrowerPrincipal or Affiliated Lessee can reasonably foresee, might adversely affect,any Property or the business, operations or condition (financial or otherwise)of Borrower, Borrower Principal or Affiliated Lessee.

 

Section 4.9.        NO PLAN ASSETS

 

Neither Borrower norAffiliated Lessee 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 orAffiliated Lessee constitutes or will constitute “plan assets” of one or moresuch plans within the meaning of 29 C.F.R. Section 2510.3-101.  In addition, (a) neither Borrower norOperating Lessee is a “governmental plan” within the meaning ofSection 3(32) of ERISA and (b) transactions by or with Borrower orAffiliated Lessee are not subject to state statutes regulating investment of,and fiduciary obligations with respect to, governmental plans similar to theprovisions of Section 406 of ERISA or Section 4975 of the InternalRevenue Code currently in effect, which prohibit or otherwise restrict thetransactions contemplated by this Agreement.

 

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Section 4.10.      NOT A FOREIGN PERSON

 

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

 

Section 4.11.      ENFORCEABILITY

 

The Loan Documents arenot subject to any right of rescission, set-off, counterclaim or defense byBorrower, Borrower Principal or Affiliated Lessee, including the defense ofusury, nor would the operation of any of the terms of the Loan Documents, orthe exercise of any right thereunder, render the Loan Documents unenforceable,and neither Borrower, Borrower Principal nor Affiliated Lessee has asserted anyright of rescission, set-off, counterclaim or defense with respectthereto.  No Default or Event of Defaultexists under or with respect to any Loan Document.

 

Section 4.12.      BUSINESS PURPOSES

 

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

 

Section 4.13.      COMPLIANCE

 

Borrower, AffiliatedLessee and each Property, and the use and operation thereof, comply in allmaterial respects with all Legal Requirements, including, without limitation,building and zoning ordinances and codes and the Americans with DisabilitiesAct.  Neither Borrower nor AffiliatedLessee has any knowledge that either is in default or violation of any order,writ, injunction, decree or demand of any Governmental Authority and neitherBorrower nor Affiliated Lessee has received any written notice of any suchdefault or violation.  There has notbeen committed by Borrower or Affiliated Lessee or, to Borrower’s or AffiliatedLessee’s respective knowledge, any other Person in occupancy of or involvedwith the operation or use of any Property, any act or omission affording anyGovernmental Authority the right of forfeiture as against any Property or anypart thereof or any monies paid in performance of Borrower’s obligations underany 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 beendelivered to Lender in respect of Borrower, Borrower Principal, AffiliatedLessee and/or the Properties (a) are true, complete and correct in all materialrespects, (b) accurately represent the financial condition of Borrower,Borrower Principal, Affiliated Lessee or the Properties, as applicable, as ofthe date of such reports, and (c) to the extent prepared or audited by an independentcertified public accounting firm, have been prepared in accordance with GAAPthroughout the periods covered, except as disclosed therein.  Neither Borrower nor Affiliated Lessee hasany contingent liabilities, liabilities for taxes, unusual forward or long-termcommitments or unrealized or anticipated losses from any unfavorablecommitments that are known to Borrower or Affiliated Lessee and reasonablylikely to have a material adverse effect on any Property or the current and/orintended operation thereof, except as referred to or reflected in saidfinancial statements.

 

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Since the date of such financial statements, there hasbeen no materially adverse change in the financial condition, operations orbusiness of Borrower, Borrower Principal or Affiliated Lessee from that setforth in said financial statements.

 

Section 4.15.      CONDEMNATION

 

No Condemnation or otherproceeding has been commenced or, to Borrower’s or Affiliated Lessee’s bestknowledge, is threatened or contemplated with respect to all or any portion ofany Property or for the relocation of roadways providing access to anyProperty.

 

Section 4.16.      UTILITIES AND PUBLIC ACCESS; PARKING

 

Each Property hasadequate rights of access to public ways and is served by water, sewer,sanitary sewer and storm drain facilities adequate to service each Property forfull utilization of each Property for its intended uses.  All public utilities necessary to the fulluse and enjoyment of each Property as currently used and enjoyed are locatedeither in the public right-of-way abutting each Property (which are connectedso as to serve such Property without passing over other property) or inrecorded easements serving such Property and such easements are set forth inand insured by the applicable Title Insurance Policy.  All roads necessary for the use of each Property for its currentpurposes have been completed and dedicated to public use and accepted by allGovernmental Authorities.  Each Propertyhas, or is served by, parking to the extent required to comply in all materialrespects with all Legal Requirements.

 

Section 4.17.      SEPARATE LOTS

 

Each Property is assessedfor real estate tax purposes as one or more wholly independent tax lot or lots,separate from any adjoining land or improvements not constituting a part ofsuch lot or lots, and no other land or improvements is assessed and taxedtogether with any Property or any portion thereof.

 

Section 4.18.      ASSESSMENTS

 

To Borrower’s knowledgeafter due inquiry, except as disclosed in any Title Insurance Policy providedpursuant to Section 3.2(b) hereof, there are no pending or proposedspecial or other assessments for public improvements or otherwise affecting anyProperty, nor are there any contemplated improvements to any Property that mayresult in such special or other assessments.

 

Section 4.19.      INSURANCE

 

Borrower has obtained andhas delivered to Lender certified copies of all Policies or, to the extent suchPolicies are not available as of the Closing Date, certificates of insurancewith respect to all such Policies reflecting the insurance coverages, amountsand other requirements set forth in this Agreement.  No claims have been made under any of the Policies, and toBorrower’s and Affiliated Lessee’s knowledge, no Person, including Borrower orAffiliated Lessee, has done, by act or omission, anything which would impairthe coverage of any of the Policies.

 

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Section 4.20.      USE OF PROPERTY

 

Each Property is usedexclusively for hotel purposes and other appurtenant and related uses.

 

Section 4.21.      CERTIFICATE OF OCCUPANCY; LICENSES

 

All certifications,permits, licenses and approvals, including, without limitation, certificates ofcompletion or occupancy and any applicable liquor license required for thelegal use, occupancy and operation of each Property for the purpose intendedherein, have been obtained and are valid and in full force and effect.  Borrower and Affiliated Lessee, asapplicable, shall keep and maintain all licenses necessary for the operation ofeach Property for the purpose intended herein. The use being made of each Property is in conformity with thecertificate of occupancy and any permits or licenses issued for such Property.

 

Section 4.22.      FLOOD ZONE

 

Except as disclosed inany survey provided pursuant to Section 3.2(c) hereof, no Improvements onany Property are located in an area identified by the Federal EmergencyManagement Agency as an area having special flood hazards, or, if anyImprovements or any Property or portion of any Improvements is located withinsuch area, Borrower has obtained the insurance prescribed inSection 8.1(a)(i).

 

Section 4.23.      PHYSICAL CONDITION

 

To Borrower’s andAffiliated Lessee’s knowledge after due inquiry and except as disclosed in theProperty Condition Reports or PIP’s provided to Lender provided pursuant toSection 3.18 hereof, each Property, including, without limitation, allbuildings, improvements, parking facilities, sidewalks, storm drainage systems,roofs, plumbing systems, HVAC systems, fire protection systems, electricalsystems, equipment, elevators, exterior sidings and doors, landscaping,irrigation systems and all structural components, are in good condition, orderand repair in all material respects.  ToBorrower’s and Affiliated Lessee’s knowledge after due inquiry, there exists nostructural or other material defects or damages in or to any Property, as aresult of a Casualty or otherwise, and whether latent or otherwise.  Neither Borrower nor Affiliated Lessee hasreceived any notice from any insurance company or bonding company of anydefects or inadequacies in any Property, or any part thereof, which wouldadversely affect the insurability of the same or cause the imposition of extraordinarypremiums or charges thereon or of any termination or threatened termination ofany policy of insurance or bond.

 

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Section 4.24.      BOUNDARIES

 

### (a)           Except as disclosed in any surveyprovided pursuant to Section 3.2(c) hereof, none of the Improvements whichwere included in determining the appraised value of any Property lie outsidethe boundaries and building restriction lines of any Property to any materialextent, and (b) no improvements on adjoining properties encroach upon anyProperty and no easements or other encumbrances upon any Property encroach uponany of the Improvements so as to materially affect the value or marketabilityof any Property.

 

Section 4.25.      LEASES AND RENT ROLL

 

Borrower has delivered toLender a true, correct and complete rent roll or lease summary in formacceptable to Lender for each Property (a “**Rent Roll**”) which includes all Leasesaffecting each Property (including, but not limited to, the applicableOperating Lease and schedules for all executed Leases for Tenants not yet inoccupancy or under which the rent commencement date has not occurred).  Except as set forth in the Rent Roll (assame has been updated by written notice thereof to Lender) and estoppelcertificates delivered to Lender on or prior to the Closing Date:  (a) each Lease is in full force and effect;(b) the premises demised under the Leases have been completed and the Tenantsunder the Leases have accepted possession of and are in occupancy of all oftheir respective demised premises; (c) the Tenants under the Leases havecommenced the payment of rent under the Leases, there are no offsets, claims ordefenses to the enforcement thereof, and neither Borrower nor to Borrower’sknowledge any Operating Lessee (with respect to any Lease other than theOperating Lease) has any monetary obligations to any Tenant under any Lease;(d) all Rents due and payable under the Leases have been paid and no portionthereof has been paid for any period more than thirty (30) days in advance; (e)the rent payable under each Lease is the amount of fixed or other rent setforth in the Rent Roll, and there is no claim or basis for a claim by theTenant thereunder for an offset or adjustment to the rent; (f) no Tenant hasmade any written claim of a material default against the landlord under anyLease which remains outstanding nor has Borrower, or to Borrower’s knowledgeOperating Lessee, Manager or any other Person involved in the operation and/ormanagement of any Property received, by telephonic, in-person, e-mail or othercommunication, any notice of a material default under any Lease; (g) toBorrower’s knowledge there is no present material default by any Tenant underany Lease; (h) all security deposits under the Leases have been collected byBorrower or the applicable Operating Lessee, as landlord thereunder; (i)Borrower is the sole owner of the entire landlord’s interest in each OperatingLease and the applicable Operating Lessee is the sole owner of the entirelandlord’s interest in each other Lease (other than either Ground Lease); (j)each Operating Lease is the valid, binding and enforceable obligation ofBorrower and there are no agreements with any Operating Lessee than asexpressly set forth in the Operating Leases; (k) no Person (other than Manager)has any possessory interest in, or right to occupy, any Property or any portionthereof except under the terms of any Lease; (l) none of the Leases containsany option or offer to purchase or right of first refusal to purchase anyProperty or any part thereof; and (m) neither the Leases nor the Rents havebeen assigned, pledged or hypothecated except to Lender, and no other Personhas any interest therein except the Tenants thereunder.

 

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Section 4.26.      FILING AND RECORDING TAXES

 

All mortgage, mortgagerecording, stamp, intangible or other similar tax required to be paid by anyPerson under applicable Legal Requirements currently in effect in connectionwith the execution, delivery, recordation, filing, registration, perfection orenforcement of any of the Loan Documents, including, without limitation, eachMortgage, have been paid or will be paid, and, under current LegalRequirements, each Mortgage is enforceable in accordance with its terms byLender (or any subsequent holder thereof).

 

Section 4.27.      MANAGEMENT AGREEMENT

 

Borrower and AffiliatedLessee hereby represent that to their respective knowledge, each ManagementAgreement is in full force and effect, there is no default thereunder by anyparty thereto, no event has occurred that, with the passage of time and/or thegiving of notice would constitute a default thereunder, and no management feesunder any Management Agreement are accrued and unpaid.

 

Section 4.28.      ILLEGAL ACTIVITY

 

No portion of anyProperty 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 anyillegal activity.

 

Section 4.29.      CONSTRUCTION EXPENSES

 

All costs and expenses ofany and all labor, materials, supplies and equipment used in the constructionmaintenance or repair of the Improvements have been paid in full.  To each of Borrower’s and AffiliatedLessee’s knowledge after due inquiry, there are no claims for payment for work,labor or materials affecting any Property which are or may become a lien priorto, or of equal priority with, the Liens created by the Loan Documents.

 

Section 4.30.      PERSONAL PROPERTY

 

Borrower has paid in fullfor, and is the owner of, all Personal Property (other than (a) Tenants’ andManager’s property and (b) personal property leases as customarily permitted byinstitutional hotel lenders) used in connection with the operation of anyProperty, free and clear of any and all security interests, liens orencumbrances, except for Permitted Encumbrances and the Lien and securityinterest created by the Loan Documents.

 

Section 4.31.      TAXES

 

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

 

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Section 4.32.      PERMITTED ENCUMBRANCES

 

None of the PermittedEncumbrances, individually or in the aggregate, materially interferes with thebenefits of the security intended to be provided by the Loan Documents,materially and adversely affects the value of any Property, impairs the use orthe operation of any Property or impairs Borrower’s ability to pay itsobligations in a timely manner.

 

Section 4.33.      FEDERAL RESERVE REGULATIONS

 

Borrower will use theproceeds of the Loan for the purposes set forth in Section 2.1(d) hereofand not for any illegal activity.  Nopart of the proceeds of the Loan will be used for the purpose of purchasing oracquiring any “margin stock” within the meaning of Regulation U of the Board ofGovernors of the Federal Reserve System or for any other purpose which would beinconsistent with such Regulation U or any other Regulations of such Board ofGovernors, or for any purposes prohibited by Legal Requirements or prohibitedby the terms and conditions of this Agreement or the other Loan Documents.

 

Section 4.34.      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 ofthe Public Utility Holding Company Act of 1935, as amended; or (c) subject toany other federal or state law or regulation which purports to restrict orregulate its ability to borrow money.

 

Section 4.35.      RECIPROCAL EASEMENT AGREEMENTS

 

### (a)           Neither Borrower, nor to theknowledge of Borrower upon due inquiry any other party is currently in default(nor has any notice been given or received with respect to an alleged or currentdefault) under any of the terms and conditions of any REA which default wouldhave a material and adverse effect on the ownership or operation of theapplicable Property or Borrower’s ability to satisfy its obligations under theLoan Documents, and each REA remains unmodified and in full force and effect;

 

### (b)           All easements, if any, grantedpursuant to any REA which were to have survived any site preparation andcompletion of construction (to the extent that the same has been completed),remain in full force and effect and have not been released, terminated,extinguished or discharged by agreement or otherwise;

 

### (c)           All sums due and owing by Borrower tothe other parties to any REA (or by the other parties to any REA to theBorrower) pursuant to the terms of the applicable REA, including withoutlimitation, all sums, charges, fees, assessments, costs, and expenses inconnection with any taxes, site preparation and construction, non-shareholdercontributions, and common area and other property management activities havebeen paid, are current, and no lien has attached on any Property (or threatthereof been made) for failure to pay any of the foregoing;

 

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### (d)           The terms, conditions, covenants,uses and restrictions contained in the REAs do not conflict in any materialmanner with any terms, conditions, covenants, uses and restrictions containedin any Lease or in any agreement between Borrower and occupant of anyperipheral parcel, including without limitation, conditions and restrictionswith respect to kiosk placement, tenant restrictions (type, location orexclusivity), sale of certain goods or services, and/or other use restrictions;and

 

### (e)           The terms, conditions, covenants,uses and restrictions contained in each Lease do not conflict in any materialmanner with any terms, conditions, covenants, uses and restrictions containedin the REAs, any other Lease or in any agreement between Borrower and occupantof any peripheral parcel, including without limitation, conditions andrestrictions with respect to kiosk placement, tenant restrictions (type,location or exclusivity), sale of certain goods or services, and/or other userestrictions.

 

Section 4.36.      NO CHANGE IN FACTS OR CIRCUMSTANCES;DISCLOSURE

 

All information submittedby Borrower or its agents to Lender and in all financial statements, rentrolls, reports, certificates and other documents submitted in connection withthe Loan or in satisfaction of the terms thereof and all statements of fact madeby Borrower in this Agreement or in any other 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 otherwisematerially and adversely affects or might materially and adversely affect anyProperty or the business operations or the financial condition of Borrower.  Borrower has disclosed to Lender allmaterial facts and has not failed to disclose any material fact that couldcause any representation or warranty made herein to be materially misleading.

 

Section 4.37.      INTELLECTUAL PROPERTY

 

All trademarks, tradenames and service marks necessary to the business of Borrower and AffiliatedLessee as presently conducted or as Borrower or Affiliated Lessee contemplatesconducting its business are in good standing and, to the extent of Borrower’sand Affiliated Lessee’s actual knowledge are uncontested.  Neither Borrower nor Affiliated Lessee hasknowingly infringed, is knowingly infringing, or has received notice ofinfringement with respect to asserted trademarks, trade names and service marksof others.  To Borrower’s and AffiliatedLessee’s knowledge, there is no infringement by others of trademarks, tradenames and service marks of Borrower or Affiliated Lessee.

 

Section 4.38.      SURVEY

 

To the knowledge ofBorrower, the survey for each Property does not fail to reflect any materialmatter affecting such Property or the title thereto.

 

Section 4.39.      EMBARGOED PERSON

 

As of the date hereof andat all times throughout the term of the Loan, including after giving effect toany transfers of interests permitted pursuant to the Loan Documents, (a) noneof the funds or other assets of Borrower, Borrower Principal or AffiliatedLessee constitute property

 

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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 PowersAct, 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 withthe result that the investment in Borrower, Borrower Principal or AffiliatedLessee, as applicable (whether directly or indirectly), is prohibited by law orthe Loan made by Lender is in violation of law (“**Embargoed Person**”); (b) noEmbargoed Person has any interest of any nature whatsoever in Borrower,Borrower Principal or Affiliated Lessee, as applicable, with the result thatthe investment in Borrower, Borrower Principal or Affiliated Lessee, asapplicable (whether directly or indirectly), is prohibited by law or the Loanis in violation of law; and (c) none of the funds of Borrower, BorrowerPrincipal or Affiliated Lessee, as applicable, have been derived from anyunlawful activity with the result that the investment in Borrower, BorrowerPrincipal or Affiliated Lessee, as applicable (whether directly or indirectly),is prohibited by law or the Loan is in violation of law.

 

Section 4.40.      PATRIOT ACT

 

All capitalized words andphrases and all defined terms used in the USA Patriot Act of 2001, 107 PublicLaw 56 (October 26, 2001) and in other statutes and all orders, rules andregulations of the United States government and its various executivedepartments, agencies and offices related to the subject matter of the PatriotAct, including Executive Order 13224 effective September 24, 2001 (collectivelyreferred to in this Section only as the “**Patriot Act**”) and areincorporated into this Section.  Each ofBorrower, Borrower Principal and Affiliated Lessee hereby represents andwarrants that Borrower, Borrower Principal and Affiliated Lessee and each andevery Person Affiliated with Borrower, Borrower Principal or Affiliated Lesseeor that to Borrower’s or Affiliated Lessee’s knowledge has an economic interestin Borrower, Borrower Principal or Affiliated Lessee, or, to Borrower’s,Borrower Principal’s, or Affiliated Lessee’s knowledge, that has or will havean interest in the transaction contemplated by this Agreement or in anyProperty or will participate, in any manner whatsoever, in the Loan (excludingany holders of publicly traded shares in CNL Hospitality Properties, Inc., apublicly traded real estate investment trust), is:  (i) not a “blocked” person listed in the Annex to Executive OrderNos. 12947, 13099 and 13224 and all modifications thereto or thereof (as usedin this Section only, the “**Annex**”); (ii) in full compliance with therequirements of the Patriot Act and all other requirements contained in therules and regulations of the Office of Foreign Assets Control, Department ofthe Treasury (as used in this Section only, “**OFAC**”); (iii) operated underpolicies, procedures and practices, if any, that are in compliance with thePatriot Act and available to Lender for Lender’s review and inspection duringnormal business hours and upon reasonable prior notice; (iv) not in receipt ofany notice from the Secretary of State or the Attorney General of the UnitedStates or any other department, agency or office of the United States claiminga violation or possible violation of the Patriot Act; (v) not listed as aSpecially Designated Terrorist or as a “blocked” person on any lists maintainedby the OFAC pursuant to the Patriot Act or any other list of terrorists orterrorist organizations maintained pursuant to any of the rules and regulationsof the OFAC issued pursuant to the Patriot Act or on any other list ofterrorists or terrorist organizations maintained pursuant to the Patriot Act;(vi) not a person who has been determined by competent authority to be subjectto any of the prohibitions contained in the Patriot Act; and (vii) not owned orcontrolled by or now acting and or will in the future act for or on behalf ofany person named in the Annex or any other list promulgated under the PatriotAct

 

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or any other person who has been determined to besubject to the prohibitions contained in the Patriot Act.  Borrower covenants and agrees that in theevent Borrower receives any notice that Borrower Principal, Affiliated Lesseeor Borrower (or any of their respective beneficial owners or Affiliates orparticipants) become listed on the Annex or any other list promulgated underthe Patriot Act or is indicted, arraigned, or custodially detained on chargesinvolving money laundering or predicate crimes to money laundering, Borrowershall immediately notify Lender.  Itshall be an Event of Default hereunder if Borrower, Borrower Principal,Affiliated Lessee or any other party to any Loan Document becomes listed on anylist promulgated under the Patriot Act or is indicted, arraigned or custodiallydetained on charges involving money laundering or predicate crimes to moneylaundering.

 

Section 4.41.      FRANCHISE AGREEMENTS.

 

Borrower and AffiliatedLessee hereby represent that to their respective knowledge, each FranchiseAgreement is in full force and effect, there is no default thereunder by anyparty thereto and no event has occurred that, with the passage of time and/orthe giving of notice would constitute a default thereunder, and no fees underany Franchise Agreement are accrued and unpaid.

 

Section 4.42.      GROUND LEASE REPRESENTATIONS

 

Except as specificallyprovided below, Borrower hereby represents and warrants to Lender with respectto each Ground Lease and/or the estoppel letter delivered to Lender by theapplicable ground lessor all of the following:

 

### (a)           The Ground Lease is in full force andeffect and has not been modified or amended in any manner whatsoever (with theexception of written instruments which have been recorded or otherwisedisclosed to Lender in writing);

 

### (b)           There are no defaults under theGround Lease by Borrower, or, to the best of Borrower’s knowledge, groundlessor thereunder, and, to the best of Borrower’s knowledge, no event hasoccurred which but for the passage of time, or notice, or both would constitutea default under the Ground Lease;

 

### (c)           All rents, additional rents and othersums due and payable under the Ground Lease have been paid in full;

 

### (d)           Neither Borrower nor the groundlessor under the Ground Lease has commenced any action or given or received anynotice for the purpose of terminating the Ground Lease;

 

### (e)           The Ground Lease or a memorandumthereof has been duly recorded.  TheGround Lease permits the interest of Borrower to be encumbered by amortgage.  The Ground Lease may not becanceled, terminated, surrendered or amended without the prior written consentof Lender;

 

### (f)            Except for the PermittedEncumbrances, Borrower’s interest in the Ground Lease is not subject to anyLiens or encumbrances superior to, or of equal priority with, the relatedSecurity Instrument other than the ground lessor’s related fee interest;

 

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### (g)           Borrower’s interest in the GroundLease is assignable to Lender upon notice to, but without the consent of, theground lessor thereunder (or, if any such consent is required, it has beenobtained prior to the date hereof).  TheGround Lease is further assignable by Lender, and its successors and assigns,without the consent of the ground lessor or, where such consent is required, itcannot be unreasonably withheld by the ground lessor;

 

### (h)           The Wilmington Ground Lease requiresthe ground lessor to give notice of any default by Borrower to Lender.  The Wilmington Ground Lease further providesthat notice of termination given under the Wilmington Ground Lease is noteffective as against Lender unless a copy of such notice has been delivered toLender in the manner described in the Wilmington Ground Lease;

 

### (i)            Lender is permitted the opportunity(including, where necessary, sufficient time to gain possession of the interestof Borrower under the Wilmington Ground Lease) to cure any default under theWilmington Ground Lease, which is curable after the receipt of notice, beforethe ground lessor thereunder may terminate the Wilmington Ground Lease;

 

### (j)            The Wilmington Ground Lease has aterm which extends not less than twenty (20) years beyond the Maturity Date, asthe same may be extended;

 

### (k)           The Wilmington Ground Lease requiresthe ground lessor to enter into a new lease upon termination of the WilmingtonGround Lease for any reason, including rejection of the Wilmington Ground Leasein a bankruptcy proceeding;

 

### (l)            Under the terms of the WilmingtonGround Lease, the related Security Instrument and the estoppel certificate fromthe ground lessor under the Wilmington Ground Lease, any related insurance andcondemnation proceeds will be applied either to the repair or restoration ofall or part of the related Property, with Lender having the right to hold anddisburse the proceeds as the repair or restoration progresses, or to thepayment of the outstanding principal balance of the Loan together with anyaccrued interest thereon; and

 

### (m)          The Wilmington Ground Lease does notimpose any restrictions on subleasing.

 

Section 4.43.      SURVIVAL; MISCELLANEOUS

 

Borrower and AffiliatedLessee agree that, unless expressly provided otherwise, all of therepresentations and warranties of Borrower, Borrower Principal and AffiliatedLessee set forth in this Agreement and in the other Loan Documents shallsurvive for so long as any portion of the Debt remains owing to Lender.  All representations, warranties, covenantsand agreements made in this Agreement or in the other Loan Documents byBorrower and Affiliated Lessee shall be deemed to have been relied upon byLender notwithstanding any investigation heretofore or hereafter made by Lenderor on its behalf.  Notwithstandinganything set forth herein to the contrary, the representations and warrantiesof Affiliated Lessee shall be deemed to be limited to any Property with respectto which it is the Operating Lessee and/or agreement to which it is a party.

 

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**ARTICLE5****BORROWER COVENANTS**

 

From the date hereof anduntil repayment of the Debt in full and performance in full of all obligationsof Borrower under the Loan Documents or the earlier release of the Lien of eachMortgage (and all related obligations) in accordance with the terms of thisAgreement and the other Loan Documents, Borrower Principal (as to Sections 5.11and  5.26 only) and Borrower hereby each covenants and agrees with Lenderthat:

 

Section 5.1.        EXISTENCE; COMPLIANCE WITH LEGALREQUIREMENTS

 

### (a)           Borrower shall do or cause to be doneall things necessary to preserve, renew and keep in full force and effect itsexistence, rights, licenses, permits and franchises and comply with all LegalRequirements applicable to it and each Property.  Borrower hereby covenants and agrees not to commit, permit orsuffer to exist any act or omission affording any Governmental Authority theright of forfeiture as against any Property or any part thereof or any moniespaid in performance of Borrower’s obligations under any of the LoanDocuments.  Borrower shall at all timesmaintain, preserve and protect all franchises and trade names used by it, itsAffiliated Lessees and any Affiliated Manager in connection with the operationof each Property.

 

### (b)           After prior written notice to Lender,Borrower, at its own expense, may contest by appropriate legal proceeding,promptly initiated and conducted in good faith and with due diligence, theLegal Requirements affecting any Property, provided that (i) no Default orEvent of Default has occurred and is continuing; (ii) such proceeding shall bepermitted under and be conducted in accordance with the provisions of any otherinstrument to which Borrower or the applicable Property is subject and shallnot constitute a default thereunder; (iii) neither such Property, any partthereof or interest therein, any of the tenants or occupants thereof,including, but not limited to the applicable Operating Lessee and Manager, norBorrower shall be affected in any material adverse way as a result of suchproceeding; (iv) non-compliance with the Legal Requirements shall not imposecivil or criminal liability on Borrower or Lender; (v) Borrower shall havefurnished the security as may be required in the proceeding or by Lender toensure compliance by Borrower with the Legal Requirements; and (vi) Borrowershall have furnished to Lender all other items reasonably requested by Lender.

 

Section 5.2.        MAINTENANCE AND USE OF PROPERTY

 

Borrower shall cause eachProperty to be maintained in a good and safe condition and repair. TheImprovements and the Personal Property shall not be removed, demolished orother than in accordance with the provisions of Section 5.21, materiallyaltered (except for normal replacement of the Personal Property) without theprior written consent of Lender.  Ifunder applicable zoning provisions the use of all or any portion of anyProperty is or shall become a nonconforming use, Borrower will not cause orpermit the nonconforming use to be discontinued or the nonconformingImprovement to be abandoned without the express written consent of Lender, suchconsent not to be unreasonably withheld.

 

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Section 5.3.        WASTE

 

Borrower shall not commitor suffer any waste of any Property or make any change in the use of anyProperty which will in any way materially increase the risk of fire or otherhazard arising out of the operation of such Property, or take any action thatmight invalidate or give cause for cancellation of any Policy, or do or permitto be done thereon anything that may in any way impair the value of anyProperty or the security for the Loan. Borrower will not, without the prior written consent of Lender, permitany drilling or exploration for or extraction, removal, or production of anyminerals from the surface or the subsurface of any Property, regardless of thedepth thereof or the method of mining or extraction thereof.

 

Section 5.4.        TAXES AND OTHER CHARGES

 

### (a)           Borrower shall pay (or cause to bepaid) all Taxes and Other Charges now or hereafter levied or assessed orimposed against any Property or any part thereof as the same become due andpayable; provided, however, Borrower’s obligation to directly pay (or cause tobe paid) Taxes shall be suspended for so long as Borrower complies with theterms and provisions of Section 9.6 hereof.  Borrower shall furnish to Lender receipts for the payment of theTaxes and the Other Charges prior to the date the same shall become delinquent(provided, however, that Borrower is not required to furnish such receipts forpayment of Taxes in the event that such Taxes have been paid by Lender pursuantto Section 9.6 hereof).  Borrowershall not suffer and shall promptly cause to be paid or transferred to bond andin either instance discharged (or fully and unconditionally released) any Lienor charge whatsoever which may be or become a Lien or charge against anyProperty, and shall promptly pay for (or cause to be paid for) all utilityservices provided to any Property.

 

### (b)           After prior written notice to Lender,Borrower, at its own expense, may contest by appropriate legal proceeding,promptly initiated and conducted in good faith and with due diligence, theamount or validity or application in whole or in part of any Taxes or OtherCharges, or any involuntary Lien or other charge, provided that (i) no Defaultor Event of Default has occurred and remains uncured; (ii) such proceedingshall be permitted under and be conducted in accordance with the provisions ofany other instrument to which Borrower is subject and shall not constitute adefault thereunder and such proceeding shall be conducted in accordance withall applicable Legal Requirements; (iii) neither the applicable Property norany part thereof or interest therein will be in danger of being sold,forfeited, terminated, canceled or lost; (iv) Borrower shall promptly uponfinal determination thereof pay the amount of any such Taxes or Other Charges,together with all costs, interest and penalties which may be payable inconnection therewith; (v) such proceeding shall suspend the collection of suchcontested Taxes or Other Charges from the applicable Property; and (vi)Borrower shall furnish such security as may be required in the proceeding, ordeliver to Lender such reserve deposits or indemnification in lieu thereof asmay be reasonably requested by Lender, to insure the payment of any such Taxesor Other Charges, together with all interest and penalties thereon (unlessBorrower has paid all of the Taxes or Other Charges under protest).  Lender may pay over any such cash deposit orpart thereof held by Lender to the claimant entitled thereto at any time when,in the judgment of Lender, the entitlement of such claimant is established orthe applicable Property (or part thereof or interest therein) shall be indanger of being sold, forfeited, terminated, canceled or

 

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### lost or thereshall be any danger of the Lien of the related Mortgage being primed by anyrelated Lien.

