**Exhibit10.21**

 

 

**MEZZANINE LOAN AGREEMENT**

 

 

Dated as ofDecember 23, 2003

 

 

Between

 

 

**ROSE MEZZANINE SPE, LP,**as Borrower

 

 

and

 

 

**FLEET NATIONAL BANK,**as Lender

 

 

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**TABLE OF CONTENTS**

 
| **ARTICLE 1 DEFINITIONS;  PRINCIPLES OF CONSTRUCTION** |                                                        |
|--------------------------------------------------------|-------------------------------------------------------------|
|                                                   |                                                        |   |
| SECTION 1.1.                                           | DEFINITIONS                                                 |   |
| SECTION 1.2.                                           | PRINCIPLES OF CONSTRUCTION                                  |   |
|                                                   |                                                        |   |
| **ARTICLE 2 GENERAL TERMS**                            |                                                        |
|                                                   |                                                        |   |
| SECTION 2.1.                                           | LOAN  COMMITMENT; DISBURSEMENT TO BORROWER                  |   |
| SECTION 2.2.                                           | INTEREST RATE                                               |   |
| SECTION 2.3.                                           | LOAN PAYMENTS                                               |   |
| SECTION 2.4.                                           | PREPAYMENTS.                                                |   |
|                                                   |                                                        |   |
| **ARTICLE 3 CONDITIONS  PRECEDENT**                    |                                                        |
|                                                   |                                                        |   |
| SECTION 3.1.                                           | REPRESENTATIONS  AND WARRANTIES; COMPLIANCE WITH CONDITIONS |   |
| SECTION 3.2.                                           | DELIVERY OF  LOAN DOCUMENTS; REPORTS; LEASES                |   |
| SECTION 3.3.                                           | RELATED DOCUMENTS                                           |   |
| SECTION 3.4.                                           | ORGANIZATIONAL DOCUMENTS                                    |   |
| SECTION 3.5.                                           | OPINIONS OF BORROWER’S  COUNSEL                        |   |
| SECTION 3.6.                                           | ANNUAL BUDGET                                               |   |
| SECTION 3.7.                                           | TAXES AND OTHER CHARGES                                     |   |
| SECTION 3.8.                                           | COMPLETION OF PROCEEDINGS                                   |   |
| SECTION 3.9.                                           | PAYMENTS                                                    |   |
| SECTION 3.10.                                          | TRANSACTION COSTS                                           |   |
| SECTION 3.11.                                          | NO MATERIAL ADVERSE CHANGE                                  |   |
| SECTION 3.12.                                          | OPERATING LEASES                                            |   |
| SECTION 3.13.                                          | LEASES; RENT ROLLS                                          |   |
| SECTION 3.14.                                          | TENANT ESTOPPELS                                            |   |
| SECTION 3.15.                                          | REA ESTOPPELS                                               |   |
| SECTION 3.16.                                          | SUBORDINATION AND  ATTORNMENT                               |   |
| SECTION 3.17.                                          | TAX LOT                                                     |   |
| SECTION 3.18.                                          | PHYSICAL  CONDITIONS REPORT; PIP REPORT                     |   |
| SECTION 3.19.                                          | MANAGEMENT AGREEMENT                                        |   |
| SECTION 3.20.                                          | APPRAISAL                                                   |   |
| SECTION  3.21.                                         | FINANCIAL  STATEMENTS                                       |   |
| SECTION  3.22.                                         | NET  OPERATING INCOME                                       |   |
| SECTION  3.23.                                         | FRANCHISE  AGREEMENTS                                       |   |
| SECTION  3.24.                                         | GROUND  LEASE                                               |   |
| SECTION  3.25.                                         | FURTHER  DOCUMENTS                                          |   |
|                                                   |                                                        |   |
| **ARTICLE 4  REPRESENTATIONS AND WARRANTIES**          |                                                        |
|                                                   |                                                        |   |
| SECTION  4.1.                                          | ORGANIZATION                                                |   |
| SECTION  4.2.                                          | STATUS  OF BORROWER; AFFILIATED LESSEE                      |   |
| SECTION  4.3.                                          | VALIDITY  OF DOCUMENTS                                      |   |
| SECTION  4.4.                                          | NO  CONFLICTS                                               |   |
| SECTION  4.5.                                          | LITIGATION                                                  |   |
| SECTION  4.6.                                          | AGREEMENTS                                                  |   |
| SECTION  4.7.                                          | SOLVENCY                                                    |   |
| SECTION  4.8.                                          | FULL  AND ACCURATE DISCLOSURE                               |   |
| SECTION  4.9.                                          | NO PLAN  ASSETS                                             |   |
| SECTION  4.10.                                         | NOT A  FOREIGN PERSON                                       |   |
| SECTION  4.11.                                         | ENFORCEABILITY                                              |   |
| SECTION  4.12.                                         | BUSINESS  PURPOSES                                          |   |

 

i

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| SECTION  4.13.                    | COMPLIANCE                                       |   |
|-----------------------------------|--------------------------------------------------|--------|
| SECTION  4.14.                    | FINANCIAL  INFORMATION                           |   |
| SECTION  4.15.                    | ILLEGAL  ACTIVITY                                |   |
| SECTION  4.16.                    | PERMITTED  ENCUMBRANCES                          |   |
| SECTION  4.17.                    | FEDERAL  RESERVE REGULATIONS                     |   |
| SECTION  4.18.                    | INVESTMENT  COMPANY ACT                          |   |
| SECTION  4.19.                    | NO  CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE |   |
| SECTION  4.20.                    | SPECIAL  PURPOSE ENTITY                          |   |
| SECTION  4.21.                    | INTELLECTUAL  PROPERTY                           |   |
| SECTION  4.22.                    | EMBARGOED  PERSON                                |   |
| SECTION  4.23.                    | PATRIOT  ACT                                     |   |
| SECTION  4.24.                    | MORTGAGE  LOAN REPRESENTATIONS                   |   |
| SECTION  4.25.                    | NO  CONTRACTUAL OBLIGATIONS                      |   |
| SECTION  4.26.                    | PLEDGED  SECURITIES                              |   |
| SECTION  4.27.                    | TAXES                                            |   |
| SECTION  4.28.                    | SURVIVAL;  MISCELLANEOUS                         |   |
|                              |                                             |   |
| **ARTICLE 5  BORROWER COVENANTS** |                                             |
|                              |                                             |   |
| SECTION  5.1.                     | EXISTENCE;  COMPLIANCE WITH LEGAL REQUIREMENTS   |   |
| SECTION  5.2.                     | MAINTENANCE  AND USE OF PROPERTY                 |   |
| SECTION  5.3.                     | WASTE                                            |   |
| SECTION  5.4.                     | TAXES  AND OTHER CHARGES                         |   |
| SECTION  5.5.                     | LITIGATION                                       |   |
| SECTION  5.6.                     | ACCESS  TO PROPERTY                              |   |
| SECTION  5.7.                     | NOTICE  OF DEFAULT                               |   |
| SECTION  5.8.                     | COOPERATE  IN LEGAL PROCEEDINGS                  |   |
| SECTION  5.9.                     | PERFORMANCE  BY BORROWER                         |   |
| SECTION  5.10.                    | AWARDS;  INSURANCE PROCEEDS                      |   |
| SECTION  5.11.                    | FINANCIAL  REPORTING                             |   |
| SECTION  5.12.                    | ESTOPPEL  STATEMENT                              |   |
| SECTION  5.13.                    | OPERATING  LEASE; LEASING MATTERS                |   |
| SECTION  5.14.                    | PROPERTY  MANAGEMENT                             |   |
| SECTION  5.15.                    | LIENS                                            |   |
| SECTION  5.16.                    | DEBT  CANCELLATION                               |   |
| SECTION  5.17.                    | ZONING                                           |   |
| SECTION  5.18.                    | ERISA                                            |   |
| SECTION  5.19.                    | NO  JOINT ASSESSMENT                             |   |
| SECTION  5.20.                    | RECIPROCAL  EASEMENT AGREEMENTS                  |   |
| SECTION  5.21.                    | ALTERATIONS                                      |   |
| SECTION  5.22.                    | FRANCHISE  AGREEMENTS.                           |   |
| SECTION  5.23.                    | GROUND  LEASE                                    |   |
| SECTION  5.24.                    | INTEREST  RATE CAP AGREEMENT                     |   |
| SECTION  5.25.                    | NOTICES                                          |   |
| SECTION  5.26.                    | CURING                                           |   |
| SECTION  5.27.                    | SPECIAL  DISTRIBUTIONS                           |   |
| SECTION  5.28.                    | LIMITATION  ON SECURITIES ISSUANCES              |   |
| SECTION  5.29.                    | LIMITATIONS  ON DISTRIBUTIONS                    |   |
| SECTION  5.30.                    | OTHER  LIMITATIONS                               |   |
| SECTION  5.31.                    | CONTRACTUAL  OBLIGATIONS                         |   |
| SECTION  5.32.                    | MANAGER  OF FLINT PROPERTY                       |   |
| SECTION  5.33.                    | CONSOLIDATED  TANGIBLE NET WORTH                 |   |
| SECTION  5.34.                    | REFINANCING                                      |   |
|                              |                                             |   |
| **ARTICLE 6  ENTITY COVENANTS**   |                                             |

 

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| SECTION  6.1.                                                 | SINGLE  PURPOSE ENTITY/SEPARATENESS           |   |
|---------------------------------------------------------------|-----------------------------------------------|--------|
| SECTION  6.2.                                                 | CHANGE  OF NAME, IDENTITY OR STRUCTURE        |   |
| SECTION  6.3.                                                 | BUSINESS  AND OPERATIONS                      |   |
| SECTION  6.4.                                                 | INDEPENDENT  DIRECTOR                         |   |
|                                                          |                                          |   |
| **ARTICLE 7 NO  SALE OR ENCUMBRANCE**                         |                                          |
|                                                          |                                          |   |
| SECTION  7.1.                                                 | TRANSFER  DEFINITIONS                         |   |
| SECTION  7.2.                                                 | NO  SALE/ENCUMBRANCE                          |   |
| SECTION  7.3.                                                 | PERMITTED  TRANSFERS                          |   |
| SECTION  7.4.                                                 | LENDER’S  RIGHTS                         |   |
| SECTION  7.5.                                                 | ASSUMPTION                                    |   |
|                                                          |                                          |   |
| **ARTICLE 8  INSURANCE; CASUALTY; CONDEMNATION; RESTORATION** |                                          |
|                                                          |                                          |   |
| SECTION  8.1.                                                 | INSURANCE                                     |   |
| SECTION  8.2.                                                 | CASUALTY                                      |   |
| SECTION  8.3.                                                 | CONDEMNATION                                  |   |
| SECTION  8.4.                                                 | RESTORATION                                   |   |
|                                                          |                                          |   |
| **ARTICLE 9  RESERVE FUNDS**                                  |                                          |
|                                                          |                                          |   |
| **ARTICLE 10  CASH MANAGEMENT**                               |                                          |
|                                                          |                                          |   |
| **ARTICLE 11  EVENTS OF DEFAULT; REMEDIES**                   |                                          |
|                                                          |                                          |   |
| SECTION  11.1.                                                | EVENT  OF DEFAULT                             |   |
| SECTION  11.2.                                                | REMEDIES                                      |   |
|                                                          |                                          |   |
| **ARTICLE 12  ENVIRONMENTAL PROVISIONS**                      |                                          |
|                                                          |                                          |   |
| SECTION  12.1.                                                | ENVIRONMENTAL  REPRESENTATIONS AND WARRANTIES |   |
| SECTION  12.2.                                                | ENVIRONMENTAL  COVENANTS                      |   |
| SECTION  12.3.                                                | LENDER’S  RIGHTS                         |   |
| SECTION  12.4.                                                | OPERATIONS  AND MAINTENANCE PROGRAMS          |   |
| SECTION  12.5.                                                | ENVIRONMENTAL  DEFINITIONS                    |   |
| SECTION  12.6.                                                | INDEMNIFICATION                               |   |
|                                                          |                                          |   |
| **ARTICLE 13  SECONDARY MARKET**                              |                                          |
|                                                          |                                          |   |
| SECTION  13.1.                                                | TRANSFER  OF LOAN                             |   |
| SECTION  13.2.                                                | DELEGATION  OF SERVICING                      |   |
| SECTION  13.3.                                                | DISSEMINATION  OF INFORMATION                 |   |
| SECTION  13.4.                                                | COOPERATION                                   |   |
| SECTION  13.5.                                                | SECURITIZATION  INDEMNIFICATION               |   |
| SECTION  13.6.                                                | INTENTIONALLY  OMITTED.                       |   |
|                                                          |                                          |   |
| **ARTICLE 14  INDEMNIFICATIONS**                              |                                          |
|                                                          |                                          |   |
| SECTION  14.1.                                                | GENERAL  INDEMNIFICATION                      |   |
| SECTION  14.2.                                                | INTANGIBLE  TAX INDEMNIFICATION               |   |
| SECTION  14.3.                                                | ERISA  INDEMNIFICATION                        |   |
| SECTION  14.4.                                                | SURVIVAL                                      |   |
|                                                          |                                          |   |
| **ARTICLE 15  EXCULPATION**                                   |                                          |
|                                                          |                                          |   |
| SECTION  15.1.                                                | EXCULPATION                                   |   |
|                                                          |                                          |   |
| **ARTICLE 16  NOTICES**                                       |                                          |
|                                                          |                                          |   |
| SECTION  16.1.                                                | NOTICES                                       |   |

 

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| **ARTICLE 17  FURTHER ASSURANCES** |                                                           |
|------------------------------------|----------------------------------------------------------------|
|                               |                                                           |   |
| SECTION  17.1.                     | REPLACEMENT  DOCUMENTS                                         |   |
| SECTION  17.2.                     | INTENTIONALLY  OMITTED                                         |   |
| SECTION  17.3.                     | FURTHER  ACTS, ETC.                                            |   |
| SECTION  17.4.                     | CHANGES  IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS       |   |
| SECTION  17.5.                     | EXPENSES                                                       |   |
|                               |                                                           |   |
| **ARTICLE 18  WAIVERS**            |                                                           |
|                               |                                                           |   |
| SECTION  18.1.                     | REMEDIES  CUMULATIVE; WAIVERS                                  |   |
| SECTION  18.2.                     | MODIFICATION,  WAIVER IN WRITING                               |   |
| SECTION  18.3.                     | DELAY  NOT A WAIVER                                            |   |
| SECTION  18.4.                     | TRIAL  BY JURY                                                 |   |
| SECTION  18.5.                     | WAIVER  OF NOTICE                                              |   |
| SECTION  18.6.                     | REMEDIES  OF BORROWER                                          |   |
| SECTION  18.7.                     | WAIVER  OF MARSHALLING OF ASSETS                               |   |
| SECTION  18.8.                     | WAIVER  OF STATUTE OF LIMITATIONS                              |   |
| SECTION  18.9.                     | WAIVER  OF COUNTERCLAIM                                        |   |
|                               |                                                           |   |
| **ARTICLE 19  GOVERNING LAW**      |                                                           |
|                               |                                                           |   |
| SECTION  19.1.                     | CHOICE  OF LAW                                                 |   |
| SECTION  19.2.                     | SEVERABILITY                                                   |   |
| SECTION  19.3.                     | PREFERENCES                                                    |   |
|                               |                                                           |   |
| **ARTICLE 20  MISCELLANEOUS**      |                                                           |
|                               |                                                           |   |
| SECTION  20.1.                     | SURVIVAL                                                       |   |
| SECTION  20.2.                     | LENDER’S  DISCRETION                                      |   |
| SECTION  20.3.                     | HEADINGS                                                       |   |
| SECTION  20.4.                     | COST OF  ENFORCEMENT                                           |   |
| SECTION  20.5.                     | SCHEDULES  INCORPORATED                                        |   |
| SECTION  20.6.                     | OFFSETS,  COUNTERCLAIMS AND DEFENSES                           |   |
| SECTION  20.7.                     | NO  JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES |   |
| SECTION  20.8.                     | PUBLICITY                                                      |   |
| SECTION  20.9.                     | CONFLICT;  CONSTRUCTION OF DOCUMENTS; RELIANCE                 |   |
| SECTION  20.10.                    | ENTIRE  AGREEMENT                                              |   |
| SECTION  20.11.                    | TAX  DISCLOSURE                                                |   |

 

iv

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**MEZZANINE LOAN AGREEMENT**

** **

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

 

**RECITALS:**

** **

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

 

WHEREAS, Borroweris the legal and beneficial owner of: (i) 99.0% of the limited partnership interests in Mortgage Borrowerand (ii) 100% of the membership interests of Rose SPE 1 GP, LLC, aDelaware limited liability company (“**Mortgage Borrower GP**”), the general partnerof Mortgage Borrower and the legal and beneficial holder of the 1.0% generalpartnership interest in Mortgage Borrower (said 99.0% limited partnershipinterest in Mortgage Borrower and 100% membership interest in Mortgage BorrowerGP, collectively, the “**Pledged Securities**”).