 

Section 5.5.        LITIGATION

 

Borrower shall giveprompt written notice to Lender of any litigation or governmental proceedingspending or threatened in writing against Borrower which might materiallyadversely affect Borrower’s condition (financial or otherwise) or business orany Property.

 

Section 5.6.        ACCESS TO PROPERTY

 

Borrower shall permitagents, representatives and employees of Lender to inspect any Property or anypart thereof at reasonable hours upon reasonable advance notice.

 

Section 5.7.        NOTICE OF DEFAULT

 

Borrower shall promptlyadvise Lender of any material adverse change in the condition (financial orotherwise) of Borrower, Borrower Principal, Affiliated Lessee or any Propertyor of the occurrence of any Default or Event of Default of which Borrower hasknowledge.

 

Section 5.8.        COOPERATE IN LEGAL PROCEEDINGS

 

Borrower shall atBorrower’s expense cooperate fully with Lender with respect to any proceedingsbefore any court, board or other Governmental Authority which may in any wayaffect the rights of Lender hereunder or any rights obtained by Lender underany of the other Loan Documents and, in connection therewith, permit Lender, atits election, to participate in any such proceedings.

 

Section 5.9.        PERFORMANCE BY BORROWER

 

Borrower shall in atimely manner observe, perform and fulfill each and every covenant, term andprovision to be observed and performed by Borrower under this Agreement and theother Loan Documents and any other agreement or instrument affecting orpertaining to any Property and any amendments, modifications or changesthereto.

 

Section 5.10.      AWARDS; INSURANCE PROCEEDS

 

Borrower shall cooperatewith Lender in obtaining for Lender the benefits of any Awards or InsuranceProceeds lawfully or equitably payable in connection with any Property, andLender shall be reimbursed for any reasonable out-of-pocket expenses incurredin connection therewith (including reasonable, actual attorneys’ fees anddisbursements, and the payment by Borrower of the expense of an appraisal onbehalf of Lender in case of a Casualty or Condemnation materially affecting anyProperty or any material part thereof) out of such Awards or InsuranceProceeds.

 

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Section 5.11.      FINANCIAL REPORTING

 

### (a)           Borrower and Borrower Principal shallkeep adequate books and records of account in accordance with GAAP, or inaccordance with other methods acceptable to Lender in its sole discretion,consistently applied and shall furnish to Lender:

 

#### (i)            quarterly and annual certified rentrolls signed and dated by Borrower, detailing the names of all Tenants underMajor Leases, the portion of the Improvements (in terms of square footage)occupied by each such Tenant, the base rent, additional rent and any othercharges payable under each such Major Lease (including annual store salesrequired to be reported by Tenant under any Lease), and the term of each suchMajor Lease, including the commencement and expiration dates and any tenantextension, expansion or renewal options, the extent to which any Tenant is indefault under any such Major Lease, and any other information as is reasonablyrequired by Lender, within forty-five (45) days after the end of each fiscalquarter or ninety (90) days after the close of each fiscal year of Borrower, asapplicable;

 

#### (ii)           quarterly and annual operatingstatements of each Property, prepared by Borrower or, if applicable, by Managerin form reasonably satisfactory to Lender and certified by Borrower in the formrequired by Lender, detailing the revenues received, the expenses incurred andthe net operating income before and after debt service (principal and interest)and major capital improvements for the period of calculation and containingappropriate year-to-date information, within forty-five (45) days after the endof each fiscal quarter or ninety (90) days after the close of each fiscal yearof Borrower, as applicable;

 

#### (iii)          quarterly and annual balance sheets,profit and loss statements, statements of cash flows, and statements of changein financial position of Borrower and Borrower Principal in the form requiredby Lender (with the annual financial statements prepared and audited by anAcceptable Accountant), together with a certificate by an authorized officer ofthe general partner of Borrower Principal certifying at to Borrower Principal’sthen Consolidated Tangible Net Worth, all within forty-five (45) days after theend of each fiscal quarter or ninety (90) days after the close of each fiscalyear of Borrower and Borrower Principal, as applicable, as the case may be; and

 

#### (iv)          an Annual Budget in form reasonablysatisfactory to Lender with respect to the operations of each Property, notlater than the later of (i) five (5) Business Days after Borrower of anyAffiliates receipt thereof and (ii) thirty (30) days or in the instance of eachMarriott Managed Property fifteen (15) days prior to the commencement of eachfiscal year of Borrower, but in no event later than February 15th ofany calendar year.  In the event thatLender reasonably objects to a proposed Annual Budget submitted by Borrower,Lender shall advise Borrower of such objections within fifteen (15) days afterreceipt thereof (and deliver to Borrower a reasonably detailed description ofsuch objections) and Borrower shall promptly revise such Annual Budget andresubmit the same to Lender.  Lendershall advise Borrower of any reasonable objections to such revised AnnualBudget within ten (10) days after receipt thereof (and deliver to Borrower areasonably detailed description of such objections) and Borrower shall promptlyrevise

 

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#### the same in accordancewith the process described in this subsection until Lender approves such AnnualBudget.  In the event Lender shall failto respond in writing to any proposed Annual Budget or revised Annual Budgetwithin the above-stated time period, Lender shall be deemed to have approvedthe same, provided that any proposed or revised Annual Budget submitted toLender pursuant to the terms hereof shall state in bold face type, 16” font andall capital letters on the cover letter accompanying each such (A) proposedAnnual Budget “ATTACHED IS A PROPOSED ANNUAL BUDGET FOR THE BELOW REFERENCEDPROPERTY(IES), YOUR FAILURE TO RESPOND IN WRITING TO THE UNDERSIGNED REGARDINGTHE SAME WITHIN FIFTEEN (15) DAYS OF THE DATE OF YOUR RECEIPT OF SAID PROPOSEDANNUAL BUDGET, SHALL BE DEEMED TO CONSTITUTE YOUR APPROVAL OF THE SAME” and (B)revised Annual Budget “ATTACHED IS A REVISED ANNUAL BUDGET FOR THE BELOWREFERENCED PROPERTY(IES), YOUR FAILURE TO RESPOND IN WRITING TO THE UNDERSIGNEDREGARDING THE SAME WITHIN FIFTEEN (15) DAYS OF THE DATE OF YOUR RECEIPT OF SAIDREVISED ANNUAL BUDGET SHALL BE DEEMED TO CONSTITUTE YOUR APPROVAL OF THESAME”.  Until such time that Lenderapproves a proposed or revised Annual Budget, which approval shall not beunreasonably withheld, conditioned or delayed, or is deemed to have approvedthe same, the most recent Annual Budget with respect to such Property shallapply; provided that, such approved Annual Budget shall be adjusted to reflectactual increases in Taxes, Insurance Premiums, utilities expenses and otherexpenses under the applicable Management Agreement, if any.

 

### (b)           Upon request from Lender, Borrowershall promptly furnish to Lender:

 

#### (i)            a property management reportregarding operating and financial performance for any Property, in reasonabledetail and certified by Borrower under penalty of perjury to be true andcomplete, but no more frequently than quarterly;

 

#### (ii)           to the extent applicable, anaccounting of all security deposits held in connection with any Lease of anypart of any Property, including the name and identification number of theaccounts in which such security deposits are held, the name and address of thefinancial institutions in which such security deposits are held and the name ofthe Person to contact at such financial institution, along with any authorityor release necessary for Lender to obtain information regarding such accountsdirectly from such financial institutions; and

 

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

 

### (c)           Borrower shall comply with thefollowing:

 

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#### (i)            If requested by Lender in connectionwith a Securitization involving a public offering, and the filing of anyrelated Disclosure Document, Borrower shall provide Lender, promptly uponrequest, with the following financial statements if, at the time a DisclosureDocument is being prepared for a Securitization, it is expected that theprincipal amount of the Loan when combined with the principal amount of anyAffiliated Loans at the time of Securitization may, or if the principal amountof the Loan when combined with the principal amount of any Affiliated Loans atany time during which the Loan and any Affiliated Loans are included in aSecuritization does, equal or exceed 20% of the aggregate principal amount ofall mortgage loans included or expected to be included, as applicable, in theSecuritization:

 

##### (A)          A balance sheet for Borrower for thetwo most recent fiscal years, meeting the requirements of Section 210.3-01of Regulation S-X of the Securities Act and statements of income and statementsof cash flows with respect to each Property for the three most recent fiscalyears, meeting the requirements of Section 210.3-02 of Regulation S-X,and, to the extent that such balance sheet is more than 135 days old as of thedate of the document in which such financial statements are included, interimfinancial statements of each Property meeting the requirements ofSection 210.3-01 and 210.3-02 of Regulation S-X (all of such financialstatements, collectively, the “**Standard Statements**”); provided, however,that with respect to a Property (other than properties that are hotels, nursinghomes, or other properties that would be deemed to constitute a business andnot real estate under Regulation S-X or other legal requirements) that has beenacquired by Borrower from an unaffiliated third party (such Property, “**AcquiredProperty**”), as to which the other conditions set forth inSection 210.3-14 of Regulation S-X for provision of financial statementsin accordance with such Section have been met, in lieu of the StandardStatements otherwise required by this section, Borrower shall instead providethe financial statements required by such Section 210.3-14 of RegulationS-X (“**AcquiredProperty Statements**”).

 

##### (B)           Not later than 45 days after the endof each fiscal quarter following the date hereof, a balance sheet for Borroweras of the end of such fiscal quarter, meeting the requirements ofSection 210.3-01 of Regulation S-X, and statements of income and statementsof cash flows of the Properties for the period commencing following the lastday of the most recent fiscal year and ending on the date of such balance sheetand for the corresponding period of the most recent fiscal year, meeting therequirements of Section 210.3-02 of Regulation S-X (provided, that if forsuch corresponding period of the most recent fiscal year Acquired PropertyStatements were permitted to be provided hereunder pursuant to subsection (i)above, Borrower shall instead provide Acquired Property Statements for suchcorresponding period).

 

##### (C)           Not later than 90 days after the endof each fiscal year following the date hereof, a balance sheet for Borrower asof the end of such fiscal year, meeting the requirements ofSection 210.3-01 of Regulation S-X, and statements

 

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##### of income and statementsof cash flows of each Property for such fiscal year, meeting the requirementsof Section 210.3-02 of Regulation S-X.

 

##### (D)          Within ten Business Days after noticefrom Lender in connection with the Securitization of this Loan, such additionalfinancial statements, such that, as of the date (each an “**Offering Document Date**”) ofeach Disclosure Document, Borrower shall have provided Lender with allfinancial statements as described in this subsection (c)(i); provided that thefiscal year and interim periods for which such financial statements shall beprovided shall be determined as of such Offering Document Date.

 

#### (ii)           If requested by Lender, Borrowershall provide Lender, promptly upon request, with summaries of the financialstatements referred to in Section 5.11(c) hereof if, at the time aDisclosure Document is being prepared for a Securitization, it is expected thatthe principal amount of the Loan and any Affiliated Loans at the time ofSecuritization may, or if the principal amount of the Loan and any AffiliatedLoans at any time during which the Loan and any Affiliated Loans are includedin a Securitization does, equal or exceed 10% (but is less than 20%) of theaggregate principal amount of all mortgage loans included or expected to beincluded, as applicable, in a Securitization. Such summaries shall meet the requirements for “summarized financialinformation,” as defined in Section 210.1-02(bb) of Regulation S-X, orsuch other requirements as may be determined to be necessary or appropriate byLender.

 

#### (iii)          All financial statements provided byBorrower hereunder pursuant to Section 5.11(c)(i) and (ii) hereof shall beprepared in accordance with GAAP, and shall meet the requirements of RegulationS-X and other applicable legal requirements. All financial statements referred to in Section 5.11(c)(i)(A)and(C) above shall be audited by Acceptable Accountants in accordance withRegulation S-X and all other applicable legal requirements, shall beaccompanied by the manually executed report of the independent accountantsthereon, which report shall meet the requirements of Regulation S-X and allother applicable legal requirements, and shall be further accompanied by amanually executed written consent of the Acceptable Accountants, in form andsubstance acceptable to Lender, to the inclusion of such financial statementsin any Disclosure Document and any Exchange Act Filing and to the use of thename of such Acceptable Accountants and the reference to such AcceptableAccountants as “experts” in any Disclosure Document and Exchange Act Filing (asdefined below), all of which shall be provided at the same time as the relatedfinancial statements are required to be provided.  All financial statements (audited or unaudited) provided byBorrower under this Section 5.11 shall be certified by the chief financialofficer or administrative member of Borrower, which certification shall statethat such financial statements meet the requirements set forth in the firstsentence of this Section 5.11(c)(iii).

 

#### (iv)          If requested by Lender, Borrower shallprovide Lender, promptly upon request, with any other or additional financialstatements, or financial, statistical or operating information, as Lender shalldetermine to be required pursuant to Regulation S-X or any amendment,modification or replacement thereto or other legal requirements in connectionwith any Disclosure Document or any filing under or pursuant to the

 

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#### Exchange Act inconnection with or relating to a Securitization (hereinafter an “**Exchange ActFiling**”) or as shall otherwise be reasonably requested by Lender.

 

#### (v)           In the event Lender determines, inconnection with a Securitization, that the financial statements required inorder to comply with Regulation S-X or other legal requirements are other thanas provided herein, then notwithstanding the provisions of Section 5.11(c)hereof, Lender may request, and Borrower shall promptly provide, suchcombination of Acquired Property Statement and/or Standard Statements or suchother financial statements as Lender determines to be necessary or appropriatefor such compliance.

 

#### (vi)          Any reports, statements or otherinformation required to be delivered under this Agreement shall be delivered inpaper form and in the event that Lender requires financial statements inconnection with subsection (c) above because the Loan when combined with theprincipal amount of any Affiliated Loans equal or exceed 20% of the aggregateprincipal amount of all mortgage loans included in a Securitization (definedbelow), Borrower shall deliver such reports, statements and other information(A) on a diskette, and (B) if requested by Lender and within the capabilitiesof Borrower’s data systems without change or modification thereto, inelectronic form and prepared and submitted in format acceptable to Lender.

 

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

 

### (e)           All items requiring the certificationof Borrower shall, except where Borrower is an individual, require acertificate executed by the general partner, managing member or chief executiveofficer of Borrower, as applicable (and the same rules shall apply to any soleshareholder, general partner or managing member which is not an individual).

 

Section 5.12.      ESTOPPEL STATEMENT

 

### (a)           After request by Lender, Borrowershall within ten (10) Business Days furnish Lender with a statement, dulyacknowledged and certified, setting forth (i) the amount of the originalprincipal amount of the Note, (ii) the rate of interest on the Note, (iii) theunpaid principal amount of the Note, (iv) the date installments of interestand/or principal were last paid, (v) any offsets or defenses to the payment ofthe Debt, if any, and (vi) that the Note, this Agreement, each Mortgage and theother Loan Documents are valid, legal and binding obligations and have not beenmodified or if modified, giving particulars of such modification.

 

### (b)           Borrower shall use its best efforts todeliver to Lender, promptly upon request, duly executed estoppel certificatesfrom (i) the applicable lessor under either Ground Lease pursuant to theapplicable terms and conditions of the applicable ground lease estoppel andagreement executed in connection herewith, and (ii) any one or more Tenants asrequired by

 

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### Lender attestingto such facts regarding the related Lease as Lender may require, including, butnot limited to attestations that each Lease covered thereby is in full forceand effect with no defaults thereunder on the part of any party, that none ofthe 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 timelyperformance of its obligations under the Lease.

 

Section 5.13.      OPERATING LEASE; LEASING MATTERS

 

### (a)           Borrower shall (i) promptly performand observe all of the covenants required to be performed and observed by itunder the Operating Leases and do all things necessary to preserve and to keepunimpaired its material rights thereunder; (ii) promptly notify Lender of anymaterial default under any Operating Lease of which it is aware; (iii) promptlydeliver to Lender a copy of any notice of default or other material noticeunder any Operating Lease delivered to any Operating Lessee by Borrower; (iv)promptly give notice to Lender of any notice or information that Borrowerreceives which indicates that an Operating Lessee is terminating its OperatingLease or that any Operating Lessee is otherwise discontinuing its operation ofthe applicable  Property; and (v)promptly enforce the performance and observance of all of the materialcovenants required to be performed and observed by the Operating Lessee underthe applicable Operating Lease.

 

### (b)           If at any time, (A)(i) an OperatingLessee shall become insolvent or a debtor in a bankruptcy proceeding or (ii) adefault has occurred and is continuing under any Operating Lease and(B) an Event of Default has occurred and is continuing and Lender hasaccelerated the Loan and is exercising its rights under the Loan Documents torealize on its collateral under the Loan and is exercising its rights under theLoan Documents to realize on the collateral securing the Loan, Lender shallhave the absolute right to (and Borrower shall reasonably cooperate and not inany way hinder, delay or otherwise interfere with Lender’s right to), (A) inthe instance of an Operating Lease between Borrower and an Affiliated Lessee, immediatelyterminate the applicable Operating Lease under and in accordance with the termsof the applicable Subordination, Attornment and Security Agreement or (b) inthe instance of an Operating Lease with a Non-Affiliated Lessee, terminate suchOperating Lease to the extent permitted under the terms of such Operating Leaseunder and in accordance with terms of the applicable Subordination,Non-Disturbance and Attornment Agreement.

 

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

 

### (d)           Any replacement Operating Lesseeshall in all events be a Qualified Lessee, and shall be a party to an OperatingLease approved in writing by Lender, in its reasonable discretion.  In the event any new Operating Lease withrespect to a Property(ies) not subject to an approved Management Agreement doesnot provide for the payment of Operating Expenses prior to the distribution ofany amounts to Borrower and/or for a reserve for Replacements that may becontrolled by Lender, in all instances acceptable to Lender in its reasonablediscretion, the

 

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### Lender shall havethe right to require adequate Operating Expenses to be reserved pursuant toSection 9.8(a) hereof with respect to such Property(ies) and/or, asapplicable, require additional Replacement Reserve Funds to be deposited withLender based on Lender’s reasonable determination with respect to theReplacement needs of such Property(ies). In addition, any new or replacement Operating Lessee (i) Affiliated withBorrower, shall execute a form of Subordination, Attornment and SecurityAgreement substantially in the same form as the one delivered in connectionwith the closing of the Loan and (ii) not Affiliated with Borrower, shallexecute a subordination, non-disturbance and attornment agreement in a form asmay be approved by Lender in its reasonable discretion.

 

### (e)           Other than any new or replacementOperating Lease, Borrower may enter into a proposed Lease (including therenewal or extension of an existing Lease (a “**Renewal Lease**”)) (or cause orpermit any Operating Lessee to enter into a proposed Lease or Renewal Lease)without the prior written consent of Lender, provided such proposed Lease orRenewal Lease (i) provides for rental rates and terms comparable to existinglocal market rates and terms (taking into account the type and quality of thetenant) as of the date such Lease is executed by Borrower or Operating Lessee,as the case may be (unless, in the case of a Renewal Lease, the rent payableduring such renewal, or a formula or other method to compute such rent, isprovided for or contemplated in the original Lease), (ii) is an arm’s-lengthtransaction with a bona fide, independent third party tenant, (iii) does nothave a materially adverse effect on the value of the applicable Property takenas a whole, (iv) is subject and subordinate to the applicable Mortgage and theTenant thereunder agrees to attorn to Lender (provided such agreement may beconditioned upon receipt of a reasonable and customary non-disturbanceagreement from Lender), (v) does not contain any option, offer, right of firstrefusal, or other similar right to acquire all or any portion of the applicableProperty, (vi) has a base term of less than fifteen (15) years includingoptions to renew, (vii) as to Major Leases, has no rent, credits, free rents orconcessions granted thereunder, and (viii) as to Major Leases, is written oncustomary form of lease reasonably acceptable to Lender.  All proposed Leases which do not satisfy therequirements set forth in this subsection shall be subject to the priorapproval of Lender and its counsel, at Borrower’s expense.  Borrower shall promptly deliver to Lendercopies of all Major Leases and to the extent requested by Lender other Leaseswhich are entered into pursuant to this subsection together with Borrower’scertification that such Leases satisfy all of the conditions of this Section.

 

### (f)            Without limiting any other provisioncontained herein, Borrower (i) shall (or shall cause the applicable OperatingLessee to) observe and perform all the obligations imposed upon the landlordunder the Leases and shall not do or permit to be done anything to impair thevalue of any of the Leases as security for the Debt; (ii) shall promptly sendcopies to Lender of all notices of default which Borrower shall send or receiveunder any Major Lease (and any other Lease to pursuant to any request made byLender); (iii) shall enforce (or cause or permit the applicable OperatingLessee to enforce) all of the material terms, covenants and conditionscontained in the Leases upon the part of the tenant thereunder to be observedor performed; (iv) shall not collect (or cause or permit any Operating Lesseeto collect) any of the Rents more than one (1) month in advance (exceptsecurity deposits shall not be deemed Rents collected in advance); (v) shallnot execute (or cause or permit any Operating Lessee to execute) any otherassignment of the landlord’s interest in any of the Leases or the Rents; and(vi) shall not consent

 

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### (or cause orpermit any Operating Lessee to consent) to any assignment of or sublettingunder any Leases not in accordance with their terms, without the prior writtenconsent of Lender.

 

### (g)           Notwithstanding any other provisioncontained herein, other than with respect to a Major Lease (including, but notlimited to, any Operating Lease) Borrower may, without the prior writtenconsent of Lender, amend, modify or waive the provisions of any Lease orterminate, reduce Rents under, accept a surrender of space under, or shortenthe term of, any Lease (including any guaranty, letter of credit or othercredit support with respect thereto) (or cause or permit any Operating Lesseeto do any of the foregoing) provided that such action (taking into account, inthe case of a termination, reduction in rent, surrender of space or shorteningof term, the planned alternative use of the affected space) does not have amaterially adverse effect on the value of the applicable Property taken as awhole, and provided that such Lease, as amended, modified or waived, isotherwise in compliance with the requirements of this Agreement and anysubordination agreement binding upon Lender with respect to such Lease.  A termination of a Lease (other than anOperating Lease) with a tenant who is in default beyond applicable notice andgrace periods shall not be considered an action which has a materially adverseeffect 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 notsatisfy the requirements set forth in this subsection shall be subject to theprior approval of Lender and its counsel (not to be unreasonably withheld), atBorrower’s expense.  Borrower shallpromptly deliver to Lender copies of amendments, modifications and waivers forMajor Leases (and any other Lease pursuant to any request made by Lender) whichare entered into pursuant to this subsection together with Borrower’scertification that all conditions of this subsection have been satisfied.

 

### (h)           Notwithstanding anything containedherein to the contrary, Borrower shall not, without the prior written consentof Lender, enter into, renew, extend, amend, modify, waive any provisions of,terminate, reduce Rents under, accept a surrender of space under, or shortenthe term of any Major Lease (or in the instance of a Major Lease other than anOperating Lease, cause or permit the applicable Operating Lessee to do any ofthe foregoing).

 

### (i)            Notwithstanding anything containedherein to the contrary, Borrower shall not, without the prior written consentof Lender, enter into, renew, extend, amend, modify, waive any provisions of,terminate, reduce Rents under, accept a surrender of space under, or shortenthe term of any Lease during a Excess Cash Flow Sweep Period (or cause orpermit the applicable Operating Lessee to do any of the foregoing).

 

Section 5.14.      PROPERTY MANAGEMENT

 

### (a)           Borrower shall or shall cause theapplicable Operating Lessee to (i) promptly perform and observe all of thecovenants required to be performed and observed by it under the ManagementAgreement and do all things necessary to preserve and to keep unimpaired itsmaterial rights thereunder; (ii) promptly notify Lender of any default underthe Management Agreement of which it is aware; (iii) promptly deliver to Lendera copy of any notice of default or other material notice received by Borrowerunder the Management Agreement; (iv) promptly give notice to Lender of anynotice or information that Borrower receives which indicates that Manager isterminating the Management Agreement or that Manager is otherwise discontinuing

 

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### its management ofthe applicable Property; and (v) promptly enforce the performance andobservance of all of the covenants required to be performed and observed byManager under the Management Agreement.

 

### (b)           If at any time, an event shall occur(i) under any Management Agreement which constitutes a material monetarydefault by Manager as determined by Lender or a material non-monetary defaultby Manager as determined by Lender which default materially and adverselyaffects the value, use or operation of any Property or the Borrower’sobligations to pay the Debt which permits Borrower or Operating Lessee toterminate the applicable Manager or (ii) under any Assignment of ManagementAgreement which permits Lender, Borrower or Operating Lessee to terminate theapplicable Manager, Borrower shall, at the request of Lender, promptly terminate(or cause Operating Lessee to terminate) the applicable Management Agreement inaccordance with the terms (including the minimum time periods for termination)of such Management Agreement and/or Assignment of Management Agreement, andreplace Manager with a Qualified Manager approved by Lender on terms andconditions satisfactory to Lender, it being understood and agreed that themanagement fee for such replacement manager shall not exceed then prevailingmarket rates.  Without limiting theforegoing, in the event any Assignment of Management Agreement shall permitLender to terminate the Management Agreement directly, upon Lender’s electionto so terminate any such Management Agreement, Borrower shall reasonablycooperate and not in any way interfere with any act by Lender’s to so terminatesuch Management Agreement.

 

### (c)           Borrower shall not, without the priorwritten consent of Lender (which consent shall not be unreasonably withheld,conditioned or delayed): (i) surrender, terminate or cancel the ManagementAgreement or otherwise replace any Manager or enter into any other managementagreement with respect to any Property (or cause or permit the applicableOperating Lessee to do any of the foregoing); (ii) reduce or consent to thereduction of the term of any Management Agreement (or cause or permit theapplicable Operating Lessee to do any of the foregoing); (iii) increase orconsent to the increase of the amount of any charges under any ManagementAgreement (or cause or permit the applicable Operating Lessee to do any of theforegoing); or (iv) otherwise modify, change, supplement, alter or amend, orwaive or release any of its rights and remedies under, any Management Agreementin any material respect (or cause or permit the applicable Operating Lessee todo any of the foregoing).

 

### (d)           Any replacement Manager shall in allevents be a Qualified Manager, and shall be a party to a Management Agreementapproved in writing by Lender, in its reasonable discretion.  In the event any new Management Agreementdoes not provide for the payment of Operating Expenses prior to thedistribution of any amounts to Operating Lessee or Borrower and/or for areserve for Replacements that may be controlled by Lender, in all instancesacceptable to Lender in its reasonable discretion, the Lender shall have theright to require adequate Operating Expenses to be reserved pursuant toSection 9.8(a) hereof with respect to such Properties and/or, asapplicable, require additional Replacement Reserve Funds in accordance with Section 9.2(b)hereof to be deposited with Lender based on Lender’s reasonable determinationwith respect to the Replacement needs of such Property(ies).  In addition, any new or replacement Managershall execute the form of assignment and subordination of management agreementin a form as may be approved by Lender in its reasonable discretion.

 

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Section 5.15.      LIENS

 

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

 

Section 5.16.      DEBT CANCELLATION

 

Borrower shall not cancelor otherwise forgive or release any claim or debt (other than termination of Leasesin accordance herewith) owed to Borrower by any Person, except for adequateconsideration and in the ordinary course of Borrower’s business.

 

Section 5.17.      ZONING

 

Borrower shall notinitiate or consent to any zoning reclassification of any portion of anyProperty or seek any variance under any existing zoning ordinance or use orpermit the use of any portion of any Property in any manner that could resultin such use becoming a non-conforming use under any zoning ordinance or anyother applicable land use law, rule or regulation, without the prior writtenconsent of Lender.

 

Section 5.18.      ERISA

 

### (a)           Borrower shall not engage in anytransaction 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, thisAgreement or the other Loan Documents) to be a non-exempt (under a statutory oradministrative class exemption) prohibited transaction under ERISA.

 

### (b)           Borrower further covenants and agreesto deliver to Lender such certifications or other evidence from time to timethroughout 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” asdefined in Section 3(3) of ERISA, which is subject to Title I of ERISA, ora “governmental plan” within the meaning of Section 3(3) of ERISA; (ii)Borrower is not subject to state statutes regulating investments and fiduciaryobligations with respect to governmental plans; and (iii) one or more of thefollowing circumstances is true:

 

##### (A)          Equity interests in Borrower arepublicly 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 “benefitplan investors” within the meaning of 29 C.F.R. §2510.3-101(f)(2); or

 

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

 

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Section 5.19.      NO JOINT ASSESSMENT

 

Borrower shall notsuffer, permit or initiate the joint assessment of any Property with (a) anyother real property constituting a tax lot separate from such Property, or (b)any portion of such Property which may be deemed to constitute personalproperty, or any other procedure whereby the Lien of any taxes which may belevied against such personal property shall be assessed or levied or charged tosuch Property.

 

Section 5.20.      RECIPROCAL EASEMENT AGREEMENTS

 

Borrower shall not enterinto, terminate or modify any REA without Lender’s prior written consent, whichconsent shall not be unreasonably withheld, conditioned or delayed.  Borrower shall enforce, comply with, and causeeach of the parties to each REA to comply with all of the material economicterms 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 withany alterations to any Improvements, exclusive of alterations to tenant spacesrequired under any Lease, (a) that may have a material adverse effect on anyProperty, (b) that are structural in nature or (c) that, together with anyother alterations undertaken at the same time (including any relatedalterations, improvements or replacements), are reasonably anticipated to havea cost in excess of the Alteration Threshold. If the total unpaid amounts incurred and to be incurred with respect tosuch alterations to the Improvements shall at any time exceed the AlterationThreshold, Borrower shall promptly deliver to Lender as security for thepayment of such amounts and as additional security for Borrower’s obligationsunder the Loan Documents any of the following: (i) cash, (ii) direct non-callableobligations of the United States of America or other obligations which are“government securities” within the meaning of Section 2(a)(16) of theInvestment Company Act of 1940, to the extent acceptable to the applicableRating Agencies, (iii) other securities acceptable to Lender and the RatingAgencies, (iv) Letter of Credit acceptable to Lender and the Rating Agencies or(v) a completion bond, provided that such completion bond is acceptable to theLender and the Rating Agencies.  Suchsecurity shall be in an amount equal to the excess of the total unpaid amountsincurred and to be incurred with respect to such alterations to theImprovements over the Alteration Threshold.

 

Section 5.22.      FRANCHISE AGREEMENTS.

 

### (a)           Each Property (other than any Propertyfor which with Lender’s consent there is no Franchise Agreement in place) shallbe operated under the terms and conditions of the applicable FranchiseAgreement.  Borrower shall or shallcause the applicable Operating Lessee to (i) pay all sums required to be paidby the franchisee under each Franchise Agreement, (ii) diligently perform,observe and enforce all of the terms, covenants and conditions of eachFranchise Agreement on the part of the franchisee thereunder to be performed,observed and enforced to the end that all things shall be done which arenecessary to keep unimpaired the rights of said franchisee under each FranchiseAgreement, (iii) promptly notify Lender of the giving of any notice to Borrowerand/or Operating Lessee of any default by the franchisee in the performance orobservance of any of the terms, covenants or conditions of any Franchise

 

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### Agreement on thepart of the franchisee thereunder to be performed and observed and deliver toLender a true copy of each such notice, and (iv) promptly deliver to Lender acopy of each financial statement, business plan, capital expenditure plan,notice of a default under the Franchise Agreement, report regarding operationsat the related Property, estimates of any monetary nature and any other itemsreasonably requested by Lender, in each case received by Borrower or AffiliatedLessee under any Franchise Agreement.

 

### (b)           Borrower shall not (and shall notcause or permit any Operating Lessee to), without the prior consent of theLender, surrender any Franchise Agreement or terminate or cancel any FranchiseAgreement or modify, change, supplement, alter or amend any FranchiseAgreement, in any respect, either orally or in writing, and Borrower herebyassigns to Lender as further security for the payment of the Debt and for theperformance and observance of the terms, covenants and conditions of thisAgreement, any and all rights, privileges and prerogatives of Borrower tosurrender any Franchise Agreement or to terminate, cancel, modify, change,supplement, alter or amend any Franchise Agreement in any respect, and any suchsurrender of any Franchise Agreement or termination, cancellation,modification, change, supplement, alteration or amendment of any FranchiseAgreement without the prior consent of Lender shall be void and of no force andeffect.

 

### (c)           If any franchisee shall default inthe performance or observance of any material term, covenant or condition ofany Franchise Agreement on the part of the franchisee thereunder to beperformed or observed, then, without limiting the generality of the otherprovisions of this Agreement, and without waiving or releasing Borrower fromany of its obligations hereunder, Lender shall have the right, but shall beunder no obligation, to pay any sums and to perform any act or take any actionas may be appropriate to cause all the terms, covenants and conditions of suchFranchise Agreement on the part of the franchisee to be performed or observedto be promptly performed or observed on behalf of Borrower, to the end that therights of said franchisee (and/or Borrower and/or Operating Lessee) in, to andunder such Franchise Agreement shall be kept unimpaired and free from default.  Any such amounts so advanced by Lendertogether with interest thereon from the date expended by Lender of the DefaultRate shall be part of the Debt and Borrower shall immediately repay suchamounts to Lender upon demand.  Pursuantto the terms of the applicable Subordination Non-Disturbance AttornmentAgreement, Subordination Attornment and Security Agreement and/or Assignment ofManagement Agreement, Lender and any person designated by Lender shall have,and are hereby granted, the right to enter upon the applicable Property at anytime and from time to time for the purpose of taking any such action.  If any Franchisor shall deliver to Lender acopy of any notice sent to Borrower and/or Operating Lessee of any defaultunder any Franchise Agreement, such notice shall constitute full protection toLender for any action taken or omitted to be taken by Lender in good faith, inreliance thereon.

 

### (d)           Borrower shall (or shall cause theapplicable Operating Lessee to) exercise each individual option, if any, toextend or renew the term of each Franchise Agreement upon demand by Lender madeat any time within ninety (90) days prior to the last day upon which any suchoption may be exercised, and Borrower hereby expressly authorizes and appointsLender as its attorney-in-fact to exercise (or cause the applicable OperatingLessee to exercise) any such option in the name of and upon behalf of Borrowershould Borrower fail to do so, which power of attorney shall be irrevocable andshall be deemed to be coupled with an interest.

 

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### (e)           Any sums expended by Lender pursuantto this Section shall bear interest at the Default Rate from the date suchcost is incurred to the date of payment to Lender, shall be deemed toconstitute a portion of the Debt , shall be secured by the lien of the Mortgageand the other Loan Documents and shall be immediately due and payable upondemand by Lender therefor.

 

### (f)            Borrower shall, promptly uponrequest of Lender, use its diligent best efforts to obtain and deliver (or causeto be delivered) an estoppel certificate from each Franchisor stating that (i)each applicable Franchise Agreement is in full force and effect and has notbeen modified, amended or assigned, (ii) neither such Franchisor nor thefranchisee named thereunder is in default under any of the terms, covenants orprovisions of each applicable Franchise Agreement and such Franchisor knows ofno 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 anyaction or given or received any notice for the purpose of terminating anyapplicable Franchise Agreement and (iv) all sums due and payable to suchFranchisor under each applicable Franchise Agreement have been paid in full.

 

### (g)           Upon the termination of any FranchiseAgreement, Borrower shall (or shall cause Operating Lessee to) promptly enterinto a new Franchise Agreement with a replacement Franchisor, which shalldeliver a comfort or similar letter to and in favor of Lender, all upon termsand conditions acceptable to Lender in its discretion.

 

Section 5.23.      GROUND LEASE

 

### (a)           With respect to each Ground Lease,Borrower shall (i) subject to Section 9.10 pay all rents, additional rentsand other sums required to be paid by Borrower, as tenant under and pursuant tothe provisions of the Ground Lease, (ii) diligently perform and observe all ofthe terms, covenants and conditions of the Ground Lease on the part ofBorrower, as tenant thereunder, (iii) promptly notify Lender of the giving ofany notice by the landlord under the Ground Lease to Borrower of any default byBorrower, as tenant thereunder, and deliver to Lender a true copy of each suchnotice within five (5) Business Days of receipt and (iv) promptly notify Lenderof any bankruptcy, reorganization or insolvency of the landlord under theGround Lease or of any notice thereof, and deliver to Lender a true copy ofsuch notice within five (5) Business Days of Borrower’s receipt.  Borrower shall not, without the priorwritten consent of Lender, surrender the leasehold estate created by the GroundLease or terminate or cancel the Ground Lease or modify, change, supplement,alter or amend the Ground Lease, either orally or in writing, and if Borrowershall default in the performance or observance of any term, covenant orcondition of the Ground Lease on the part of Borrower, as tenant thereunder,and shall fail to cure the same prior to the expiration of any applicable cureperiod provided thereunder, Lender shall have the right, but shall be under noobligation, to pay any sums and to perform any act or take any action as may beappropriate to cause all of the terms, covenants and conditions of the GroundLease on the part of Borrower to be performed or observed on behalf ofBorrower, to the end that the rights of Borrower in, to and under the GroundLease shall be kept unimpaired and free from default.  If the landlord under the Ground Lease shall deliver to Lender acopy of any notice of default under the Ground Lease, such notice shallconstitute full protection to Lender for any action taken or omitted to betaken by Lender, in good faith, in reliance thereon.

 

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### Borrower shallexercise each individual option, if any, to extend or renew the term of theGround Lease upon demand by Lender made at any time within ninety (90) daysprior to the last day upon which any such option may be exercised, and Borrowerhereby expressly authorizes and appoints Lender its attorney-in-fact toexercise any such option in the name of and upon behalf of Borrower shouldBorrower fail to do so, which power of attorney shall be irrevocable and shallbe deemed to be coupled with an interest.

 

### (b)           Other than as permitted by thisAgreement, notwithstanding anything contained in either Ground Lease to thecontrary, Borrower shall not further sublet any portion of the applicableProperty subject to such Ground Lease (other than as permitted pursuant to theapplicable terms and conditions hereof) without prior written consent ofLender.  In addition, (i) any suchsublease shall not terminate or be terminable by the lessee thereunder,including, but not limited to, in the event of any action for the foreclosureof the Security Instrument (unless a judgment is obtained therein against suchsublessee); and (ii) in the event that the Ground Lease is terminated asaforesaid, the sublessee under the sublease shall attorn to the lessor underthe Ground Lease or to the purchaser at the sale of the applicable Property onsuch foreclosure, as the case may be. In the event that any portion of the applicable Property shall be subletpursuant to the terms of this subsection, such sublease shall be deemed to beincluded in the applicable Property.

 

Section 5.24.      INTEREST RATE CAP AGREEMENT

 

### (a)           Prior to or contemporaneously withthe Closing Date, Borrower shall have obtained the Rate Cap, which shallcontinue until the end of the Interest Period in which the Maturity Date of theLoan shall occur and have a notional amount which shall not at any time be lessthan the outstanding principal balance of the Loan.  The Rate Cap shall be maintained throughout the term of the Loanwith an Acceptable Counterparty.  If theprovider of the Rate Cap or any Replacement Rate Cap ceases to be an AcceptableCounterparty, Borrower shall obtain a Replacement Rate Cap at Borrower’s solecost and expense within ten (10) days of receipt of notice from Lender orBorrower’s obtaining knowledge that the provider is no longer an AcceptableCounterparty.

 

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

 

### (c)           Borrower shall comply with all of itsobligations under the terms and provisions of the Rate Cap and any ReplacementRate Cap.  All amounts paid by theAcceptable Counterparty under the Rate Cap to Borrower or Lender shall bedeposited immediately into the

 

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### Cash ManagementAccount.  Borrower shall take allactions reasonably requested by Lender to enforce Lender’s rights under theRate Cap and any Replacement Rate Cap in the event of a default by theAcceptable Counterparty and shall not waive, amend or otherwise modify any ofits rights thereunder.

 

### (d)           In the event that Borrower fails topurchase and deliver to Lender the Rate Cap or any Replacement Rate Cap as andwhen required hereunder, or fails to maintain such agreement in accordance withthe terms and provisions of this Agreement, Lender may purchase the Rate Cap orany Replacement Rate Cap, as applicable, and the cost incurred by Lender inpurchasing the Rate Cap or any Replacement Rate Cap, as applicable, shall bepaid by Borrower to Lender with interest thereon at the Default Rate from thedate such cost was incurred by Lender until such cost is reimbursed by Borrowerto Lender.

 

### (e)           In connection with the Rate Cap andany Replacement Rate Cap, Borrower shall obtain and deliver to Lender anopinion from counsel (which counsel may be in house counsel for the AcceptableCounterparty) for the Acceptable Counterparty (upon which Lender and itssuccessors and assigns may rely) which shall provide, in relevant part, that:

 

#### (i)            the Acceptable Counterparty is dulyorganized, validly existing, and in good standing under the laws of itsjurisdiction of incorporation and has the organizational power and authority toexecute and deliver, and to perform its obligations under, the Rate Cap or theReplacement Rate Cap, as applicable;

 

#### (ii)           the execution and delivery of theRate Cap or the Replacement Rate Cap, as applicable, by the AcceptableCounterparty, and any other agreement which the Acceptable Counterparty hasexecuted and delivered pursuant thereto, and the performance of its obligationsthereunder have been and remain duly authorized by all necessary action and donot contravene any provision of its certificate of incorporation or by laws (orequivalent organizational documents) or any law, regulation or contractualrestriction binding on or affecting it or its property;

 

#### (iii)          all consents, authorizations andapprovals required for the execution and delivery by the AcceptableCounterparty of the Rate Cap or the Replacement Rate Cap, as applicable, andany other agreement which the Acceptable Counterparty has executed anddelivered pursuant thereto, and the performance of its obligations thereunderhave been obtained and remain in full force and effect, all conditions thereofhave been duly complied with, and no other action by, and no notice to orfiling with any governmental authority or regulatory body is required for suchexecution, delivery or performance; and

 

#### (iv)          the Rate Cap or the Replacement Cap,as applicable, and any other agreement which the Acceptable Counterparty hasexecuted and delivered pursuant thereto, has been duly executed and deliveredby the Acceptable Counterparty and constitutes the legal, valid and bindingobligation of the Acceptable Counterparty, enforceable against the AcceptableCounterparty 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 whetherenforcement is sought in a proceeding in equity or at law).

 

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Section 5.25.      MANAGER OF FLINT PROPERTY

 

The initial Manager ofthe Flint Property as of the Closing Date is Flagstone.  Borrower anticipates entering into withInterstate a new Management Agreement (“**Flint Interstate Management Agreement**”)in the exact same form as the form in place on the Closing Date with Interstateon the other Interstate Properties.  Onor before December 31, 2003, Borrower shall provide Lender with a copy of theexecuted Flint Interstate Management Agreement as well as the Assignment ofManagement Agreement in the form delivered on the Closing Date and executed byInterstate for the other Interstate Managed Properties.

 

Section 5.26.      CONSOLIDATED TANGIBLE NET WORTH

 

Borrower Principal shallnot permit the Consolidated Tangible Net Worth of Borrower Principal and itsSubsidiaries on a consolidated basis at any time to be less than the sum of$150,000,000 plus the cost basis of the Properties subject to the Lien of theMortgage at such time as set forth on Schedule III hereof minus the aggregatethen outstanding principal balance of the Loan and Mezzanine Loan.

 

**ARTICLE6****ENTITY COVENANTS**

 

Section 6.1.        SINGLE PURPOSE ENTITY/SEPARATENESS

 

Until the Debt has beenpaid in full, Borrower represents, warrants and covenants as follows:

 

### (a)           Borrower has not and will not:

 

#### (i)            engage in any business or activityother than the ownership, operation and maintenance of the Properties, andactivities incidental thereto;

 

#### (ii)           acquire or own any assets other than(A) the Properties, and (B) such incidental Personal Property as may benecessary for the operation of each Property;

 

#### (iii)          merge into or consolidate with anyPerson, or dissolve, terminate, liquidate in whole or in part, transfer orotherwise dispose of all or substantially all of its assets or change its legalstructure, without the prior written consent of Lender and after aSecuritization written confirmation from each of the applicable Rating Agenciesthat the same shall not result in the qualification, withdrawal or downgrade ofthe initial, or if higher, then current ratings issued in connection with aSecuritization;

 

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

 

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#### (v)           own any subsidiary, or make anyinvestment in, any Person, without the prior written consent of Lender andafter a Securitization written confirmation from each of the applicable RatingAgencies that said ownership or investment shall not result in thequalification, withdrawal or downgrade of the initial, or if higher, thencurrent ratings issued in connection with a Securitization;

 

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

 

#### (vii)         incur any debt, secured or unsecured,direct or contingent (including guaranteeing any obligation), other than (A)the Debt, (B) trade and operational indebtedness incurred in the ordinarycourse of business with trade creditors (including obligations in respect ofalterations, replacements and capital improvements permitted under the LoanDocuments), provided such indebtedness is (1) unsecured, (2) not evidenced by anote, (3) on commercially reasonable terms and conditions, and (4) due not morethan 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 theordinary course of business relating to Personal Property on commerciallyreasonable terms and conditions; provided however, the aggregate amount of theindebtedness described in (B) and (C) shall when combined with any similarindebtedness then held by the Affiliated Lessee not exceed at any time fivepercent (5%) of the outstanding principal amount of the Note;

 

#### (viii)        fail to maintain its records, books ofaccount, bank accounts, financial statements, accounting records and otherentity documents separate and apart from those of any other Person; except thatBorrower’s financial position, assets, liabilities, net worth and operatingresults may be included in the consolidated financial statements of anAffiliate, provided that such consolidated financial statements clearly and conspicuouslyidentify the Borrower as a separate legal entity;

 

#### (ix)           enter into any contract or agreementwith any general partner, member, shareholder, principal, guarantor of theobligations of Borrower, or any Affiliate of the foregoing, except upon termsand conditions that are intrinsically fair, commercially reasonable andsubstantially similar to those that would be available on an arm’s-length basiswith unaffiliated third parties;

 

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

 

#### (xi)           except as otherwise expresslypermitted by the Loan Documents, assume or guaranty the debts of any otherPerson (other than any commercially reasonable guaranty of any AffiliatedLessee’s obligations under any Franchise Agreement or Management Agreementconsented to by Lender), hold itself out to be responsible for the debts of anyother Person, or otherwise pledge its assets for the benefit of any otherPerson or hold out its credit as being available to satisfy the obligations ofany other Person;

 

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#### (xii)          make any loans or advances to anyPerson, without the prior written consent of Lender and after a Securitizationwritten confirmation from each of the applicable Rating Agencies that the sameshall 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 orfails to file a consolidated federal income tax return with any Person (unlessprohibited or required, as the case may be, by applicable Legal Requirements);

 

#### (xiv)        fail either to hold itself out to thepublic as a legal entity separate and distinct from any other Person or toconduct its business solely in its own name or fail to correct any knownmisunderstanding regarding its separate identity;

 

#### (xv)         fail to maintain adequate capital forthe normal obligations reasonably foreseeable in a business of its size andcharacter and in light of its contemplated business operations;

 

#### (xvi)        if it is a partnership or limitedliability company, without the unanimous written consent of all of its partnersor members, as applicable, and the written consent of 100% of the directors ormanagers as applicable, of each SPE Component Entity (if any), including,without limitation, each Independent Director, (a) file or consent to thefiling of any petition, either voluntary or involuntary, to take advantage ofany Creditors Rights Laws, (b) seek or consent to the appointment of areceiver, liquidator or any similar official, (c) take any action that mightcause such entity to become insolvent, or (d) make an assignment for the benefitof creditors;

 

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

 

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

 

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

 

#### (xx)          violate or cause to be violated theassumptions made with respect to Borrower and its principals in any opinionletter pertaining to substantive consolidation delivered to Lender inconnection with the Loan; or

 

#### (xxi)         fail to maintain a sufficient number ofemployees in light of its contemplated business operations.

 

### (b)           If Borrower is a partnership orlimited liability company which is not a single member limited liabilitycompany, each general partner in the case of a general partnership, eachgeneral partner in the case of a limited partnership, or the managing member inthe case of a limited liability company (each an “**SPE Component Entity**”) ofBorrower, as applicable, shall

 

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### be a corporationor a single member Delaware limited liability company (which shall comply withall additional provisions contained herein with respect to Delaware limitedliability companies) whose sole asset is its interest in Borrower.  Each SPE Component Entity (i) will at alltimes comply with each of the covenants, terms and provisions contained inSection 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 notengage 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 anyobligation); and (v) will cause Borrower to comply with the provisions of thisSection 6.1 and Section 6.4. Prior to the withdrawal or the disassociation of any SPE ComponentEntity from Borrower, Borrower shall immediately appoint a new general partneror managing member whose articles of incorporation (or other applicableformation and entity documentation) are substantially similar to those of suchSPE Component Entity and, if an opinion letter pertaining to substantiveconsolidation was required at closing, deliver a new opinion letter acceptableto Lender and the Rating Agencies with respect to the new SPE Component Entityand its equity owners.  Notwithstandingthe foregoing, to the extent Borrower is a single member Delaware limitedliability company, so long as Borrower maintains such formation status no SPEComponent Entity shall be required.

 

### (c)           In the event Borrower is a singlemember Delaware limited liability company, the limited liability companyagreement of Borrower (the “**LLC Agreement**”) shall provide that (i) uponthe 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 byMember of all of its limited liability company interest in Borrower and theadmission of the transferee in accordance with the Loan Documents and the LLCAgreement, or (B) the resignation of Member and the admission of an additionalmember of Borrower in accordance with the terms of the Loan Documents and theLLC Agreement), any person acting as Independent Director of Borrower shall,without any action of any other Person and simultaneously with the Memberceasing to be the member of Borrower, automatically be admitted to Borrower asa member thereof (“**Special Member**”) and shall continueBorrower without dissolution and (ii) Special Member may not resign fromBorrower or transfer its rights as Special Member unless (A) a successorSpecial Member has been admitted to Borrower as Special Member in accordancewith requirements of Delaware law and (B) such successor Special Member hasalso 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 uponthe admission to Borrower of a substitute Member, (ii) Special Membershall be a member of Borrower that has no interest in the profits, losses andcapital of Borrower and has no right to receive any distributions of Borrowerassets, (iii) pursuant to Section 18-301 of the Delaware LimitedLiability Company Act (the “**Act**”), Special Member shall not be requiredto make any capital contributions to Borrower and shall not receive a limitedliability company interest in Borrower, (iv) Special Member, in its capacity asSpecial Member, may not bind Borrower and (v) except as required by anymandatory provision of the Act, Special Member, in its capacity as SpecialMember, shall have no right to vote on, approve or otherwise consent to anyaction by, or matter relating to, Borrower, including, without limitation, themerger, consolidation or conversion of Borrower; provided, however, suchprohibition shall not limit the obligations of Special Member, in its capacityas Independent Director, to vote on such matters required by the Loan Documentsor the LLC Agreement.  In order toimplement the admission to Borrower of Special Member, Special

 

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### Member shallexecute a counterpart to the LLC Agreement. Prior to its admission to Borrower as Special Member, Special Membershall not be a member of Borrower.

 

Upon the occurrence ofany event that causes the Member to cease to be a member of Borrower, to thefullest extent permitted by law, the personal representative of Member shall,within ninety (90) days after the occurrence of the event that terminated thecontinued membership of Member in Borrower, agree in writing (i) to continueBorrower and (ii) to the admission of the personal representative or its nomineeor designee, as the case may be, as a substitute member of Borrower, effectiveas of the occurrence of the event that terminated the continued membership ofMember of Borrower in Borrower.  Anyaction initiated by or brought against Member or Special Member under anyCreditors Rights Laws shall not cause Member or Special Member to cease to be amember of Borrower and upon the occurrence of such an event, the business ofBorrower shall continue without dissolution. The LLC Agreement shall provide that each of Member and Special Memberwaives any right it might have to agree in writing to dissolve Borrower uponthe occurrence of any action initiated by or brought against Member or SpecialMember under any Creditors Rights Laws, or the occurrence of an event thatcauses Member or Special Member to cease to be a member of Borrower.

 

Section 6.2.        CHANGE OF NAME, IDENTITY OR STRUCTURE

 

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

 

Section 6.3.        BUSINESS AND OPERATIONS

 

Borrower will qualify todo business and will remain in good standing under the laws of the applicableState as and to the extent the same are required for the ownership,maintenance, management and operation of each Property.

 

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Section 6.4.                       INDEPENDENTDIRECTOR

 

### (a)                                  Theorganizational documents of each SPE Component Entity (if any) shall providethat at all times there shall be, and Borrower shall cause there to be, atleast two duly appointed members of the board of directors, board of managersor equivalent governing board (each an “**Independent Director**”) of such SPEComponent Entity reasonably satisfactory to Lender each of whom are not at thetime of such individual’s initial appointment, and shall not have been at anytime during the preceding five (5) years, and shall not be at any time whileserving as an Independent Director of such SPE Component Entity, either (i) ashareholder (or other equity owner) of, or an officer, director, partner,manager, member (other than as a Special Member in the case of a single memberDelaware limited liability company, or in the instance in which suchIndependent Director is an employee, representative or officer of a corporateservice company which in the ordinary course of business serves as IndependentDirector for an Affiliate of Borrower other than any Affiliate which has adirect interest in Borrower, Affiliated Lessee or any of Borrower’s constituententities), employee, attorney or counsel of, Borrower, such SPE ComponentEntity or any of  their respectiveshareholders, partners, members, subsidiaries or Affiliates; (ii) a customer orcreditor of, or supplier to, Borrower or any of its respective shareholders,partners, members, subsidiaries or Affiliates who derives any of its purchasesor revenue from its activities with Borrower or such SPE Component Entity orany Affiliate of any of them; (iii) a Person who Controls or is under commonControl with any such shareholder, officer, director, partner, manager, member,employee, supplier, creditor or customer; or (iv) a member of the immediatefamily of any such shareholder, officer, director, partner, manager, member,employee, supplier, creditor or customer.

###  

### (b)                                 Theorganizational documents of each SPE Component Entity (if any) shall providethat the board of directors, board of managers or equivalent governing board ofsuch SPE Component Entity shall not take any action which, under the terms ofany certificate of incorporation, certificate of formation, limited liabilitycompany agreement, by-laws, similar entity governance document or any votingtrust agreement with respect to any common stock, requires an unanimous vote ofthe board of directors of such SPE Component Entity of Borrower unless at thetime of such action there shall be at least two members of the board ofdirectors who are Independent Directors. Such SPE Component Entity will not, without the unanimous writtenconsent of its board of directors, board of managers or other equivalentgoverning board including each Independent Director, on behalf of itself orBorrower, (i) file or consent to the filing of any petition, either voluntaryor involuntary, to take advantage of any applicable Creditors Rights Laws; (ii)seek or consent to the appointment of a receiver, liquidator or any similarofficial; (iii) take any action that might cause such entity to becomeinsolvent; or (iv) make an assignment for the benefit of creditors.

###  

# **ARTICLE 7**NO SALE OR ENCUMBRANCE

# ** **

Section 7.1.                       TRANSFERDEFINITIONS

 

For purposes ofthis Article 7 an “**Affiliated Manager**” shall mean any managingagent in which Borrower, Affiliated Lessee, Borrower Principal, any SPEComponent Entity (if any) or any Affiliate of such entities has, directly orindirectly, any legal, beneficial or economic interest;

 

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“**Control**”shall mean the power to direct the management and policies of a RestrictedParty, directly or indirectly, whether through the ownership of votingsecurities or other beneficial interests, by contract or otherwise; “**RestrictedParty**” shall mean 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 beneficialowner of Borrower, Affiliated Lessee, Borrower Principal, any SPE ComponentEntity (if any), any Affiliated Manager or any non-member manager; and a “**Sale orPledge**” shall mean a voluntary or involuntary sale, conveyance,mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any optionswith respect to, or any other transfer or disposition of (directly orindirectly, voluntarily or involuntarily, by operation of law or otherwise, andwhether or not for consideration or of record) of a legal or beneficialinterest.

 

Section 7.2.                       NOSALE/ENCUMBRANCE

 

### (a)                                  Borrowershall not cause or permit a Sale or Pledge of any Property or any part thereofor any legal or beneficial interest therein held by Borrower nor permit a Saleor Pledge of an interest in any Restricted Party (in each case, a “**ProhibitedTransfer**”), other than pursuant to Leases of space in theImprovements 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 saleof publicly traded shares in CNL Hospitality Properties, Inc.

###  

### (b)                                 AProhibited Transfer shall include, but not be limited to, (i) an installmentsales agreement wherein Borrower agrees to sell any Property or any partthereof for a price to be paid in installments; (ii) other than an OperatingLease, an agreement by Borrower leasing all or a substantial part of anyProperty 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,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 orPledge of such corporation’s stock or the creation or issuance of new stock inone or a series of transactions; (iv) if a Restricted Party is a limited orgeneral partnership or joint venture, any merger or consolidation or thechange, removal, resignation or addition of a general partner or the Sale orPledge of the partnership interest of any general or limited partner or anyprofits or proceeds relating to such partnership interests or the creation orissuance of new partnership interests; (v) if a Restricted Party is a limitedliability company, any merger or consolidation or the change, removal,resignation or addition of a managing member or non-member manager (or if nomanaging member, any member) or the Sale or Pledge of the membership interestof any member or any profits or proceeds relating to such membership interest;(vi) if a Restricted Party is a trust or nominee trust, any merger,consolidation or the Sale or Pledge of the legal or beneficial interest in aRestricted Party or the creation or issuance of new legal or beneficial interests;or (vii) the removal of Manager, the acceptance by Borrower of the resignationof Manager when such Manager was not entitled under the applicable ManagementAgreement to resign or the resignation of the Manager in collusion with theBorrower, in each case other than in accordance with Section 5.14.

###  

Section 7.3.                       PERMITTEDTRANSFERS

 

Notwithstandingthe provisions of Section 7.2, the following transfers shall not be deemedto be a Prohibited Transfer: (a) a transfer by devise or descent or byoperation of law

 

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upon the death of a member, partner or shareholder of a RestrictedParty; (b) the transfer, in one or a series of transactions, of not morethan forty-nine percent (49%) of the stock, limited partnership interests ornon-managing membership interests (as the case may be) in a Restricted Party;provided, however, no such transfers shall result in a change in Control in theRestricted Party or change in control of any Property, and as a condition toeach such transfer, Lender shall receive not less than thirty (30) days priorwritten notice of such proposed transfer; (c) the pledge by Borrower’slimited partner of its interest in Borrower and by the sole member ofBorrower’s general partner of its interest in Borrower’s general partner assecurity for the Mezzanine Loan; (d) upon receipt of Lender’s priorwritten consent and after a Securitization written confirmation from each ofthe applicable Rating Agencies that the same shall not result in the qualification,withdrawal or downgrade of the initial, or if higher, then current ratingsissued in connection with such Securitization, in connection with any refinanceof the Mezzanine Loan, the pledge by Borrower’s limited partner of its interestin Borrower and by the sole member of Borrower’s general partner of itsinterest in Borrower’s general partner as security for such refinancing;(e) a transfer permitted under the Intercreditor Agreement; (f) a transferin a transaction (including, without limitation, a merger or consolidation)whereby CNL Rose Acquisition Corp., CNL Rose GP Corp. or CNL HospitalityProperties, Inc. transfer their interests in Borrower Principal provided thatfollowing such transaction a majority of the interests in Borrower Principalcontinue to be owned, directly or indirectly, by CNL Hospitality Properties,Inc. and CNL Hospitality Properties, Inc. shall continue to Control BorrowerPrincipal; or (g) other than as to Borrower Principal or any of BorrowerPrincipal’s Subsidiaries, any transaction, including, without limitation, amerger or consolidation involving a Restricted Party, whereby, immediatelyfollowing such transaction (i) a majority of the ownership interests in suchRestricted Party are owned, directly or indirectly, by Persons who owned,directly or indirectly, a majority of the ownership interests of suchRestricted Party immediately prior to such transaction, and (ii) as to anyentity other than CNL Hospitality Properties, Inc., there is no resultingchange in Control.  Notwithstanding theforegoing, any transfer (other than a transfer expressly permitted under theIntercreditor Agreement) that results in any Person owning in excess offorty-nine percent (49%) of the ownership interest in a Restricted Party otherthan a transfer permitted under the Intercreditor Agreement shall comply withthe requirements of Section 7.4 hereof.

 

Section 7.4.                       LENDER’SRIGHTS

 

Lender reservesthe right to condition the consent to a Prohibited Transfer requested hereunderupon (a) a modification of the terms hereof and an assumption of the Note andthe other Loan Documents as so modified by the proposed Prohibited Transfer,(b) receipt of payment of a transfer fee equal to one percent (1%) of theoutstanding principal balance of the Loan and all of Lender’s expenses incurredin connection with such Prohibited Transfer, (c) receipt of writtenconfirmation from the Rating Agencies that the Prohibited Transfer will notresult in a downgrade, withdrawal or qualification of the initial, or if higher,then current ratings issued in connection with a Securitization, or if aSecuritization has not occurred, any ratings to be assigned in connection witha Securitization, (d) the proposed transferee’s continued compliance with thecovenants set forth in this Agreement (including, without limitation, thecovenants in Article 6) and the other Loan Documents, and (e) thesatisfaction of such other conditions and/or legal opinions as Lender shalldetermine in its sole discretion to be in the interest of Lender.  All expenses incurred by Lender shall bepayable by Borrower whether or not Lender consents to the ProhibitedTransfer.  Lender shall not be requiredto demonstrate any

 

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actual impairment of its security or any increased risk of defaulthereunder in order to declare the Debt immediately due and payable upon aProhibited Transfer made without Lender’s consent. This provision shall applyto each and every Prohibited Transfer, whether or not Lender has consented toany previous Prohibited Transfer. Notwithstanding anything to the contrary contained in thisSection 7.4, in the event a substantive non-consolidation opinion wasdelivered to Lender and the Rating Agencies in connection with the closing ofthe Loan, and if any Sale or Pledge permitted under this Article 7 resultsin 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 suchtransfer, and in addition to any other requirement for Lender consent containedherein, deliver a revised substantive non-consolidation opinion to Lenderreflecting such Prohibited Transfer, which opinion shall be in form, scope andsubstance acceptable in all respects to Lender and the Rating Agencies.