 

WHEREAS Borroweris the legal and beneficial owner of all of the Pledged Securities.

 

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

 

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

 

----

 

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

 

NOW THEREFORE, in consideration of the making of the Loan by Lender andthe covenants, agreements, representations and warranties set forth in thisAgreement, the parties hereto hereby covenant, agree, represent and warrant asfollows:

 

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

# ** **

Section 1.1.                                   DEFINITIONS

 

For all purposesof this Agreement, except as otherwise expressly required or unless the contextclearly indicates a contrary intent:

 

“**AcceptableAccountant**” shall mean a “Big Four” accounting firm or otherindependent certified public accountant acceptable to Lender.

 

“**AcceptableCounterparty**” shall mean any counterparty to the Rate Cap thathas and shall maintain, until the expiration of the applicable Rate Cap, acredit rating of not less than AA- from S&P and not less than Aa3 fromMoody’s.

 

“**AcquiredProperty**” shall have the meaning set forth inSection 5.11(c)(i)(A) hereof.

 

“**AcquiredProperty Statements**” shall have the meaning set forth inSection 5.11(c)(i)(A) hereof.

 

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

 

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

 

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

 

“**AffiliatedLoans**” shall mean a loan made by Lender to a parent, subsidiaryor other entity which is an Affiliate of Borrower or Borrower Principal.

 

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

 

2

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

 

“**AllocatedLoan Percentage**” shall mean that proportion, expressed as apercentage, which each Allocated Loan Amount, if any, bears to the outstandingprincipal balance of the Note.  The sumof the Allocated Loan Percentages shall at all times equal 100%.  The initial Allocated Loan Percentages areas set forth on Schedule A hereto.

 

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

 

“**AlterationThreshold**” means with respect to any particular Property fivepercent (5%) of the then Allocated Loan Amount attributable to such Property.

 

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

 

“**AnnualBudget**” shall mean, individually or collectively, as the contextmay require, the operating budgets, including all planned capital expenditures,for each Property approved by Lender in accordance withSection 5.11(a)(iv) hereof for the applicable calendar year or otherperiod.

 

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

 

“**BorrowerPartnership Agreement**” shall mean that certain Amended and Restated Partnership Agreement ofRose Mezzanine SPE, LP, dated as of December 4, 2003, by and between RoseMezzanine SPE GP, LLC, a Delaware limited liability company, as generalpartner, and RFS Partnership, L.P. and RFS Financing Partnership, L.P., each aTennessee limited partnership, as limited partners.

 

“**BorrowerPrincipal**” shall mean RFS Partnership, L.P., a Tennessee limitedpartnership.

 

“**BreakageCosts**” shall have the meaning set forth inSection 2.3(f)(v) hereof.

 

“**BridgeLoan**” shall have the meaning set forth in the Mortgage LoanAgreement.

 

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

 

3

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

 

“**CashManagement Account**” shall mean an Eligible Account establishedpursuant to the Cash Management Agreement.

 

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

 

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

 

“**ClosingDate**” shall mean the date of the funding of the Loan.

 

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

 

“**CollateralAssignment of Interest Rate Cap**” shall mean that certainCollateral Assignment of Interest Rate Cap Agreement, dated as of the datehereof, executed by Borrower in connection with the Loan for the benefit ofLender, as the same may be amended, restated, replaced, supplemented orotherwise modified from time to time.

 

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

 

“**CondemnationProceeds**” shall have the meaning set forth inSection 8.4(b).

 

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

 

“**ConsolidatedTangible Net Worth**” means, for Borrower Principal and itsSubsidiaries on a consolidated basis as of any date of determination, Partners’Capital on that date minus Intangible Assets on that date.

 

“**ContractualObligation**” shall mean as to any Person, any provision of anysecurity issued by such Person or of any agreement, instrument or undertakingto which such Person is a party or by which it or any of its property is bound,or any provision of the foregoing.

 

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

 

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

 

4

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

 

“**DebtService**” shall mean, with respect to any particular period oftime, scheduled principal and/or interest payments under the Note.

 

“**Default**”shall mean the occurrence of any event hereunder or under any other LoanDocument which, but for the giving of notice or passage of time, or both, wouldbe an Event of Default.

 

“**DefaultRate**” shall mean, with respect to the Loan, a rate per annumequal to the lesser of (a) the maximum rate permitted by applicable law, or (b)four percent (4%) above the Note Rate.

 

“**DeterminationDate**” shall mean (a) with respect to any Interest Period priorto the Interest Period within which the Securitization Closing Date occurs, two(2) Business Days prior to the start of the applicable Interest Period; (b)with respect to the Interest Period within which the Securitization ClosingDate occurs, (i) for that portion of such Interest Period which ends on the dayprior to the Securitization Closing Date, the date that is two (2) BusinessDays prior to the start of such Interest Period, and (ii) for the remainingportion of such Interest Period which commences on the Securitization ClosingDate, the date that is two (2) Business Days prior to the SecuritizationClosing Date; and (iii) with respect to each Interest Period thereafter, thedate that is two (2) Business Days prior to the beginning of such InterestPeriod.

 

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

 

“**EligibleAccount**” shall mean a separate and identifiable account from allother funds held by the holding institution that is either (a) an account oraccounts maintained with a federal or state chartered depository institution ortrust company which complies with the definition of Eligible Institution or (b)a segregated trust account or accounts maintained with a federal or statechartered depository institution or trust company acting in its fiduciarycapacity which, in the case of a state chartered depository institution ortrust company, is subject to regulations substantially similar to 12 C.F.R.§9.10(b), having in either case a combined capital and surplus of at least$50,000,000 and subject to supervision or examination by federal and stateauthority.  An Eligible Account will notbe evidenced by a certificate of deposit, passbook or other instrument.

 

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

 

“**EmbargoedPerson**” shall have the meaning set forth in Section 4.22hereof.

 

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

 

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

 

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

 

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

 

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

 

“**ExchangeAct**” shall mean the Securities and Exchange Act of 1934, asamended.

 

“**ExchangeAct Filing**” shall have the meaning set forth inSection 5.11(c) hereof.

 

“**ExtendedMaturity Date**” shall have the meaning set forth inSection 2.3(b).

 

“**ExtensionFee**” shall mean 0.250% of the original principal amount of theNote.

 

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

 

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

 

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

 

“**Fitch**”shall mean Fitch, Inc.

 

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

 

“**FlintProperty**” shall have the meaning set forth in Schedule Bhereof.

 

“**ForeignTaxes**” shall have the meaning set forth inSection 2.3(f)(ii).

 

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

 

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

 

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

 

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

 

“**GovernmentalAuthority**” shall mean any court, board, agency, department,commission, office or other authority of any nature whatsoever for anygovernmental unit (federal, state, county, municipal, city, town, specialdistrict or otherwise) whether now or hereafter in existence.

 

“**GroundLease**” means, individually or collectively, as the context mayrequire, that certain (a) Ground Lease dated November 30, 1987 betweenCommonwealth Trust Company, trustee for the Chopin Trust, as Lessor, and RFPGroup, Inc., as Lessee, the terms of which were amended and evidenced of recordby that certain Memorandum and Amendment to Ground Lease Agreement dated as ofJune 20, 1988 and recorded in Book 730, Page 289 of the Office of theRecorder of Deeds for new Castle County, Delaware, between Commonwealth TrustCompany, trustee for the Chopin Trust and RFP Group, Inc., as assigned underAssignment of Lease from RFP Group, Inc. to RFS Partnership, L.P. datedOctober 14, 1994 and recorded in Deed Book 1824, Page 196 and furtherassigned by that certain assignment by RFS Partnership, L.P. to MortgageBorrower, and as amended by that certain Ground Lease Estoppel and Agreement byNorthtowne, Inc., as successor trustee for Chopin Trust, and Borrower andagreed and consented to by the National Life Insurance Company of Vermont allwith respect to the “Wilmington Newark Property” (as defined onSchedule A) (such Ground Lease, the “**Wilmington Ground Lease**”) and (b) Leasebetween Shively Masonic Lodge No. 951, F. & A.M. by and through its Boardof Trustees and its Building Committee, as Lessor, and West, Inc. d/b/a HolidayInn Southwest, as Lessee which was recorded at Book 5039, Page 873 in theOffice of the Clerk of the County Court of Jefferson County, Kentucky being thesame leasehold estate which was acquired by LVSW Partners, LP, a Tennesseelimited partnership, from West, Inc. by Assignment of Lease datedNovember 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 085 in the same clerk’s office and which was further assigned by RFSPartnership, L.P. to Mortgage Borrower, under Assignment and Assumption ofGround Lease dated as of and recorded promptly following the date hereof, allwith respect to the “Louisville Southwest Property” (as defined onSchedule A) (such Ground Lease, the “**Louisville Southwest Ground Lease”)**.

 

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

 

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

 

“**IndemnifiedParties**” shall mean (a) Lender, (b) any prior owner or holder ofthe Loan or Participations in the Loan, (c) any servicer or prior servicer ofthe Loan, (d) any Investor or any prior Investor in any Securities, (e) anytrustees, custodians or other fiduciaries who hold or who have held a full orpartial interest in the Loan for the benefit of any Investor or other thirdparty, (f) any receiver  or otherfiduciary appointed in a foreclosure or other Creditors Rights Laws proceeding,(g) any officers, directors, shareholders, partners, members, employees,

 

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agents, servants, representatives, contractors, subcontractors,Affiliates or subsidiaries of any and all of the foregoing, and (h) the heirs,legal representatives, successors and assigns of any and all of the foregoing(including, without limitation, any successors by merger, consolidation 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.

 

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

 

**“Independent Director”**shallhave the meaning set forth in Section 6.4 hereof.

 

“**InsurancePremiums**” shall have the meaning set forth inSection 8.1(b) hereof.

 

“**InsuranceProceeds**” shall have the meaning set forth inSection 8.4(b) hereof.

 

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

 

“**IntercreditorAgreement**” shall mean the Intercreditor Agreement, dated of evendate herewith, by and between Lender and Mortgage Lender.

 

“**InterestPeriod**” shall mean (a) with respect to the initial period forthe accrual of interest due under this Agreement, the Interim Interest Period,and (b) with respect to the First Payment Date and each Payment Datethereafter, the period from and including the Selected Day immediatelypreceding the applicable Payment Date through but excluding the Selected Daynext occurring after the applicable Payment Date.  Notwithstanding the foregoing clause (b), if the Lender so electsat any time, the “Interest Period” shall be the calendar month preceding eachPayment Date.

 

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

 

“**InternalRevenue Code**” shall mean the Internal Revenue Code of 1986, asamended, as it may be further amended from time to time, and any successorstatutes thereto, and applicable U.S. Department of Treasury regulations issuedpursuant thereto in temporary or final form.

 

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

 

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

 

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

 

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“**Lease**”shall have the meaning set forth in the Mortgages (and shall include, but notbe limited to, each Operating Lease).

 

“**LegalRequirements**” shall mean all statutes, laws, rules, orders,regulations, ordinances, judgments, decrees and injunctions of Governmental Authoritiesaffecting Borrower, Mortgage Borrower, Mortgage Borrower GP, BorrowerPrincipal, any other SPE Component Entity, Affiliated Lessee, the Collateral,any Property or any part thereof, or the construction, use, alteration oroperation thereof, whether now or hereafter enacted and in force, and allpermits, licenses, authorizations and regulations relating thereto, and allcovenants, agreements, restrictions and encumbrances contained in anyinstruments, either of record or known to Borrower or Mortgage Borrower, at anytime in force affecting Borrower, Mortgage Borrower, Mortgage Borrower GP, anyother SPE Component Entity, Borrower Principal, Affiliated Lessee, theCollateral, any Property or any part thereof, including, without limitation,any which may (a) require repairs, modifications or alterations in or to anyProperty or any part thereof, or (b) in any way materially limit the use andenjoyment thereof for hotel and related uses.

 

“**Letter ofCredit**”  shall mean anirrevocable, unconditional, transferable, clean sight draft letter of creditacceptable to Lender and the Rating Agencies (either an evergreen letter ofcredit or one which does not expire until the applicable date in the event of aLetter of Credit delivered pursuant to the provisions of Section 5.21) infavor of Lender and entitling Lender to draw thereon in New York, New Yorkissued by a domestic Eligible Institution or the U.S. agency or branch of aforeign Eligible Institution.  If at anytime the bank issuing the Letter of Credit shall cease to be an EligibleInstitution, Lender shall have the right to immediately draw down the Letter ofCredit in full and apply the proceeds thereof in accordance with the termshereof.

 

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

 

(a)                                  therate for deposits in U.S. Dollars, for a period equal to one month, whichappears on the Telerate Page 3750 as of 11:00 a.m., London time, on the relatedDetermination Date; provided, however, if Telerate is unavailable, the rateshall be as specified on Reuters Screen LIBOR Page or, more than one rate isspecified on Reuters Screen LIBOR Page, the LIBOR Rate shall be the arithmeticmean of all rates.  Lender shalldetermine the LIBOR Rate for each Interest Period and Selected Day and thedetermination of the LIBOR Rate by Lender shall be binding upon Borrower absentmanifest error, by

 

(b)                                 apercentage equal to 100% minus the applicable Reserve Percentage then ineffect.

 

LIBOR may or maynot be the lowest rate based upon the market for U.S. Dollar deposits in theLondon Interbank Eurodollar Market at which the Lender prices loans on the datewhich LIBOR is determined by Lender as set forth above.

 

“**LIBORLoan**” shall mean the Loan at such time as interest thereonaccrues at the LIBOR Rate.

 

“**LIBORMargin**” shall mean 4.65%.

 

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

 

“**Lien**”shall mean any mortgage, deed of trust, lien, pledge, hypothecation,assignment, security interest, or any other encumbrance, charge or transfer of,on or affecting Borrower, Mortgage Borrower, Mortgage Borrower GP, any otherSPE Component Entity, the Collateral, any Property, any portion thereof or anyinterest therein, including, without limitation, any conditional sale or othertitle retention agreement, any financing lease having substantially the sameeconomic effect as any of the foregoing, the filing of any financing statement,and mechanic’s, materialmen’s and other similar liens and encumbrances.

 

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

 

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

 

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

 

“**LoanDocuments**” shall mean, collectively, this Agreement, the Note,the Pledge Agreement, the Indemnity, each Subordination of ManagementAgreement/Estoppel, the Collateral Assignment of Interest Rate Cap, eachSubordination, Non-Disturbance and Attornment Agreement, each Subordination andAttornment Agreement, and any and all other documents, agreements andcertificates executed and/or delivered in connection with the Loan, as the samemay be amended, restated, replaced, supplemented or otherwise modified fromtime to time.

 

“**LockoutPeriod**” shall mean the period commencing on the date hereofthrough and including the Payment Date occurring in June, 2005.

 

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

 

“**Losses**”shall mean any and all claims, suits, liabilities (including, withoutlimitation, strict liabilities), actions, proceedings, obligations, debts,damages, losses, costs, expenses, fines, penalties, charges, fees, judgments,awards, amounts paid in settlement of whatever kind or nature (including butnot limited to legal fees and other costs of defense).

 

“**LouisvilleProperty**” shall have the meaning set forth on Schedule Battached hereto.

 

“**MajorLease**” shall mean as to any Property (i) any Lease which,individually or when aggregated with all other leases at such Property with thesame Tenant or its Affiliate, either (A) accounts for five percent (5%) or moreof such Property’s aggregate Net Operating Income, or (B) demises 5,000 squarefeet or more of such Property’s gross leasable area, (ii) any Lease whichcontains any option, offer, right of first refusal or other similar entitlementto acquire all or any portion of any Property, or (iii) any instrumentguaranteeing or providing credit support for any Lease meeting the requirementsof (i) or (ii) above.  Without limitingany of the foregoing, each Operating Lease shall be considered a Major Leasefor all purposes hereunder.

 

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

 

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

 

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

 

“**MaximumLegal Rate**” shall mean the maximum nonusurious interest rate, ifany, that at any time or from time to time may be contracted for, taken,reserved, charged or received on the indebtedness evidenced by the Note and asprovided for herein or the other Loan Documents, under the laws of such stateor states whose laws are held by any court of competent jurisdiction to governthe interest rate provisions of the Loan.

 

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

 

“**MiamiAirport West Property**” shall have the meaning set forth onSchedule B hereto.

 

“**MiamiLakes Property**” shall have the meaning set forth on Schedule Bhereto.

 

“**MonthlyPayment Amount**” shall mean the monthly payment of interest dueon each Payment Date equal to the interest that has or will accrue at the NoteRate during the Interest Period in which the applicable Payment Date shalloccur based on the outstanding principal balance of the Note (a) as the sameshall exist on the Closing Date in the instance of the First Payment Date and(b) thereafter as the same shall exist on the Selected Day immediatelypreceding the applicable Payment Date.

 

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

 

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

 

“**MortgageBorrower**” shall have the meaning set forth in the Recitalshereof

 

“**MortgageBorrower GP**” shall have the meaning set forth in the Recitalshereof.

 

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

 

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

 

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

 

“**MortgageLoan Agreement**” shall have the meaning set forth in the Recitalshereof.

 

“**MortgageLoan Documents**” shall mean the “Loan Documents” as defined inthe Mortgage Loan Agreement.

 

“**MortgageLoan Event of Default**” shall mean an “Event of Default” underand as defined in the Mortgage Loan Agreement.

 

“**MortgageNote**” shall have the meaning set forth in the Recitals hereto.

 

“**MortgageReserve Accounts**” shall mean the “Reserve Accounts” as definedin the Mortgage Loan Agreement.

 

“**NetLiquidation Proceeds After Debt Service**” with respect to anyLiquidation Event, all amounts paid or payable to or received by or on behalfof Mortgage Borrower in connection with such Liquidation Event, less amountsrequired or permitted to be deducted therefrom pursuant to the Mortgage LoanDocuments and amounts paid pursuant to the Mortgage Loan Documents to MortgageLender, including, without limitation, proceeds of any sale, refinancing orother disposition or liquidation, the amount of any award or payment incurredin connection with any condemnation or taking by eminent domain, and the amountof any insurance proceeds paid in connection with any casualty loss, asapplicable, other than, in the case of a casualty loss or condemnation award,amounts required or permitted by the terms of the Mortgage Loan Documents to beapplied to the restoration or repair of the Mortgaged Property, less (i) in thecase of a foreclosure sale or transfer of the Property in connection withrealization thereon following an Event of Default under the Mortgage Loan orother disposition, such reasonable and customary costs and expenses of sale orother disposition (including reasonable attorneys’ fees and brokeragecommissions), (ii) in the case of a foreclosure sale, such costs and expensesincurred by Mortgage Lender under the Mortgage Loan Documents as MortgageLender shall be entitled to receive reimbursement for under the terms of theMortgage Loan Documents, (iii) in the case of a casualty loss or condemnation,such costs and expenses of collection (including reasonable attorneys’ fees) ofthe related insurance proceeds or condemnation award as shall be approved byMortgage Lender pursuant to the terms of the Mortgage Loan Documents, or if theMortgage Loan has been paid in full, by Lender, and (iv) in the case of arefinancing of the Mortgage Loan or the Property, such costs and expenses(including reasonable attorneys’ fees) of such refinancing as shall bereasonably approved by Lender.

 

“**NetOperating Income**” shall mean, with respect to any period oftime, the amount obtained by subtracting Operating Expenses from OperatingIncome, as such amount may be adjusted by Lender in its good faith discretionbased on Lender’s current underwriting standards

 

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

 

“**NetProceeds**” shall have the meaning set forth inSection 8.4(b) hereof.

 

“**NetProceeds Deficiency**” shall have the meaning set forth inSection 8.4(b)(vi) hereof.

 

**“Non-Affiliated Lessee”**shall mean, individually or collectively, as the context may require, eachoperating lessee under an Operating Lease, which is not an Affiliate ofBorrower, provided that such operating lessee shall be selected in accordancewith the terms hereof.  As of the datehereof, the term Non-Affiliated Lessee shall refer to Landcom HospitalityManagement, Inc., in its capacity as the lessee of (a) the Miami Lakes Propertyand (b) the Miami Airport West Property.

 

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

 

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

 

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

 

“**OfferingDocument Date**” shall have the meaning set forth inSection 5.11(c)(i)(D) hereof.

 

“**Officer’sCertificate**” shall mean a certificate delivered to Lender byBorrower which is signed by an authorized officer of the general partner ofBorrower.

 

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

 

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

 

“**OperatingIncome**” shall mean, with respect to any period of time, allincome, computed in accordance with GAAP, derived from the ownership andoperation of  each Property fromwhatever source, *including*, but not limited to, Rents,utility charges, escalations, forfeited security deposits, interest on creditaccounts, service fees or charges, license fees, parking fees, rent concessionsor credits, and other required pass-throughs but *excluding*sales, useand occupancy or other taxes on receipts required to be accounted for byBorrower to any Governmental Authority, refunds and uncollectible accounts,sales of furniture, fixtures and equipment, interest income from any sourceother than the escrow accounts, Mortgage Reserve Accounts or other accountsrequired pursuant to the Loan Documents, Insurance Proceeds (other thanbusiness interruption or other loss of income insurance), Awards, percentagerents, unforfeited security deposits, utility and other similar deposits,income from tenants not paying rent, income from tenants in bankruptcy,non-recurring or extraordinary income, including, without limitation lease terminationpayments, and any disbursements to Mortgage Borrower from the Mortgage ReserveAccounts.

 

“**OperatingLease**” shall mean, individually or collectively, as the contextmay require, the operating lease or similar agreement entered into by andbetween Mortgage Borrower and the applicable Operating Lessee, which governsthe operation of one of more of the Properties as the same may be amended,restated, replaced, supplemented or modified from time to time, in accordancewith the terms hereof and of the Mortgage Loan Agreement.

 

“**OperatingLessee**” shall mean, individually or collectively, as the contextmay require, Affiliated Lessee and Non-Affiliated Lessee, together with anysubstitutes or replacements determined by Lender and Mortgage Lender in accordancewith the terms hereof and of the Mortgage Loan Agreement, respectively.

 

“**OrganizationalDocuments**” shall mean, as to any Person, the certificate ofincorporation and by-laws with respect to a corporation; the certificate oforganization and operating agreement with respect to a limited liabilitycompany; the certificate of limited partnership and partnership agreement withrespect to a limited partnership, or any other organizational or governingdocuments of such Person.

 

“**OtherCharges**” shall mean all ground rents, maintenance charges,impositions other than Taxes, and any other charges, including, withoutlimitation, vault charges and license fees for the use of vaults, chutes andsimilar areas adjoining any Property, now or hereafter levied or assessed orimposed against any Property or any part thereof.

 

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

 

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

 

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

 

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“**PaymentDate**” shall mean the day that is seven (7) Business Days priorto the Selected Day.

 

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

 

“**Person**”shall mean any individual, corporation, partnership, joint venture, limitedliability company, estate, trust, unincorporated association, any other entity,any federal, state, county or municipal government or any bureau, department oragency thereof and any fiduciary acting in such capacity on behalf of any ofthe foregoing.

 

“**PersonalProperty**” shall have the meaning set forth in the grantingclause of the Mortgages.

 

“**PhysicalConditions Report**” shall mean a report regarding the physicalcondition of each Property, satisfactory in form and substance to MortgageLender in accordance with the terms of the Mortgage Loan Agreement.

 

“**PIPReport**” shall mean any property improvement plan or othersimilar report issued by any Franchisor or Manager (with respect to anyProperty which is not subject to a Franchise Agreement), with respect to anyrepairs, replacements, improvements or additions as may be required under theapplicable Franchise Agreement or Management Agreement.

 

“**PledgeAgreement**” shall have the meaning set forth in the Recitalshereto.

 

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

 

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

 

“**ProhibitedTransfer**” shall have the meaning set forth in Section 7.2hereof.

 

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

 

“**ProvidedInformation**” shall have the meaning set forth inSection 13.4(a) hereof.

 

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**“Qualified Lessee”**shallmean (a) CNL Rose SPE Tenant Corp.; (b) an entity which is an Affiliate ofMortgage Borrower, including, any then existing Affiliated Lessee, providedthat (i) no Default or Event of Default shall exist hereunder, (ii) in theinstance of an entity which is then an Affiliated Lessee, such entity is notthen in default beyond any applicable notice or cure period under any OperatingLease, Franchise Agreement or Management Agreement to which it is a party,(iii) such entity shall be a “special purpose entity” containing (A) the samespecial purpose entity covenants as set forth in CNL Rose SPE Tenant Corp.’sorganizational documents as the same shall exist as of the Closing Date, and(B) such other special purpose entity covenants or provisions as may then berequired by the Rating Agencies, (iv) Mortgage Lender shall have first receiveda substantive non-consolidation opinion with respect to the appointment of suchentity as successor lessee under any Operating Lease and (v) a QualifiedManager shall be managing each related Property pursuant to a ManagementAgreement in form acceptable to Lender and Mortgage Lender or (c) a hoteloperating company which at the time of its engagement as Operating Lessee (i)shall be (or when considered together with any Affiliate thereof, shall be)operating and controlling full-service hotels having an aggregate of at least2,500 rooms and 20 hotel properties similar to the Properties, exclusive ofrooms located on any Property and the Properties, (ii) shall be approved by (A)Lender (such approval not to be unreasonably withheld) and (B) Mortgage Lenderin accordance with the terms of the Mortgage Loan Agreement and (iii) for whichMortgage Lender shall have received written confirmation from the RatingAgencies that the appointment of such operating lessee shall 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.

 

“**QualifiedManager**” shall mean a reputable and experienced professionalmanagement organization (a) which manages, together with its Affiliates,full-service hotels, having in aggregate at least 2,500 rooms and 20 hotelproperties similar to the Properties, exclusive of rooms located on anyProperty and the Properties, (b) approved by (i) Lender (which approval byLender shall not be unreasonably withheld) and (ii) Mortgage Lender in accordance with the terms of the MortgageLoan Agreement and (c) for which Mortgage Lender shall have received (i)written confirmation from the Rating Agencies that the employment of suchmanager will not result in a downgrade, withdrawal or qualification of theinitial, or if higher, then current ratings issued in connection with aSecuritization, or if a Securitization has not occurred, any ratings to beassigned in connection with a Securitization, and (ii) with respect to anyAffiliated Manager, a substantive non-consolidation opinion.

 

“**Rate Cap**”shall mean an interest rate cap with a termination date no earlier than the endof the Interest Period in which the initial Maturity Date occurs, entered intowith Bank 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 accordance with the aboveprovisions, the current provider will continue to perform its obligations underthe Rate Cap; and provided, further, any replacement Rate Capshall be

 

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

 

“**RatingAgencies**” shall mean each of S&P, Moody’s and Fitch, or anyother nationally-recognized statistical rating agency which has been approvedby Lender, provided that from and after the Securitization Date, such termshall only refer to the nationally-recognized statistical rating agency(ies)rating the securities offered in connection with the Securitization.

 

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

 

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

 

“**ReleasePrice**” shall mean 120% times the then Allocated Loan Amount ofthe Property(ies) being released.

 

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

 

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

 

“**ReplacementRate Cap**” shall mean an interest rate cap from an AcceptableCounterparty with terms identical to the Rate Cap.

 

“**ReservePercentage**” shall mean, with respect to any day of any InterestPeriod, that percentage (expressed as a decimal) which is in effect on suchday, as prescribed by the Board of Governors of the Federal Reserve System (orany successor), for determining the maximum reserve requirement (includingbasic, supplemental, emergency, special and marginal reserves) generallyapplicable to financial institutions regulated by the Federal Reserve Boardcomparable in size and type to Lender in respect of “Eurocurrency liabilities”(or in respect of any other category of liabilities which includes deposits byreference to which the interest rate on the Loan is determined), whether or notLender has any Eurocurrency liabilities or such requirement otherwise in factapplies to Lender.  The LIBOR Rate shallbe adjusted automatically as of the effective date of each change in theReserve Percentage.  As of the datehereof, the Reserve Percentage is zero, however, there can be no assurance asto what such amount may be in the future.

 

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

 

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“**RestorationConsultant**” shall have the meaning set forth inSection 8.4(b)(iii) hereof.

 

“**RestorationRetainage**” shall have the meaning set forth inSection 8.4(b)(iv) hereof.

 

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

 

“**Sale orPledge**” shall have the meaning set forth in Section 7.1hereof.

 

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

 

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

 

“**SecuritiesLiabilities**” shall have the meaning set forth inSection 13.5 hereof.

 

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

 

“**SecuritizationClosing Date**” shall have the meaning set forth in the MortgageLoan Agreement.

 

“**SelectedDay**” means the fifteenth (15th) day of each calendar month orsuch other date as determined by the Lender pursuant to Section 2.2(d)hereof.

 

“**SPEComponent Entity**” shall have the meaning set forth inSection 6.1(b) hereof.

 

“**SpecialMember**” shall have the meaning set forth in Section 6.1(c).

 

“**StandardStatements**” shall have the meaning set forth inSection 5.11(c)(i)(A) hereof.

 

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

 

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

 

“**StaticLIBOR Rate**” shall have the meaning set forth inSection 2.2(b) hereof.

 

“**StaticLIBOR Rate Loan**” shall have the meaning set forth inSection 2.3(f)(iii) hereof.

 

“**Subordinationand Attornment Agreement**” shall mean for each Operating Leasewith an Affiliated Lessee, a Subordination and Attornment Agreement betweenLender and the Affiliated Lessee, acceptable to Lender in accordance with theterms of this Agreement as the same may be amended, modified and in effect fromtime to time.

 

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

 

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“**Subordinationof Management Agreement/Estoppel**” shall mean, individually orcollectively, as the context may require, (i) for the Interstate Properties andHilton Properties (each as defined in the Mortgage Loan Agreement), eachSubordination and Attornment Agreement executed in connection with eachManagement Agreement, by and among Lender, Borrower, Mortgage Borrower, theAffiliated Lessee and the applicable Manager and (ii) for the MarriottProperties (as defined in the Mortgage Loan Agreement), each Manager Estoppelby the applicable Manager for the benefit of Lender, in each case as the samemay be amended, restated, replaced, supplemented or otherwise modified inaccordance with the terms hereof.

 

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

 

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

 

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

 

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

 

“**TitleInsurance Policy**” shall have the meaning set forth in theMortgage Loan Agreement.

 

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

 

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

 

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

 

Section 1.2.                                   PRINCIPLESOF 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 thecontext shall indicate otherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder”and words of similar import when used in this Agreement shall refer to thisAgreement as a whole and not to any particular provision of thisAgreement.  Unless otherwise specified,all meanings attributed to defined terms herein shall be equally applicable toboth the singular and plural forms of the terms so defined.

 

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# **ARTICLE 2**GENERAL TERMS

# ** **

Section 2.1.                                   LOANCOMMITMENT; DISBURSEMENT TO BORROWER

 

### (a)                                  Subjectto and upon the terms and conditions set forth herein, Lender hereby agrees tomake and Borrower hereby agrees to accept the Loan on the Closing Date.

###  

### (b)                                 Borrowermay request and receive only one borrowing in respect of the Loan and anyamount borrowed and repaid in respect of the Loan may not be reborrowed.

###  

### (c)                                  TheLoan shall be evidenced by the Note and secured by the Pledge Agreement and theother Loan Documents.

###  

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

###  

Section 2.2.                                   INTERESTRATE

 

### (a)                                  NoteRate.  The outstanding principalbalance of the Loan shall bear interest at the Note Rate.  Except as otherwise set forth in thisAgreement, interest shall be paid in arrears.

###  

### (b)                                 Unavailabilityof LIBOR Rate.  In the event that Lendershall have determined (which determination shall be conclusive and binding uponBorrower absent manifest error) that by reason of circumstances affecting theinterbank eurodollar market, adequate and reasonable means do not exist forascertaining the LIBOR Rate, then Lender shall forthwith give notice bytelephone of such determination, confirmed in writing, to Borrower at least one(1) Business Day prior to the last day of the related Interest Period. If suchnotice is given, the Note Rate, commencing with the first (1st) day of the nextsucceeding Interest Period, shall be the LIBOR Rate in effect for the mostrecent Interest Period (the “**Static LIBOR Rate**”).