 

Section 7.5.                       ASSUMPTION

 

Notwithstandingthe foregoing provisions of this Article 7, following the date which issix (6) months from the Closing Date, Lender shall not unreasonably withholdconsent to a transfer of the Properties in its entirety to, and the relatedassumption of the Loan by, any Person (a “**Transferee**”) provided that each of thefollowing terms and conditions are satisfied:

 

### (a)                                  noDefault or Event of Default has occurred;

###  

### (b)                                 Borrowershall have (i) delivered written notice to Lender of the terms of suchprospective transfer not less than sixty (60) days before the date on whichsuch transfer is scheduled to close and, concurrently therewith, all suchinformation concerning the proposed Transferee as Lender shall reasonablyrequire and (ii) paid to Lender a non-refundable processing fee in the amountof $25,000.  Lender shall have the rightto approve or disapprove the proposed transfer based on its then currentunderwriting and credit requirements for similar loans secured by similarproperties which loans are sold in the secondary market, such approval not tobe unreasonably withheld.  Indetermining whether to give or withhold its approval of the proposed transfer,Lender shall consider the experience and track record of Transferee and itsprincipals in owning and operating facilities similar to the Properties, thefinancial strength of Transferee and its principals, the general businessstanding of Transferee and its principals and Transferee’s and its principals’relationships and experience with contractors, vendors, tenants, lenders andother business entities; provided, however, that, notwithstanding Lender’sagreement to consider the foregoing factors in determining whether to give orwithhold such approval, such approval shall be given or withheld based on whatLender determines to be commercially reasonable and, if given, may be givensubject to such conditions as Lender may deem reasonably appropriate;

###  

### (c)                                  Borrowershall have paid to Lender, concurrently with the closing of such Transfer, (i)a non-refundable assumption fee in an amount equal to one percent (1.0%) of thethen outstanding principal balance of the Note and (ii) all out-of-pocket costsand expenses, including reasonable attorneys’ fees, incurred by Lender inconnection with the transfer;

###  

### (d)                                 Transfereeassumes and agrees to pay the Debt as and when due subject to the provisions ofArticle 15 hereof and, prior to or concurrently with the closing of suchtransfer,

 

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### Transferee and itsconstituent partners, members or shareholders as Lender may require,  shall execute, without any cost or expenseto Lender, such documents and agreements as Lender shall reasonably require toevidence and effectuate said assumption;

###  

### (e)                                  Borrowerand Transferee, without any cost to Lender, shall furnish any informationrequested by Lender for the preparation of, and shall authorize Lender to file,new financing statements and financing statement amendments and other documentsto the fullest extent permitted by applicable law, and shall execute anyadditional documents reasonably requested by Lender;

###  

### (f)                                    Borrowershall have delivered to Lender, without any cost or expense to Lender, suchendorsements to Lender’s Title Insurance Policy insuring that fee simple and/orleasehold title to the Properties, as applicable, is vested in Transferee(subject to Permitted Encumbrances), hazard insurance endorsements orcertificates and other similar materials as Lender may deem necessary at thetime of the transfer, all in form and substance satisfactory to Lender;

###  

### (g)                                 Transfereeshall have furnished to Lender, if Transferee is a corporation, partnership,limited liability company or other entity, all appropriate papers evidencingTransferee’s organization and good standing, and the qualification of thesigners to execute the assumption of the Debt, which papers shall includecertified copies of all documents relating to the organization and formation ofTransferee and of the entities, if any, which are partners or members ofTransferee.  Transferee and suchconstituent partners, members or shareholders of Transferee (as the case maybe), as Lender shall require, shall comply with the covenants set forth inArticle 6 hereof;

###  

### (h)                                 Transfereeshall assume the obligations of Borrower under any Management Agreement orprovide a new management agreement with a new manager which meets with therequirements of Section 5.14 hereof and assign to Lender as additionalsecurity such new management agreement;

###  

### (i)                                     Transfereeshall furnish an opinion of counsel satisfactory to Lender and its counsel (A)that Transferee’s formation documents provide for the matters described insubparagraph (g) above, (B) that the assumption of the Debt has been dulyauthorized, executed and delivered, and that the Note, each Mortgage, thisAgreement, the assumption agreement and the other Loan Documents are valid,binding and enforceable against Transferee in accordance with their terms, (C)that Transferee and any entity which is a controlling stockholder, member orgeneral partner of Transferee, have been duly organized, and are in existenceand good standing, and (E) with respect to such other matters as Lender mayreasonably request;

###  

### (j)                                     ifrequired by Lender, Lender shall have received confirmation in writing from theRating Agencies that rate the Securities to the effect that the transfer willnot result in a qualification, downgrade or withdrawal of any rating initiallyassigned or to be assigned to the Securities;

###  

### (k)                                  Borrower’sobligations under the contract of sale pursuant to which the transfer isproposed to occur shall expressly be subject to the satisfaction of the termsand conditions of this Section 7.5; and

 

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### (l)                                     Transfereeshall, prior to such transfer, deliver a substantive non-consolidation opinionto Lender, which opinion shall be in form, scope and substance acceptable inall respects to Lender and the Rating Agencies.

###  

A consent byLender with respect to a transfer of the Properties in its entirety to, and therelated assumption of the Loan by, a Transferee pursuant to thisSection 7.5 shall not be construed to be a waiver of the right of Lenderto consent to any subsequent transfer of any Property.

 

# **ARTICLE 8**INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

# ** **

Section 8.1.                       INSURANCE

 

### (a)                                  Borrowershall obtain and maintain, or cause to be maintained, at all times insurancefor Borrower and each Property providing at least the following coverages:

###  

#### (i)                                     comprehensive“all risk” insurance on the Improvements and the Personal Property, in eachcase (A) in an amount equal to one hundred percent (100%) of the “FullReplacement Cost,” which for purposes of this Agreement shall mean actualreplacement value (exclusive of costs of excavations, foundations, undergroundutilities and footings) with a waiver of depreciation; (B) containing an agreedamount endorsement with respect to the Improvements and Personal Propertywaiving all co-insurance provisions; (C) providing for no deductible in excessof $50,000 for all such insurance coverage; and (D)  if any of the Improvements or the use of such Property shall atany time constitute legal non-conforming structures or uses, providing coveragefor contingent liability from Operation of Building Laws, Demolition Costs andIncreased Cost of Construction Endorsements and containing an “Ordinance or LawCoverage” or “Enforcement” endorsement. In addition, Borrower shall obtain: (y) if any portion of theImprovements is currently or at any time in the future located in a  “special flood hazard area” designated bythe Federal Emergency Management Agency, flood hazard insurance in an amountequal to the maximum amount of such insurance available under the NationalFlood Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or theNational Flood Insurance Reform Act of 1994, as each may be amended; and (z)earthquake insurance in amounts and in form and substance reasonablysatisfactory to Lender in the event such Property is located in an area with ahigh degree of seismic risk, provided that the insurance pursuant to clauses(y) and (z) hereof shall be on terms consistent with the comprehensive all riskinsurance policy required under this subsection (i);

####  

#### (ii)                                  CommercialGeneral Liability insurance against claims for personal injury, bodily injury,death or property damage occurring upon, in or about such Property, including“Dram Shop” or other liquor liability coverage if alcoholic beverages are soldfrom or may be consumed at such Property, with such insurance (A) to be on theso-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) tocontinue at not less than the aforesaid limit until required to be changed byLender in writing by reason of changed economic conditions making suchprotection inadequate; and (C) to cover at least the following hazards: (1)premises and operations; (2) products and completed operations;

 

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#### (3) independentcontractors; (4) blanket contractual liability; and (5) contractual liabilitycovering the indemnities contained in Article 12 and Article 14hereof to the extent the same is available;

####  

#### (iii)                               lossof rents insurance or business income insurance, as applicable, (A) with losspayable to Lender; (B) covering all risks required to be covered by theinsurance provided for in subsection (i) above; and (C) which providesthat after the physical loss to the Improvements and Personal Property occurs,the loss of rents or income, as applicable, will be insured until completion ofRestoration 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 whichprovides that after the physical loss to the Improvements and Personal Propertyhas been repaired, the continued loss of income will be insured until suchincome either returns to the same level it was at prior to the loss, or theexpiration of six (6) months from the date that such Property is repaired orreplaced and operations are resumed, whichever first occurs, andnotwithstanding that the policy may expire prior to the end of suchperiod.  The amount of such loss ofrents or business income insurance, as applicable, shall be determined prior tothe date hereof and at least once each year thereafter based on Borrower’sreasonable estimate of the gross income from such Property for the succeedingperiod of coverage required above.  Allproceeds payable to Lender pursuant to this subsection shall be held byLender and shall be applied to the obligations secured by the Loan Documentsfrom time to time due and payable hereunder and under the Note; provided,however, that nothing herein contained shall be deemed to relieve Borrower ofits obligations to pay the obligations secured by the Loan Documents on therespective dates of payment provided for in the Note, this Agreement and theother Loan Documents except to the extent such amounts are actually paid out ofthe proceeds of such loss of rents or business income insurance, as applicable;

####  

#### (iv)                              atall times during which structural construction, repairs or alterations arebeing made with respect to the Improvements, and only if such Property coverageform does not otherwise apply, (A) owner’s contingent or protective liabilityinsurance covering claims not covered by or under the terms or provisions ofthe above mentioned commercial general liability insurance policy; and (B) theinsurance provided for in subsection (i) above written in a so-calledBuilder’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 amountendorsement waiving co-insurance provisions;

####  

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

####  

#### (vi)                              comprehensiveboiler and machinery insurance, if applicable, in amounts as shall bereasonably required by Lender on terms consistent with the commercial propertyinsurance policy required under subsection (i) above;

 

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#### (vii)                           excessliability insurance in an amount not less than $50,000,000 per occurrence onterms consistent with the commercial general liability insurance required undersubsection (ii) above or as otherwise approved by Lender;

####  

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

####  

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

####  

#### (x)                                   motorvehicle liability coverage for all owned and non-owned vehicles, includingrented and leased vehicles containing minimum limits per occurrence, includingumbrella coverage, of One Million and No/100 Dollars ($1,000,000);

####  

#### (xi)                                environmentalinsurance for the Louisville Property in form acceptable to Lender for aninitial term of two years past the initial Maturity Date and, if Borrowerextends the Maturity Date in accordance with Section 2.3(b) hereof, foreach Extended Maturity Date, for two years from such Extended Maturity Date;and

####  

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

####  

With respect tothe Policies required to be maintained pursuant to clauses (i), (iii) and (vi)above, Borrower shall maintain insurance coverage against Losses resulting fromacts of terrorism.

 

### (b)                                 Allinsurance provided for in Section 8.1(a) shall be obtained under valid andenforceable 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 responsibleinsurance companies authorized to do business in the State and having a claimspaying ability rating of “A” or better by S&P (or such other ratingsapproved by Lender) and a general policy rating of “A” or better and afinancial class of VIII or better by A.M. Best Company, Inc.  The Policies described inSection 8.1(a) shall designate Lender and its successors and assigns asadditional insureds, mortgagees and/or loss payee as deemed appropriate byLender.  To the extent such Policies arenot available as of the Closing Date, Borrower shall deliver to Lendercertified copies of all Policies or other evidence of insurance reasonablyacceptable to Lender not later than thirty (30) days after the ClosingDate.  Not less than ten (10) days priorto the expiration

 

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### dates of the Policiestheretofore furnished to Lender, renewal Policies or other evidence ofinsurance reasonably acceptable to Lender accompanied by evidence satisfactoryto Lender of payment of the premiums due thereunder (the “**Insurance Premiums**”) shall bedelivered by Borrower to Lender.

###  

### (c)                                  Anyblanket insurance Policy shall specifically allocate to each Property theamount of coverage from time to time required hereunder and shall otherwiseprovide the same protection as would a separate Policy insuring only theapplicable Property in compliance with the provisions of Section 8.1(a).

###  

### (d)                                 AllPolicies provided for or contemplated by Section 8.1(a), except for thePolicy referenced in Section 8.1(a)(v), shall name Borrower as the insuredand Lender as the additional insured, as its interests may appear, and in thecase of property damage, boiler and machinery, flood and earthquake insurance,shall contain a so-called New York standard non-contributing mortgagee clausein favor of Lender providing that the loss thereunder shall be payable toLender.

###  

### (e)                                  AllPolicies provided for in Section 8.1(a) shall contain clauses orendorsements to the effect that:

###  

#### (i)                                     noact or negligence of Borrower, or anyone acting for Borrower, or of any Tenantor other occupant, or failure to comply with the provisions of any Policy,which might otherwise result in a forfeiture of the insurance or any partthereof, shall in any way affect the validity or enforceability of theinsurance insofar as Lender is concerned;

####  

#### (ii)                                  thePolicies shall not be materially changed (other than to increase the coverageprovided thereby) or canceled without at least thirty (30) days’ prior writtennotice to Lender and any other party named therein as an additional insured;

####  

#### (iii)                               theissuers thereof shall give written notice to Lender if the Policies have notbeen renewed thirty (30) days prior to its expiration;

####  

#### (iv)                              Lendershall not be liable for any Insurance Premiums thereon or subject to anyassessments thereunder; and

####  

#### (v)                                 thePolicies described in clauses (i), (iii) and (vi) above do not contain anexclusion for acts of terror or similar acts of sabotage.

####  

### (f)                                    Ifat any time Lender is not in receipt of written evidence that all insurancerequired hereunder is in full force and effect, Lender shall have the right,without notice to Borrower, to take such action as Lender deems necessary toprotect its interest in the applicable Property, including, without limitation,obtaining such insurance coverage as Lender in its sole discretion deemsappropriate.  All premiums incurred byLender in connection with such action or in obtaining such insurance andkeeping it in effect shall be paid by Borrower to Lender upon demand and, untilpaid, shall be secured by the Mortgages and shall bear interest at the DefaultRate.

 

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### (g)                                 Borrowershall cause any payments paid under the Policy described inSection 8.1(a)(xi) to be paid to Lender.

###  

Section 8.2.                       CASUALTY

 

If any Propertyshall 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 and shall promptlycommence and diligently prosecute the Restoration of such Property inaccordance with Section 8.4, whether or not Lender makes any Net Proceedsavailable pursuant to Section 8.4. Borrower shall pay all costs of such Restoration whether or not suchcosts are covered by insurance.  Lendermay, but shall not be obligated to make proof of loss if not made promptly byBorrower.  Borrower shall adjust allclaims for Insurance Proceeds in consultation with, and approval of, Lender;provided, however, if an Event of Default has occurred and is continuing,Lender shall have the exclusive right to participate in the adjustment of allclaims for Insurance Proceeds.  Withoutlimiting any other provision contained herein, in the event Lender shall notmake Net Proceeds available to Borrower for the restoration of any Property,Borrower may obtain a partial release of such Property in accordance with andto the extent permitted under Section 2.4(c)(ii).

 

Section 8.3.                       CONDEMNATION

 

Borrower shallpromptly give Lender notice of the actual or threatened commencement of anyproceeding for the Condemnation of any Property of which Borrower has knowledgeand shall deliver to Lender copies of any and all papers served in connectionwith such proceedings.  Lender mayparticipate in any such proceedings, and Borrower shall from time to timedeliver to Lender all instruments requested by it to permit such participation.  Borrower shall, at its expense, diligentlyprosecute any such proceedings, and shall consult with Lender, its attorneysand experts, and cooperate with them in the carrying on or defense of any suchproceedings.  Notwithstanding any takingby any public or quasi-public authority through Condemnation or otherwise(including but not limited to any transfer made in lieu of or in anticipationof the exercise of such taking), Borrower shall continue to pay the Debt at thetime and in the manner provided for its payment in the Note and in thisAgreement and the Debt shall not be reduced until any Award shall have beenactually received and applied by Lender, after the deduction of expenses ofcollection, to the reduction or discharge of the Debt.  Lender shall not be limited to the interestpaid on the Award by the condemning authority but shall be entitled to receiveout of the Award interest at the rate or rates provided herein or in theNote.  If any Property or any portionthereof is taken by a condemning authority, Borrower shall promptly commenceand diligently prosecute the Restoration of such Property and otherwise complywith the provisions of Section 8.4, whether or not Lender makes any NetProceeds available pursuant to Section 8.4.  If such Property is sold, through foreclosure or otherwise, priorto the receipt by Lender of the Award, Lender shall have the right, whether ornot a deficiency judgment on the Note shall have been sought, recovered ordenied, to receive the Award, or a portion thereof sufficient to pay the Debt.  Without limiting any other provisioncontained herein, in the event Lender shall not make Net Proceeds available toBorrower for the restoration of any Property, Borrower may obtain a partialrelease of such Property in accordance with and to the extent permitted underSection 2.4(c)(ii).

 

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Section 8.4.                       RESTORATION

 

The followingprovisions shall apply in connection with any Restoration of a Property:

 

### (a)                                  Ifthe costs of completing the Restoration shall be less than five percent (5%) ofthe Allocated Loan Amount with respect to the affected Property, the NetProceeds will be disbursed by Lender to Borrower upon receipt, provided thatall of the conditions set forth in Section 8.4(b)(i) are met and Borrowerdelivers to Lender a written undertaking to expeditiously commence and tosatisfactorily complete with due diligence the Restoration in accordance withthe terms of this Agreement.

###  

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

###  

#### (i)                                     TheNet Proceeds shall be made available to Borrower for Restoration provided thateach of the following conditions are met:

####  

##### (A)                              noEvent 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 theProperties (immediately prior to the applicable Casualty) has been damaged,destroyed or rendered unusable as a result of a Casualty or (2) in the eventthe Net Proceeds are Condemnation Proceeds, less than ten percent (10%) of theland constituting the affected Property is taken, such land is located alongthe perimeter or periphery of the affected Property, and no portion of theImprovements is located on such land;

#####  

##### (C)                                theOperating Leases of the affected Property in effect as of the date of theoccurrence of such Casualty or Condemnation, whichever the case may be, andeach other Major Lease, if any, in effect as of such date shall remain in fullforce and effect during and after the completion of the Restoration withoutabatement of rent beyond the time required for Restoration;

#####  

##### (D)                               Borrowershall commence the Restoration as soon as reasonably practicable (but in noevent later than ninety (90) days after such Casualty or Condemnation,whichever the case may be, occurs) and shall diligently pursue the same tosatisfactory completion;

 

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##### (E)                                 Lendershall be satisfied that any operating deficits, including all scheduledpayments of principal and interest under the Note, which will be incurred withrespect to the affected Property as a result of the occurrence of any suchCasualty or Condemnation, whichever the case may be, will be covered out of theinsurance coverage referred to in Section 8.1(a)(iii) above;

#####  

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

#####  

##### (G)                                theaffected Property and the use thereof after the Restoration will be incompliance with and permitted under all Legal Requirements;

#####  

##### (H)                               theRestoration shall be done and completed by Borrower in an expeditious anddiligent fashion and in compliance with all applicable Legal Requirements;

#####  

##### (I)                                    suchCasualty or Condemnation, as applicable, does not result in the loss of accessto the affected Property or the Improvements;

#####  

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

#####  

##### (K)                               theNet Proceeds together with any cash or cash equivalent deposited by Borrowerwith Lender are sufficient in Lender’s reasonable judgment to cover the cost ofthe Restoration.

#####  

#### (ii)                                  TheNet Proceeds shall be held by Lender until disbursements commence, and, untildisbursed in accordance with the provisions of this Section 8.4, shallconstitute additional security for the Debt and other obligations under theLoan Documents.  The Net Proceeds shallbe disbursed by Lender to, or as directed by, Borrower from time to time duringthe course of the Restoration, upon receipt of evidence satisfactory to Lenderthat (A) all the conditions precedent to such advance, including those setforth in Section 8.4(b)(i), have been satisfied, (B) all materialsinstalled and work and labor performed (except to the extent that they are tobe paid for out of the requested disbursement) in connection with the relatedRestoration item have been paid for in full, and (C) there exist no notices ofpendency, stop orders, mechanic’s or materialman’s liens or notices ofintention to file same, or any other liens or encumbrances of any naturewhatsoever on the affected Property which have not either been fully bonded tothe satisfaction of Lender and discharged of record or in the alternative fullyinsured to the satisfaction of Lender by the title company issuing the TitleInsurance Policy.  

 

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#### Notwithstandingthe foregoing, Insurance Proceeds from the Policies required to be maintainedby Borrower pursuant to Section 8.1(a)(iii) shall be controlled by Lenderat all times, shall not be subject to the provisions of this Section 8.4and shall be used solely for the payment of the obligations under the LoanDocuments and Operating Expenses.

####  

#### (iii)                               Allplans and specifications required in connection with the Restoration shall besubject to prior review and acceptance in all respects by Lender and by anindependent consulting engineer selected by Lender (the “**Restoration Consultant**”).  Lender shall have the use of the plans andspecifications and all permits, licenses and approvals required or obtained inconnection with the Restoration.  Theidentity of the contractors, subcontractors and materialmen engaged in the Restoration,as well as the contracts in excess of $100,000 under which they have beenengaged, shall be subject to prior review and acceptance by Lender and theRestoration Consultant.  All costs andexpenses incurred by Lender in connection with making the Net Proceedsavailable for the Restoration, including, without limitation, reasonablecounsel fees and disbursements and the Restoration Consultant’s fees, shall bepaid by Borrower.

####  

#### (iv)                              Inno event shall Lender be obligated to make disbursements of the Net Proceeds inexcess of an amount equal to the costs actually incurred from time to time forwork in place as part of the Restoration, as certified by the RestorationConsultant, minus the Restoration Retainage. The term “Restoration Retainage” shall mean an amount equal to tenpercent (10%) of the costs actually incurred for work in place as part of theRestoration, as certified by the Restoration Consultant, until the Restorationhas been completed.  The RestorationRetainage shall be reduced to five percent (5%) of the costs incurred uponreceipt by Lender of satisfactory evidence that fifty percent (50%) of theRestoration has been completed.  TheRestoration Retainage shall in no event, and notwithstanding anything to thecontrary set forth above in this Section 8.4(b), be less than the amountactually held back by Borrower from contractors, subcontractors and materialmenengaged in the Restoration.  TheRestoration Retainage shall not be released until the Restoration Consultantcertifies to Lender that the Restoration has been completed in accordance withthe provisions of this Section 8.4(b) and that all approvals necessary forthe re-occupancy and use of the affected Property have been obtained from allappropriate Governmental Authorities, and Lender receives evidence satisfactoryto Lender that the costs of the Restoration have been paid in full or will bepaid in full out of the Restoration Retainage; provided, however, that Lenderwill release the portion of the Restoration Retainage being held with respectto any contractor, subcontractor or materialman engaged in the Restoration asof the date upon which the Restoration Consultant certifies to Lender that thecontractor, subcontractor or materialman has satisfactorily completed all workand has supplied all materials in accordance with the provisions of thecontractor’s, subcontractor’s or materialman’s contract, the contractor,subcontractor or materialman delivers the lien waivers and evidence of paymentin full of all sums due to the contractor, subcontractor or materialman as maybe reasonably requested by Lender or by the title company issuing the TitleInsurance Policy, and Lender receives an endorsement to the Title InsurancePolicy insuring the continued priority of the lien of each Mortgage andevidence of payment of any premium payable for such endorsement.  If required by Lender, the release of anysuch portion of the Restoration Retainage shall be approved by the suretycompany, if any, which has issued

 

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#### a payment orperformance bond with respect to the contractor, subcontractor or materialman.

####  

#### (v)                                 Lendershall not be obligated to make disbursements of the Net Proceeds morefrequently than once every calendar month.

####  

#### (vi)                              Ifat any time the Net Proceeds or the undisbursed balance thereof shall not, inthe reasonable opinion of Lender in consultation with the RestorationConsultant, be sufficient to pay in full the balance of the costs which areestimated by the Restoration Consultant to be incurred in connection with thecompletion of the Restoration, Borrower shall deposit the deficiency (the “**Net ProceedsDeficiency**”) with Lender before any further disbursement of the NetProceeds shall be made.  The NetProceeds Deficiency deposited with Lender shall be held by Lender and shall bedisbursed for costs actually incurred in connection with the Restoration on thesame conditions applicable to the disbursement of the Net Proceeds, and untilso disbursed pursuant to this Section 8.4(b) shall constitute additionalsecurity for the Debt and other obligations under the Loan Documents.

####  

#### (vii)                           Theexcess, if any, of the Net Proceeds and the remaining balance, if any, of theNet Proceeds Deficiency deposited with Lender after the Restoration Consultantcertifies to Lender that the Restoration has been completed in accordance withthe provisions of this Section 8.4(b), and the receipt by Lender ofevidence satisfactory to Lender that all costs incurred in connection with theRestoration have been paid in full, shall be remitted by Lender to Borrower,provided no Event of Default shall have occurred and shall be continuing underthe Note, this Agreement or any of the other Loan Documents.

####  

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

###  

### (d)                                 Inthe event of foreclosure of any Mortgage, or other transfer of title to the affectedProperty in extinguishment in whole or in part of the Debt, all right, titleand interest of Borrower in and to the Policies then in force concerning eachProperty and all proceeds payable thereunder shall thereupon vest in thepurchaser at such foreclosure, Lender or other transferee in the event of suchother transfer of title.

###  

# **ARTICLE 9**RESERVE FUNDS

# ** **

Section 9.1.                       REQUIREDREPAIRS

 

### (a)                                  Borrowershall make (or cause to be made) the repairs and improvements set forth onSchedule I and as more particularly described in the Physical ConditionsReport or any Environmental Report delivered in connection with the Closing ofthe Loan prepared in

 

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### connection with theclosing of the Loan (such repairs hereinafter referred to as “**RequiredRepairs**”).  Borrower shallcomplete (or cause to be completed) the Required Repairs in a good andworkmanlike manner on or before the date that is twelve (12) months from thedate hereof or within such other time frame for completion specifically setforth on Schedule I.

###  

### (b)                                 Borrowershall establish on the date hereof an Eligible Account with Lender or Lender’sagent to fund the Required Repairs (the “**Required Repair Account**”) into whichBorrower shall deposit on the date hereof the amount of $288,750.00, whichamount equals 125% of the estimated cost for the completion of the RequiredRepairs.  Amounts so deposited shallhereinafter be referred to as the “**Required Repair Funds**.”

###  

Section 9.2.                       REPLACEMENTS

 

### (a)                                  Onan ongoing basis throughout the term of the Loan, Borrower shall make (or causeto be made) capital repairs, replacements and improvements necessary to keepeach Property in good order and repair and in a good marketable condition orprevent deterioration of each Property, including, but not limited to, repairs,replacements of, or additions to FF&E and those repairs, replacements andimprovements more particularly described (i) in any Physical Condition Reportreceived at any time after the Closing Date, (ii) any PIP Report received atany time after the Closing Date, (iii) on Schedule II attached hereto andmade a part hereof or (iv) the applicable Annual Budget approved by Lender(collectively, the “**Replacements**”).  Borrower shall complete all Replacements (or cause allReplacements to be made) in a good and workmanlike manner as soon ascommercially reasonable after commencing to make each such Replacement.

###  

### (b)                                 Borrowershall establish on the date hereof Eligible Accounts with Lender or Lender’sagent to fund the Replacements (i) with respect to the Marriott ManagedProperties (such account, the “**Marriott Replacement Reserve Account**”),(ii) with respect to the Hilton Managed Properties (other than the DoubletreeProperty) (such account, the “**Hilton Replacement Reserve Account**”), (iii)with respect to the Doubletree Property (such account, the “**DoubletreeReplacement Reserve Account**”), (ii) with respect to the InterstateManaged Properties (such account, the “**Interstate Replacement Reserve Account**” andtogether with the Marriott Replacement Reserve Account, the Hilton ReplacementReserve Account, the Doubletree Replacement Reserve Account and any otherreserve for Replacements provided for in any Management Agreement approved byLender, in accordance with the terms hereof, collectively, the “**ManagerReplacement Reserve Accounts**”), and (v) with respect to each otherProperty (such account, the “**Other Replacement Reserve Account**” andtogether with the Marriott Replacement Reserve Account, the Hilton ReplacementReserve Account, the Doubletree Replacement Reserve Account and the InterstateReplacement Reserve Account, collectively, the “**Replacement Reserve Account**”).  Borrower shall (or shall cause theapplicable Manager to) timely deposit into each Manager Replacement ReserveAccount (A)  on the Closing Date $0.00 into the Marriott ReplacementReserve Account, $125,835.00 into the Hilton Replacement Reserve Account, $0.00into the Doubletree Replacement Reserve Account and $0.00 into the InterstateReplacement Reserve Account and (B) thereafter, the applicable amountsrequired to be reserved from time to time with respect to Replacements underthe applicable Management Agreement (the aggregate amount of such deposits, the“**ManagerReplacement Reserve Monthly Deposit**”).  In addition, Borrower shall deposit into the Other

 

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Replacement Reserve Account (A)$0.00 on the Closing Date and (B) five percent (5%) of total gross revenuesfrom the operations of each Property not subject to a Management Agreementproviding for a reserve for Replacements acceptable to Lender, including, butnot limited to, any Property operated by a Non-Affiliated Lessee (the aggregateamount of such deposits, the **“OtherReplacement Reserve Monthly Deposit”** and together with the ManagerReplacement Reserve Monthly Deposit, collectively, the **“Replacement Reserve Monthly Deposit”**).  On or before the twenty-first (21st) day ofeach calendar month during the term of the Loan, Borrower shall provide toLender an accounting of all amounts deposited into each Replacement ReserveAccount during such month.  Amounts sodeposited in each Replacement Reserve Account shall hereinafter be referred tocollectively as **“Replacement Reserve Funds.”**  Lender may, in its reasonable discretion,adjust the Other Replacement Reserve Monthly Deposit from time to time to anamount sufficient to maintain the proper maintenance and operation of theapplicable Property and Borrower shall deposit or cause to be deposited anyadditional amounts not deposited by the applicable Manager.  In the event Lender shall at any timeincrease the Other Replacement Reserve Monthly Deposit, Borrower may, at itselection, request that Lender obtain, at the sole cost and expense of Borrower,a Physical Conditions Report prepared by an engineer selected by Lender in itsreasonable discretion, in which case the Other Replacement Reserve MonthlyDeposit shall be adjusted by Lender based on the results of such report,provided that in no event shall such amounts be reduced below the greater of(a) the aggregate Other Replacement Reserve Monthly Deposit then required byLender with respect to the Other Replacement Reserve Account or (b) the amountnecessary to perform any work required in any PIP Report or by any LegalRequirement with respect to the applicable Property.  Furthermore, in the event of a default by Manager under anyManagement Agreement relating to the maintenance and repair of one or moreProperties, Lender shall have the right to cause Borrower to deposit additionalfunds in an amount sufficient to remedy such defaults into the OtherReplacement Reserve Account, provided that Borrower shall have the right tocontest such additional deposit requirement in the same manner set forth in thepreceding sentence, with respect to any contest to any additional fundings withrespect to the Other Replacement Reserve Monthly Deposit.