###  

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

 

### (c)                                  Computationsand Determinations.  All interestshall be computed on the basis of a year of 360 days and paid for the actualnumber of days elapsed during an Interest Period.  Lender shall determine each interest rate applicable to the Debtin accordance with this Agreement and its determination thereof shall beconclusive in the absence of manifest error. The books and records of Lender shall be prima facie evidence of allsums owing to Lender from

 

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### time to time under thisAgreement, but the failure to record any such information shall not limit oraffect the obligations of Borrower under the Loan Documents.

###  

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

###  

### (e)                                  DefaultRate.  Any principal of, and to theextent permitted by applicable law, any interest on the Note, and any other sumpayable hereunder, which is not paid when due shall bear interest from the datedue 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)                                    UsurySavings.  This Agreement and theNote are subject to the express condition that at no time shall Borrower beobligated or required to pay interest on the principal balance of the Loan at arate which could subject Lender to either civil or criminal liability as aresult of being in excess of the Maximum Legal Rate.  If, by the terms of this Agreement or the other Loan Documents,Borrower is at any time required or obligated to pay interest on the principalbalance due hereunder at a rate in excess of the Maximum Legal Rate, the LIBORRate, the Static LIBOR Rate or the Default Rate, as the case may be, shall bedeemed to be immediately reduced to the Maximum Legal Rate and all previouspayments in excess of the Maximum Legal Rate shall be deemed to have beenpayments in reduction of principal and not on account of the interest duehereunder.  All sums paid or agreed tobe paid to Lender for the use, forbearance, or detention of the sums due underthe Loan, shall, to the extent permitted by applicable law, be amortized,prorated, allocated, and spread throughout the full stated term of the Loanuntil payment in full so that the rate or amount of interest on account of theLoan does not exceed the Maximum Legal Rate of interest from time to time ineffect and applicable to the Loan for so long as the Loan is outstanding.

###  

Section 2.3.                                   LOANPAYMENTS

 

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

###  

#### (i)                                     apayment on the Closing Date of all interest that will accrue on the principalamount of the Note during the Interim Interest Period;

####  

#### (ii)                                  apayment on each Payment Date of interest equal to the Monthly Payment Amountand any other interest that has or will accrue hereunder during the InterestPeriod in which such Payment Date occurs; and

####  

#### (iii)                               theoutstanding principal amount and all interest thereon (including interestthrough the end of the Interest Period in which the Maturity Date occurs) shallbe due and payable on the Payment Date occurring in December, 2006 (the “**MaturityDate**”), unless the Maturity Date is extended pursuant toSection 2.3(b) below.

####  

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

 

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### **Maturity Date**”), respectively, and, as toeach Extension Option, upon satisfaction of the following terms and conditions:

###  

#### (i)                                     noEvent of Default shall have occurred and be continuing at the time theapplicable Extension Option is exercised and on the date that the applicableextension term is commenced;

####  

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

####  

#### (iii)                               Borrowershall obtain and deliver to Lender prior to exercise of such Extension Option,one or more Replacement Rate Caps, which Replacement Rate Caps shall beeffective commencing on the first day of such Extension Option and shall have amaturity date not earlier than the end of the Interest Period in which theapplicable Extended Maturity Date shall occur;

####  

#### (iv)                              inconnection with each Extension Option, Borrower shall have delivered to Lendertogether with its notice pursuant to subsection (b) of thisSection 2.3 and as of the commencement of the applicable Extension Option,an Officer’s Certificate in form acceptable to the Lender (A) certifying thateach of the representations and warranties of Borrower contained in the LoanDocuments is true, complete and correct in all material respects as of the dateof such Officer’s Certificate to the extent such representations and warrantiesare not matters which by their nature can no longer be true and correct as aresult of the passage of time or (B) specifying any exceptions to suchrepresentations and warranties as may be acceptable to Lender in itsdiscretion.

####  

#### (v)                                 inconnection with the exercise of each Extension Option, Borrower shall have paidto Lender the Extension Fee; and

####  

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

####  

All references inthis Agreement and in the other Loan Documents to the Maturity Date shall meanthe applicable Extended Maturity Date in the event the applicable ExtensionOption is exercised.

 

### (c)                                  Paymentsafter Default.  (i) Upon theoccurrence and during the continuance of an Event of Default, interest on theoutstanding principal balance of the Loan and, to the extent permitted by law,overdue interest and other amounts due in respect of the Loan shall accrue atthe Default Rate, and (ii) subject to the rights of Mortgage Lender and theterms of the Cash Management Agreement, upon (A) the occurrence and during thecontinuance of a monetary Event of Default or an Event of Default underSection 11.1(f) hereof or (B) the occurrence of nay other Event of Defaultwith respect to which Lender has accelerated the Loan, Lender shall be entitledto receive and Borrower shall pay to Lender all cash flow from the Properties,such amount to be applied by Lender to the payment of the Debt in such order asLender shall determine in its sole discretion, including, without limitation,alternating applications thereof

 

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### 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 PledgeAgreement.  This paragraph shall not beconstrued as an agreement or privilege to extend the date of the payment of theDebt, nor as a waiver of any other right or remedy accruing to Lender by reasonof the occurrence of any Event of Default; the acceptance of any payment fromBorrower shall not be deemed to cure or constitute a waiver of any Event ofDefault; and Lender retains its rights under this Agreement to accelerate andto continue to demand payment of the Debt upon the happening of and during thecontinuance any Event of Default, despite any payment by Borrower to Lender.

###  

### (d)                                 LatePayment Charge.  If any principal orinterest payment is not paid by Borrower on or before three (3) Business Daysafter the date on which it is due, Borrower shall pay to Lender upon demand anamount equal to the lesser of five percent (5%) of such unpaid sum or themaximum amount permitted by applicable law in order to defray the expenseincurred by Lender in handling and processing such delinquent payment and to compensateLender for the loss of the use of such delinquent payment.  Any such amount shall be secured by thePledge Agreement and the other Loan Documents to the extent permitted byapplicable law.

###  

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

###  

### (f)                                    AdditionalPayment Provisions.

###  

#### (i)                                     Ifat any time after the date hereof, Lender (which shall include, for purposes ofthis Section, any corporation controlling Lender) reasonably determines thatdue to the adoption or modification of any Legal Requirement regardingtaxation, Lender’s required levels of reserves, deposits, Federal DepositInsurance Corporation insurance or capital (including any allocation of capitalrequirements or conditions), or similar requirements, or any interpretation oradministration thereof by any Tribunal or compliance of Lender with any of suchrequirements, has or would have the effect of (a) increasing Lender’s costsrelating to the Loan, or (b) reducing the yield or rate of return

 

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#### of Lender on theLoan, to a level below that which Lender could have achieved but for theadoption or modification of any such Legal Requirements, Borrower shall, withinfifteen (15) days of any request by Lender, pay to Lender such additionalamounts as (in Lender’s sole judgment, after good faith and reasonablecomputation) will compensate Lender for such increase in costs or reduction inyield or rate of return of Lender (a “**Consequential Loss**”).  No failure by Lender to immediately demandpayment of any additional amounts payable hereunder shall constitute a waiverof Lender’s right to demand payment of such amounts at any subsequenttime.  Nothing herein contained shall beconstrued or so operate as to require Borrower to pay any interest, fees, costsor charges greater than is permitted by applicable Law.

####  

#### (ii)                                  Allpayments made by Borrower hereunder shall be made free and clear of, andwithout reduction for or on account of, income, stamp or other taxes, levies,imposts, duties, charges, fees, deductions, reserves or withholdings imposed,levied, collected, withheld or assessed by any Governmental Authorities, whichare imposed, enacted or become effective on or after the date hereof (suchnon-excluded taxes being referred to collectively as “**Foreign Taxes**”), excludingincome and franchise taxes of the United States of America or any politicalsubdivision or taxing authority thereof or therein.  If any Foreign Taxes are required to be withheld from any amountspayable to Lender hereunder and such Foreign Taxes are not a result ofactivities of Lender unrelated to the Loan or Borrower, the amounts so payableto Lender shall be increased to the extent necessary to yield to Lender (afterpayment of all Foreign Taxes) interest or any such other amounts payablehereunder at the rate or in the amounts specified hereunder. Whenever anyForeign Tax is payable pursuant to applicable law by Borrower, as promptly aspossible thereafter, Borrower shall send to Lender an original officialreceipt, if available, or certified copy thereof showing payment of suchForeign Tax. Borrower hereby indemnifies Lender for any incremental taxes,interest or penalties that may become payable by Lender which may result fromany failure by Borrower to pay any such Foreign Tax when due to the appropriatetaxing authority of which Lender shall have provided Borrower with priorwritten notice, if possible, or any failure by Borrower to remit to Lender therequired receipts or other required documentary evidence. Lender’s inability tonotify Borrower of any such Foreign Tax in accordance with the immediatelypreceding sentence shall in no way relieve Borrower of its obligations underthis Section 2.3(f)(ii).

####  

#### (iii)                               Ifany requirement of law or any change therein or in the interpretation orapplication thereof, shall hereafter make it unlawful for Lender to make ormaintain a Loan with the Note Rate being based on LIBOR as contemplatedhereunder, (i) the obligation of Lender hereunder to make such Loan based onLIBOR or to convert the Loan from the Static LIBOR Rate to the LIBOR Rate shallbe canceled forthwith and (ii) any outstanding LIBOR Loan shall be convertedautomatically to a loan bearing interest at the Static LIBOR Rate (the “**Static LIBORRate Loan**”) on the next succeeding Payment Date or within suchearlier period as required by law. Borrower hereby agrees promptly to pay Lender, upon demand, anyadditional amounts necessary to compensate Lender for any costs incurred byLender in making any conversion in accordance with this Agreement, including,without limitation, any interest or fees payable by Lender to lenders of fundsobtained by it in order to make or maintain the LIBOR Loan hereunder.

 

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

####  

##### (A)                              shallhereafter impose, modify or hold applicable any reserve, special deposit,compulsory loan or similar requirement against assets held by, or deposits orother liabilities in or for the account of, advances or loans by, or othercredit extended by, or any other acquisition of funds by, any office of Lenderwhich is not otherwise included in the determination of the LIBOR Ratehereunder;

#####  

##### (B)                                shallhereafter have the effect of reducing the rate of return on Lender’s capital asa consequence of its obligations hereunder to a level below that which Lendercould have achieved but for such adoption, change or compliance (taking intoconsideration Lender’s policies with respect to capital adequacy) by any amountdeemed by Lender to be material; or

#####  

##### (C)                                shallhereafter impose on Lender any other condition and the result of any of theforegoing is to increase the cost to Lender of making, renewing or maintainingloans or extensions of credit or to reduce any amount receivable hereunder;

#####  

then, in any suchcase, 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 than ninety(90) days written notice specifying in reasonable detail the event by reason ofwhich it has become so entitled and the additional amount required to fullycompensate Lender for such additional cost or reduced amount. A certificate asto any additional costs or amounts payable pursuant to the foregoing sentencesubmitted by Lender to Borrower shall be conclusive in the absence of manifesterror. This provision shall survive payment of the Note and the satisfaction ofall other obligations of Borrower under this Agreement and the Loan Documents.

 

#### (v)                                 Borroweragrees to indemnify Lender and to hold Lender harmless from any loss or expensewhich Lender sustains or incurs as a consequence of (i) any default by Borrowerin payment of the principal of or interest on a LIBOR Loan, including, withoutlimitation, any such loss or expense arising from interest or fees payable byLender to lenders of funds obtained by it in order to maintain a LIBOR Loanhereunder,

 

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#### (ii) anyprepayment (whether voluntary or mandatory) of the LIBOR Loan that did notinclude all interest which had accrued (or would have accrued) at the Note Ratethrough the end of the related Interest Period, including, without limitation,such loss or expense arising from interest or fees payable by Lender to lendersof funds obtained by it in order to maintain the LIBOR Loan hereunder, and(iii) the conversion (for any reason whatsoever, whether voluntary orinvoluntary) of the Note Rate from the LIBOR Rate to the Static LIBOR Rate withrespect to any portion of the outstanding principal amount of the Loan thenbearing interest at the LIBOR Rate on a date other than the Payment Dateimmediately following the last day of an Interest Period, including, withoutlimitation, such loss or expenses arising from interest or fees payable byLender to lenders of funds obtained by it in order to maintain a LIBOR Loanhereunder (the amounts referred to in clauses (i), (ii) and (iii) are hereinreferred to collectively as the “**Breakage Costs**”).  This provision shall survive payment of the Note in full and thesatisfaction of all other obligations of Borrower under this Agreement and theother Loan Documents.

####  

#### (vi)                              Lendershall not be entitled to claim compensation pursuant to thisSection 2.3(f) for any Foreign Taxes, increased cost or reduction inamounts received or receivable hereunder, or any reduced rate of return, whichwas incurred or which accrued more than one hundred eighty (180) days beforethe date Lender notified Borrower of the change in law or other circumstance onwhich such claim of compensation is based and delivered to Borrower a writtenstatement setting forth in reasonable detail the basis for calculating theadditional amounts owed to Lender under this Section 2.3(f), whichstatement shall be conclusive and binding upon all parties hereto absentmanifest error.

####  

#### (vii)                           Withinfifteen (15) days after request by Lender (or at the time of any prepayment),Borrower shall pay to Lender such amount or amounts as will compensate Lenderfor any loss, cost, expense, penalty, claim or liability, including any lossincurred in obtaining, prepaying, liquidating or employing deposits or otherfunds from third parties and any loss of yield, as determined by Lender in itsjudgment reasonably exercised, incurred by it with respect to the Loan as aresult of the payment or prepayment of any amount on a date other than the datesuch amount is required or permitted to be paid or prepaid; provided thatLender delivers to Borrower a certificate as to the amounts of such costsdescribed herein, which certificate shall be conclusive in the absence ofmanifest error.  Lender shall have noobligation to purchase, sell and/or match funds in connection with the fundingor maintaining of the Loan or any portion thereof.  The obligations of Borrower under this Section shall surviveany termination of the Loan Documents and payment of the Note and shall not bewaived by any delay by Lender in seeking such compensation.

####  

#### (viii)                        Allpayments made by Borrower  hereunder orunder the other Loan Documents shall be made irrespective of, and without anydeduction for, any setoff, defense or counterclaims.

####  

#### (ix)                                Remittancesin payment of any part of the Loan in less than the required amount inimmediately available U.S. funds shall not, regardless of any receipt or creditissued therefor, constitute payment until the required amount is actuallyreceived by the holder hereof in immediately available U.S. funds and shall bemade and accepted subject

 

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#### to the conditionthat any check or draft may be handled for collection in accordance with thepractices of the collecting bank or banks.

####  

Section 2.4.                                   PREPAYMENTS.

 

### (a)                                  VoluntaryPrepayments.  Except as otherwiseexpressly provided herein and in Section 2.4(c) hereof, Borrower shall nothave the right to prepay the Loan in whole or in part prior to the initialMaturity Date. Any partial prepayment shall be applied to the last payments ofprincipal due under the Loan and shall reduce the outstanding principal balanceof the Loan for purposes of computing the Monthly Payment Amount.