###  

### (c)                                  Borrowershall establish on the date hereof an Eligible Account with Lender or Lender’sagent to fund certain Replacements described in the PIP reports delivered inconnection with the closing of the Loan as summarized on Schedule IVattached hereto (the “**Closing PIP Reports**”) to the extent notcovered by the applicable Replacement Reserve Accounts (such account, the “**PIP ReserveAccount**”).  Borrower shalltimely deposit into the PIP Reserve Account (A) on the Closing Date$4,100,000.00 and (B) thereafter, an amount equal to $265,000.00 or such loweramount as Lender may reasonably require taking into account Replacements madeand performed by Borrower as required by the Closing PIP Reports and anyreleases of Properties pursuant to the terms of this Loan Agreement (theaggregate amount of such deposits, the “**PIP Reserve Monthly Deposit**”).  Additionally, in connection with any releaseof a Release Property pursuant to Section 2.4(c), Lender may requireBorrower to make a deposit into the PIP Reserve Account in an amount as Lenderdeems is reasonably necessary to cause the amounts in the PIP Reserve Account(taking into account any future PIP Reserve Monthly Deposits and amounts in theapplicable Replacement Reserve Account and any future deposits therein asrequired hereunder) to be sufficient to pay the Required PIP Replacements forthe remaining Properties.  Amounts sodeposited in the PIP Reserve Account shall hereinafter be referred tocollectively as “**PIP Reserve Funds**”. Borrower shall complete (or cause to be

 

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### completed) theReplacements described in the Closing PIP Reports in a good and workmanlikemanner on or before the date specified in Schedule IV attached hereto (the“**RequiredPIP Replacements**”).  Upon theearlier to occur (i) payment in full of the Debt and (ii) completion of theRequired PIP Replacements, any PIP Reserve Funds remaining in the PIP ReserveAccount shall be released to Borrower and the obligation to make the PIPReserve Monthly Deposit shall cease.

###  

Section 9.3.                       INTENTIONALLYOMITTED

 

Section 9.4.                       REQUIREDWORK

 

Borrower shalldiligently pursue (or cause to be pursued) all Required Repairs andReplacements, including any Required PIP Replacements (collectively, the “**RequiredWork**”) to completion in accordance with the following requirements:

 

### (a)                                  Lenderreserves the right, at its option, to approve all contracts or work orders withmaterialmen, mechanics, suppliers, subcontractors, contractors or other partiesproviding labor or materials in connection with the Required Work to the extentsuch contracts or work orders exceed $150,000. Upon Lender’s request, Borrower shall assign (or cause to be assigned)any contract or subcontract to Lender.

###  

### (b)                                 Inthe event Lender determines in its reasonable discretion that any Required Workis not being or has not been performed in a workmanlike or timely manner,Lender shall have the option to withhold disbursement for such unsatisfactoryRequired Work and to proceed under existing contracts or to contract with thirdparties to complete such Required Work and to apply the Required Repair Funds,the Replacement Reserve Funds or the PIP Reserve Funds (to the extent theReplacement Reserve Funds are insufficient to cover the applicableReplacements), as applicable, toward the labor and materials necessary tocomplete such Required Work, without providing any prior notice to Borrower andto exercise any and all other remedies available to Lender upon an Event ofDefault hereunder.

###  

### (c)                                  Inorder to facilitate Lender’s completion of the Required Work, Borrower grantsLender the right to enter onto the applicable Property and perform any and allwork and labor necessary to complete the Required Work and/or employ watchmento protect such Property from damage. All sums so expended by Lender, to the extent not from the Reserve Funds,shall be deemed to have been advanced under the Loan to Borrower and secured byeach Mortgage.  For this purposeBorrower constitutes and appoints Lender its true and lawful attorney-in-factwith full power of substitution to complete or undertake the Required Work inthe name of Borrower upon Borrower’s failure to do so in a workmanlike andtimely manner.  Such power of attorneyshall be deemed to be a power coupled with an interest and cannot berevoked.  Borrower empowers saidattorney-in-fact as follows: (i) to use any of the Reserve Funds for thepurpose of making or completing the Required Work; (ii) to make such additions,changes and corrections to the Required Work as shall be necessary or desirableto complete the Required Work; (iii) to employ such contractors,subcontractors, agents, architects and inspectors as shall be required for suchpurposes; (iv) to pay, settle or compromise all existing bills and claims whichare or may become Liens against the applicable Property, or as may be necessaryor desirable for the completion of the Required Work, or for clearance oftitle; (v) to execute all

 

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### applications andcertificates in the name of Borrower which may be required by any of thecontract documents; (vi) to prosecute and defend all actions or proceedings inconnection with any Property or the rehabilitation and repair of any Property;and (vii) to do any and every act which Borrower might do on its own behalf tofulfill the terms of this Agreement.

###  

### (d)                                 Nothingin this Section 9.4 shall: (i) make Lender responsible for making orcompleting the Required Work; (ii) require Lender to expend funds in additionto the Reserve Funds to make or complete any Required Work; (iii) obligateLender to proceed with the Required Work; or (iv) obligate Lender to demandfrom Borrower additional sums to make or complete any Required Work.

###  

### (e)                                  Borrowershall permit Lender and Lender’s agents and representatives (including, withoutlimitation, Lender’s engineer, architect, or inspector) or third partiesperforming Required Work pursuant to this Section 9.4 after reasonablenotice to Borrower to enter onto any Property during normal business hours(subject to the rights of tenants under Leases approved, if required) inaccordance with the terms hereof and Managers under approved ManagementAgreements to inspect the progress of any Required Work and all materials beingused in connection therewith, to examine all plans and shop drawings relatingto such Required Work which are or may be kept at any Property, and to completeany Required Work made pursuant to this Section 9.4.  Borrower shall cause all contractors andsubcontractors to cooperate with Lender and Lender’s representatives or suchother persons described above in connection with inspections described in thisSection 9.4 or the completion of Required Work pursuant to thisSection 9.4.

###  

### (f)                                    Lendermay, to the extent any Required Work would reasonably require an inspection ofany Property, inspect such Property at Borrower’s expense prior to making adisbursement of the Reserve Funds in order to verify completion of the RequiredWork for which reimbursement is sought. Borrower shall pay Lender a reasonable inspection fee not exceeding$1,000 for each such inspection.  Lendermay require that such inspection be conducted by an appropriate independentqualified professional selected by Lender and/or may require a copy of acertificate of completion by an independent qualified professional acceptableto Lender prior to the disbursement of the Reserve Funds.  Borrower shall pay the expense of theinspection as required hereunder, whether such inspection is conducted byLender or by an independent qualified professional.

###  

### (g)                                 TheRequired Work and all materials, equipment, fixtures, or any other item comprisinga part of any Required Work shall be constructed, installed or completed, asapplicable, free and clear of all mechanic’s, materialman’s or other Liens(except for Permitted Encumbrances).

###  

### (h)                                 Beforeeach disbursement of the Reserve Funds, Lender may require Borrower to provideLender with a search of title to the applicable Property effective to the dateof the disbursement, which search shows that no mechanic’s or materialmen’s orother Liens of any nature have been placed against such Property since the dateof recordation of the Mortgages and that title to such Property is free andclear of all Liens (except for Permitted Encumbrances).

 

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### (i)                                     AllRequired Work shall comply with all Legal Requirements and applicable insurancerequirements including, without limitation, applicable building codes, specialuse permits, environmental regulations, and requirements of insuranceunderwriters.

###  

### (j)                                     Borrowerhereby assigns to Lender all rights and claims Borrower may have against allPersons supplying labor or materials in connection with the Required Work;provided, however, that Lender may not pursue any such rights or claims unlessan Event of Default has occurred and remains uncured.

###  

Section 9.5.                       RELEASEOF RESERVE FUNDS

 

### (a)                                  Withrespect to a Property upon written request from Borrower and in all instancessatisfaction of the requirements set forth in this Agreement, Lender shallpromptly disburse to Borrower amounts from (i) the applicable Required RepairAccount to the extent necessary to reimburse Borrower for the actual costs ofeach Required Repair (but not exceeding 125% of the original estimated cost ofsuch Required Repair as set forth on Schedule I, unless Lender has agreedto reimburse Borrower for such excess cost pursuant to Section 9.5(f)),(ii) the applicable Replacement Reserve Account to the extent necessary toreimburse Borrower for the actual costs of any approved Replacements or (iii)the PIP Reserve Account to the extent necessary to reimburse Borrower for theactual costs of any Required PIP Replacements to the extent funds in theapplicable Replacement Reserve Account are insufficient for such Required PIPReplacements**. **Notwithstanding thepreceding sentence, with respect to any Property, in no event shall Lender berequired to (x) disburse any amounts which would cause the amount of fundsremaining in the applicable Required Repair Account after any disbursement(other than with respect to the final disbursement) to be less than 125% of thethen current estimated cost of completing all remaining Required Repairs forsuch Property, (y) disburse funds from any of the Reserve Accounts if an Eventof Default exists, or (z) disburse funds from any Replacement Reserve Accountor the PIP Reserve Account to reimburse Borrower for the costs of routinerepairs or maintenance to such Property (other than FF&E Replacementsrequired pursuant to any PIP Report) or for costs which are to be reimbursedfrom funds held in the related Required Repair Account or the PIP ReserveAccount.

###  

### (b)                                 Eachrequest for disbursement from any of the Reserve Accounts shall be on a formprovided or approved by Lender and shall (i) include copies of invoices for allitems or materials purchased and all labor or services provided and (ii)specify (A) the Required Work for which the disbursement is requested,including, but not limited to, the Property(ies) to which it relates (B) thequantity and price of each item purchased, if the Required Work includes thepurchase or replacement of specific items, (C) the price of all materials(grouped by type or category) used in any Required Work other than the purchaseor replacement of specific items, (D) the cost of all contracted labor or otherservices applicable to each Required Work for which such request fordisbursement is made and (E) in the instance of a request for disbursement fromthe Replacement Reserve Account, the applicable Reserve Account(s) to whichsuch request relates.  With each requestBorrower shall certify that all Required Work has been performed in accordancewith 

### all Legal Requirementsand, as applicable, any and all requirements set forth in any ManagementAgreement, Franchise Agreement, and/or Operating Lease.  Except as provided in Section 9.5(d),each request for disbursement shall be made only after completion of theRequired Repair or Replacement (or the portion thereof completed in accordancewith

 

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### Section 9.5(d)), asapplicable, for which disbursement is requested.  Borrower shall provide Lender evidence satisfactory to Lender inits reasonable judgment of such completion or performance.  With respect to a Property, Lender shallonly disburse funds from the Replacement Reserve Account applicable to suchProperty.

###  

### (c)                                  Borrowershall pay all invoices in connection with the Required Work with respect towhich a disbursement is requested prior to submitting such request fordisbursement from the applicable Reserve Accounts or shall have given undertakingsand assurances acceptable to Lender that Borrower shall pay all such amountsfrom Lender’s disbursements or, if acceptable assurances are not provided, atthe request of Borrower, Lender will issue joint checks, payable to Borrowerand the contractor, supplier, materialman, mechanic, subcontractor or otherparty to whom payment is due in connection with the Required Work.  In the case of payments made by joint check,Lender may require a waiver of lien from each Person receiving payment prior toLender’s disbursement of the Reserve Funds. In addition, as a condition to any disbursement, Lender may requireBorrower to obtain lien waivers from each contractor, supplier, materialman,mechanic or subcontractor who receives payment in an amount equal to or greaterthan $100,000 for completion of its work or delivery of its materials.  Any lien waiver delivered hereunder shallconform to all Legal Requirements and shall cover all work performed andmaterials supplied (including equipment and fixtures) for the applicableProperty by that contractor, supplier, subcontractor, mechanic or materialmanthrough the date covered by the current disbursement request (or, in the eventthat payment to such contractor, supplier, subcontractor, mechanic ormaterialmen is to be made by a joint check, the release of lien shall beeffective through the date covered by the previous release of funds request).

###  

### (d)                                 If(i) the cost of any item of Required Work exceeds $150,000, (ii) the contractorperforming such Required Work requires periodic payments pursuant to terms of awritten contract, and (iii) Lender has approved in writing in advance suchperiodic payments, a request for disbursement from the applicable ReserveAccounts may be made after completion of a portion of the work under suchcontract, provided (A) such contract requires payment upon completion of suchportion of work, (B) the materials for which the request is made are on site atthe applicable Property and are properly secured or have been installed in suchProperty, (C) all other conditions in this Agreement for disbursement have beensatisfied, and (D) in the case of a Replacement, funds remaining in theapplicable Replacement Reserve Account together with the PIP Reserve Accountare, in Lender’s judgment, sufficient to complete such Replacement and otherReplacements when required.

###  

### (e)                                  Borrowershall not make a request for, nor shall Lender have any obligation to make, anydisbursement from any Reserve Account more frequently than once in any calendarmonth and (except in connection with the final disbursement) in any amount lessthan the lesser of (i) $10,000 or (ii) the total cost of the Required Work forwhich the disbursement is requested.

###  

### (f)                                    Inthe event any Borrower requests a disbursement from the Required Repair Accountto reimburse Borrower for the actual cost of labor or materials used inconnection with repairs or improvements other than the Required Repairsspecified on Schedule I, or for a Required Repair to the extent the costof such Required Repair exceeds 125% of the estimated cost of such RequiredRepair as set forth on Schedule I (in either case, an “**AdditionalRequired Repair**”), Borrower shall disclose in writing to Lender thereason why funds in the Required

 

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### Repair Account should beused to pay for such Additional Required Repair.  If Lender determines that (i) such Additional Required Repair isof the type intended to be covered by the Required Repair Account, (ii) suchAdditional Required Repair is not covered or is not of the type intended to becovered by the Replacement Reserve Account, (iii) costs for such AdditionalRequired Repair are reasonable, (iv) the funds in the Required Repair Accountare sufficient to pay for such Additional Required Repair and all otherRequired Repairs for the applicable Property specified on Schedule I, and(v) all other conditions for disbursement under this Agreement have been met,Lender may disburse funds from the Required Repair Account.

###  

### (g)                                 Inthe event any Borrower requests a disbursement from any Replacement ReserveAccount to reimburse Borrower for the actual cost of labor or materials used inconnection with repairs or improvements other than the Replacements specifiedin the Physical Conditions Report prepared in connection with the closing ofthe Loan, any PIP Report or the Annual Budget (an “**Additional Replacement**”),Borrower shall disclose in writing to Lender the reason why funds in suchReplacement Reserve Account should be used to pay for such AdditionalReplacement.  If Lender determines that(i) such Additional Replacement is of the type intended to be covered by suchReplacement Reserve Account, (ii) such Additional Replacement is not covered oris not of the type intended to be covered by the Required Repair Account, (iii)costs for such Additional Replacement are reasonable, (iv) the funds in theapplicable Replacement Reserve Account are sufficient to pay for suchAdditional Replacement and all other Replacements with respect to the Property(ies)to which such Replacement Reserve Account relates as specified in the PhysicalConditions Report, any PIP Report or the Annual Budget, and (v) all otherconditions for disbursement under this Agreement have been met, Lender maydisburse funds from the applicable Replacement Reserve Account.

###  

### (h)                                 Lender’sdisbursement of any Reserve Funds or other acknowledgment of completion of anyRequired Work in a manner satisfactory to Lender shall not be deemed acertification or warranty by Lender to any Person that the Required Work hasbeen completed in accordance with Legal Requirements.

###  

### (i)                                     Ifthe funds in any Reserve Account should exceed the amount of payments actuallyapplied by Lender for the purposes of the account, Lender in its reasonablediscretion shall either return any excess to Borrower or credit such excessagainst future payments to be made to that Reserve Account.  In allocating any such excess, Lender maydeal with the Person shown on Lender’s records as being the owner of eachapplicable Property.  If at any timeLender reasonably determines that the Reserve Funds are not or will not besufficient to make the required payments, Lender shall notify Borrower of suchdetermination and Borrower shall pay to Lender any amount necessary to make upthe deficiency within ten (10) days after notice from Lender to Borrowerrequesting payment thereof.

###  

### (j)                                     Theinsufficiency of any balance in any of the Reserve Accounts shall not relieveBorrower from its obligation to fulfill all preservation and maintenancecovenants in the Loan Documents.

###  

### (k)                                  Uponthe earlier to occur of (i) the timely completion of all Required Repairs andany Additional Required Repairs, if any, in accordance with the requirements ofthis Agreement, as verified by Lender in its reasonable discretion, or (ii) thepayment in full of the Debt,

 

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### all amounts remaining ondeposit, if any, in the Required Repair Account shall be returned to Borroweror the Person shown on Lender’s records as being the owner of the Propertiesand no other party shall have any right or claim thereto.

###  

### (l)                                     Uponpayment in full of the Debt, all amounts remaining on deposit, if any, in eachReplacement Reserve Account and the PIP Reserve Account shall be returned toBorrower or the Person shown on Lender’s records as being the owner of eachapplicable Property to which such Replacement Reserve Account relates and noother party shall have any right or claim thereto.

###  

### (m)                               Notwithstandinganything contained herein to the contrary, from and after the completion of the“Initial Renovations” as defined in the Marriott Pooling Agreement, Lendershall upon prior written notice from Borrower permit Marriott Manager to accessthe Marriott Replacement Reserve Account for the purpose of makingdisbursements therefrom under and in accordance with terms of the applicableMarriott Management Agreement, without regard to any contrary or additionaldisbursement requirements set forth herein.

###  

Section 9.6.                       TAXAND INSURANCE RESERVE FUNDS

 

Borrower shallestablish on the date hereof an Eligible Account with Lender or Lender’s agentsufficient to discharge Borrower’s obligations for the payment of Taxes andInsurance Premiums pursuant to Section 5.4 and Section 8.1 hereof(the “**Taxand Insurance Reserve Account**”) into which Borrower shall deposit onthe date hereof $577,200.15, which amount, when added to the required monthlydeposits set forth in the next sentence, is sufficient to make the payments ofTaxes and Insurance Premiums as required herein.  Borrower shall deposit into the Tax and Insurance Reserve Accounton each Payment Date (a) one-twelfth of the Taxes that Lender estimates will bepayable during the next ensuing twelve (12) months or such higher amountnecessary to accumulate with Lender sufficient funds to pay all such Taxes atleast thirty (30) days prior to the earlier of (i) the date that the same willbecome delinquent and (ii) the date that additional charges or interest willaccrue due to the non-payment thereof, and (b) except to the extent Lender haswaived the insurance escrow because the insurance required hereunder ismaintained under a blanket insurance Policy acceptable to Lender in accordancewith Section 8.1(c), one-twelfth of the Insurance Premiums that Lenderestimates will be payable during the next ensuing twelve (12) months for therenewal of the coverage afforded by the Policies upon the expiration thereof orsuch higher amount necessary to accumulate with Lender sufficient funds to payall such Insurance Premiums at least thirty (30) days prior to the expirationof the Policies (said amounts in (a) and (b) above hereinafter called the “**Tax andInsurance Reserve Funds**”). Lender will apply the Tax and Insurance Reserve Funds to payments ofTaxes and Insurance Premiums required to be made by Borrower pursuant toSection 5.4 and Section 8.1 hereof. In making any disbursement from the Tax and Insurance Reserve Account,Lender may do so according to any bill, statement or estimate procured from theappropriate public office or tax lien service (with respect to Taxes) orinsurer or agent (with respect to Insurance Premiums), without inquiry into theaccuracy of such bill, statement or estimate or into the validity of any tax,assessment, sale, forfeiture, tax lien or title or claim thereof.  If the amount of the Tax and InsuranceReserve Funds shall exceed the amounts due for Taxes and Insurance Premiumspursuant to Section 5.4 and Section 8.1 hereof, Lender shall, in itsreasonable discretion, return any excess to Borrower or credit such excessagainst future

 

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payments to be made to the Tax and Insurance Reserve Account.  In allocating any such excess, Lender maydeal with the person shown on Lender’s records as being the owner of theapplicable Property.  Any amountremaining in the Tax and Insurance Reserve Account after the Debt has been paidin full shall be returned to Borrower and no other party shall have any rightor claim thereto.  If at any time Lenderreasonably determines that the Tax and Insurance Reserve Funds are not or willnot be sufficient to pay Taxes and Insurance Premiums by the dates set forth in(a) and (b) above, Lender shall notify Borrower of such determination andBorrower shall pay to Lender any amount necessary to make up the deficiencywithin ten (10) days after notice from Lender to Borrower requesting paymentthereof.  Notwithstanding any of theforegoing to the contrary, in lieu of funding the Tax and Insurance EscrowReserve in accordance with the terms hereof, Borrower may from time to timeprovide a Letter of Credit to Lender in an amount sufficient to fund the Taxand Insurance Funds with respect to any calendar year(s) as determined fromtime to time by Lender in its discretion, in such instance Borrower’s escrowobligations under this Section 9.6 shall cease until such time as saidLetter of Credit expires, is drawn upon or otherwise fails to meet thedefinitional requirements for a Letter of Credit as set forth in Article 1hereof.

 

Section 9.7.                       EXCESSCASH RESERVE

 

Borrower shallestablish on the date hereof an Eligible Account into which Borrower shalldeposit all Excess Cash on each Payment Date during any Excess Cash Flow SweepPeriod (the “**Excess Cash Reserve Account**”).  Amounts so deposited shall hereinafter be referred to as the “**Excess CashReserve Funds**.”  Provided noEvent of Default has occurred and is continuing, sums from the Excess CashReserve Account shall be disbursed to Borrower upon the earlier to occur of (a)payment in full of the Debt or (b) the date upon which the Debt ServiceCoverage Ratio shall be greater than 1.10 to 1.00 for a period of twoconsecutive fiscal quarters and no Event of Default has occurred and iscontinuing; provided, however, if the Debt Service Coverage Ratio is great than1.15 for one fiscal quarter and no Event of Default has occurred and iscontinuing, such sums shall be disbursed to Borrower under this clause (b) onthe date on which the Debt Service Coverage Ratio shall be greater than 1.15for a period of one fiscal quarter.  Inthe event a Excess Cash Flow Sweep Period occurs three (3) times during theterm of the Loan or, if Borrower exercises its first Extension Option inaccordance with Section 2.3 hereof, four (4) times during the term of theLoan, Borrower shall not be entitled to any disbursement of the amounts in theExcess Cash Reserve Account during the remaining term of the Loan, the ExcessCash Flow Sweep Period shall continue, and Borrower shall continue to be obligatedto pay Excess Cash to Lender on each Payment Date until the Debt is paid infull.

 

Section 9.8.                       OPERATINGEXPENSES; EXTRAORDINARY EXPENSES

 

### (a)                                  Borrowershall establish on the date hereof an Eligible Account with Lender or Lender’sagent into which Borrower shall deposit, on each Payment Date during the termof the Loan, funds sufficient to pay all Operating Expenses required to beincurred during the following month in accordance with the Annual Budgetapproved by Lender (the “**Operating Expense Reserve Account**.”)  Amounts so deposited shall hereinafter bereferred to as the “**Operating Expense Reserve Funds**.”  Provided no Event of Default has occurredand is continuing, sums from the Operating Expense Reserve Account shall bedisbursed by Lender to Borrower following receipt and approval of Borrower’swritten request for the payment of such Operating

 

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### Expenses.  Notwithstanding the foregoing, Borrowershall not be required to make any deposits into the Operating Expense ReserveAccount for so long as each Property continues to be operated by (a) aQualified Manager pursuant to a Management Agreement acceptable to Lender whichprovides for the payment of Operating Expenses of the applicable Property priorto the disbursement of any amounts due the Operating Lessee or Borrower or (b)a Qualified Lessee (which is not an Affiliate of Borrower) pursuant to anOperating Lease acceptable to Lender which provides for the payment ofOperating Expenses of the applicable Property pursuant to an Annual Budgetapproved by Lender prior to the disbursement of any amounts due Borrower.

###  

### (b)                                 Borrowershall establish on the date hereof an Eligible Account with Lender or Lender’sagent into which Borrower shall deposit, on each Payment Date during the termof the Loan, funds sufficient to pay any Extraordinary Expenses for thefollowing month which have been approved by Lender (the “**Extraordinary Expense Reserve Account**.”)  Amounts so deposited shall hereinafter bereferred to as the “**Extraordinary Expense Reserve Funds**.”  Provided no Event of Default has occurredand is continuing, sums from the Extraordinary Expense Reserve Account shall bedisbursed by Lender to Borrower following receipt and approval (which approvalshall not be unreasonably withheld) of Borrower’s written request for thepayment of such Extraordinary Expenses.

###  

Section 9.9.                       RESERVEFUNDS GENERALLY

 

### (a)                                  Allearnings or interest on the Reserve Accounts shall be payable to Borrower.  Lender or its servicer shall maintain theReserve Accounts and any funds deposited therein in interest-bearing accounts,which in all instances shall be an Eligible Account(s) and (A) such funds shallnot be invested except in Permitted Investments, and (B) all interest earned oraccrued thereon shall be for the account of and be retained by Borrower.  In no event shall Lender or any loanservicer that at any time holds or maintains any Reserve Account be required toselect any particular interest-bearing account or the account that yields thehighest rate of interest, provided that selection of the account shall beconsistent with the general standards at the time being utilized by Lender orthe loan servicer, as applicable, in establishing similar accounts for loans ofcomparable type.  All such interestshall be and become part of the applicable Reserve Account and shall bedisbursed in accordance with the applicable provisions of this Article 9;provided, however, that Lender may, at its election, retain any such interestfor its own account during the occurrence and continuance of a monetary Eventof Default.  Borrower agrees that itshall include all interest on Reserve Funds as the income of Borrower (and, ifBorrower is a partnership or other pass-through entity, the partners, membersor beneficiaries of Borrower, as the case may be), and Borrower shall be shallbe the owner of the applicable Reserve Funds for federal and applicable stateand local tax purposes, except to the extent that Lender retains any interestfor its own account during the occurrence and continuance of a monetary Eventof Default as provided herein.

###  

### (b)                                 Borrowergrants to Lender a first-priority perfected security interest in, and assignsand pledges to Lender, each of the Reserve Accounts and any and all ReserveFunds now or hereafter deposited in the Reserve Accounts as additional securityfor payment of the Debt.  Until expendedor applied in accordance herewith, the Reserve Accounts and the Reserve Fundsshall constitute additional security for the Debt.  The provisions of this Section 9.9 are intended

 

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### to give Lender or anysubsequent holder of the Loan “control” of the Reserve Accounts within themeaning of the UCC.

###  

### (c)                                  Exceptas otherwise set forth herein, the Reserve Accounts and any and all ReserveFunds now or hereafter deposited in the Reserve Accounts shall be subject tothe exclusive dominion and control of Lender, which shall hold the ReserveAccounts and any or all Reserve Funds now or hereafter deposited in the ReserveAccounts subject to the terms and conditions of this Agreement.  Except as otherwise set forth herein,neither Borrower, nor any other Person shall have any right of withdrawal fromthe Reserve Accounts or any other right or power with respect to the ReserveAccounts or any or all of the Reserve Funds now or hereafter deposited in theReserve Accounts, except as expressly provided in this Agreement.

###  

### (d)                                 Lendershall furnish or cause to be furnished to Borrower, without charge, an annualaccounting of each Reserve Account in the normal format of Lender or its loanservicer, showing credits and debits to such Reserve Account and the purposefor which each debit to each Reserve Account was made.

###  

### (e)                                  Aslong as no Event of Default has occurred, Lender shall make disbursements fromthe Reserve Accounts in accordance with this Agreement.  All such disbursements shall be deemed tohave been expressly pre-authorized by Borrower, and shall not be deemed toconstitute the exercise by Lender of any remedies against Borrower unless anEvent of Default has occurred and is continuing and Lender has expressly statedin writing its intent to proceed to exercise its remedies as a secured party,pledgee or lienholder with respect to the Reserve Accounts.

###  

### (f)                                    Ifany Event of Default occurs, Borrower shall immediately lose all of its rightsto receive disbursements from the Reserve Accounts until the earlier to occurof (i) the date on which such Event of Default is cured to Lender’s satisfaction,or (ii) the payment in full of the Debt. In addition, at Lender’s election, Borrower shall lose all of its rightsto receive interest on the Reserve Accounts during the occurrence andcontinuance of an Event of Default. Upon the occurrence of any Event of Default, Lender may exercise any orall of its rights and remedies as a secured party, pledgee and lienholder withrespect to the Reserve Accounts. Without limitation of the foregoing, upon any Event of Default, Lendermay use and disburse the Reserve Funds (or any portion thereof) for any of thefollowing purposes: (A) repayment of the Debt, including, but not limited to,principal prepayments and the prepayment premium applicable to such full orpartial prepayment (as applicable); (B) reimbursement of Lender for all losses,fees, costs and expenses (including, without limitation, reasonable legal fees)suffered or incurred by Lender as a result of such Event of Default; (C)payment of any amount expended in exercising any or all rights and remediesavailable to Lender at law or in equity or under this Agreement or under any ofthe other Loan Documents; (D) payment of any item from any of the ReserveAccounts as required or permitted under this Agreement; or (E) any otherpurpose permitted by applicable law; provided, however, that any suchapplication of funds shall not cure or be deemed to cure any Event ofDefault.  Without limiting any otherprovisions hereof, each of the remedial actions described in the immediatelypreceding sentence shall be deemed to be a commercially reasonable exercise ofLender’s rights and remedies as a secured party with respect to the ReserveFunds and shall not in any event be deemed to constitute a setoff or aforeclosure of a statutory banker’s lien. Nothing in this Agreement shall obligate Lender to apply all or any

 

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### portion of the ReserveFunds to effect a cure of any Event of Default, or to pay the Debt, or in anyspecific order of priority.  Theexercise of any or all of Lender’s rights and remedies under this Agreement orunder any of the other Loan Documents shall not in any way prejudice or affectLender’s right to initiate and complete a foreclosure under any or all of theMortgages.

###  

### (g)                                 Notwithstandinganything contained herein or in any other Loan Document to the contrary, Lendershall not be permitted to apply funds in the Marriott, Hilton or InterstateReplacement Reserve Accounts toward the payment of any amounts other thanReplacements with respect to the applicable Property(ies), unless and until theapplicable Management Agreement pursuant to which such Replacement ReserveAccount relates shall expire or otherwise terminate.

###  

### (h)                                 TheReserve Funds shall not constitute escrow or trust funds (except for theReplacement Reserve Accounts relating to the Marriott Managed Properties, theHilton Managed Properties and the Interstate Managed Properties) and may becommingled with other monies held by Lender. Notwithstanding anything else herein to the contrary, Lender maycommingle in one or more Eligible Accounts any and all funds controlled byLender, including, without limitation, funds pledged in favor of Lender byother borrowers, whether for the same purposes as the Reserve Accounts orotherwise.  Without limiting any otherprovisions of this Agreement or any other Loan Document, the Reserve Accountsmay be established and held in such name or names as Lender or its loanservicer, as agent for Lender, shall deem appropriate, including, withoutlimitation, in the name of Lender or such loan servicer, as agent forLender.  In the case of any ReserveAccount which is held in a commingled account, Lender or its loan servicer, asapplicable, shall maintain records sufficient to enable it to determine at alltimes which portion of such account is related to the Loan.  The Reserve Accounts are solely for theprotection of Lender.  With respect tothe Reserve Accounts, Lender shall have no responsibility beyond the allowanceof due credit for the sums actually received by Lender or beyond thereimbursement or payment of the costs and expenses for which such accounts wereestablished in accordance with their terms. Upon assignment of the Loan by Lender, any Reserve Funds shall be turnedover to the assignee and any responsibility of Lender as assignor shallterminate.  The requirements of thisAgreement concerning Reserve Accounts in no way supersede, limit or waive anyother rights or obligations of the parties under any of the Loan Documents orunder applicable law.

###  

### (i)                                     Borrowershall not, without obtaining the prior written consent of Lender, furtherpledge, assign or grant any security interest in the Reserve Accounts or theReserve Funds deposited therein or permit any Lien to attach thereto, exceptfor the security interest granted in this Section 9.9, or any levy to bemade thereon, or any UCC Financing Statements, except those naming Lender asthe secured party, to be filed with respect thereto.

###  

### (j)                                     Borrowerwill maintain the security interest created by this Section 9.9 as a firstpriority perfected security interest and will defend the right, title andinterest of Lender in and to the Reserve Accounts and the Reserve Funds againstthe claims and demands of all Persons whomsoever.  At any time and from time to time, upon the written request ofLender, and at the sole expense of Borrower, Borrower will promptly and dulyexecute and deliver such further instruments and documents and will take suchfurther actions as Lender reasonably may request

 

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### for the purpose ofobtaining or preserving the full benefits of this Agreement and of the rightsand powers herein granted.

###  

Section 9.10.                 GROUNDRENT RESERVE FUNDS.

 

Borrower shallestablish on the date hereof an Eligible Account with Lender or Lender’s agentsufficient to discharge Borrower’s obligations for the payment of Rent undereach Ground Lease (the “**Ground Rent Reserve Account**”) into whichBorrower shall deposit on the date hereof $0.00, which amount, when added tothe required monthly deposits set forth in the next sentence, is sufficient tomake the payments of Ground Rent as required under each Ground Lease(collectively, the “**Ground Rent Reserve Funds**”).  Borrower shall deposit into the Ground RentReserve Account on each Payment Date (the “**Ground Rent Monthly Deposit**”) one-twelfthof the annual Ground Rent that Lender estimates will be payable during the nextensuing twelve (12) months.  Lender willapply the Ground Rent Reserve Funds to payments of Ground Rent required to bemade by Borrower pursuant to each Ground Lease.  In making any disbursement from the Ground Rent Reserve Account,Lender may do so according to any bill, statement or estimate procured from theground lessor under each Ground Lease, without inquiry into the accuracy ofsuch bill, statement or estimate or into the validity of any rent, additionalrent or other charge thereof.  If theamount of the Ground Rent Reserve Funds shall exceed the amounts due for Rentunder the Ground Leases, Lender shall, in its sole discretion, return anyexcess to Borrower or credit such excess against future payments to be made tothe Ground Rent Reserve Account.  Inallocating any such excess, Lender may deal with the person shown on Lender’srecords as being the owner of the leasehold title to the applicableProperty.  Any amount remaining in theGround Rent Reserve Account after the Debt has been paid in full shall bereturned to Borrower or the person shown on Lender’s records as being the ownerof the leasehold title to the applicable Property and no other party shall haveany right or claim thereto.  If at anytime Lender reasonably determines that the Ground Rent Reserve Funds are not orwill not be sufficient to pay Ground Rent by the due date, Lender shall notifyBorrower of such determination and Borrower shall pay to Lender any amountnecessary to make up the deficiency within ten (10) days after notice fromLender to Borrower requesting payment thereof. Notwithstanding any of the foregoing to the contrary, in lieu of fundingthe Ground Rent Reserve Account in accordance with the terms set forth above,Borrower may from time to time provide a Letter of Credit to Lender in anamount sufficient to fund the Ground Rent Reserve Funds with sufficient funds topay Ground Rents with respect to an entire calendar year(s) as determined fromtime to time by Lender in its discretion; in such instance Borrowers escrowobligations under this Section 9.10 shall cease until such time as saidLetter of Credit expires, is drawn upon or otherwise fails to meet thedefinitional requirements for a Letter of Credit as set forth in Article 1hereof.

 

Section 9.11.                 LEASEENHANCEMENT FUNDS

 

Borrower shallestablish on the date hereof an Eligible Account with Lender or Lender’s agent(the “**LeaseEnhancement Account**”) into which Borrower shall deposit on the datehereof $420,000.00 (the “**Lease Enhancement Funds**”) to serve asadditional security for the Loan. Notwithstanding any of the foregoing to the contrary, in lieu of fundingthe Lease Enhancement Account in accordance with the terms set forth above,Borrower may from time to time provide a Letter of Credit to Lender in anamount equal to the initial deposit therein as

 

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described above; in such instance Borrower’s escrow obligations underthis Section 9.11 shall cease (and any Lease Enhancement Funds released toBorrower) until such time as said Letter of Credit expires or otherwise failsto meet the definitional requirements for a Letter of Credit as set forth inArticle 1 hereof in which event Borrower immediately upon demand of Lendershall deposit the Lease Enhancement Funds in the amount of $420,000.00 withLender or provide a Letter of Credit satisfying the definitions of such term.

 

# **ARTICLE 10**CASH MANAGEMENT

# ** **

Section 10.1.                 CASHMANAGEMENT AGREEMENT

 

On or prior to theClosing Date, Borrower, Lender and Agent shall enter into the Cash ManagementAgreement for the operation of the Cash Management Account and the subaccountsfor the Reserve Funds, which Cash Management Agreement shall, among otherthings, provide that (a) the Managers shall deposit all Rents from eachProperty to the Affiliated Lessee is entitled to under the applicableManagement Agreement, directly into the Cash Management Account, (b) theNon-Affiliated Lessee shall deposit Rents payable to the Borrower under theapplicable Operating Lease directly into the Cash Management Account and (c) inthe event that an Excess Cash Flow Sweep Period occurs and is continuing andonly as to Properties where the Operating Lessee or Manager is not payingOperating Expenses pursuant to the applicable Operating Lease or ManagementAgreement, Operating Expenses shall be disbursed by Lender pursuant to theAnnual Budget approved by Lender, and (d) all amounts in the CashManagement Account shall be applied by Lender in accordance with the CashManagement Agreement.

 

# **ARTICLE 11**EVENTS OF DEFAULT; REMEDIES

# ** **

Section 11.1.                 EVENTOF DEFAULT

 

The occurrence ofany one or more of the following events shall constitute an “**Event ofDefault**”:

 

### (a)                                  ifany portion of the Debt is not paid on or prior to the date the same is due orif 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 moneyin the Cash Management Account for payment of all amounts then due and payable(including any deposits into Reserve Accounts) and Lender’s access to suchmoney has not been constrained or constricted in any manner;

###  

### (b)                                 exceptas otherwise expressly provided in the Loan Documents, if any of the Taxes orOther Charges (including Ground Rents) are not paid when the same are due andpayable, unless there is sufficient money in the Tax and Insurance ReserveAccount or Ground Rent Reserve Account, as applicable for payment of amountsthen due and payable and Lender’s access to such money has not been constrainedor restricted in any manner;

###  

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

 

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### (d)                                 ifBorrower breaches any covenant with respect to itself or any SPE ComponentEntity (if any) contained in (i) Article 6 and Borrower shall withinfifteen (15) days of the earlier of Borrower’s knowledge or notice of suchbreach, fail to cure the same and deliver an updated non-consolidation opinionacknowledging such breach in form and substance acceptable to Lender or (ii) anycovenant contained in Article 7 hereof;

###  

### (e)                                  ifany representation or warranty of, or with respect to, Borrower, AffiliatedLessee, Borrower Principal, any SPE Component Entity, or any member, generalpartner, principal or beneficial owner of any of the foregoing, made herein, inany other Loan Document, or in any certificate, report, financial statement orother instrument or document furnished to Lender at the time of the closing ofthe Loan or during the term of the Loan shall have been false or misleading inany material respect when made;

###  

### (f)                                    if(i) Borrower, or any managing member (which shall not include MezzanineBorrower as long as the Mezzanine Loan is outstanding) or general partner ofBorrower, Operating Lessee, Borrower Principal or any SPE Component Entity (ifany) shall commence any case, proceeding or other action (A) under anyCreditors Rights Laws, seeking to have an order for relief entered with respectto it, or seeking to adjudicate it a bankrupt or insolvent, or seekingreorganization, or (B) seeking appointment of a receiver, trustee, custodian,conservator or other similar official for it or for all or any substantial partof its assets, or Borrower, Operating Lessee, any managing member (which shallnot include Mezzanine Borrower as long as the Mezzanine Loan is outstanding) orgeneral partner of Borrower, Operating Lessee, Borrower Principal, or any SPEComponent Entity (if any) shall make a general assignment for the benefit ofits creditors; or (ii) there shall be commenced against Borrower, OperatingLessee, any managing member (which shall not include Mezzanine Borrower as longas the Mezzanine Loan is outstanding) or general partner of Borrower, OperatingLessee, 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 orappointment or (B) remains undismissed, undischarged or unbonded for a periodof ninety (90) days; or (iii) there shall be commenced against Borrower,Operating Lessee, any managing member (which shall not include MezzanineBorrower as long as the Mezzanine Loan is outstanding) or general partner ofBorrower, Operating Lessee, Borrower Principal, or any SPE Component Entity (ifany) any case, proceeding or other action seeking issuance of a warrant ofattachment, execution, distraint or similar process against all or anysubstantial part of its assets which results in the entry of any order for anysuch relief which shall not have been vacated, discharged, or stayed or bondedpending appeal within ninety (90) days from the entry thereof; or (iv)Borrower, Operating Lessee, any managing member (which shall not include theMezzanine Borrower as long as the Mezzanine Loan is outstanding) or generalpartner of Borrower, Operating Lessee, Borrower Principal, or any SPE ComponentEntity (if any) shall take any action in furtherance of, or indicating itsconsent to, approval of, or acquiescence in, any of the acts set forth inclause (i), (ii), or (iii) above; or (v) Borrower, Operating Lessee, anymanaging member (which shall not include Mezzanine Borrower as long as theMezzanine Loan is outstanding) or general partner of Borrower, OperatingLessee, Borrower Principal, or any SPE Component Entity (if any) shallgenerally not, or shall be unable to, or shall admit in writing its inabilityto, pay its debts as they become due;

 

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### (g)                                 ifBorrower shall be in default beyond applicable notice and grace periods underany other mortgage, deed of trust, deed to secure debt or other securityagreement covering any part of any Property, whether it be superior or juniorin lien to any or all of the Mortgages;

###  

### (h)                                 ifany Property becomes subject to any mechanic’s, materialman’s or other Lienother than a Lien for any Taxes or Other Charges not then due and payable andthe Lien shall remain undischarged of record (by payment, bonding or otherwise)for a period of sixty (60) days;

###  

### (i)                                     ifany federal tax lien is filed against Borrower, any managing member (whichshall not include Mezzanine Borrower as long as the Mezzanine Loan isoutstanding) or general partner of Borrower, Affiliated Lessee, BorrowerPrincipal, or any SPE Component Entity (if any) or any Property and same is notdischarged of record within thirty (30) days after same is filed;

###  

### (j)                                     ifa judgment is filed against the Borrower in excess of $100,000 which is notvacated or discharged within 30 days;

###  

### (k)                                  ifany default occurs under any guaranty or indemnity executed in connectionherewith and such default continues after the expiration of applicable graceperiods, if any;

###  

### (l)                                     ifBorrower shall permit any event within its control to occur that would causeany REA to terminate without notice or action by any party thereto or wouldentitle any party to terminate any REA and the term thereof by giving notice toBorrower; or any REA shall be surrendered, terminated or canceled for anyreason 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 priorwritten consent; or Borrower shall fail, within ten (10) Business Days afterdemand by Lender, to exercise its option to renew or extend the term of any REAor shall fail or neglect to pursue diligently all actions necessary to exercisesuch renewal rights pursuant to such REA except as provided for in suchREA  and the same shall have (or shallbe reasonably expected to have) a material and adverse affect on the value,use, operation or enjoyment of the applicable Property as a hotel of a similartype as the hotel situated on such Property as of the Closing Date or on theability of Borrower to perform its obligations (including its paymentobligations under this Agreement, the Note and the other Loan Documents);

###  

### (m)                               ifBorrower breaches any of its covenants contained in Section 5.24;

###  

### (n)                                 ifa default has occurred and is continuing beyond any applicable cure periodunder any Franchise Agreement or Management Agreement, which entitles suchFranchisor or Manager, as the case may be, to terminate or cancel suchFranchise Agreement or Management Agreement;

###  

### (o)                                 ifBorrower, without Lender’s consent, modifies, amends, terminates or cancels (orpermits or directs Operating Lessee to modify, amend, terminate or cancel) anyFranchise Agreement or operates any Property under the name of any hotel chainor system other than the name such Property is operated under as of the datehereof;

 

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### (p)                                 ifBorrower, without Lender’s consent, modifies, amends, terminates or cancels (orpermits or directs any Affiliated Lessee to modify, amend, terminate or cancel)any Management Agreement;

###  

### (q)                                 ifany Affiliated Lessee is in default beyond any applicable notice or cure periodunder the applicable Operating Lease;

###  

### (r)                                    ifan “Event of Default” shall occur under any Subordination, Attornment andSecurity Agreement;

###  

### (s)                                  ifthere shall occur any default by Borrower, as tenant under either Ground Lease,in the observance or performance of any term, covenant or condition of theapplicable Ground Lease on the part of Borrower to be observed or performed andsaid default is not cured following the expiration of any applicable grace andnotice periods therein provided, or if the leasehold estate created by theapplicable Ground Lease shall be surrendered or if the applicable Ground Leaseshall cease to be in full force and effect or the applicable Ground Lease shallbe terminated or canceled for any reason or under any circumstances whatsoever,or if any of the terms, covenants or conditions of the applicable Ground Leaseshall in any manner be modified, changed, supplemented, altered, or amendedwithout the consent of Lender;

###  

### (t)                                    ifBorrower Principal breaches its covenant set forth in Section 5.26 unlesswithin five (5) days of written notice from Lender, CNL Hospitality Properties,Inc. executes this Agreement assuming all obligations of Borrower Principalhereunder; or

###  

### (u)                                 ifBorrower shall continue to be in default under any other term, covenant orcondition of this Agreement or any of the Loan Documents for more than ten (10)days after notice from Lender in the case of any default which can be cured bythe payment of a sum of money or for thirty (30) days after notice from Lenderin the case of any other default, provided that if such default cannotreasonably be cured within such thirty (30) day period and Borrower shall havecommenced to cure such default within such thirty (30) day period andthereafter diligently and expeditiously proceeds to cure the same, such thirty(30) day period shall be extended for so long as it shall require Borrower inthe exercise of due diligence to cure such default, it being agreed that nosuch extension shall be for a period in excess of sixty (60) days.

###  

Section 11.2.                 REMEDIES

 

### (a)                                  Uponthe occurrence of an Event of Default (other than an Event of Default describedin Section 11.1(f) above) and at any time thereafter during the continuanceof such Event of Default Lender may, in addition to any other rights orremedies available to it pursuant to this Agreement and the other LoanDocuments or at law or in equity, take such action, without notice or demand,that Lender deems advisable to protect and enforce its rights against Borrowerand in the Properties or any of them, including, without limitation, declaringthe Debt to be immediately due and payable, and Lender may enforce or availitself of any or all rights or remedies provided in the Loan Documents againstBorrower and any Property, including, without limitation, all rights orremedies available at law or in equity; and upon any Event of Default describedin Section 11.1(f) above, the Debt and all other obligations of Borrowerhereunder and under the other Loan Documents shall immediately andautomatically become due

 

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### and payable, withoutnotice or demand, and Borrower hereby expressly waives any such notice ordemand, anything contained herein or in any other Loan Document to the contrarynotwithstanding.

###  

### (b)                                 Uponthe occurrence and during the continuance of an Event of Default, all or anyone or more of the rights, powers, privileges and other remedies available toLender against Borrower under this Agreement or any of the other Loan Documentsexecuted and delivered by, or applicable to, Borrower or at law or in equitymay be exercised by Lender at any time and from time to time, whether or notall or any of the Debt shall be declared due and payable, and whether or notLender shall have commenced any foreclosure proceeding or other action for theenforcement of its rights and remedies under any of the Loan Documents withrespect to any Property.  Any suchactions taken by Lender shall be cumulative and concurrent and may be pursuedindependently, singularly, successively, together or otherwise, at such timeand in such order as Lender may determine in its sole discretion, to thefullest extent permitted by law, without impairing or otherwise affecting theother rights and remedies of Lender permitted by law, equity or contract or asset forth herein or in the other Loan Documents.

###  

# **ARTICLE 12**ENVIRONMENTAL PROVISIONS

# ** **

Section 12.1.                 ENVIRONMENTALREPRESENTATIONS AND WARRANTIES

 

Borrowerrepresents and warrants, based upon an Environmental Report of each Propertyand information that Borrower knows or should reasonably have known, andsubject to all matters disclosed in the Environmental Reports deliveredpursuant to the provisions of (or referenced in) Section 3.2(e) hereofthat:  (a) there are no HazardousMaterials or underground storage tanks in, on, or under any Property, exceptthose that are both (i) in compliance with Environmental Laws and with permitsissued 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 thatnecessary to operate such Property for the purposes set forth herein or (B)fully disclosed to and approved by Lender in writing pursuant to anEnvironmental Report; (b) there are no past, present or threatened Releases ofHazardous Materials in violation of any Environmental Law or which wouldrequire remediation by a Governmental Authority in, on, under or from any Propertyexcept as described in the Environmental Report; (c) there is no threat of anyRelease of Hazardous Materials migrating to any Property except as described inthe Environmental Report; (d) there is no past or present non-compliance withEnvironmental Laws, or with permits issued pursuant thereto, in connection withany Property except as described in the Environmental Report; (e) Borrower doesnot know of, and has not received, any written or oral notice or othercommunication from any Person relating to Hazardous Materials in, on, under orfrom any Property; and (f) Borrower has truthfully and fully provided toLender, in writing, any and all information relating to environmentalconditions in, on, under or from such Property known to Borrower or containedin Borrower’s files and records, including but not limited to any reportsrelating to Hazardous Materials in, on, under or migrating to or from suchProperty and/or to the environmental condition of such Property.

 

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Section 12.2.                 ENVIRONMENTALCOVENANTS

 

Borrower covenantsand agrees that so long as Borrower owns, manages, is in possession of, orotherwise controls the operation of the Properties:  (a) all uses and operations on or of each Property, whether byBorrower or any other Person, shall be in compliance in all material respectswith all Environmental Laws and permits issued pursuant thereto; (b) thereshall 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, exceptthose that are both (i) in compliance with all Environmental Laws and withpermits issued pursuant thereto, if and to the extent required, and (ii) (A) inamounts not in excess of that necessary to operate any Property for thepurposes set forth herein or (B) fully disclosed to and approved by Lender inwriting; (d) Borrower shall keep each Property free and clear of allEnvironmental Liens; (e) Borrower shall, at its sole cost and expense, fullyand expeditiously cooperate in all activities pursuant to Section 12.4below, including but not limited to providing all relevant information andmaking knowledgeable persons available for interviews; (f) Borrower shall, atits sole cost and expense, perform any environmental site assessment or otherinvestigation of environmental conditions in connection with each Property,pursuant to any reasonable written request of Lender, upon Lender’s reasonablebelief that such Property is not in full compliance with all EnvironmentalLaws, and share with Lender the reports and other results thereof, and Lenderand other Indemnified Parties shall be entitled to rely on such reports andother results thereof; (g) Borrower shall, at its sole cost and expense, complywith all reasonable written requests of Lender to (i) reasonably effectuateremediation of any Hazardous Materials in, on, under or from such Property; and(ii) comply with any Environmental Law; (h) Borrower shall not allow any tenantor other user of any Property to violate any Environmental Law; and (i)Borrower shall immediately notify Lender in writing after it has become awareof (A) any presence or Release or threatened Release of Hazardous Materials in,on, under, from or migrating towards any Property; (B) any non-compliance withany Environmental Laws related in any way to any Property; (C) any actual orpotential Environmental Lien against any Property; (D) any required or proposedremediation of environmental conditions relating to any Property; and (E) anywritten or oral notice or other communication of which Borrower becomes awarefrom any source whatsoever (including but not limited to a GovernmentalAuthority) relating in any way to Hazardous Materials.  Any failure of Borrower to perform itsobligations pursuant to this Section 12.2 shall constitute bad faith wastewith respect to the Properties.

 

Section 12.3.                 LENDER’SRIGHTS

 

Lender and anyother Person designated by Lender, including but not limited to anyrepresentative of a Governmental Authority, and any environmental consultant,and any receiver appointed by any court of competent jurisdiction, shall havethe right, but not the obligation, to enter upon any Property at all reasonabletimes to assess any and all aspects of the environmental condition of eachProperty and its use, including but not limited to conducting any environmentalassessment or audit (the scope of which shall be determined in Lender’sreasonable discretion) and taking samples of soil, groundwater or other water,air, or building materials, and conducting other invasive testing.  Borrower shall cooperate with and provideaccess to Lender and any such person or entity designated by Lender.

 

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Section 12.4.                 OPERATIONSAND MAINTENANCE PROGRAMS

 

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

 

Section 12.5.                 ENVIRONMENTALDEFINITIONS

 

“**EnvironmentalLaw**” means any present and future federal, state and local laws,statutes, ordinances, rules, regulations, standards, policies and othergovernment directives or requirements, as well as common law, including but notlimited to the Comprehensive Environmental Response, Compensation and LiabilityAct and the Resource Conservation and Recovery Act, that apply to Borrower orany Property and relate to Hazardous Materials or protection of human health orthe environment.  “**Environmental Liens**” meansall 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 writtenreports resulting from the environmental site assessments of any Propertydelivered to Lender in connection with the Loan.  “**Hazardous Materials**” shall mean petroleum and petroleumproducts and compounds containing them, including gasoline, diesel fuel andoil; explosives, flammable materials; radioactive materials; polychlorinatedbiphenyls and compounds containing them; lead and lead-based paint; asbestos orasbestos-containing materials in any form that is or could become friable;underground or above-ground storage tanks, whether empty or containing anysubstance; any substance the presence of which on any Property is prohibited byany federal, state or local authority; any substance that requires specialhandling; and any other material or substance now or in the future defined as a“hazardous substance,” “hazardous material”, “hazardous waste”, “toxicsubstance”, “toxic pollutant”, “contaminant”, or “pollutant” within the meaningof 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 HazardousMaterials.

 

Section 12.6.                 INDEMNIFICATION

 

### (a)                                  Borrowerand Borrower Principal covenant and agree at their sole cost and expense, toprotect, defend, indemnify, release and hold Indemnified Parties harmless fromand against any and all Losses imposed upon or incurred by or asserted againstany Indemnified

 

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### Parties and directly orindirectly arising out of or in any way relating to any one or more of thefollowing:  (i) any presence of anyHazardous Materials in, on, above, or under any Property; (ii) any past,present or threatened Release of Hazardous Materials in, on, above, under orfrom any Property; (iii) any activity by Borrower, any Person Affiliated withBorrower, and any Tenant or other user of any Property in connection with anyactual, 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 Materialsat any time located in, under, on or above any Property or any actual orproposed remediation of any Hazardous Materials at any time located in, under,on or above any Property, whether or not such remediation is voluntary orpursuant to court or administrative order, including but not limited to anyremoval, remedial or corrective action; (iv) any past, present or threatenednon-compliance or violations of any Environmental Laws (or permits issuedpursuant to any Environmental Law) in connection with any Property or operationsthereon, including but not limited to any failure by Borrower, any person orentity Affiliated with Borrower, and any tenant or other user of any Propertyto comply with any order of any Governmental Authority in connection with anyEnvironmental Laws; (v) the imposition, recording or filing or the threatenedimposition, recording or filing of any Environmental Lien encumbering anyProperty; (vi) any acts of Borrower, any person or entity Affiliated withBorrower, and any tenant or other user of any Property in (A) arranging fordisposal or treatment, or arranging with a transporter for transport fordisposal or treatment, of Hazardous Materials at any facility or incinerationvessel containing such or similar Hazardous Materials or (B) accepting anyHazardous Materials for transport to disposal or treatment facilities,incineration vessels or sites from which there is a Release, or a threatenedRelease of any Hazardous Substance which causes the incurrence of costs forremediation; and (vii) any misrepresentation or inaccuracy in anyrepresentation or warranty or material breach or failure to perform anycovenants or other obligations pursuant to this Agreement relating toenvironmental matters.

###  

### (b)                                 Uponwritten request by any Indemnified Party, Borrower and Borrower Principal shalldefend same (if requested by any Indemnified Party, in the name of theIndemnified Party) by attorneys and other professionals reasonably approved bythe Indemnified Parties.  Notwithstandingthe foregoing, any Indemnified Parties may, in their sole discretion, engagetheir own attorneys and other professionals to defend or assist them, and, atthe option of Indemnified Parties, their attorneys shall control the resolutionof any claim or proceeding.  Upondemand, Borrower and Borrower Principal shall pay or, in the sole discretion ofthe Indemnified Parties, reimburse, the Indemnified Parties for the payment ofreasonable fees and disbursements of attorneys, engineers, environmentalconsultants, laboratories and other professionals in connection therewith.

###  

### (c)                                  Notwithstandingthe foregoing, Borrower shall have no liability for any Losses imposed upon orincurred by or asserted against any Indemnified Parties and described insubsection (a) above to the extent that Borrower can conclusively proveboth that such Losses were caused solely by actions, conditions or events thatoccurred after the date that Lender (or any purchaser at a foreclosure sale)actually acquired title to any Property and that such Losses were not caused bythe direct or indirect actions of Borrower, Borrower Principal, or any partner,member, principal, officer, director, trustee or manager of Borrower orBorrower Principal or any employee, agent, contractor or Affiliate of Borroweror Borrower Principal.  The obligations

 

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### and liabilities ofBorrower and Borrower Principal under this Section 12.6 shall fullysurvive indefinitely notwithstanding any termination, satisfaction, assignment,entry of a judgment of foreclosure, exercise of any power of sale, or deliveryof a deed in lieu of foreclosure of any or all of the Mortgages.

###  

# **ARTICLE 13**SECONDARY MARKET

# ** **

Section 13.1.                 TRANSFEROF LOAN

 

Lender may, at anytime, sell, transfer or assign the Loan Documents, or grant participationstherein (“**Participations**”)or syndicate the Loan (“**Syndication**”) or issue mortgagepass-through certificates or other securities evidencing a beneficial interestin 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.                 DELEGATIONOF SERVICING

 

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

 

Section 13.3.                 DISSEMINATIONOF INFORMATION

 

Lender may forwardto each purchaser, transferee, assignee, or servicer of, and each participant,or investor in, the Loan, or any Participations and/or Securities or any oftheir respective successors (collectively, the “**Investor**”) or any RatingAgency rating the Loan, or any Participations and/or Securities, eachprospective Investor, and any organization maintaining databases on theunderwriting and performance of commercial mortgage loans, all documents andinformation which Lender now has or may hereafter acquire relating to the Debtand to Borrower, any managing member or general partner thereof, BorrowerPrincipal, any SPE Component Entity (if any) and any Property, includingfinancial statements, whether furnished by Borrower or otherwise, as Lenderdetermines necessary or desirable. Borrower irrevocably waives any and all rights it may have underapplicable Legal Requirements to prohibit such disclosure, including but notlimited to any right of privacy.

 

Section 13.4.                 COOPERATION

 

At the request ofthe holder of the Note and, to the extent not already required to be providedby Borrower under this Agreement, Borrower and Borrower Principal shall usereasonable efforts to provide information not in the possession of the holderof the Note in order to satisfy the market standards to which the holder of theNote customarily adheres or which may be reasonably required in the marketplaceor by the Rating Agencies in connection with such sales or transfers,including, without limitation, to:

 

### (a)                                  provideupdated financial, budget and other information (including, but not limited to,rent rolls meeting the requirements set forth in Section 5.11(a)(i) hereofand operating

 

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### statements for eachProperty meeting the requirements set forth in Section 5.11(a)(ii) hereof)with respect to each Property, Borrower, Borrower Principal and Manager andprovide modifications and/or updates to the appraisals, market studies,environmental reviews and reports and engineering reports of any Propertyobtained in connection with the making of the Loan (all of the foregoing beingreferred to as the “**Provided Information**”), together, ifcustomary, with appropriate verification and/or consents of the ProvidedInformation through letters of auditors or opinions of counsel of independentattorneys acceptable to Lender and the Rating Agencies;;

###  

### (b)                                 makereasonable changes to the organizational documents of Borrower, any SPEComponent Entity and their respective principals, including, but not limited to,changes to the ownership structure of Borrower as may be necessary to create asecond Mezzanine Borrower acceptable to Lender in its reasonable discretion;

###  

### (c)                                  atBorrower’s expense, cause counsel to render or update existing opinion lettersas to enforceability and non-consolidation, and a 10b-5 comfort letter, whichmay be relied upon by the holder of the Note, the Rating Agencies and theirrespective counsel, which shall be dated as of the closing date of theSecuritization;

###  

### (d)                                 permitsite inspections, appraisals, market studies and other due diligenceinvestigations of any Property, as may be reasonably requested by the holder ofthe Note or the Rating Agencies or as may be necessary or appropriate inconnection with the Securitization;

###  

### (e)                                  makethe representations and warranties with respect to any or all Properties,Borrower,  Borrower Principal and theLoan Documents as are made in the Loan Documents and such other representationsand warranties as may be reasonably requested by the holder of the Note or theRating Agencies;

###  

### (f)                                    executesuch amendments to the Loan Documents as may be requested by the holder of theNote or the Rating Agencies or otherwise to effect the Securitizationincluding, without limitation, bifurcation of the Loan into two or morecomponents and/or separate notes and/or creating a senior/subordinate notestructure; provided, however, that Borrower shall not be required to modify oramend any Loan Document if such modification or amendment would (i) change theinterest rate or the stated maturity, except in connection with a bifurcationof 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 thatexisted immediately prior to such modification, or (ii) in the reasonablejudgment of Borrower, modify or amend any other material economic term of theLoan, or (iii) in the reasonable judgment of Borrower, materially increaseBorrower’s obligations and liabilities under the Loan Documents;

###  

### (g)                                 deliverto Lender and/or any Rating Agency, (i) one or more certificates executed by anofficer of the Borrower certifying as to the accuracy, as of the closing dateof the Securitization, of all representations made by Borrower in the LoanDocuments as of the Closing Date in all relevant jurisdictions or, if suchrepresentations are no longer accurate, certifying as to what modifications tothe representations would be required to make such representations accurate asof the closing date of the Securitization, and (ii) certificates of therelevant

 

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### Governmental Authoritiesin all relevant jurisdictions indicating the good standing and qualification ofBorrower as of the date of the closing date of the Securitization;

###  

### (h)                                 havereasonably appropriate personnel participate in a bank meeting and/orpresentation for the Rating Agencies or Investors; and

###  

### (i)                                     cooperatewith and assist Lender in obtaining ratings of the Securities from two (2) ormore of the Rating Agencies.

###  

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

 

All reasonablethird party costs and expenses incurred by Borrower in connection withBorrower’s complying with the requests and requirements made under thisSection 13.4 shall be paid by Borrower.

 

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

 

Section 13.5.                 SECURITIZATIONINDEMNIFICATION

 

### (a)                                  Borrowerand Borrower Principal understand that certain of the Provided Information maybe included in disclosure documents in connection with the Securitization,including, without limitation, a prospectus, prospectus supplement, offeringmemorandum or private placement memorandum (each, a “**Disclosure Document**”) and mayalso be included in filings with the Securities and Exchange Commissionpursuant to the Securities Act or the Exchange Act, or provided or madeavailable to investors or prospective investors in the Securities, the RatingAgencies, and service providers relating to the Securitization.  In the event that the Disclosure Document isrequired to be revised prior to the sale of all Securities, Borrower andBorrower Principal will cooperate with the holder of the Note in updating theDisclosure Document by providing all current information necessary to keep theDisclosure Document accurate and complete in all material respects.