###  

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

###  

### (c)                                  PaymentsAfter the Lockout Period.

###  

#### (i)                                     FullPrepayment.

####  

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

#####  

##### (B)                                Inaddition to the foregoing requirements for a full prepayment of the Loan, priorto Lender’s obligation to accept a prepayment pursuant to the foregoingSection 2.4(c)(i)(A) Borrower shall have paid (or cause to be paid) anyamounts required to be paid under Section 2.4(c)(i) of the Mortgage LoanAgreement to Mortgage Lender in connection with the full prepayment of theMortgage Loan, provided that, the requirements set forth in thisSection 2.4(c)(i)(B) shall not apply in the event (1) (x) such prepaymentis sourced solely from the funds of Mezzanine Borrower or any of its Affiliates(other than Mortgage Borrower or any SPE Component Entity (as defined in theMortgage Loan Agreement)) and such funds are not derived from any of theProperties or any other collateral for the Mortgage Loan (it being understoodand agreed that the Mezzanine Borrower shall in any event be entitled to applyto any such prepayment of the Mezzanine Loan funds sourced or derived from anyof the Properties or any other collateral for the Mortgage  Loan to the extent the same have previouslybeen distributed to the Mezzanine Borrower provided such distribution was notin violation of the Mortgage Loan Documents) (provided that

 

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

#####  

#### (ii)                                  PartialPrepayment.  Provided no Event ofDefault shall have occurred and is then continuing, commencing on the day afterthe expiration of the Lockout Period, and upon giving Lender at least thirty(30) days (but not more than ninety (90) days) prior written notice, which saidnotice can be given prior to the expiration of the Lockout Period in connectionwith the prepayment to occur following the Lockout Period, Borrower mayvoluntarily prepay a portion of the Loan on a Payment Date provided suchprepayment is being made in connection with a partial prepayment of theMortgage Loan and the release of a Property pursuant to Section 2.4(c)(ii)of the Mortgage Loan Agreement and the Mortgage Loan Borrower has complied withall of the terms and conditions of Section 2.4(c)(ii) of the Mortgage LoanAgreement, and provided Borrower satisfies the following release conditions:

####  

##### (A)                              Borrowershall provide Lender with prior written notice specifying (1) the Payment Dateon which Borrower intends to make the partial prepayment (“**Release Date**”) and (2) theProperty proposed to be released from the Lien of the related Mortgage (the “**ReleaseProperty**”)

#####  

##### (B)                                Borrowershall pay to Lender (i) the applicable Release Price, (ii) all amounts payableunder Section 2.4(c)(iii) below in connection with the accompanyingprepayment of the Loan, and (iii) any and all expenses incurred by Lender inconnection with any such release, including, but not limited to, reasonableattorney’s fees and expenses, as required under clause (F) below;

#####  

##### (C)                                Borrowershall pay in the event the prepayment occurs at any time during the periodafter the Lockout Period through and including the Payment Date occurring inDecember, 2005, a prepayment premium in the amount of 1.75% of the applicableRelease Price;

#####  

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

#####  

##### (E)                                 Borrowershall deliver to Lender such other documents, instruments, opinions andcertificates as Lender may reasonably request;

#####  

##### (F)                                 Borrowershall pay all out-of-pocket costs and expenses of Lender incurred in connectionwith the proposed prepayment, including Lender’s reasonable attorneys’ fees andexpenses; and

#####  

##### (G)                                Withoutlimiting the generality of any of the provisions contained herein, Borrowershall have paid any amounts required to be paid to Mortgage Lender inconnection with the release of the Release Property.

 

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#### (iii)                               Prepaymentsin General.  All payments andprepayments of the Loan, whether voluntary, involuntary, at the Maturity Dateor otherwise (but exclusive of prepayments made pursuant to Section 2.4(d)hereof) shall include in the event that any such repayment or prepayment ismade on a day other than a Payment Date, a sum equal to the amount of interestwhich would have accrued under this Agreement through the end of the InterestPeriod in which the next Payment Date occurs. For purposes of this Agreement, an involuntary prepayment shall bedeemed to include, but not be limited to, a prepayment of the Loan inconnection with or following the Lender’s acceleration of the outstandingbalance of the Loan.

####  

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

###  

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

###  

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

###  

### (g)                                 LiquidationEvents.

###  

#### (i)                                     Inthe event of (A) any Casualty to any Property or any material portion thereof,(B) any Condemnation of any Property or any material portion thereof,(C) any transfer of any Property in connection with a realization thereonfollowing a Mortgage Event of Default, including, without limitation, aforeclosure sale, or (D) any refinancing of any Property or the MortgageLoan (each, a “Liquidation Event”), Borrower shall cause the relatedNet Liquidation Proceeds After Debt Service to be deposited directly into anEligible Account with Lender (the “Mezzanine Debt Service Account”).  On each date on which Lender actuallyreceives a distribution of Net Liquidation Proceeds After Debt Service,Borrower shall prepay the outstanding principal balance of the Note in an

 

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

####  

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

####  

### (h)                                 Prepaymentof the Mortgage Loan.  Subject tothe provisions of Section 5.33 hereof, in the event that the Mortgage Loanis paid in full at any time prior to the then Maturity Date of the Loan, theDebt shall then be immediately due and payable regardless of the Maturity Dateof the Loan.

###  

# **ARTICLE 3**CONDITIONS PRECEDENT

# ** **

The obligation ofLender to make the Loan hereunder is subject to the fulfillment by Borrower orwaiver by Lender of the following conditions precedent no later than theClosing Date.

 

Section 3.1.                                   REPRESENTATIONSAND WARRANTIES; COMPLIANCE WITH CONDITIONS

 

Therepresentations and warranties of Borrower and Affiliated Lessee contained inthis Agreement and the other Loan Documents shall be true and correct in allmaterial respects on and as of the Closing Date with the same effect as if madeon and as of such date, and Lender shall have determined that no Default or anEvent of Default shall have occurred and be continuing nor will any Default orEvent of Default occur immediately following the Closing Date; and Borrowershall be in compliance in all material respects with all terms and conditionsset forth in this Agreement and in each other Loan Document on its part to beobserved or performed.

 

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Section 3.2.                                   DELIVERYOF LOAN DOCUMENTS; REPORTS; LEASES

 

### (a)                                  PledgeAgreement, Loan Agreement and Note. Lender shall have received from Borrower a fully executed andacknowledged counterparts of the Pledge Agreement and evidence that the UniformCommercial Code financing statements have been delivered to the title companyfor recording and/or filing, in the reasonable judgment of Lender, so as toeffectively create upon such recording and/or filing valid and enforceableLiens upon the Collateral, of first priority, in favor of Lender (or such othertrustee as may be required or desired under local law).  Lender shall have also received fromBorrower and Borrower Principal, the applicable Operating Lessee and Manager,as applicable, fully executed counterparts of this Agreement, the Note, eachSubordination, Non-Disturbance and Attornment Agreement, each Subordination andAttornment Agreement, and each Subordination of Management Agreement/Estoppeland all other Loan Documents.

###  

### (b)                                 Intentionallydeleted.

###  

### (c)                                  Intentionallydeleted.

###  

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

###  

### (e)                                  EnvironmentalReports.  Lender shall have receivedan Environmental Report in respect of each Property satisfactory to Lender (oran acceptable update and reliance letter relating to the applicableEnvironmental Report delivered to Bridge Lender in connection with the BridgeLoan).

###  

### (f)                                    Intentionallydeleted.

###  

### (g)                                 Encumbrances.  Borrower shall have taken or caused to betaken such actions in such a manner so that Lender has a valid and perfectedfirst Lien as of the Closing Date on the Collateral, and Lender shall have receivedsatisfactory evidence thereof.

###  

### (h)                                 LienSearches.  Borrower shall havedelivered to Lender certified search results pertaining to the Borrower,Borrower Principal, Mortgage Borrower, Mortgage Borrower GP, Affiliated Lesseeand such other Persons or any SPE Component Entity as reasonably required byLender for state and federal tax liens, bankruptcy, judgment, litigation andstate and local UCC filings.

###  

Section 3.3.                                   RELATEDDOCUMENTS

 

Each additionaldocument not 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.

 

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Section 3.4.                                   ORGANIZATIONALDOCUMENTS

 

On or before theClosing Date, Borrower shall deliver or cause to be delivered to Lender (a)copies certified by Borrower of all organizational documentation related toBorrower, Borrower Principal, Mortgage Borrower, Mortgage Borrower GP and eachSPE Component Entity which must be acceptable to Lender in its sole discretion,and (b) such other evidence of the formation, structure, existence, goodstanding and/or qualification to do business of the Borrower, BorrowerPrincipal and each SPE Component Entity, as Lender may request in its solediscretion, including, without limitation, good standing or existencecertificates, qualifications to do business in the appropriate jurisdictions,resolutions authorizing the entering into of the Loan and incumbencycertificates as may be requested by Lender.

 

Section 3.5.                                   OPINIONSOF BORROWER’S COUNSEL

 

Lender shall havereceived opinions of Borrower’s counsel (a) with respect to non-consolidationissues, (b) with respect to due execution, authority, enforceability of theLoan Documents and such other matters as Lender may require, and (c) withrespect to the perfection of Lender’s security interest in the Collateral, allsuch opinions in form, scope and substance satisfactory to Lender and Lender’scounsel in their sole discretion.  Inaddition, Borrower shall deliver to Lender on the Closing Date an opinionletter from Borrower’s counsel relating to Lender’s security interest in theCollateral being perfected by delivery of certificates evidencing the equityinterests or by the filing of the UCC-1 Financing Statement with the Secretaryof State of Delaware.

 

Section 3.6.                                   ANNUALBUDGET

 

Borrower shallhave delivered, and Lender shall have approved, the Annual Budget with respectto the Properties for the current fiscal year, a copy of which is attached asExhibit A hereto.

 

Section 3.7.                                   TAXESAND OTHER CHARGES

 

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

 

Section 3.8.                                   COMPLETIONOF PROCEEDINGS

 

All corporate andother proceedings taken or to be taken in connection with the transactions contemplatedby this Agreement and other Loan Documents and all documents incidental theretoshall be satisfactory in form and substance to Lender, and Lender shall havereceived all such counterpart originals or certified copies of such documentsas Lender may reasonably request.

 

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Section 3.9.                                   PAYMENTS

 

All payments,deposits or escrows required to be made or established by Borrower under thisAgreement, the Note and the other Loan Documents on or before the Closing Dateshall have been paid.

 

Section 3.10.                             TRANSACTIONCOSTS

 

Except asotherwise expressly provided herein, Borrower shall have paid or reimbursedLender for all out of pocket expenses in connection with the underwriting,negotiation, 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 expenses chargedby counsel to Lender.

 

Section 3.11.                             NOMATERIAL ADVERSE CHANGE

 

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

 

Section 3.12.                             OPERATINGLEASES

 

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

 

Section 3.13.                             LEASES;RENT ROLLS

 

Lender shall havereceived a Rent Roll or summary of all Leases affecting any Property (otherthan Operating Leases, which are addressed in Section 3.12), which shallbe satisfactory in form and substance to Lender.

 

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Section 3.14.                             TENANTESTOPPELS

 

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

 

Section 3.15.                             REAESTOPPELS

 

Borrower shallhave delivered to Lender copies of each executed REA estoppel letter deliveredto Mortgage Lender, from each party to any REA with respect to any Property, asrequired by Mortgage Lender pursuant to the Mortgage Loan Agreement.

 

Section 3.16.                             SUBORDINATIONAND ATTORNMENT

 

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

 

Section 3.17.                             TAXLOT

 

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.                             PHYSICALCONDITIONS REPORT; PIP REPORT

 

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

 

Section 3.19.                             MANAGEMENTAGREEMENT

 

Lender shall havereceived a certified copy of each Management Agreement with respect to eachProperty subject to a Management Agreement, each of which shall be satisfactoryin 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 herebyacknowledges (a) receipt of appraisals with respect to each Property, asdelivered to Bank of America, N.A. in connection with the  Bridge Loan and (b) that each such appraisaltogether with any reliance letter which Lender may require in its reasonablediscretion shall be deemed acceptable for all purpose under thisSection 3.20 absent any material adverse change to the applicable Propertyfrom and after the date of such appraisal.

 

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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.

 

Section3.24.          GROUND LEASE

 

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

 

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.

 

**ARTICLE 4****REPRESENTATIONS AND WARRANTIES**

 

Borrower and, wherespecifically indicated, each Borrower Principal, represents and warrants toLender as of the Closing Date that:

 

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Section 4.1.            ORGANIZATION

 

Each of Borrower,Borrower Principal (when not an individual), Mortgage Borrower, MortgageBorrower GP and Affiliated Lessee (a) has been duly organized and is validlyexisting and in good standing with requisite power and authority to own itsproperties and to transact the businesses in which it is now engaged, (b) isduly qualified to do business and is in good standing in each jurisdictionwhere it is required to be so qualified in connection with its properties,businesses and operations, (c) possesses all rights, licenses, permits andauthorizations, governmental or otherwise, necessary to entitle it to own itsproperties and to transact the businesses in which it is now engaged, and thesole business of Borrower is the ownership, and management of the MortgageBorrower, and (d) in the case of Borrower, has full power, authority and legalright to grant, bargain, sell, pledge, assign, warrant, transfer and convey theCollateral pursuant to the terms of the Loan Documents, and in the case ofBorrower, Mortgage Borrower, each Borrower Principal and Affiliated Lessee, hasfull power, authority and legal right to keep and observe all of the terms ofthe Loan Documents and/or Mortgage Loan Documents  to which it is a party. Borrower and  Borrower Principalrepresent and warrant that the chart attached hereto as Exhibit B sets forth anaccurate ownership structure of Borrower.

 

Section 4.2.            STATUSOF BORROWER; AFFILIATED LESSEE

 

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

 

Section 4.3.            VALIDITYOF DOCUMENTS

 

Borrower, MortgageBorrower, Affiliated Lessee, and Borrower Principal have taken all necessaryaction to authorize the execution, delivery and performance of this Agreement,the other Loan Documents and the Mortgage Loan Documents to which they areparties.  This Agreement, the other LoanDocuments and the Mortgage Loan Documents have been duly executed and deliveredby or on behalf of Borrower, Mortgage Borrower, Affiliated Lessee and  Borrower Principal, as applicable, andconstitute the legal, valid and binding obligations of Borrower, MortgageBorrower, Affiliated Lessee and Borrower Principal, as applicable, enforceableagainst each, as applicable, in accordance with their respective terms, subjectonly to applicable bankruptcy, insolvency and similar laws affecting rights ofcreditors generally, and subject, as to enforceability, to general principlesof equity (regardless of whether enforcement is sought in a proceeding inequity or at law).

 

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Section 4.4.            NO CONFLICTS

 

The execution, deliveryand performance of this Agreement, the other Loan Documents and the MortgageLoan Documents to be executed by Borrower, Mortgage Borrower, Affiliated Lesseeand Borrower Principal, as applicable, will not conflict with or result in a breach of any of the terms orprovisions of, or constitute a default under, or result in the creation orimposition of any lien, charge or encumbrance (other than pursuant to the LoanDocuments or Mortgage Loan Documents) upon any of the property or assets ofBorrower, Mortgage Borrower, Affiliated Lessee or Borrower Principal pursuantto the terms of any agreement or instrument to which Borrower, MortgageBorrower, Affiliated Lessee or Borrower Principal s a party or by which any ofBorrower’s, Mortgage Borrower’s, Affiliated Lessee’s or Borrower Principal’sproperty or assets is subject, nor will such action result in any violation ofthe provisions of any statute or any order, rule or regulation of anyGovernmental Authority having jurisdiction over Borrower, Mortgage Borrower,Affiliated Lessee or Borrower Principal or any of Borrower’s, MortgageBorrower’s, Affiliated Lessee’s or Borrower Principal’s properties or assets,and any consent, approval, authorization, order, registration or qualification ofor with any Governmental Authority required for the execution, delivery andperformance by Borrower, Mortgage Borrower, Affiliated Lessee or BorrowerPrincipal of this Agreement, any of the other Loan Documents or any of theMortgage Loan Documents has been obtained and is in full force and effect.

 

Section 4.5.            LITIGATION

 

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

 

Section 4.6.            AGREEMENTS

 

None of Borrower,Mortgage Borrower, Borrower Principal nor any Affiliated Lessee is a party toany agreement or instrument or subject to any restriction which wouldmaterially and adversely affect Borrower, Mortgage Borrower, BorrowerPrincipal, Affiliated Lessee, the Collateral or any Property, or Borrower’s,Mortgage Borrower’s, Borrower Principal’s or Affiliated Lessee’s business,properties or assets, operations or condition, financial or otherwise.  None of Borrower, Mortgage Borrower,Borrower Principal nor Affiliated Lessee is in default in any material respectin the performance, observance or fulfillment of any of the obligations, covenantsor conditions contained in any agreement or instrument to which it is a partyor by which Borrower, Mortgage Borrower, Borrower Principal, Affiliated Lesseeor the Collateral is bound.  None ofBorrower, Mortgage Borrower, Borrower Principal or Affiliated Lessee has anymaterial financial obligation under any agreement or instrument to whichBorrower, Mortgage Borrower, Borrower Principal or Affiliated Lessee is a partyor by which Borrower, Mortgage

 

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

 

Section 4.7.            SOLVENCY

 

Neither Borrower norBorrower Principal has (a) entered into the transaction or executed the Note(if applicable), this Agreement or any other Loan Documents to which any suchPerson is a party, with the actual intent to hinder, delay or defraud any creditorand (b) received reasonably equivalent value in exchange for their respectiveobligations under such Loan Documents. Giving effect to the Loan, the fair saleable value of the assets of eachof Borrower, and Borrower Principal exceeds and will, immediately following themaking of the Loan, exceed the total liabilities of each of Borrower andBorrower Principal, including, without limitation, subordinated, unliquidated,disputed and contingent liabilities.  Nopetition in bankruptcy has been filed against Borrower, Mortgage Borrower,Borrower Principal, Affiliated Lessee or any SPE Component Entity (if any) inthe last ten (10) years, and neither Borrower, Mortgage Borrower, 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, Mortgage Borrower, Borrower Principal, Affiliated Lessee nor any SPEComponent Entity (if any) is contemplating either the filing of a petition byit under any Creditors Rights Laws or the liquidation of all or a major portionof Borrower’s, Mortgage Borrower’s, Borrower Principal’s, SPE ComponentEntity’s or Affiliated Lessee’s assets or property, and  Borrower has no knowledge of any Personcontemplating the filing of any such petition against Borrower, MortgageBorrower, Borrower Principal, Affiliated Lessee or any SPE Component Entity (ifany).