###  

### (b)                                 Borrowerand Borrower Principal agree in connection with each of (i) a preliminary and afinal offering memorandum or private placement memorandum or similar document(including any Investor or Rating Agency “term sheets” or 

 

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### presentations relating toany Property and/or the Loan) or (ii) a preliminary and final prospectus orprospectus supplement, as applicable, (A) that Borrower and Borrower Principalwill provide a certificate certifying that Borrower and Borrower Principal havecarefully examined such memorandum or prospectus or other document (includingany Investor or Rating Agency “term sheets” or presentations relating to anyProperty and/or the Loan), as applicable, including without limitation, thesections entitled “Special Considerations,” and/or “Risk Factors,” and “CertainLegal Aspects of the Mortgage Loan,” or similar sections, and all sectionsrelating to Borrower, Borrower Principal, Manager, their Affiliates, the Loan,the Loan Documents and any Property, and any risks or special considerationsrelating thereto, and that, to the best of Borrower’s knowledge, such sections(and any other sections reasonably requested) do not contain any untruestatement of a material fact or omit to state a material fact necessary inorder to make the statements made, in the light of the circumstances underwhich they were made, not misleading, and (B) that Borrower will provide anindemnification certificate (1) indemnifying Lender (and for purposes ofthis Section 13.5, Lender hereunder shall include its officers anddirectors) and the Affiliate of Lender that (i) has filed the registrationstatement, if any, relating to the Securitization and/or (ii) which is actingas issuer, depositor, sponsor and/or a similar capacity with respect to theSecuritization (any Person described in (i) or (ii), an “**Issuer Person**”), and eachdirector and officer of any Issuer Person, and each Person or entity whocontrols any Issuer Person within the meaning of Section 15 of theSecurities 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, eachof its directors and officers and each Person who controls any such Personwithin the meaning of Section 15 of the Securities Act and Section 20of the Exchange Act (collectively, the “**Underwriter Group**”) for any Losses to whichLender, the Issuer Group or the Underwriter Group may become subject insofar asthe Losses arise out of or are based upon any untrue statement or allegeduntrue statement of any material fact which is in fact untrue contained in suchsections (including any Investor or Rating Agency “term sheets” orpresentations relating to any Property and/or the Loan) or arise out of or arebased upon the omission or alleged omission which is in fact an omission tostate therein a material fact required to be stated in such sections (includingany Investor or Rating Agency “term sheets” or presentations relating to anyProperty and/or the Loan) or necessary in order to make the statements in suchsections (including any Investor or Rating Agency “term sheets” orpresentations relating to any Property and/or the Loan) or in light of thecircumstances under which they were made, not misleading (collectively the“Securities Liabilities”) and (2) agreeing to reimburse Lender, the IssuerGroup and the Underwriter Group for any legal or other expenses reasonablyincurred by Lender and Issuer Group in connection with investigating ordefending the Securities Liabilities; provided, however, that Borrower will beliable in any such case under clauses (1) or (2) above only to the extent thatany such Securities Liabilities arise out of or is based upon any such untruestatement or omission made therein in reliance upon and in conformity withinformation furnished to Lender or any member of the Issuer Group orUnderwriter Group by or on behalf of Borrower or Borrower Principal inconnection with the preparation of the memorandum or prospectus or otherdocument (including any Investor or Rating Agency “term sheets” orpresentations relating to any Property and/or the Loan) or in connection withthe underwriting of the Loan, including, without limitation, financialstatements of Borrower or Borrower Principal, operating statements, rent rolls,environmental site assessment reports and Property condition reports withrespect to any Property.  This indemnityagreement will be in addition to any liability which Borrower may otherwisehave.  Moreover, the indemnificationprovided for in Clauses (1) and (2) above shall be effective whether or not acertificate described in (A) above is provided and shall be applicable based oninformation previously provided by Borrower and Borrower Principal or theirAffiliates if Borrower or Borrower Principal do not provide the indemnificationcertificate.

 

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### (c)           In connection with filings under theExchange Act or any information provided to holders of Securities on an ongoingbasis, Borrower agrees to indemnify (i) Lender, the Issuer Group and theUnderwriter Group for Losses to which Lender, the Issuer Group or theUnderwriter Group may become subject insofar as the Securities Liabilitiesarise out of or are based upon the omission or alleged omission which is infact an omission to state in the Provided Information a material fact requiredto be stated in the Provided Information in order to make the statements in theProvided Information, in light of the circumstances under which they were madenot misleading and (ii) reimburse Lender, the Issuer Group or the UnderwriterGroup for any legal or other expenses reasonably incurred by Lender, the IssuerGroup or the Underwriter Group in connection with defending or investigatingthe Securities Liabilities.

###  

### (d)           Promptly after receipt by anindemnified party under this Section 13.5 of notice of the commencement ofany action, such indemnified party will, if a claim in respect thereof is to bemade against the indemnifying party under this Section 13.5, notify theindemnifying party in writing of the commencement thereof, but the omission toso notify the indemnifying party will not relieve the indemnifying party fromany liability which the indemnifying party may have to any indemnified partyhereunder except to the extent that failure to notify causes prejudice to theindemnifying party.  In the event thatany action is brought against any indemnified party, and it notifies theindemnifying party of the commencement thereof, the indemnifying party will beentitled, jointly with any other indemnifying party, to participate thereinand, to the extent that it (or they) may elect by written notice delivered tothe indemnified party promptly after receiving the aforesaid notice from suchindemnified party, to assume the defense thereof with counsel reasonablysatisfactory to such indemnified party. After notice from the indemnifying party to such indemnified party underthis Section 13.5 the indemnifying party shall be responsible for anylegal or other expenses subsequently incurred by such indemnified party inconnection with the defense thereof other than reasonable costs ofinvestigation; provided, however, if the defendants in any such action includeboth the indemnified party and the indemnifying party and the indemnified partyshall have reasonably concluded that there are any legal defenses available toit and/or other indemnified parties that are different from or additional tothose available to the indemnifying party, the indemnified party or partiesshall have the right to select separate counsel to assert such legal defensesand to otherwise participate in the defense of such action on behalf of suchindemnified party or parties.  Theindemnifying party shall not be liable for the expenses of more than one suchseparate counsel unless an indemnified party shall have reasonably concludedthat there may be legal defenses available to it that are different from oradditional to those available to another indemnified party.

###  

### (e)           In order to provide for just andequitable contribution in circumstances in which the indemnity agreementsprovided for in  Section 13.5(c) orSection 13.5(d) is or are for any reason held to be unenforceable by anindemnified party in respect of any losses, claims, damages or liabilities (oraction in respect thereof) referred to therein which would otherwise beindemnifiable under Section 13.5(c) or Section 13.5(d), theindemnifying party shall contribute to the amount paid or payable by theindemnified party as a result of such losses, claims, damages or liabilities(or action in respect thereof); provided, however, that no Person guilty offraudulent misrepresentation (within the meaning of Section 11(f) of theSecurities Act) shall be entitled to contribution from any Person who was notguilty of such fraudulent misrepresentation. In determining the amount of contribution to which the respectiveparties are entitled, the following factors shall be considered:  (i) the indemnified party’s, Borrower’s and

 

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Borrower Principal’s relativeknowledge and access to information concerning the matter with respect to whichclaim was asserted; (ii) the opportunity to correct and prevent any statementor omission; and (iii) any other equitable considerations appropriate in thecircumstances.  Lender and Borrowerhereby agree that it would not be equitable if the amount of such contributionwere determined by pro rata or per capita allocation.

###  

### (f)            The liabilities and obligations ofBorrower, Borrower Principal and Lender under this Section 13.5 shallsurvive the satisfaction of this Agreement and the satisfaction and dischargeof the Debt.

 

Section 13.6.      INTENTIONALLY DELETED.

 

# **ARTICLE 14**INDEMNIFICATIONS

 

Section 14.1.      GENERALINDEMNIFICATION

 

Borrower shall indemnify,defend and hold harmless the Indemnified Parties from and against any and all Lossesimposed upon or incurred by or asserted against any Indemnified Parties anddirectly or indirectly arising out of or in any way relating to any one or moreof the following: (a) any accident, injury to or death of persons or loss of ordamage to property occurring in, on or about any Property or any part thereofor on the adjoining sidewalks, curbs, adjacent property or adjacent parkingareas, streets or ways; (b) any use, nonuse or condition in, on or about anyProperty or any part thereof or on the adjoining sidewalks, curbs, adjacentproperty or adjacent parking areas, streets or ways; (c) performance of anylabor or services or the furnishing of any materials or other property inrespect of any Property or any part thereof; (d) any failure of any Property tobe in compliance with any Applicable Legal Requirements; (e) any and all claimsand demands whatsoever which may be asserted against Lender by reason of anyalleged obligations or undertakings on its part to perform or discharge any ofthe terms, covenants, or agreements contained in any Lease; (f) the holding orinvesting of the Reserve Accounts or the performance of the Required Work,Additional Required Repairs or Additional Replacements, or (g) the payment ofany commission, charge or brokerage fee to anyone which may be payable inconnection with the funding of the Loan (collectively, the “**IndemnifiedLiabilities**”); provided, however, that Borrower shall not have anyobligation to Lender hereunder to the extent that such Indemnified Liabilitiesarise from the gross negligence, illegal acts, fraud or willful misconduct ofLender.  To the extent that theundertaking to indemnify, defend and hold harmless set forth in the precedingsentence may be unenforceable because it violates any law or public policy,Borrower shall pay the maximum portion that it is permitted to pay and satisfyunder applicable law to the payment and satisfaction of all IndemnifiedLiabilities incurred by Lender.

 

Section 14.2.      MORTGAGEAND INTANGIBLE TAX INDEMNIFICATION

 

Borrower shall, at itssole cost and expense, protect, defend, indemnify, release and hold harmlessthe Indemnified Parties from and against any and all Losses imposed upon orincurred by or asserted against any Indemnified Parties and directly or indirectlyarising out of or in any

 

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way relating to any tax on themaking and/or recording of any or all of the Mortgages, the Note or any of theother Loan Documents, but excluding any income, franchise or other similartaxes.

 

Section 14.3.      ERISA INDEMNIFICATION

 

Borrower shall, at itssole cost and expense, protect, defend, indemnify, release and hold harmlessthe Indemnified Parties from and against any and all Losses (including, withoutlimitation, reasonable attorneys’ fees and costs incurred in the investigation,defense, and settlement of Losses incurred in correcting any prohibitedtransaction or in the sale of a prohibited loan, and in obtaining anyindividual prohibited transaction exemption under ERISA that may be required,in Lender’s sole discretion) that Lender may incur, directly or indirectly, asa result of a default under Section 4.8 or Section 5.18 of thisAgreement.

 

Section 14.4.      SURVIVAL

 

The obligations andliabilities of Borrower under this Article 14 shall fully survive indefinitelynotwithstanding any termination, satisfaction, assignment, entry of a judgmentof foreclosure, exercise of any power of sale, or delivery of a deed in lieu offoreclosure of any or all of the Mortgages.

 

# **ARTICLE 15**EXCULPATION

 

Section 15.1.      EXCULPATION

 

### (a)           Except as otherwise provided hereinor in the other Loan Documents, Lender shall not enforce the liability andobligation of Borrower or Borrower Principal, as applicable, to perform andobserve the obligations contained herein or in the other Loan Documents by anyaction or proceeding wherein a money judgment shall be sought against Borroweror Borrower Principal, except that Lender may bring a foreclosure action,action for specific performance or other appropriate action or proceeding toenable Lender to enforce and realize upon this Agreement, the Note, any or allof the Mortgages and the other Loan Documents, and the interest in anyProperty, the Rents and any other collateral given to Lender created by thisAgreement, the Note, the Mortgages and the other Loan Documents; provided,however, that any judgment in any such action or proceeding shall beenforceable against Borrower or Borrower Principal, as applicable, only to theextent of Borrower’s or Borrower Principal’s interest in any Property, in theRents and in any other collateral given to Lender.  Lender, by accepting this Agreement, the Note, the Mortgages andthe other Loan Documents, agrees that it shall not, except as otherwiseprovided in this Section 15.1, sue for, seek or demand any deficiencyjudgment against Borrower or Borrower Principal in any such action orproceeding, under or by reason of or under or in connection with thisAgreement, the Note, the Mortgages or the other Loan Documents.  The provisions of this Section 15.1shall not, however, (i) constitute a waiver, release or impairment of anyobligation evidenced or secured by this Agreement, the Note, the Mortgages orthe other Loan Documents; (ii) impair the right of Lender to name Borrower orBorrower Principal as a party defendant in any action or suit for judicialforeclosure and sale under this Agreement and any or all of the Mortgages;(iii) affect the validity or enforceability of any indemnity (including,without limitation, those contained in Section 12.6, Section 13.5 andArticle 14 of this

 

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Agreement), guaranty, masterlease or similar instrument made in connection with this Agreement, the Note,the Mortgages and the other Loan Documents; (iv) impair the right of Lender toobtain the appointment of a receiver; (v) impair the enforcement of theassignment of leases provisions contained in each Mortgage; or (vi) impair theright of Lender to obtain a deficiency judgment or other judgment on the Noteagainst Borrower or Borrower Principal if necessary to obtain any InsuranceProceeds or Awards to which Lender would otherwise be entitled under thisAgreement; provided however, Lender shall only enforce such judgment to the extentof the Insurance Proceeds and/or Awards.

###  

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

###  

#### (i)            fraud or intentionalmisrepresentation by Borrower, Borrower Principal or any other Affiliate ofBorrower or Borrower Principal in connection with the execution and thedelivery of this Agreement, the Note, the Mortgages, any of the other LoanDocuments, or any certificate, report, financial statement or other instrumentor document furnished to Lender at the time of the closing of the Loan orduring the term of the Loan;

####  

#### (ii)           Borrower’s misapplication ormisappropriation of Rents received by Borrower after the occurrence of an Eventof Default;

####  

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

####  

#### (iv)          the misapplication or themisappropriation of Insurance Proceeds or Awards;

####  

#### (v)           Borrower’s failure to pay Taxes,Other Charges (except to the extent that sums sufficient to pay such amountshave been deposited in escrow with Lender pursuant to the terms hereof andthere exists no impediment to Lender’s utilization thereof), charges for laboror materials or other charges that can create liens on any Property beyond anyapplicable notice and cure periods specified herein;

####  

#### (vi)          Borrower’s failure to return or toreimburse Lender for all Personal Property taken from any Property by or onbehalf of Borrower and not replaced with Personal Property of the same utilityand of the same or greater value;

####  

#### (vii)         any act of actual waste or arson byBorrower, any principal, Affiliate, member or general partner thereof or byBorrower Principal, any principal, Affiliate, member or general partnerthereof;

####  

#### (viii)        Borrower’s failure following any Eventof Default to deliver to Lender upon demand all Rents and books and recordsrelating to any Property;

####  

#### (ix)           Borrower’s gross negligence orwillful misconduct; or

 

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#### (x)            Borrower or any Affiliated Lesseeshall take any action of any kind or nature whatsoever, either directly orindirectly to oppose, impede, obstruct, challenge, hinder, frustrate, enjoin orotherwise interfere with (A) Lender’s termination of any Operating Leasewith any Affiliated Lessee, (B) Lender or the party acquiring any Propertyfollowing the occurrence of a foreclosure or deed in lieu thereof (in fullsubstitution of the applicable Affiliated Lessee) being deemed the “Owner”under the Management Agreement, (C)  the execution, delivery oreffectiveness of a new Management Agreement directly between Lender or theparty acquiring any Property following a foreclosure or deed in lieu thereofand applicable Manager or (D)  any payment or other transfer by Manager offunds which would otherwise be paid to any Affiliated Lessee under anyOperating Lease directly to Lender or the party acquiring any Propertyfollowing the occurrence of a foreclosure or deed in lieu thereof, in each caseafter or as a result of any automatic termination of the applicable OperatingLease or of Lender exercising its right to terminate the Operating Lease, ineach case pursuant to the applicable Subordination, Attornment and SecurityAgreement and this Agreement, or shall, either directly or indirectly, cause orpermit any other person to take any action which, if taken by such AffiliatedLessee would constitute an event described in this Section 15.1(b)(x).

####  

### (c)           Notwithstanding the foregoing, theagreement 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 andeffect and the Debt shall become fully recourse to Borrower and BorrowerPrincipal, jointly and severally, in the event (i) of a breach by Borrower orSPE Component Entity of any of the covenants set forth in Article 6 (excludingSections 6.1(xv) and 6.1(xviii)(A) thereof) or a breach by AffiliatedLessee of any of the covenants set forth in Section 15 of theSubordination, Attornment and Security Agreement, except the extent that suchbreach was inadvertent, immaterial and is promptly cured, (ii) of a breach ofany of the covenants set forth in Article 7 hereof, (iii) any Property or anypart thereof shall become an asset in (A) a voluntary bankruptcy or insolvencyproceeding or Borrower Principal, or (B) an involuntary bankruptcy orinsolvency proceeding of Borrower or Borrower Principal in connection withwhich Borrower, Borrower Principal, SPE Component Entity or any Affiliate ofany of the foregoing has or have colluded in any way with the creditorscommencing or filing such proceeding and such proceeding is not dismissed inninety (90) days.

###  

### (d)           Nothing herein shall be deemed to bea 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 forthe full amount of the indebtedness secured by the Mortgages or to require thatall collateral shall continue to secure all of the indebtedness owing to Lenderin accordance with this Agreement, the Note, the Mortgages or the other LoanDocuments.

 

# **ARTICLE 16**NOTICES

 

Section 16.1.      NOTICES

 

All notices, consents,approvals and requests required or permitted hereunder or under any other LoanDocument shall be given in writing and shall be effective for all purposes ifhand

 

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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 UnitedStates Postal Service, with proof of attempted delivery, or by (c) telecopier(with answer back acknowledged provided an additional notice is given pursuantto subsection (b) above), addressed as follows (or at such other address andPerson as shall be designated from time to time by any party hereto, as thecase may be, in a written notice to the other parties hereto in the mannerprovided for in this Section):

 
| If to Lender:   |   | Bank of  America, N.A.                              |
|-----------------|--------|-----------------------------------------------------|
|            |   | Capital  Markets Servicing Group                    |
|            |   | 555 South  Flower Street, 6th Floor                 |
|            |   | CA9-706-06-42                                       |
|            |   | Los Angeles,  California 90071                      |
|            |   | Attn:  Servicing Manager                       |
|            |   | Telephone  No: (800) 462-0505                       |
|            |   | Facsimile  No.: (213) 345-6587                      |
|            |   |                                                |
| With a copy to: |   | Bank of  America Legal Department                   |
|            |   | GCIB/CMBS                                           |
|            |   | NC1-007-20-01                                       |
|            |   | 100 North  Tyron Street                             |
|            |   | Charlotte,  North Carolina 28255-0001               |
|            |   | Attention:  Glenn J. Reid, Esq.                |
|            |   | Facsimile  No.: (704) 387-0922                      |
|            |   |                                                |
| 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                      |
|            |   |                                                |
| 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                        |

 

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|   |   | Attention:  Richard J. Fildes, Esq. |
|--------|--------|------------------------------------------|
|   |   | Facsimile  No.: (407) 843-4444           |

 

A notice shall be deemedto have been given:  in the case of handdelivery, 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 caseof expedited prepaid delivery and telecopy, upon the first attempted deliveryon a Business Day.

 

# **ARTICLE 17**FURTHER ASSURANCES

 

Section 17.1.      REPLACEMENT DOCUMENTS

 

Upon receipt of anaffidavit of an officer of Lender as to the loss, theft, destruction ormutilation of the Note or any other Loan Document which is not of publicrecord, and, in the case of any such mutilation, upon surrender andcancellation of such Note or other Loan Document, Borrower will issue, in lieuthereof, a replacement Note or other Loan Document, dated the date of suchlost, stolen, destroyed or mutilated Note or other Loan Document in the sameprincipal amount thereof and otherwise of like tenor.

 

Section 17.2.      RECORDING OF MORTGAGE, ETC.

 

Borrower forthwith uponthe execution and delivery of the Mortgages and thereafter, from time to time,will cause the Mortgages and any of the other Loan Documents creating a lien orsecurity interest or evidencing the lien hereof upon any Property and eachinstrument of further assurance to be filed, registered or recorded in suchmanner and in such places as may be required by any present or future law inorder to publish notice of and fully to protect and perfect the lien orsecurity interest hereof upon, and the interest of Lender in, anyProperty.  Borrower will pay all taxes,filing, registration or recording fees, and all expenses incident to thepreparation, execution, acknowledgment and/or recording of the Note, theMortgages, the other Loan Documents, any note, deed of trust or mortgagesupplemental hereto, any security instrument with respect to any Property andany instrument of further assurance, and any modification or amendment of theforegoing documents, and all federal, state, county and municipal taxes,duties, imposts, assessments and charges arising out of or in connection withthe execution and delivery of the Mortgages, any deed of trust or mortgagesupplemental hereto, any security instrument with respect to any Property orany instrument of further assurance, and any modification or amendment of theforegoing documents, except where prohibited by law so to do.

 

Section 17.3.      FURTHER ACTS, ETC.

 

Borrower will, at thecost of Borrower, and without expense to Lender, do, execute, acknowledge anddeliver all and every further acts, deeds, conveyances, deeds of trust,mortgages, assignments, security agreements, control agreements, notices ofassignments, 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 herebymortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged,assigned, warranted and transferred or intended now or hereafter so to be, orwhich Borrower may be or

 

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may hereafter become bound toconvey or assign to Lender, or for carrying out the intention or facilitatingthe performance of the terms of this Agreement or for filing, registering orrecording the Mortgages, or for complying with all Legal Requirements.  Borrower, on demand, will execute anddeliver, and in the event it shall fail to so execute and deliver, herebyauthorizes Lender to execute in the name of Borrower or without the signatureof Borrower to the extent Lender may lawfully do so, one or more financingstatements and financing statement amendments to evidence more effectively,perfect and maintain the priority of the security interest of Lender in anyProperty.  Borrower grants to Lender anirrevocable power of attorney coupled with an interest for the purpose ofexercising and perfecting any and all rights and remedies available to Lenderat law and in equity, including without limitation, such rights and remediesavailable to Lender pursuant to this Section 17.3.

 

Section 17.4.      CHANGES IN TAX, DEBT, CREDIT ANDDOCUMENTARY STAMP LAWS

 

### (a)           If any law is enacted or adopted oramended after the date of this Agreement which deducts the Debt from the valueof any Property for the purpose of taxation or which imposes a tax, eitherdirectly or indirectly, on the Debt or Lender’s interest in any Property,Borrower will pay the tax, with interest and penalties thereon, if any.  If Lender is advised by counsel chosen by itthat the payment of tax by Borrower would be unlawful or taxable to Lender orunenforceable or provide the basis for a defense of usury then Lender shallhave 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 orbe entitled to any credit or credits on account of the Debt for any part of theTaxes or Other Charges assessed against any Property, or any part thereof, andno deduction shall otherwise be made or claimed from the assessed value of anyProperty, or any part thereof, for real estate tax purposes by reason of theMortgages or the Debt.  If such claim,credit or deduction shall be required by law, Lender shall have the option, by writtennotice of not less than one hundred twenty (120) days, to declare the Debtimmediately due and payable.

###  

If at any time the UnitedStates of America, any State thereof or any subdivision of any such State shallrequire revenue or other stamps to be affixed to the Note, the Mortgage, or anyof 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 andagrees 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 andexpenses (including reasonable, actual attorneys’ fees and disbursements andthe allocated costs of internal legal services and all actual disbursements ofinternal counsel) reasonably incurred by Lender in accordance with thisAgreement in connection with (a) the preparation, negotiation, execution anddelivery of this Agreement and the other Loan Documents and the consummation ofthe transactions contemplated hereby and thereby and all the costs offurnishing all opinions by counsel for Borrower (including without limitationany opinions requested by Lender as to

 

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any legal matters arising underthis Agreement or the other Loan Documents with respect to any Property); (b)any default by Borrower in Borrower’s ongoing performance of and compliancewith Borrower’s respective agreements and covenants contained in this Agreementand the other Loan Documents on its part to be performed or complied with afterthe Closing Date, including, without limitation, confirming compliance withenvironmental and insurance requirements; (c) following a request by Borrower,Lender’s ongoing performance and compliance with all agreements and conditionscontained in this Agreement and the other Loan Documents on its part to beperformed 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 Documentsand any other documents or matters requested by Lender; (e) securing Borrower’scompliance with any requests made pursuant to the provisions of this Agreement;(f) the filing and recording fees and expenses, title insurance and reasonablefees and expenses of counsel for providing to Lender all required legalopinions, and other similar expenses incurred in creating and perfecting theLien in favor of Lender pursuant to this Agreement and the other LoanDocuments; (g) enforcing or preserving any rights, in response to third partyclaims or the prosecuting or defending of any action or proceeding or otherlitigation, in each case against, under or affecting Borrower, this Agreement,the other Loan Documents, any Property, or any other security given for theLoan; and (h) enforcing any obligations of or collecting any payments due fromBorrower under this Agreement, the other Loan Documents or with respect to anyProperty or in connection with any refinancing or restructuring of the creditarrangements provided under this Agreement in the nature of a “work-out” or ofany insolvency or bankruptcy proceedings; provided, however, that Borrowershall not be liable for the payment of any such costs and expenses to theextent the same arise by reason of the gross negligence, illegal acts, fraud orwillful misconduct of Lender. Additionally, on the Closing Date Borrower shall pay Lender asecuritization fee in the amount of $520,000.00 (the “**Securitization Fee**”).

 

# **ARTICLE 18**WAIVERS

 

Section 18.1.      REMEDIES CUMULATIVE; WAIVERS

 

The rights, powers andremedies of Lender under this Agreement shall be cumulative and not exclusiveof any other right, power or remedy which Lender may have against Borrower orBorrower Principal pursuant to this Agreement or the other Loan Documents, orexisting 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 maydetermine in Lender’s sole discretion. No delay or omission to exercise any remedy, right or power accruingupon an Event of Default shall impair any such remedy, right or power or shallbe construed as a waiver thereof, but any such remedy, right or power may beexercised from time to time and as often as may be deemed expedient.  A waiver of one Default or Event of Defaultwith respect to Borrower shall not be construed to be a waiver of any subsequentDefault or Event of Default by Borrower or to impair any remedy, right or powerconsequent thereon.

 

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Section 18.2.      MODIFICATION, WAIVER IN WRITING

 

No modification,amendment, extension, discharge, termination or waiver of any provision of thisAgreement, or of the Note, or of any other Loan Document, nor consent to anydeparture by Borrower therefrom, shall in any event be effective unless thesame shall be in a writing signed by the party against whom enforcement issought, and then such waiver or consent shall be effective only in the specificinstance, and for the purpose, for which given.  Except as otherwise expressly provided herein, no notice to, ordemand on Borrower, shall entitle Borrower to any other or future notice ordemand in the same, similar or other circumstances.

 

Section 18.3.      DELAY NOT A WAIVER

 

Neither any failure norany delay on the part of Lender in insisting upon strict performance of anyterm, condition, covenant or agreement, or exercising any right, power, remedyor privilege hereunder, or under the Note or under any other Loan Document, orany other instrument given as security therefor, shall operate as or constitutea waiver thereof, nor shall a single or partial exercise thereof preclude anyother future exercise, or the exercise of any other right, power, remedy orprivilege.  In particular, and not byway of limitation, by accepting payment after the due date of any amountpayable under this Agreement, the Note or any other Loan Document, Lender shallnot be deemed to have waived any right either to require prompt payment whendue of all other amounts due under this Agreement, the Note or the other LoanDocuments, or to declare a default for failure to effect prompt payment of anysuch other amount.

 

Section 18.4.      TRIAL BY JURY

 

**BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREESNOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVESANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW ORHEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIMOR OTHER ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY ANDVOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND LENDER, AND IS INTENDED TOENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO ATRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH OF LENDER, BORROWER PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TOFILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THISWAIVER BY BORROWER, BORROWER PRINCIPAL AND LENDER.**

 

Section 18.5.      WAIVER OF NOTICE

 

Borrower shall not beentitled to any notices of any nature whatsoever from Lender except withrespect to matters for which this Agreement or the other Loan Documents specificallyand expressly provide for the giving of notice by Lender to Borrower and except

 

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with respect to matters forwhich Borrower is not, pursuant to applicable Legal Requirements, permitted towaive the giving of notice.  Borrowerhereby expressly waives the right to receive any notice from Lender withrespect to any matter for which this Agreement or the other Loan Documents donot specifically and expressly provide for the giving of notice by Lender toBorrower.

 

Section 18.6.      REMEDIES OF BORROWER

 

In the event that a claimor adjudication is made that Lender or its agents have acted unreasonably orunreasonably delayed acting in any case where by law or under this Agreement orthe other Loan Documents, Lender or such agent, as the case may be, has anobligation to act reasonably or promptly, Borrower agrees that neither Lendernor its agents shall be liable for any monetary damages, and Borrower’s soleremedies shall be limited to commencing an action seeking injunctive relief ordeclaratory judgment.  The partieshereto agree that any action or proceeding to determine whether Lender hasacted reasonably shall be determined by an action seeking declaratory judgment.  Lender agrees that, in such event, it shallcooperate in expediting any action seeking injunctive relief or declaratoryjudgment.

 

Section 18.7.      WAIVER OF MARSHALLING OF ASSETS

 

To the fullest extentpermitted by law, Borrower, for itself and its successors and assigns, waivesall rights to a marshalling of the assets of Borrower, Borrower’s partners andothers with interests in Borrower, and of any Property, and agrees not toassert any right under any laws pertaining to the marshalling of assets, thesale in inverse order of alienation, homestead exemption, the administration ofestates of decedents, or any other matters whatsoever to defeat, reduce oraffect the right of Lender under the Loan Documents to a sale of any Propertyfor the collection of the Debt without any prior or different resort forcollection or of the right of Lender to the payment of the Debt out of the netproceeds of any Property in preference to every other claimant whatsoever.

 

Section 18.8.      WAIVER OF STATUTE OF LIMITATIONS

 

Borrower hereby expresslywaives and releases, to the fullest extent permitted by law, the pleading ofany statute of limitations as a defense to payment of the Debt or performanceof its Other Obligations.

 

Section 18.9.      WAIVER OF COUNTERCLAIM

 

Borrower hereby waivesthe right to assert a counterclaim, other than a compulsory counterclaim, inany action or proceeding brought against it by Lender or its agents.

 

Section 18.10.    GRADSKY WAIVERS.

 

Borrower Principal herebywaives each of the following:

 

### (a)           Any rights of Borrower Principal ofsubrogation, reimbursement, indemnification, and/or contribution againstBorrower or any other person or entity, and any other rights and

 

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defenses that are or may becomeavailable to Borrower Principal or any other person or entity by reasons ofSections 2787-2855, inclusive of the California Civil Code;

###  

### (b)           Any rights or defenses that may beavailable by reason of any election of remedies by Lender (including, withoutlimitation, any such election which in any manner impairs, effects, reduces,releases, destroys or extinguishes Borrower Principal’s subrogation rights,rights to proceed against Borrower for reimbursement, or any other rights ofBorrower Principal to proceed against any other person, entity or security,including but not limited to any defense based upon an election of remedies byLender under the provisions of Section 580(d) of the California Code ofCivil Procedure or any similar law of California or of any other State or ofthe United Sates); and

 

### (c)           Any rights or defenses BorrowerPrincipal may have because its obligations under this Agreement (the “**BorrowerPrincipal Obligations**”) are secured by real property or any estatefor years.  These rights or defensesinclude, but are not limited to, any rights or defenses that are based upon,directly or indirectly, the application of Section 580(a),Section 580(b), Section 580(d) or Section 726 of the CaliforniaCode of Civil Procedure to the Borrower Principal Obligations.