 

Section 4.8.            FULL AND ACCURATE DISCLOSURE

 

No statement of fact madeby or on behalf of Borrower, Mortgage Borrower, any SPE Component Entity (asdefined herein and in the Mortgage Loan Agreement), Borrower Principal 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, MortgageBorrower, any SPE Component Entity (as defined herein and in the Mortgage LoanAgreement), Borrower Principal 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,the Collateral or the business, operations or condition (financial orotherwise) of Borrower, Borrower Principal or Affiliated Lessee.

 

Section 4.9.            NO PLAN ASSETS

 

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

 

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

 

Section 4.10.          NOT A FOREIGN PERSON

 

Neither Borrower norBorrower Principal is a “foreign person” within the meaning of §1445(f)(3) ofthe Internal Revenue Code.

 

Section 4.11.          ENFORCEABILITY

 

The Loan Documents are notsubject to any right of rescission, set-off, counterclaim or defense byBorrower or Borrower Principal, including the defense of usury, nor would theoperation of any of the terms of the Loan Documents, or the exercise of anyright thereunder, render the Loan Documents unenforceable, and neither Borrowernor Borrower Principal has asserted any right of rescission, set-off,counterclaim or defense with respect thereto. No Default or Event of Default exists under or with respect to any LoanDocument.

 

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, MortgageBorrower, Affiliated Lessee and each Property, and the use and operationthereof, comply in all material respects with all Legal Requirements,including, without limitation, building and zoning ordinances and codes and theAmericans with Disabilities Act. Borrower has no knowledge that any of such entities is in default orviolation of any order, writ, injunction, decree or demand of any GovernmentalAuthority and Borrower has not received any written notice of any such defaultor violation.  There has not beencommitted by Borrower or, to Borrower’s knowledge, any other Person inoccupancy of or involved with the operation or use of any Property, any act oromission affording any Governmental Authority the right of forfeiture asagainst any Property or any part thereof or any monies paid in performance of Borrower’sobligations under any of the Loan Documents.

 

Section 4.14.          FINANCIAL INFORMATION

 

All financial data,including, without limitation, the balance sheets, statements of cash flow,statements of income and operating expense and rent rolls, that have beendelivered to Lender in respect of Borrower, Borrower Principal, MortgageBorrower, Mortgage Borrower GP, Affiliated Lessee and/or the Properties (a) aretrue, complete and correct in all material respects, (b) accurately representthe financial condition of Borrower, Borrower Principal, Mortgage Borrower,Mortgage Borrower GP, Affiliated Lessee or the Properties, as applicable, as ofthe date of such reports, and (c) to the extent prepared or audited by anindependent certified public accounting firm, have been prepared in accordancewith GAAP throughout the periods covered, except as disclosed therein.  Neither Borrower, Mortgage Borrower,Mortgage

 

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 Borrower GPnor Affiliated Lessee has any contingent liabilities, liabilities for taxes,unusual forward or long-term commitments or unrealized or anticipated lossesfrom any unfavorable commitments that are known to Borrower 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.  Since the date ofsuch financial statements, there has been no materially adverse change in thefinancial condition, operations or business of Borrower, Mortgage Borrower,Mortgage Borrower GP, Borrower Principal or Affiliated Lessee from that setforth in said financial statements.

 

Section 4.15.          ILLEGAL ACTIVITY

 

No portion of theCollateral or any Property has been or will be purchased with proceeds of anyillegal activity, and no part of the proceeds of the Loan will be used inconnection with any illegal activity.

 

Section 4.16.          PERMITTED ENCUMBRANCES

 

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

 

Section 4.17.          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 4.18.          INVESTMENT COMPANY ACT

 

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

 

Section 4.19.          NO CHANGE IN FACTS OR CIRCUMSTANCES;DISCLOSURE

 

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

 

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any other Loan Document or in any Mortgage LoanDocument, are accurate, complete and correct in all material respects.  There has been no material adverse change inany condition, fact, circumstance or event that would make any such informationinaccurate, incomplete or otherwise misleading in any material respect or thatotherwise materially and adversely affects or might materially and adverselyaffect the Collateral, any Property or the business operations or the financialcondition of Borrower, Mortgage Borrower, Affiliated Lessee or BorrowerPrincipal.  Borrower has disclosed toLender all material facts and has not failed to disclose any material fact thatcould cause any representation or warranty made herein to be materiallymisleading.

 

Section4.20.          SPECIAL PURPOSE ENTITY

 

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

 

Section 4.21.          INTELLECTUAL PROPERTY

 

All trademarks, tradenames and service marks necessary to the business of Borrower as presentlyconducted or as Borrower contemplates conducting its business are in goodstanding and, to the extent of Borrower’s actual knowledge are uncontested.  Borrower has not knowingly infringed, is notknowingly infringing, and has not received notice of infringement with respectto asserted trademarks, trade names and service marks of others.  To Borrower’s knowledge, there is no infringementby others of trademarks, trade names and service marks of Borrower.

 

Section 4.22.          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 or Borrower Principal constituteproperty of, or are beneficially owned, directly or indirectly, by any person,entity or government subject to trade restrictions under U.S. law, includingbut not limited to, the International Emergency Economic Powers Act, 50 U.S.C.§§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., andany Executive Orders or regulations promulgated thereunder with the result thatthe investment in Borrower or Borrower Principal, as applicable (whetherdirectly or indirectly), is prohibited by law or the Loan made by Lender is inviolation of law (“**Embargoed Person**”); (b) no Embargoed Personhas any interest of any nature whatsoever in Borrower or Borrower Principal, asapplicable, with the result that the investment in Borrower or BorrowerPrincipal, as applicable (whether directly or indirectly), is prohibited by lawor the Loan is in violation of law; and (c) none of the funds of Borrower orBorrower Principal, as applicable, have been derived from any unlawful activitywith the result that the investment in Borrower or Borrower Principal, asapplicable (whether directly or indirectly), is prohibited by law or the Loanis in violation of law.

 

Section 4.23.          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 and

 

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regulations of the United States government and itsvarious executive departments, agencies and offices related to the subjectmatter of the Patriot Act, including Executive Order 13224 effective September24, 2001 (collectively referred to in this Section only as the “**Patriot Act**”)and are incorporated into this Section. Each of Borrower and Borrower Principal hereby represents and warrantsthat Borrower and Borrower Principal and each and every Person Affiliated withBorrower and Borrower Principal or that to Borrower’s knowledge has an economicinterest in Borrower or Borrower Principal, or, to Borrower’s or BorrowerPrincipal’s knowledge, that has or will have an interest in the transactioncontemplated by this Agreement or in the Collateral or any Property or willparticipate, in any manner whatsoever, in the Loan (excluding any holders ofpublicly traded shares in CNL Hospitality Properties, Inc., a publicly tradedreal estate investment trust), is:  (i)not a “blocked” person listed in the Annex to Executive Order Nos. 12947, 13099and 13224 and all modifications thereto or thereof (as used in thisSection 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 subject toany 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 or any other person who has been determined to be subject to theprohibitions contained in the Patriot Act. Borrower covenants and agrees that in the event Borrower receives anynotice that Borrower Principal or Borrower (or any of their respectivebeneficial owners or Affiliates or participants) become listed on the Annex orany other list promulgated under the Patriot Act or is indicted, arraigned, orcustodially detained on charges involving money laundering or predicate crimesto money laundering, Borrower shall immediately notify Lender.  It shall be an Event of Default hereunder ifBorrower, Borrower Principal, or any other party to any Loan Document becomeslisted on any list promulgated under the Patriot Act or is indicted, arraignedor custodially detained on charges involving money laundering or predicatecrimes to money laundering.

 

Section 4.24.          MORTGAGE LOAN REPRESENTATIONS

 

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

 

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Section4.25.          NO CONTRACTUAL OBLIGATIONS

 

Other than the LoanDocuments, the Borrower Partnership Agreement and the Mortgage BorrowerPartnership Agreement, as of the date of this Agreement, Borrower is notsubject to any Contractual Obligations and has not entered into any agreement,instrument or undertaking by which it or its assets are bound, or has incurredany indebtedness (other than the Loan), and prior to the date of thisAgreement, neither Borrower nor any of its Subsidiaries has entered into anyContractual Obligation, or any agreement, instrument or undertaking by which itor its assets are bound or incurred any indebtedness (other than the Loan orthe Mortgage Loan (as applicable)) except for such liabilities, which areimmaterial in the aggregate, that are incident to Borrower’s activities as amember of the Mortgage Borrower or that are being satisfied in connection withthe funding of the Loan.

 

Section4.26.          PLEDGED SECURITIES

 

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

 

Section 4.27.          TAXES

 

Mortgage Borrower,Borrower, Borrower Principal and Affiliated Lessee have filed all federal,state, county, municipal, and city income, personal property and other taxreturns required to have been filed by them and paid all taxes and relatedliabilities which have become due pursuant to such returns or pursuant to anyassessments received by them.  NeitherBorrower, Mortgage Borrower, Borrower Principal nor Affiliated Lessee knows ofany basis for any additional assessment in respect of any such taxes and relatedliabilities for prior years.

 

Section 4.28.          SURVIVAL; MISCELLANEOUS

 

Borrower agrees that,unless expressly provided otherwise, all of the representations and warrantiesof Borrower and of Borrower Principal set forth in this Agreement and in theother Loan Documents shall survive for so long as any portion of the Debtremains owing to Lender.  Allrepresentations, warranties, covenants and agreements made in this Agreement orin the other Loan Documents by Borrower shall be deemed to have been relied uponby Lender notwithstanding any investigation heretofore or hereafter made byLender or on its behalf.

** **

**ARTICLE 5****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 thePledge Agreement (and all related obligations) in accordance with the terms ofthis Agreement and the other Loan Documents, Borrower Principal (as toSections 5.11 and 5.33 only) and Borrower each hereby covenants and agreeswith Lender that:

 

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Section 5.1.            EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS

 

### (a)           Borrower and Mortgage Borrower shalldo or cause to be done all things necessary to preserve, renew and keep in fullforce and effect its existence, rights, licenses, permits and franchises andcomply with all Legal Requirements applicable to it, and each Property.  Borrower hereby covenants and agrees not tocommit, permit or suffer to exist any act or omission affording any GovernmentalAuthority the right of forfeiture as against the Collateral, any Property orany part thereof or any monies paid in performance of Borrower’s obligationsunder any of the Loan Documents. Borrower shall at all times cause Mortgage Borrower to maintain,preserve and protect all franchises and trade names used by it, AffiliatedLessee and any Affiliated Manager in connection with the operation of eachProperty.  To the extent anything thisArticle 5 or any other section of this Agreement requires Borrower to causeMortgage Borrower to take any action, such requirement shall require Borrowerto act solely in its capacity as an equity owner of Mortgage Borrower andMortgage Borrower SPE.

 

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

 

Section 5.2.            MAINTENANCE AND USE OF PROPERTY

 

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

 

Section 5.3.            WASTE

 

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

 

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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 cause MortgageBorrower to pay all Taxes and Other Charges now or hereafter levied or assessedor imposed against any Property or any part thereof as the same become due andpayable; provided, however, Borrower’s obligation to cause Mortgage Borrower todirectly pay (or cause to be paid) Taxes shall be suspended for so long asMortgage Borrower complies with the terms and provisions of Section 9.6 ofthe Mortgage Loan Agreement.  Borrowershall cause Mortgage Borrower to 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 cause Mortgage Borrower tofurnish such receipts for payment of Taxes in the event that such Taxes havebeen paid by Mortgage Lender pursuant to Section 9.6 of the Mortgage LoanAgreement).  Borrower shall causeMortgage Borrower to not suffer and shall promptly cause Mortgage Borrower topay or transfer to bond and in either instance discharge (or fully andunconditionally release) any Lien or charge whatsoever which may be or become aLien or charge against any Property, and shall cause Mortgage Borrower topromptly pay for (or cause to be paid for) all utility services provided to anyProperty.

 

### (b)           After prior written notice to Lender,Borrower, at its own expense, may permit Mortgage Borrower to contest byappropriate legal proceeding, promptly initiated and conducted in good faithand with due diligence, the amount or validity or application in whole or inpart of any Taxes or Other Charges, or any involuntary Lien or other charge,provided that (i) no Default or Event of Default has occurred and remainsuncured; (ii) such proceeding shall be permitted under and be conducted inaccordance with the provisions of any other instrument to which Borrower orMortgage Borrower is subject and shall not constitute a default thereunder andsuch proceeding shall be conducted in accordance with all applicable LegalRequirements; (iii) neither the applicable Property nor any part thereof orinterest therein will be in danger of being sold, forfeited, terminated,canceled or lost; (iv) Borrower shall cause Mortgage Borrower to 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)Mortgage Borrower shall have furnished Mortgage Lender with such security asmay be required in the proceeding, or shall have delivered to Mortgage Lendersuch reserve deposits or indemnification in lieu thereof as may be reasonablyrequested by Mortgage Lender, to insure the payment of any such Taxes or OtherCharges, together with all interest and penalties thereon (unless MortgageBorrower has paid all of the Taxes or Other Charges under protest).

 

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Section 5.5.            LITIGATION

 

Borrower shall giveprompt written notice to Lender of any litigation or governmental proceedingspending or threatened in writing against Borrower, Borrower Principal, MortgageBorrower or Affiliated Lessee which might materially adversely affectBorrower’s, Mortgage Borrower’s, Borrower Principal’s or Affiliated Lessee’scondition (financial or otherwise) or business or any Property or theCollateral.

 

Section 5.6.            ACCESS TO PROPERTY

 

Borrower shall causeMortgage Borrower to permit agents, representatives and employees of Lender toinspect any Property or any part thereof at reasonable hours upon reasonableadvance notice.

 

Section 5.7.            NOTICE OF DEFAULT

 

Borrower shall promptlyadvise Lender of any material adverse change in the condition (financial orotherwise) of Borrower, Mortgage Borrower, Borrower Principal, Affiliated Lesseeor any Property or of the occurrence of any Default or Event of Default ofwhich Borrower has knowledge.

 

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 the Collateral and any amendments, modifications or changesthereto.

 

Section 5.10.          AWARDS; INSURANCE PROCEEDS

 

Borrower shall, and shallcause Mortgage Borrower and Affiliated Lessee to, cooperate with Lender inobtaining for Lender the benefits of any Awards or Insurance Proceeds lawfullyor equitably payable in connection with any Property, and Lender shall bereimbursed for any reasonable out-of-pocket expenses incurred in connectiontherewith (including reasonable, actual attorneys’ fees and disbursements, andthe payment by Borrower of the expense of an appraisal on behalf of Lender incase of a Casualty or Condemnation materially affecting any Property or anymaterial part thereof) out of such Awards or Insurance Proceeds.

 

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Section 5.11.          FINANCIAL REPORTING

 

### (a)           Borrower and Borrower Principalshall, and shall cause Mortgage Borrower to, keep adequate books and records ofaccount in accordance with GAAP, or in accordance with other methods acceptableto Lender in its sole discretion, consistently applied and shall furnish orcause to be furnished to Lender:

 

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

 

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

 

#### (iii)          quarterly and annual balance sheets,profit and loss statements, statements of cash flows, and statements of 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 as to Borrower Principal’sthen Consolidated Tangible Net Worth (which certificate shall be accompanied bya description of the computation of such Consolidated Tangible Net Worthreasonably acceptable to Lender), all within forty-five (45) days after the endof each fiscal quarter or ninety (90) days after the close of each fiscal yearof Borrower and Borrower Principal, as applicable, as the case may be; and

 

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

 

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#### 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 the same in accordance with the process described in this subsectionuntil Lender approves such Annual Budget. In the event Lender shall fail to respond in writing to any proposedAnnual Budget or revised Annual Budget within the above-stated time period,Lender shall be deemed to have approved the same, provided that any proposed orrevised Annual Budget submitted to Lender pursuant to the terms hereof shallstate in bold face type, 16” font and all capital letters on the cover letteraccompanying each such (A) proposed Annual Budget “ATTACHED IS A PROPOSEDANNUAL BUDGET FOR THE BELOW REFERENCED PROPERTY(IES), YOUR FAILURE TO RESPONDIN WRITING TO THE UNDERSIGNED REGARDING THE SAME WITHIN FIFTEEN (15) DAYS OFTHE DATE OF YOUR RECEIPT OF SAID PROPOSED ANNUAL BUDGET, SHALL BE DEEMED TOCONSTITUTE YOUR APPROVAL OF THE SAME” and (B) revised Annual Budget “ATTACHEDIS A REVISED ANNUAL BUDGET FOR THE BELOW REFERENCED PROPERTY(IES), YOUR FAILURETO RESPOND IN WRITING TO THE UNDERSIGNED REGARDING THE SAME WITHIN FIFTEEN (15)DAYS OF THE DATE OF YOUR RECEIPT OF SAID REVISED ANNUAL BUDGET SHALL BE DEEMEDTO CONSTITUTE YOUR APPROVAL OF THE SAME”. Until such time that Lender approves a proposed or revised AnnualBudget, which approval shall not be unreasonably withheld, conditioned ordelayed, or is deemed to have approved the same, the most recent Annual Budgetwith respect to such Property shall apply; provided that, such approved AnnualBudget shall be adjusted to reflect actual increases in Taxes, InsurancePremiums, utilities expenses and other expenses under the applicable ManagementAgreement, 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.

 

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### (c)           Intentionally Omitted.

 

### (d)           Borrower and Borrower Principal shallfurnish Lender (or cause Mortgage Borrower to furnish Lender) with such otheradditional financial or management information (including state and federal taxreturns) as may, from time to time, be reasonably required by Lender in formand substance satisfactory to Lender (including, without limitation, anyfinancial reports required to be delivered by any Tenant or any guarantor ofany Lease pursuant to the terms of such Lease), and shall furnish to Lender andits agents convenient facilities for the examination and audit of any suchbooks and records.

 

### (e)           All items requiring the certificationof Borrower or Mortgage Borrower shall, except where Borrower is an individual,require a certificate executed by the general partner, managing member or chiefexecutive officer of Borrower or Mortgage Borrower, as applicable (and the samerules shall apply to any sole shareholder, general partner or managing memberwhich 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, the Pledge Agreementand the other Loan Documents are valid, legal and binding obligations and havenot been modified or if modified, giving particulars of such modification.

 

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

 

Section 5.13.          OPERATING LEASE; LEASING MATTERS

 

### (a)           Borrower shall (or shall causeMortgage Borrower to) (i) promptly perform and observe all of the covenantsrequired to be performed and observed by it under the Operating Leases and doall things necessary to preserve and to keep unimpaired its material rightsthereunder; (ii) promptly notify Lender of any material default under anyOperating Lease of which it is aware; (iii) promptly deliver to Lender a copyof any notice of default or other material notice under any Operating Leasedelivered to any Operating Lessee by Mortgage Borrower; (iv) promptly givenotice to Lender of any notice or information that Mortgage Borrower receiveswhich indicates that an Operating Lessee is terminating its Operating Lease orthat any Operating Lessee is otherwise discontinuing its operation of theapplicable  Property;

 

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### and (v) promptlyenforce the performance and observance of all of the material covenantsrequired to be performed and observed by the Operating Lessee under theapplicable Operating Lease.

 

### (b)           If at any time after the occurrenceand during the continuance of an Event of Default Lender realizes on theCollateral, Borrower shall (A) in the instance of an Operating Leasebetween Mortgage Borrower and an Affiliated Lessee, cause Mortgage Borrower tocooperate and not in any way hinder, delay or otherwise interfere with the termination of the applicable OperatingLease in accordance with the terms of the applicable Subordination andAttornment Agreement or (b) in the instance of an Operating Lease with aNon-Affiliated Lessee, cause Mortgage Borrower to terminate such OperatingLease to the extent permitted under the terms of such Operating Lease under andin accordance with terms of the applicable Subordination, Non-Disturbance andAttornment Agreement.

 

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

 

### (d)           Borrower shall (or shall causeMortgage Borrower to) ensure that any replacement Operating Lessee shall in allevents be a Qualified Lessee, and shall be a party to an Operating Leaseapproved in writing by Lender, in its reasonable discretion and shall beapproved by Mortgage Lender in accordance with the Mortgage Loan Documents. Inaddition, any new or replacement Operating Lessee (i) Affiliated with Borrower,shall execute a form of Subordination and Attornment Agreement in formsubstantially similar to the form delivered in connection with the closing ofthe Loan and (ii) not Affiliated with Borrower, shall execute a ofSubordination and Attornment Agreement in form reasonably acceptable to Lender.

 

### (e)           Other than any new or replacementOperating Lease, Borrower may permit Mortgage Borrower to enter into a proposedLease (including the renewal or extension of an existing Lease (a “**RenewalLease**”)) (or cause or permit any Operating Lessee to enter into aproposed Lease or Renewal Lease) without the prior written consent of Lender,provided such proposed Lease or Renewal Lease (i) provides for rental rates andterms comparable to existing local market rates and terms (taking into accountthe type and quality of the tenant) as of the date such Lease is executed byMortgage Borrower or Operating Lessee, as the case may be (unless, in the caseof a Renewal Lease, the rent payable during such renewal, or a formula or othermethod to compute such rent, is provided for or contemplated in the originalLease), (ii) is an arm’s-length transaction with a bona fide, independent thirdparty tenant, (iii) does not have a materially adverse effect on the valueof the applicable Property taken as a whole, (iv) does not contain anyoption, offer, right of first refusal, or other similar right to acquire all orany portion of the applicable Property, (v) has a base term of less than fifteen(15) years including options to renew, (vi) as to Major Leases, has norent, credits, free rents or concessions granted thereunder, and (vii) asto Major Leases, is written on customary form of lease reasonably acceptable toLender.  All proposed Leases which donot satisfy the requirements set forth in this subsection shall be subject tothe prior approval of Lender and its counsel, at Borrower’s expense.

 

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### Borrower shallpromptly deliver to Lender copies of all Major Leases and to the extentrequested by Lender other Leases which are entered into pursuant to thissubsection together with Borrower’s certification that such Leases satisfy allof the conditions of this Section.

 

### (f)            Without limiting any other provisioncontained herein, Borrower (i) shall (or shall cause Mortgage Borrower or theapplicable Operating Lessee to) observe and perform all the obligations imposedupon the landlord under the Leases and shall not do or permit to be doneanything to impair the value of any of the Leases as security for the Debt;(ii) shall cause Mortgage Borrower to promptly send copies to Lender of allnotices of default which Mortgage Borrower shall send or receive under anyMajor Lease (and any other Lease to pursuant to any request made by Lender);(iii) shall enforce (or cause or permit Mortgage Borrower or the applicableOperating Lessee to enforce) all of the material terms, covenants andconditions contained in the Leases upon the part of the tenant thereunder to beobserved or performed; (iv) shall not collect (or cause or permit MortgageBorrower or any Operating Lessee to collect) any of the Rents more than one (1)month in advance (except security deposits shall not be deemed Rents collectedin advance); (v) shall not execute (or cause or permit Mortgage Borrower or anyOperating Lessee to execute) any other assignment of the landlord’s interest inany of the Leases or the Rents; and (vi) shall not consent (or cause or permitMortgage Borrower or any Operating Lessee to consent) to any assignment of orsubletting under any Leases not in accordance with their terms, without theprior written consent 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, permit Mortgage Borrower to amend, modify or waive theprovisions of any Lease or terminate, reduce Rents under, accept a surrender ofspace under, or shorten the term of, any Lease (including any guaranty, letterof credit or other credit support with respect thereto) (or cause or permitMortgage Borrower or any Operating Lessee to do any of the foregoing) providedthat such action (taking into account, in the case of a termination, reductionin rent, surrender of space or shortening of term, the planned alternative useof the affected space) does not have a materially adverse effect on the valueof the applicable Property taken as a whole, and provided that such Lease, asamended, modified or waived, is otherwise in compliance with the requirementsof this Agreement and any subordination agreement binding upon Lender withrespect to such Lease.  A termination ofa Lease (other than an Operating Lease) with a tenant who is in default beyondapplicable notice and grace periods shall not be considered an action which hasa materially adverse effect on the value of the applicable Property taken as awhole.  Any amendment, modification,waiver, termination, rent reduction, space surrender or term shortening whichdoes not satisfy the requirements set forth in this subsection shall be subjectto the prior approval of Lender and its counsel (not to be unreasonablywithheld), at Borrower’s expense. Borrower shall promptly deliver to Lender copies of amendments,modifications and waivers for Major Leases (and any other Lease pursuant to anyrequest made by Lender) which are entered into pursuant to this subsectiontogether with Borrower’s certification that all conditions of this subsectionhave been satisfied.

 

### (h)           Notwithstanding anything containedherein to the contrary, Borrower shall not permit Mortgage Borrower, withoutthe prior written consent of Lender to enter into, renew, extend, amend,modify, waive any provisions of, terminate, reduce Rents under, accept asurrender of space under, or shorten the term of any Major Lease (or in theinstance of a Major

 

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### Lease other thanan Operating Lease, cause or permit the applicable Operating Lessee to do anyof the foregoing).

 

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

 

Section 5.14.          PROPERTY MANAGEMENT

 

### (a)           Borrower shall cause MortgageBorrower or the applicable Operating Lessee to (i) promptly perform and observeall of the covenants required to be performed and observed by it under theManagement Agreement and do all things necessary to preserve and to keepunimpaired its material rights thereunder; (ii) promptly notify Lender of anydefault under the Management Agreement of which it is aware; (iii) promptlydeliver to Lender a copy of any notice of default or other material noticereceived by Mortgage Borrower under the Management Agreement; (iv) promptlygive notice to Lender of any notice or information that Mortgage Borrowerreceives which indicates that Manager is terminating the Management Agreementor that Manager is otherwise discontinuing its management of the applicableProperty; and (v) promptly enforce the performance and observance of all of thecovenants required to be performed and observed by Manager under the ManagementAgreement.

 

### (b)           Subject to the rights of the MortgageLender and the applicable provisions of the Mortgage Loan Documents, if at anytime, an event shall occur (i) under any Management Agreement which constitutesa material monetary default by Manager as determined by Lender or a materialnon-monetary default by Manager as determined by Lender which defaultmaterially and adversely affects the value, use or operation of the Property orthe Borrower’s obligation to pay the Debt and permits Mortgage Borrower orOperating Lessee to terminate the applicable Manager or (ii) under anySubordination of Management Agreement/Estoppel permits Lender, MortgageBorrower or Operating Lessee to terminate the applicable Manager, Borrowershall, at the request of Lender, cause Mortgage Borrower to 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 Subordination of ManagementAgreement/Estoppel, and replace Manager with a Qualified Manager approved byLender on terms and conditions satisfactory to Lender, it being understood andagreed that the management fee for such replacement manager shall not exceedthen prevailing market rates.  Withoutlimiting the foregoing, in the event any Subordination of ManagementAgreement/Estoppel shall permit Lender to terminate the Management Agreementdirectly, upon Lender’s election to so terminate any such Management Agreement,Borrower shall reasonably cooperate and not in any way interfere with any actby Lender’s to so terminate such Management Agreement.

 

### (c)           Borrower shall not cause or permitMortgage Borrower to, without the prior written consent of Lender (whichconsent shall not be unreasonably withheld, conditioned or delayed): (i)surrender, terminate or cancel the Management Agreement or otherwise replaceany

 

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### Manager or enterinto any other management agreement with respect to any Property (or cause orpermit the applicable Operating Lessee to do any of the foregoing); (ii) reduceor consent to the reduction of the term of any Management Agreement (or causeor permit the applicable Operating Lessee to do any of the foregoing); (iii)increase or consent to the increase of the amount of any charges under anyManagement Agreement (or cause or permit the applicable Operating Lessee to doany of the foregoing); or (iv) otherwise modify, change, supplement, alter oramend, or waive or release any of its rights and remedies under, any ManagementAgreement in any material respect (or cause or permit the applicable OperatingLessee to do any of the foregoing).

 

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

 

Section 5.15.          LIENS

 

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

 

Section 5.16.          DEBT CANCELLATION

 

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

 

Section 5.17.          ZONING

 

Borrower shall not permitMortgage Borrower to initiate or consent to any zoning reclassification of anyportion of any Property or seek any variance under any existing zoningordinance or use or permit the use of any portion of any Property in any mannerthat could result in such use becoming a non-conforming use under any zoningordinance or any other applicable land use law, rule or regulation, without theprior written consent 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.

 

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### (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).

 

Section 5.19.          NO JOINT ASSESSMENT

 

Borrower shall not permitMortgage Borrower to suffer, permit or initiate the joint assessment of anyProperty with (a) any other real property constituting a tax lot separate fromsuch Property, or (b) any portion of such Property which may be deemed toconstitute personal property, or any other procedure whereby the Lien of anytaxes which may be levied against such personal property shall be assessed orlevied or charged to such Property.

 

Section 5.20.          RECIPROCAL EASEMENT AGREEMENTS

 

Borrower shall not permitMortgage Borrower to enter into, terminate or modify any REA without Lender’sprior written consent, which consent shall not be unreasonably withheld,conditioned or delayed.  Borrower shallcause Mortgage Borrower to enforce, comply with, and cause each of the partiesto each REA to comply with all of the material economic terms and conditionscontained 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,

 

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

 

 

Section 5.22.          FRANCHISE AGREEMENTS.

 

(a)           Borrower shall ensure that eachProperty (other than any Property for which with Lender’s consent there is noFranchise Agreement in place) shall be operated under the terms and conditionsof the applicable Franchise Agreement. Borrower shall cause Mortgage Borrower or the applicable OperatingLessee to (i) pay all sums required to be paid by the franchisee under eachFranchise Agreement, (ii) diligently perform, observe and enforce all of theterms, covenants and conditions of each Franchise Agreement on the part of thefranchisee thereunder to be performed, observed and enforced to the end thatall things shall be done which are necessary to keep unimpaired the rights ofsaid franchisee under each Franchise Agreement, (iii) promptly notify Lender ofthe giving of any notice to Mortgage Borrower and/or Operating Lessee of anydefault by the franchisee in the performance or observance of any of the terms,covenants or conditions of any Franchise Agreement on the part of thefranchisee thereunder to be performed and observed and deliver to Lender a truecopy of each such notice, and (iv) promptly deliver to Lender a copy of eachfinancial statement, business plan, capital expenditure plan, notice of defaultunder the Franchise Agreement, report regarding operations of the relatedProperty, estimates of any monetary nature and any other items reasonablyrequested by Lender, in each case received by Borrower, Mortgage Borrower orAffiliated Lessee under any Franchise Agreement.

 

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

 

### (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 and subject to the rights of the Mortgage Lender,Lender shall have the right, but shall be under no obligation, to pay any sumsand to perform any act or take any action as may be appropriate to cause allthe terms, covenants and conditions of such Franchise Agreement on the part ofthe franchisee to be performed or observed to be promptly performed or observedon behalf of Mortgage Borrower, to the end that the rights of said franchisee(and/or Mortgage Borrower and/or Operating Lessee) in, to and under suchFranchise 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 at 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 and Attornment Agreement and/or Subordination ofManagement Agreement/Estoppel, Lender and

 

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### any persondesignated by Lender shall have, and are hereby granted, the right to enterupon the applicable Property at any time and from time to time for the purposeof taking any such action.  If anyFranchisor shall deliver to Lender a copy of any notice sent to MortgageBorrower, Borrower and/or Operating Lessee of any default under any FranchiseAgreement, such notice shall constitute full protection to Lender for anyaction taken or omitted to be taken by Lender in good faith, in reliancethereon.

 

### (d)           Subject to the rights of the MortgageLender, Borrower shall cause the Mortgage Borrower or the applicable OperatingLessee to exercise each individual option, if any, to extend or renew the termof each Franchise Agreement upon demand by Lender made at any time withinninety (90) days prior to the last day upon which any such option may beexercised, and Borrower hereby expressly authorizes and appoints Lender as itsattorney-in-fact to exercise (or cause the applicable Operating Lessee toexercise) any such option in the name of and upon behalf of Mortgage Borrowershould Borrower fail to cause the Mortgage Borrower to do so, which power ofattorney shall be irrevocable and shall be deemed to be coupled with aninterest.