###  

The provisions of thissubsection (c) mean, among other things:

 

(y)           Lender may collect from BorrowerPrincipal without first foreclosing on any real or personal property collateralpledged by Borrower for the Debt; and

 

(z)            Subject to the provisions of Article15, if Lender forecloses on a real property pledged by Borrower:

 

###### (1)           The Borrower Principal Obligationsshall not be reduced by the price for which the collateral sold at theforeclosure sale or the value of the collateral at the time of the sale.

######  

###### (2)           Lender may collect from BorrowerPrincipal even if Lender, by foreclosing on the real property collateral, hasdestroyed any right of Borrower Principal to collect from Borrower.  Further, the provisions of this Agreementconstitute an unconditional and irrevocable waiver of any rights and defensesBorrower Principal may have because Borrower’s obligations are secured by realproperty.  These rights and defenses,include, but are not limited to, any rights or defenses based upon Section 580(a),Section 580(b), Section 580(d) or Section 726 of the CaliforniaCode of Civil Procedure.

 

# **ARTICLE 19**GOVERNING LAW

 

Section 19.1.      CHOICE OF LAW

 

This Agreement shall bedeemed to be a contract entered into pursuant to the laws of the State of NewYork and shall in all respects be governed, construed, applied and enforced in

 

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accordance with the laws of theState of New York, provided however, (a) that with respect to the creation,perfection, priority and enforcement of any Lien created by the Loan Documents,and the determination of deficiency judgments, the laws of the state where anyProperty is located shall apply, and (b) with respect to the security interestin each of the Reserve Accounts and the Cash Management Account, the laws ofthe State of New York shall apply.

 

Section 19.2.      SEVERABILITY

 

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

 

Section 19.3.      PREFERENCES

 

Lender shall have thecontinuing and exclusive right to apply or reverse and reapply any and allpayments by Borrower to any portion of the obligations of Borrowerhereunder.  To the extent Borrower makesa payment or payments to Lender, which payment or proceeds or any part thereofare subsequently invalidated, declared to be fraudulent or preferential, setaside or required to be repaid to a trustee, receiver or any other party underany Creditors Rights Laws, state or federal law, common law or equitable cause,then, to the extent of such payment or proceeds received, the obligationshereunder or part thereof intended to be satisfied shall be revived andcontinue in full force and effect, as if such payment or proceeds had not beenreceived by Lender.

 

# **ARTICLE 20**MISCELLANEOUS

 

Section 20.1.      SURVIVAL

 

This Agreement and allcovenants, agreements, representations and warranties made herein and in thecertificates delivered pursuant hereto shall survive the making by Lender ofthe Loan and the execution and delivery to Lender of the Note, and shallcontinue in full force and effect so long as all or any of the Debt isoutstanding and unpaid unless a longer period is expressly set forth herein orin the other Loan Documents.  Wheneverin this Agreement any of the parties hereto is referred to, such referenceshall be deemed to include the legal representatives, successors and assigns ofsuch party.  All covenants, promises andagreements in this Agreement,  by or onbehalf 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 thisAgreement, Lender exercises any right given to it to approve or disapprove, orany arrangement or term is to be satisfactory to Lender, the decision of Lenderto approve or disapprove or to decide whether arrangements or terms aresatisfactory or not satisfactory shall (except as is otherwise specificallyherein provided) be in the sole discretion of Lender and shall be final andconclusive.

 

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Section 20.3.      HEADINGS

 

The Article and/orSection headings and the Table of Contents in this Agreement are includedherein for convenience of reference only and shall not constitute a part ofthis Agreement for any other purpose.

 

Section 20.4.      COST OF ENFORCEMENT

 

In the event (a) that anyor all of the Mortgages is foreclosed in whole or in part, (b) of thebankruptcy, insolvency, rehabilitation or other similar proceeding in respect ofBorrower or any of its constituent Persons or an assignment by Borrower or anyof its constituent Persons for the benefit of its creditors, or (c) Lenderexercises any of its other remedies under this Agreement or any of the otherLoan Documents, Borrower shall be chargeable with and agrees to pay all costsof collection and defense, including attorneys’ fees and costs, incurred byLender or Borrower in connection therewith and in connection with any appellateproceeding or post-judgment action involved therein, together with all requiredservice or use taxes.

 

Section 20.5.      SCHEDULES INCORPORATED

 

The Schedules annexedhereto are hereby incorporated herein as a part of this Agreement with the sameeffect as if set forth in the body hereof.

 

Section 20.6.      OFFSETS, COUNTERCLAIMS AND DEFENSES

 

Any assignee of Lender’sinterest in and to this Agreement, the Note and the other Loan Documents shalltake the same free and clear of all offsets, counterclaims or defenses whichare unrelated to such documents which Borrower may otherwise have against anyassignor of such documents, and no such unrelated counterclaim or defense shallbe interposed or asserted by Borrower in any action or proceeding brought byany such assignee upon such documents and any such right to interpose or assertany such unrelated offset, counterclaim or defense in any such action orproceeding is hereby expressly waived by Borrower.

 

Section 20.7.      NO JOINT VENTURE OR PARTNERSHIP; NOTHIRD PARTY BENEFICIARIES

 

### (a)           Borrower and Lender intend that therelationships created hereunder and under the other Loan Documents be solelythat of borrower and lender.  Nothingherein or therein is intended to create a joint venture, partnership,tenancy-in-common, or joint tenancy relationship between Borrower and Lendernor to grant Lender any interest in any Property other than that of mortgagee,beneficiary or lender.

###  

### (b)           This Agreement and the other LoanDocuments are solely for the benefit of Lender and Borrower and nothingcontained in this Agreement or the other Loan Documents shall be deemed toconfer upon anyone other than Lender and Borrower any right to insist upon orto enforce the performance or observance of any of the obligations containedherein or therein.  All conditions tothe obligations of Lender to make the Loan hereunder are imposed solely andexclusively for the benefit of Lender and no other Person shall have standingto require satisfaction of such conditions in accordance with their terms or beentitled to assume that

 

130

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Lender will refuse to make theLoan in the absence of strict compliance with any or all thereof and no otherPerson shall under any circumstances be deemed to be a beneficiary of suchconditions, any or all of which may be freely waived in whole or in part byLender if, in Lender’s sole discretion, Lender deems it advisable or desirableto do so.

###  

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

###  

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

###  

### (e)           By accepting or approving anythingrequired to be observed, performed or fulfilled or to be given to Lenderpursuant to this Agreement, the Mortgages, the Note or the other LoanDocuments, including, without limitation, any officer’s certificate, balancesheet, 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 ofsame, and such acceptance or approval thereof shall not constitute any warrantyor affirmation with respect thereto by Lender.

###  

### (f)            Borrower recognizes and acknowledgesthat in accepting this Agreement, the Note, the Mortgages and the other LoanDocuments, Lender is expressly and primarily relying on the truth and accuracyof the representations and warranties set forth in Article 4 of this Agreementwithout any obligation to investigate any Property and notwithstanding anyinvestigation of any Property by Lender; that such reliance existed on the partof Lender prior to the date hereof, that the warranties and representations area material inducement to Lender in making the Loan; and that Lender would notbe willing to make the Loan and accept this Agreement, the Note, the Mortgagesand the other Loan Documents in the absence of the warranties andrepresentations 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 mediaintended to reach the general public which refers to the Loan, Lender, Banc ofAmerica Securities LLC, or any of their Affiliates shall be subject to theprior 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 anymedia intended to reach the general public which refers to the Loan, anyProperty, Borrower, Borrower Principal and their respective Affiliates withoutthe approval of Borrower or any such Persons. Borrower also agrees that Lender may share any information pertaining tothe Loan with Bank of America Corporation, including its bank subsidiaries,Banc of America Securities LLC and any other Affiliates of the foregoing, inconnection with the sale or transfer of the Loan or any Participations and/orSecurities created.

 

131

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Section 20.9.      CONFLICT; CONSTRUCTION OF DOCUMENTS;RELIANCE

 

In the event of anyconflict between the provisions of this Agreement and any of the other LoanDocuments, the provisions of this Agreement shall control.  The parties hereto acknowledge that theywere represented by competent counsel in connection with the negotiation,drafting and execution of the Loan Documents and that such Loan Documents shallnot be subject to the principle of construing their meaning against the partywhich drafted same.  Borroweracknowledges that, with respect to the Loan, Borrower shall rely solely on itsown judgment and advisors in entering into the Loan without relying in anymanner on any statements, representations or recommendations of Lender or anyparent, subsidiary or Affiliate of Lender. Lender shall not be subject to any limitation whatsoever in the exerciseof any rights or remedies available to it under any of the Loan Documents orany other agreements or instruments which govern the Loan by virtue of the ownershipby it or any parent, subsidiary or Affiliate of Lender of any equity interestany of them may acquire in Borrower, and Borrower hereby irrevocably waives theright to raise any defense or take any action on the basis of the foregoingwith respect to Lender’s exercise of any such rights or remedies.  Borrower acknowledges that Lender engages inthe business of real estate financings and other real estate transactions andinvestments which may be viewed as adverse to or competitive with the business ofBorrower or its Affiliates.

 

Section 20.10.    ENTIRE AGREEMENT

 

This Agreement and theother Loan Documents contain the entire agreement of the parties hereto andthereto in respect of the transactions contemplated hereby and thereby, and allprior agreements among or between such parties, whether oral or written betweenBorrower and Lender are superseded by the terms of this Agreement and the otherLoan Documents.

 

Section 20.11.    CROSS COLLATERALIZATION

 

Withoutlimitation to any other right or remedy provided to Lender in this Agreement orany of the other Loan Documents, Borrower acknowledges and agrees that to thefull extent permitted under applicable law, upon the occurrence of an Event ofDefault (i) Lender shall have the right to pursue all of its rights andremedies in one proceeding, or separately and independently in separateproceedings which it, as Lender, in its sole and absolute discretion, shalldetermine from time to time, (ii) Lender is not required to either marshalassets, sell any of the collateral for the Loan in any inverse order ofalienation, or be subjected to any “one action” or “election of remedies” lawor rule, (iii) the exercise by Lender of any remedies against any of thecollateral for the Loan will not impede Lender from subsequently orsimultaneously exercising remedies against other collateral for the Loan, (iv)all Liens and other rights, remedies and privileges provided to Lender in thisAgreement and in the other Loan Documents or otherwise shall remain in fullforce and effect until Lender has exhausted all of its remedies against thecollateral for the Loan and all of the collateral for the Loan has beenforeclosed, sold and/or otherwise realized upon and (v) all of the Propertiesshall be security for the performance of all of Borrower’s obligationshereunder.

 

132

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Section 20.12.    TAX DISCLOSURE

 

Notwithstandinganything herein to the contrary, except as reasonably necessary to comply withapplicable securities laws, each party (and each employee, representative orother agent of each party) hereto may disclose to any and all persons, withoutlimitation of any kind, any information with respect to the United Statesfederal income “tax treatment” and “tax structure” (in each case, within themeaning of Treasury Regulation Section 1.6011-4) of the transactionscontemplated hereby and all materials of any kind (including opinions or othertax analyses) that are provided to such parties (or their representatives)relating to such tax treatment and tax structure; provided that withrespect to any document or similar item that in either case containsinformation concerning the tax treatment or tax structure of the transaction aswell as other information, this sentence shall only apply to such portions ofthe document or similar item that relate to the United States federal incometax treatment or tax structure of the transactions contemplated hereby.

 

Section 20.13.    MEZZANINE LOAN AGREEMENTS.

 

As of theClosing Date, the Mezzanine Lender has not made the Mezzanine Loan to MezzanineBorrower.  For so long as the MezzanineLoan has to not been entered into, this Agreement shall be interpreted withoutreference to the Mezzanine Loan or any of the terms that relate to theMezzanine Loan including but not limited to “Mezzanine Debt Service”,“Mezzanine Borrower”, “Mezzanine Lender” and “Mezzanine Loan”.

 

[Signatures Commence on Following Page]

 

133

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

 
|   | BORROWER:                                                                                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                    |
|   |                                                                                                                                                                                    |
|   | ROSE SPE 1,  L.P., a Delaware limited partnership                                                                                                                                       |
|   |                                                                                                                                                                                    |   |
|   | By:                                                                                                                                                                                     | Rose SPE 1  GP, LLC, its general partner |
|   |                                                                                                                                                                                    |   |
|   |                                                                                                                                                                                    | By: |   |
|   |                                                                                                                                                                                    |   | Name: |   |
|   |                                                                                                                                                                                    |   | Title: |   |
|   |                                                                                                                                                                                    |   |   |
|   |                                                                                                                                                                                    |
|   | BORROWER  PRINCIPAL:                                                                                                                                                                    |
|   |                                                                                                                                                                                    |
|   | Acknowledged  and agreed to with respect to its obligations set forth in Article 4, Section  5.11, Section 5.26, 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: |   |
|   |                                                                                                                                                                                    |   | Name: |   |
|   |                                                                                                                                                                                    |   | Title: |   |
|   |                                                                                                                                                                                    |   |   |
|   |                                                                                                                                                                                    |
|   | AFFILIATED  LESSEE:                                                                                                                                                                     |
|   |                                                                                                                                                                                    |
|   | Acknowledged  and agreed to with respect to its obligations set forth in Article 4 hereof:                                                                                              |
|   |                                                                                                                                                                                    |
|   |                                                                                                                                                                                    |
|   | CNL ROSE SPE  TENANT CORP.,  a Delaware corporation                                                                                                                                     |
|   |                                                                                                                                                                                    |
|   | By:                                                                                                                                                                                     |   |   |
|   |                                                                                                                                                                                    | Name: |   |
|   |                                                                                                                                                                                    | Title: |   |
|        |                                                                                                                                                                                         |  |  |  |  |  |  |  |  |  |

 

----

 
|   | LENDER:                |
|--------|------------------------|
|   |                   |
|   | BANK OF  AMERICA, N.A. |
|   |                   |   |
|   |                   |   |
|   | By:                    |   |   |
|   |                   | Name: |   |   |
|   |                   | Title: |   |   |
|        |                        |  |  |  |  |

 

2

----

 

EXHIBIT A

 

Annual Budget

 

----

 

EXHIBIT B

 

Borrower Equity Ownership Structure

 

**Exhibit B to Loan Agreement**

ROSESPE Structure for CMBS (26Pool)

 

~~* *~~

 

HI Phoenix Chandler, AZ; HOM Phoenix Chandler, AZ; HI Sedona, AZ; RISacramento/Cal Expo, CA; DT San Diego Del Mar, CA; HI Denver SW Lakewood, CO;RI Wilmington/Newark, DE;  HI Ft.Lauderdale/Cypress, FL;  TPS MiamiAirport West, FL;  TPS Miami Lakes,FL;  RI Orlando International Drive, FL;HOL Crystal Lake, IL;  HOL LouisvilleSouthwest, KY; RI Ann Arbor, MI;  CYFlint, 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; RIFt. Worth River Plaza, TX; TPS Fort Worth Southwest, TX;  HI Laredo, TX;  and  RI Tyler, TX

 
|  |
|--|

 

v.3.03  11-5-2003

 

CONFIDENTIALITYNOTICE:  The information containedherein is confidential and intended only for the use of CNL HospitalityProperties, 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 thisinformation is strictly prohibited.

 

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**SCHEDULEA**

** **

**Properties andInitial Allocated Loan Amounts and Percentages**

 
| **Property**                                                                                            |   | **Initial  Allocated  Loan Amount** |      | **Initial  Allocated  Loan Percentage** |   |
|---------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|-----------------------------------------|--------|
| Hampton Inn Phoenix Chandler  Chandler, Arizona                                                         |   | $                                   | 2,302,857 |                                    | 1.8    | % |
| Homewood Suites Phoenix Chandler  Chandler, Arizona                                                     |   | $                                   | 2,600,000 |                                    | 2.0    | % |
| Hampton Inn Sedona  Sedona, Arizona                                                                     |   | $                                   | 2,340,000 |                                    | 1.8    | % |
| Residence Inn Sacramento/Cal Expo  Sacramento, California                                               |   | $                                   | 9,842,857 |                                    | 7.6    | % |
| Doubletree Hotel San Diego Del Mar  San Diego, California                                               |   | $                                   | 7,280,000 |                                    | 5.6    | % |
| Hampton Inn  Denver SW Lakewood  Lakewood, Colorado                                                     |   | $                                   | 1,485,714 |                                    | 1.1    | % |
| Residence Inn  Wilmington/Newark (the “Wilmington  Newark Property”)  Wilmington, Delaware    |   | $                                   | 7,428,571 |                                    | 5.7    | % |
| Hampton Inn Ft. Lauderdale-Cypress Creek  Ft. Lauderdale, Florida                                       |   | $                                   | 2,785,714 |                                    | 2.1    | % |
| Towne Place Suites  Miami Airport West (the “Miami Airport  West Property”)  Miami, Florida   |   | $                                   | 2,971,429 |                                    | 2.3    | % |
| Towne Place Suites  Miami Lakes  (The “Miami Lakes Property”)  Miami, Florida                 |   | $                                   | 2,971,429 |                                    | 2.3    | % |
| Residence Inn by Marriott International Drive  Orlando, Florida                                         |   | $                                   | 7,502,857 |                                    | 5.8    | % |
| Holiday Inn Crystal Lake  Crystal Lake, Illinois                                                        |   | $                                   | 8,431,429 |                                    | 6.5    | % |
| Holiday Inn Southwest Louisville (the  “Louisville Southwest Property”)  Louisville, Kentucky |   | $                                   | 4,828,571 |                                    | 3.7    | % |
| Residence Inn Ann Arbor  Ann Arbor, Michigan                                                            |   | $                                   | 4,364,286 |                                    | 3.4    | % |
| Courtyard Flint  Flint, Michigan                                                                        |   | $                                   | 3,996,571 |                                    | 3.1    | % |

 

----

 
| **Property**                                                    |   | **Initial  Allocated  Loan Amount** |       | **Initial  Allocated  Loan Percentage** |   |
|-----------------------------------------------------------------|--------|-------------------------------------|------------|-----------------------------------------|--------|
| Hampton Inn Minneapolis  Minnetonka  Minnetonka, Minnesota      |   | $                                   | 1,374,286  |                                    | 1.1    | % |
| Hampton Inn Hattiesburg  Hattiesburg,Mississippi                |   | $                                   | 4,605,714  |                                    | 3.5    | % |
| Hampton Inn Lincoln Airport I-80  Lincoln, Nebraska             |   | $                                   | 3,279,714  |                                    | 2.5    | % |
| Residence Inn Fishkill  Fishkill, New York                      |   | $                                   | 14,508,000 |                                    | 11.2   | % |
| Hampton Inn Oklahoma City-Airport I-40  Oklahoma City, Oklahoma |   | $                                   | 4,230,571  |                                    | 3.3    | % |
| Hampton Inn Tulsa  Tulsa, Oklahoma                              |   | $                                   | 2,971,429  |                                    | 2.3    | % |
| Residence Inn Warwick  Warwick, Rhode Island                    |   | $                                   | 6,314,286  |                                    | 4.9    | % |
| Ft. Worth Towne Place Suites-Southwest Ft.  Worth, Texas        |   | $                                   | 3,484,000  |                                    | 2.7    | % |
| Residence Inn - Ft. Worth River Plaza  Ft. Worth, Texas         |   | $                                   | 7,242,857  |                                    | 5.6    | % |
| Hampton Inn - Laredo  Laredo, Texas                             |   | $                                   | 6,760,000  |                                    | 5.2    | % |
| Residence Inns Tyler  Tyler, Texas                              |   | $                                   | 4,096,857  |                                    | 3.2    | % |

 

2

----

 

**SCHEDULE B**

 

**Initial PropertyManager 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 (“Doubletree  Property”)             |   | 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 MiamiAirport West Property and the Miami Lakes Property, such Properties are leasedto the Non-Affiliated Lessee which may or may not have entered into managementagreements 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 (“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                          |

 

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(2) On the Closing Date theInitial Manager is Flagstone Hospitality Management LLC, a Tennessee limitedliability company (“Flagstone”). Borrower anticipates entering into a new Management Agreement in theexact same form as the ones with Interstate for the other Interstate Propertiesin effect on the Closing Date with Interstate on or before December 31, 2003.

 

2

----

 

**SCHEDULE I**

 

**REQUIRED REPAIRS**

 
| **Property  Name**     |   | **Address**           |   | **Location** |   | **Prop.  Improvements**                                                                                                                                       |   | **ESA  Information**                           |   | **Environmental  Concerns**                                                                                                                                                                                               |   | **Recommendations**                                                                                                                     |   | **Estimated  Cost** |   | **Reserve  Amount  (125%)** |
|------------------------|--------|-----------------------|--------|--------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|-----------------------------|
|                   |   |                  |   |         |   |                                                                                                                                                          |   |                                           |   |                                                                                                                                                                                                                      |   |                                                                                                                                    |   |                |   |                        |
| Courtyard  by Marriott |   | 5205  Gateway  Centre |   | Flint,  MI   |   | 3-story hotel, 102 guest  rooms, 2.58-acres, built in 1996, undeveloped and agricultural prior to 1996                                                        |   | Phase I ESA by PSI 6/16/03,  inspected 6/6/03  |   | **Mold** - PSI observed areas of moisture and mold  growth in a pool room.  PSI issued a  mold R&P Plan on November 25, 2003.                                                                                    |   | **Mold remediation required.   ESD recommends escrowing funds for remediation. ESD estimate is  $10,000.**                         |   | **10,000**          |   | **12,500**                  |
|                   |   |                  |   |         |   |                                                                                                                                                          |   |                                           |   |                                                                                                                                                                                                                      |   |                                                                                                                                    |   |                |   |                        |
| Residence  Inn         |   | 3303  Troup  Highway  |   | Tyler,  TX   |   | 16 buildings with guest  suites, one gatehouse/office building, 4.125 acres, built in 1985,  undeveloped prior to 1985                                        |   | Phase I ESA by PSI 6/16/03,  inspected 6/5/03  |   | **Mold** - Moisture intrusion and visible mold  growth were observed in various areas - the gatehouse, closets in guest  suites, and near commercial washing machines. PSI issued mold R&P Plan on  October 20, 2003. |   | **Mold remediation required. ESD recommends escrowing funds  for remediation. ESD estimate for mold remediation is $40,000.**           |   | **40,000**          |   | **50,000**                  |
|                   |   |                  |   |         |   |                                                                                                                                                          |   |                                           |   |                                                                                                                                                                                                                      |   |                                                                                                                                    |   |                |   |                        |
| Residence  Inn         |   | 7975  Canada  Ave.    |   | Orlando,  FL |   | eleven 2-story hotel  buildings, 176 guest rooms, built in 1984, undeveloped prior to 1984                                                                    |   | Phase I ESA by PSI 6/9/03,  inspected 5/29/03  |   | **Mold** - Water damage and mold growth were  observed in multiple buildings. PSI issued a mold R&P Plan on October 6,  2003.                                                                                         |   | **Mold remediation required. ESD recommends funds be escrowed  for remediation.  ESD estimate for  mold remediation is $176,000.** |   | **176,000**         |   | **220,000**                 |
|                   |   |                  |   |         |   |                                                                                                                                                          |   |                                           |   |                                                                                                                                                                                                                      |   |                                                                                                                                    |   |                |   |                        |
| Residence  Inn         |   | 500  Kilvert St.      |   | Warwick,  RI |   | twelve 2-story hotel buildings  with 96 guest rooms, office and storage buildings, 3.80 acres, built in 1989,  sand and gravel pit from 1936 to the mid-1980s |   | Phase I ESA by PSI 6/19/03,  inspected 5/30/03 |   | **Mold** - Water intrusions from roof leaks and  small areas of mold growth were observed in six mechanical rooms. PSI issued  a mold R&P Plan on September 22, 2003.                                                 |   | **Mold remediation required.   ESD recommends funds be escrowed for remediation. ESD estimate for  mold remediation is $5,000.**   |   | **5,000**           |   | **6,250**                   |
|                   |   |                  |   |         |   |                                                                                                                                                          |   |                                           |   |                                                                                                                                                                                                                      |   |                                                                                                                                    |   |                |   |                        |
|                   |   |                  |   |         |   |                                                                                                                                                          |   |                                           |   |                                                                                                                                                                                                                      |   | **TOTAL RESERVES**                                                                                                                      |   |                |   | **288,750**                 |

 

----

 

**SCHEDULE II**

 

**REPLACEMENTS**

 

----

 

**SCHEDULE III**

 

**COST BASIS OFPROPERTIES**

 
|   |   | **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 |   |

 

----

 

**SCHEDULE IV**

 

**CLOSING PIP REPORTS**

 

*CNL PIP SCHEDULE*

 
| **Flag**           |   | **Location**                  |   | **State** |   | **2004** |      | **2005** |   | **2006**      |   | **Total** |
|--------------------|--------|-------------------------------|--------|-----------|--------|----------|-----------|----------|--------|---------------|--------|-----------|
|               |   |                          |   |      |   |     |      |     |   |          |   |      |
| **Marriott**       |   |                          |   |      |   |     |      |     |   |          |   |      |
| Residence  Inn     |   | Ann Arbor                     |   | MI        |   | $        | 828,428   |     | $      | —        |   | $         | — |   | $ | 828,428 |
| Courtyard          |   | Flint                         |   | MI        |   | $        | 771,743   |     | $      | —        |   | $         | — |   | $ | 771,743 |
| Residence  Inn     |   | Orlando  International Drive  |   | FL        |   | $        | 1,901,268 |     | $      | —        |   | $         | — |   | $ | 1,901,268 |
| Residence  Inn     |   | Sacramento  Cal Expo          |   | CA        |   | $        | 8,435     |     | $      | —        |   | $         | — |   | $ | 8,435 |
| Residence  Inn     |   | Fishkill                      |   | NY        |   | $        | 311,510   |     | $      | —        |   | $         | — |   | $ | 311,510 |
| Residence  Inn     |   | Tyler                         |   | TX        |   | $        | —    |     | $      | 2,102,308     |   | $         | — |   | $ | 2,102,308 |
| Residence  Inn     |   | Forth Worth  River Plaza      |   | TX        |   | $        | —    |     | $      | 1,912,123     |   | $         | — |   | $ | 1,912,123 |
| Residence  Inn     |   | Warwick                       |   | RI        |   | $        | —    |     | $      | 851,595       |   | $         | — |   | $ | 851,595 |
| TownePlace  Suites |   | Forth Worth                   |   | TX        |   | $        | —    |     | $      | —        |   | $         | 409,327 |   | $ | 409,327 |
| Residence  Inn     |   | Wilmington  Newark            |   | DE        |   | $        | —    |     | $      | —        |   | $         | 1,777,826 |   | $ | 1,777,826 |
| TownePlace  Suites |   | Miami Airport  West           |   | FL        |   | $        | —    |     | $      | —        |   | $         | 404,238 |   | $ | 404,238 |
| TownePlace  Suites |   | Miami Lakes                   |   | FL        |   | $        | —    |     | $      | —        |   | $         | 404,238 |   | $ | 404,238 |
| *Internet Access*  |   |                          |   |      |   | $        | 513,000   |     | $      | —        |   | $         | — |   | $ | 513,000 |
|               |   |                          |   |      |   | $        | 4,334,384 |     | $      | 4,866,026     |   | $         | 2,995,628 |   | $ | 12,196,038 |
|               |   |                          |   |      |   |     |      |     |   |          |   |      |
| **Interstate**     |   |                          |   |      |   |     |      |     |   |          |   |      |
| Holiday Inn        |   | Crystal  Lakes                |   | IL        |   | $        | 500,000   |     | $      | —        |   | $         | — |   | $ | 500,000 |
| Holiday Inn        |   | Louisville  Southwest         |   | KY        |   | $        | —    |     | $      | 778,484       |   | $         | — |   | $ | 778,484 |
|               |   |                          |   |      |   | $        | 500,000   |     | $      | 778,484       |   | $         | — |   | $ | 1,278,484 |
|               |   |                          |   |      |   |     |      |     |   |          |   |      |
| **Hilton**         |   |                          |   |      |   |     |      |     |   |          |   |      |
| Homewood  Suites   |   | Phoenix  Chandler             |   | AZ        |   | $        | 441,246   |     | $      | —        |   | $         | — |   | $ | 441,246 |
| Hampton Inn        |   | Sedona                        |   | AZ        |   | $        | 281,718   |     | $      | —        |   | $         | — |   | $ | 281,718 |
| Hampton Inn        |   | Laredo                        |   | TX        |   | $        | 351,996   |     | $      | —        |   | $         | — |   | $ | 351,996 |
| Hampton Inn        |   | Lakewood                      |   | CO        |   | $        | 200,613   |     | $      | —        |   | $         | — |   | $ | 200,613 |
| Hampton Inn        |   | Minneapolis  Minnetonka       |   | MN        |   | $        | 805,028   |     | $      | —        |   | $         | — |   | $ | 805,028 |
| Hampton Inn        |   | Phoenix  Chandler             |   | AZ        |   | $        | —    |     | $      | 464,900       |   | $         | — |   | $ | 464,900 |
| Hampton Inn        |   | Ft.  Lauderdale Cypress Creek |   | FL        |   | $        | —    |     | $      | 999,598       |   | $         | — |   | $ | 999,598 |
| Hampton Inn        |   | Lincoln  Airport I-80         |   | NE        |   | $        | —    |     | $      | —        |   | $         | 690,251 |   | $ | 690,251 |
| Hampton Inn        |   | Oklahoma  City Airport I-40   |   | OK        |   | $        | —    |     | $      | —        |   | $         | 871,054 |   | $ | 871,054 |
| Hampton Inn        |   | Hattiesburg                   |   | MS        |   | $        | —    |     | $      | —        |   | $         | 766,834 |   | $ | 766,834 |
| Hampton Inn        |   | Tulsa                         |   | OK        |   | $        | —    |     | $      | —        |   | $         | 690,897 |   | $ | 690,897 |
| *Internet Access*  |   |                          |   |      |   | $        | 336,000   |     | $      | —        |   | $         | — |   | $ | 336,000 |
|               |   |                          |   |      |   | $        | 2,416,602 |     | $      | 1,464,498     |   | $         | 3,019,036 |   | $ | 6,900,135 |
|               |   |                          |   |      |   |     |      |     |   |          |   |      |
| **Hilton**         |   |                          |   |      |   |     |      |     |   |          |   |      |
| Doubletree         |   | San Diego  Del Mar            |   | CA        |   | $        | —    |     | $      | —        |   | $         | 528,012 |   | $ | 528,012 |
|               |   |                          |   |      |   |     |      |     |   |          |   |      |
| **Total**          |   |                          |   |      |   | $        | 7,250,985 |     | **$**  | **7,109,008** |   | **$**     | **6,542,676** |   | $ | 20,902,670 |

 

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