 

### (e)           Any sums expended by Lender pursuantto this Section shall bear interest at the Default Rate from the date such costis incurred to the date of payment to Lender, shall be deemed to constitute aportion of the Debt , shall be secured by the lien of the Pledge Agreement andthe other Loan Documents and shall be immediately due and payable upon demandby Lender therefor.

 

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

 

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

 

Section 5.23.          GROUND LEASE

 

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

 

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### Mortgage Borrower,as tenant thereunder, and deliver to Lender a true copy of each such noticewithin five (5) Business Days of receipt and (iv) promptly notify Lender of anybankruptcy, reorganization or insolvency of the landlord under the Ground Leaseor of any notice thereof, and deliver to Lender a true copy of such noticewithin five (5) Business Days of Mortgage Borrower’s receipt.  Mortgage Borrower shall not, without theprior written consent of Lender, surrender the leasehold estate created by theGround Lease or terminate or cancel the Ground Lease or modify, change,supplement, alter or amend the Ground Lease, either orally or in writing, andif Mortgage Borrower shall default in the performance or observance of anyterm, covenant or condition of the Ground Lease on the part of MortgageBorrower, as tenant thereunder, and shall fail to cure the same prior to theexpiration of any applicable cure period provided thereunder, Lender (subjectto the rights of Mortgage 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 Mortgage Borrower to be performed or observed on behalf ofMortgage Borrower, to the end that the rights of Mortgage Borrower in, to andunder the Ground Lease shall be kept unimpaired and free from default.  If the landlord under the Ground Lease shalldeliver to Lender a copy of any notice of default under the Ground Lease, suchnotice shall constitute full protection to Lender for any action taken oromitted to be taken by Lender, in good faith, in reliance thereon.  Mortgage Borrower shall exercise eachindividual option, if any, to extend or renew the term of the Ground Lease upondemand by Lender made at any time within ninety (90) days prior to the last dayupon which any such option may be exercised, and Mortgage Borrower herebyexpressly authorizes and appoints Lender its attorney-in-fact to exercise anysuch option in the name of and upon behalf of Mortgage Borrower should MortgageBorrower 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 this Agreement,notwithstanding anything contained in either Ground Lease to the contrary,Borrower shall not cause or permit Mortgage Borrower to further sublet anyportion of applicable Property subject to such Ground Lease (other than aspermitted pursuant to the applicable terms and conditions hereof) without priorwritten consent of Lender.  In addition,(i) any such sublease shall not terminate or be terminable by the lesseethereunder, including, but not limited to, in the event of any action for theforeclosure of the Security Instrument (unless a judgment is obtained thereinagainst such sublessee); and (ii) in the event that the Ground Lease isterminated as aforesaid, the sublessee under the sublease shall attorn to thelessor under the Ground Lease or to the purchaser at the sale of the applicableProperty on such foreclosure, as the case may be.  In the event that any portion of the applicable Property shall besublet pursuant to the terms of this subsection, such sublease shall be deemedto be included 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

 

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### obtain aReplacement Rate Cap at Borrower’s sole cost and expense within ten (10) daysof receipt of notice from Lender or Borrower’s obtaining knowledge that theprovider is no longer an Acceptable Counterparty.

 

### (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 an account designated by Lender.  Provided no Event of Default shall thenexist, to the extent any funds actually received in such account when combinedwith funds actually received by and due Mezzanine Lender under this Agreement,the other Loan Documents and the Intercreditor Agreement, exceed amounts thendue Lender under this Agreement and the other Loan Documents, such excess shallbe distributed to Borrower.  Borrowershall take all actions reasonably requested by Lender to enforce Lender’srights under the Rate Cap and any Replacement Rate Cap in the event of adefault by the Acceptable Counterparty and shall not waive, amend or otherwisemodify any of its rights thereunder.

 

### (d)           In the event that Borrower fails to purchaseand deliver to Lender the Rate Cap or any Replacement Rate Cap as and whenrequired hereunder, or fails to maintain such agreement in accordance with theterms and provisions of this Agreement, Lender may purchase the Rate Cap or anyReplacement 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 its jurisdictionof incorporation and has the organizational power and authority to execute anddeliver, and to perform its obligations under, the Rate Cap or the ReplacementRate Cap, as applicable;

 

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#### (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).

 

Section5.25.          NOTICES

 

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

 

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

 

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

 

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

 

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

 

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### the ability ofBorrower to perform under the Loan Documents or the rights and remedies ofLender under the Loan Documents.

 

Section 5.26.          CURING

 

Lender shall have theright, but shall not have the obligation, to exercise Borrower’s rights underthe Mortgage Borrower Partnership Agreement (a) to cure a Default or Event ofDefault under the Mortgage Loan, and (b) to satisfy any Liens, claims orjudgments against any Property (except for Liens permitted by the Mortgage LoanDocuments), in the case of either (a) or (b), unless Borrower or MortgageBorrower shall be diligently pursuing remedies to cure to Lender’s solesatisfaction.  Borrower shall reimburseLender on demand for any and all costs incurred by Lender in connection withcuring any such Default or Event of Default under the Mortgage Loan orsatisfying any Liens, claims or judgments against any Property.

 

Section 5.27.          SPECIALDISTRIBUTIONS

 

On each date on whichamounts are required to be paid to Lender under any of the Loan Documents,Borrower shall exercise its rights under the Mortgage Borrower Partnership Agreementto cause Mortgage Borrower (to the extent of any and all available cash afterpayment of all amounts due under or required to be paid pursuant to theMortgage Loan Documents) to make to Borrower a distribution in an aggregateamount such that Lender shall receive the amount required to be paid to Lenderon such date, after consideration of all amounts  (a) to be paid to Lender under the Cash Management Agreement onsuch date (and actually received by Lender on such date) and (b) any otheramounts actually received by Lender (and due Lender under the IntercreditorAgreement) as of such date.  Nothingcontained herein shall in any way modify (or be deemed to modify) any otherobligation of Borrower hereunder, including, but not limited to any other paymentobligations of Borrower hereunder.

 

Section 5.28.          LIMITATION ON SECURITIES ISSUANCES

 

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

 

Section 5.29.          LIMITATIONS ON DISTRIBUTIONS

 

Following (a) theoccurrence and during the continuance of a monetary Event of Default, (b) theoccurrence and during the continuance of an Event of Default under Section11.1(f) hereof or (c) the occurrence of any other Event of Default with respectto which Lender has accelerated the Loan, Borrower shall not make anydistributions to its members.

 

Section 5.30.          OTHER LIMITATIONS

 

Prior to the payment infull of the Debt, neither Borrower nor any of its Subsidiaries shall, norpermit Mortgage Borrower to, without the prior written consent of Lender (whichmay be furnished or withheld at its sole and absolute discretion, except asotherwise provided herein), give its consent or approval to any of thefollowing actions or items:

 

### (a)           except as expressly permittedpursuant to and in accordance with the terms hereof (including, withoutlimitation, the provisions of Section 5.34 hereof, with respect to a refinance

 

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

 

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

 

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

 

### (d)           approve the terms of any AnnualBudget (unless pursuant to and in accordance with the provisions of Section5.11(a)(iv));

 

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

 

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

 

### (g)           any material change in the method ofconduct of the business of Mortgage Borrower or Borrower or any of itssubsidiaries, such consent to be given in the reasonable discretion of theLender;

 

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

 

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

 

Section 5.31.          CONTRACTUALOBLIGATIONS

 

Other than the LoanDocuments, the Borrower Partnership Agreement (and the initial membershipinterests in Borrower issued pursuant thereto), the Mortgage Loan Documents andthe Mortgage Borrower Partnership Agreement, neither Borrower nor any of itsassets shall be subject to any Contractual Obligations, and Borrower shall notenter into any agreement,

 

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

 

Section 5.32.          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**”) inthe exact same form as the form in place on the Closing Date with Interstate onthe other Interstate Properties.  On orbefore February 15, 2004, Borrower shall provide Lender with a copy of theexecuted Flint Interstate Management Agreement as well as the Subordination ofManagement Agreement/Estoppel in the form delivered on the Closing Date andexecuted by Interstate for the other Interstate Managed Properties.

 

Section 5.33.          CONSOLIDATEDTANGIBLE 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$150,000,000.00 plus the cost basis of the Properties subject to the Lien ofthe Mortgage at such time as set forth on Schedule I hereto minus the aggregatethen outstanding principal balance of the Loan and Mortgage Loan.

 

Section 5.34.          REFINANCING

 

Borrower shall not consent to or permit a refinancingof the Mortgage Loan unless it obtains the prior written consent of Lender,which consent may be withheld in the event (a) Lender shall determine in itssole and absolute discretion that the terms of such new mortgage loan are notat least equivalent to the terms of the Mortgage Loan, (b) without limiting theforegoing, (i) the principal balance of the new mortgage loan shall in no eventexceed the principal balance of the Mortgage Loan on the date of therefinancing, (ii) the new mortgage loan shall have an interest rate that is nohigher than the then current interest rate for the Mortgage Loan, as determinedby Lender in its sole discretion (and shall provide for an interest rate capagreement substantially identical to the Rate Cap), (iii) the new mortgage loanshall have an amortization schedule that provides for repayment in monthlyinstallments each of which is no greater than the monthly principal paymentsdue under the Mortgage Note , (iv) the new mortgage loan shall have a maturitydate that is no earlier than that provided for under the Mortgage Loan at thetime of the closing thereof, as such maturity date may be extended pursuant tothe Mortgage Loan Agreement, and (v) the terms of the new mortgage loan shallpermit the Loan, (c) the new mortgage lender shall refuse to enter into anintercreditor agreement with Lender no less favorable to Lender (as determinedin Lender’s sole and absolute discretion) than the Intercreditor Agreement, (d)Borrower shall fail to execute and deliver such amendments to this Agreementand the other Loan Documents as Lender may determine necessary to preserve allrights granted Lender under this Agreement and the other Loan Documents, (e)Borrower shall fail to deliver to Lender such settlement statements, pay-offletters, opinions and other documentation as Lender shall request in connectionwith such refinancing, or (f) Borrower shall fail to pay all costs and expensesincurred by Lender (including, but not limited to, attorneys’ fees) inconnection with such refinancing.

 

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** **

**ARTICLE 6****ENTITY COVENANTS**

 

Section 6.1.            SINGLE PURPOSE ENTITY/SEPARATENESS

 

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

 

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

 

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

 

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

 

#### (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)         with respect to (x) Borrower , incurany debt, secured or unsecured, direct or contingent (including guaranteeingany obligation), other than (A) the Debt, (B) trade

 

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

 

#### (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 and Mortgage Borrower’s financial position, assets, liabilities, networth and operating results may be included in the consolidated financialstatements of an Affiliate, provided that such consolidated financialstatements clearly and conspicuously identify the Borrower as a separate legalentity;

 

#### (ix)           enter into any contract or agreementwith any general partner, member, shareholder, principal, guarantor of theobligations of Borrower or of Mortgage Borrower, or any Affiliate of theforegoing, except upon terms and conditions that are intrinsically fair,commercially reasonable and substantially similar to those that would beavailable on an arm’s-length basis with 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;

 

#### (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 orfail to file a consolidated tax return on which Borrower (and as applicable,Mortgage Borrower and any SPE Component Entity

 

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#### thereof) is identified asa separate entity from all other Persons, or which otherwise complies with orif necessary is promptly amended to comply with all applicable Rating Agencyrequirements;

 

#### (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 thebenefit of 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) fail topay its own liabilities (including, without limitation, salaries of its ownemployees) 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;

 

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

 

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

 

### (b)           If Borrower is a partnership 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 be a corporation or a single member Delawarelimited liability company (which shall comply with all additional provisionscontained herein with respect to Delaware limited liability companies) whosesole asset is its interest in Borrower. Each SPE Component Entity (i) will at all times

 

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### comply with each of the covenants, terms andprovisions contained in Section 6.1(a)(iii) - (vi) and (viii) - (xxi), asif such representation, warranty or covenant was made directly by such SPE ComponentEntity; (ii) will not engage in any business or activity other than owning aninterest in Borrower; (iii) will not acquire or own any assets other than itspartnership, membership, or other equity interest in Borrower; (iv) will notincur any debt, secured or unsecured, direct or contingent (includingguaranteeing any obligation); and (v) will cause Borrower to comply with theprovisions of this Section 6.1 and Section 6.4.  Prior to the withdrawal or thedisassociation of any SPE Component Entity from Borrower, Borrower shallimmediately appoint a new general partner or managing member whose articles ofincorporation (or other applicable formation and entity documentation) aresubstantially similar to those of such SPE Component Entity and, if an opinionletter pertaining to substantive consolidation was required at closing, delivera new opinion letter acceptable to Lender and the Rating Agencies with respectto the new SPE Component Entity and its equity owners.  Notwithstanding the foregoing, to the extentBorrower is a single member Delaware limited liability company, so long asBorrower maintains such formation status, no SPE Component Entity shall berequired.

 

### (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 by Memberof all of its limited liability company interest in Borrower and the admissionof the transferee in accordance with the Loan Documents and the LLC Agreement,or (B) the resignation of Member and the admission of an additional member ofBorrower in accordance with the terms of the Loan Documents and the LLCAgreement), 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 capacity asIndependent Director, to vote on such matters required by the Loan Documents orthe LLC Agreement.  In order toimplement the admission to Borrower of Special Member, Special 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.

 

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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 itsnominee or designee, as the case may be, as a substitute member of Borrower,effective as of the occurrence of the event that terminated the continuedmembership of Member of Borrower in Borrower. Any action initiated by or brought against Member or Special Memberunder any Creditors Rights Laws shall not cause Member or Special Member tocease to be a member of Borrower and upon the occurrence of such an event, thebusiness of Borrower shall continue without dissolution.  The LLC Agreement shall provide that each ofMember and Special Member waives any right it might have to agree in writing todissolve Borrower upon the occurrence of any action initiated by or broughtagainst Member or Special Member under any Creditors Rights Laws, or theoccurrence of an event that causes Member or Special Member to cease to be amember 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, Borrower Principal, Mortgage Borrower orSPE Component Entity (if any), (e) Borrower’s state of organization, or (f)Borrower’s organizational identification number, without in each case notifyingLender of such change in writing at least thirty (30) days prior to theeffective date of such change and, in the case of a change in Borrower’sstructure, without first obtaining the prior written consent of Lender.  In addition, Borrower shall not change orpermit to be changed any organizational documents of Borrower or any SPEComponent Entity (if any) if such change would adversely impact the covenantsset forth in Section 6.1 and Section 6.4 hereof.  Borrower authorizes Lender to file anyfinancing statement or financing statement amendment required by Lender toestablish or maintain the validity, perfection and priority of the securityinterest granted herein.  At the requestof Lender, Borrower shall execute a certificate in form satisfactory to Lenderlisting the trade names under which Borrower intends to operate each Property,and representing and warranting that Borrower does business under no othertrade name with respect to such Property. If Borrower does not now have an organizational identification numberand later obtains one, or if the organizational identification number assignedto Borrower subsequently changes, Borrower shall promptly notify Lender of suchorganizational identification number or change.

 

Section 6.3.            BUSINESS AND OPERATIONS

 

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

 

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

 

Section 6.4.            INDEPENDENT DIRECTOR

 

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

 

### (b)           The organizational documents of eachSPE Component Entity (if any) shall provide that the board of directors, boardof managers or equivalent governing board of such SPE Component Entity shallnot take any action which, under the terms of any certificate of incorporation,certificate of formation, limited liability company agreement, by-laws, similarentity governance document or any voting trust agreement with respect to anycommon stock, requires an unanimous vote of the board of directors of such SPEComponent Entity of Borrower unless at the time of such action there shall beat least two members of the board of directors who are IndependentDirectors.  Such SPE Component Entitywill not, without the unanimous written consent of its board of directors, boardof managers or other equivalent governing board including each IndependentDirector, on behalf of itself or Borrower, (i) file or consent to the filing ofany petition, either voluntary or involuntary, to take advantage of anyapplicable Creditors Rights Laws; (ii) seek or consent to the appointment of areceiver, liquidator or any similar official; (iii) take any action that mightcause such entity to become insolvent; or (iv) make an assignment for thebenefit of creditors.

 

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**ARTICLE 7****NO SALE OR ENCUMBRANCE**

** **

Section 7.1.            TRANSFER DEFINITIONS

 

For purposes of thisArticle 7 an “**Affiliated Manager**” shall mean any managing agent in whichBorrower, Mortgage 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; “**Control**” shall mean the powerto direct the management and policies of a Restricted Party, directly orindirectly, whether through the ownership of voting securities or otherbeneficial interests, by contract or otherwise; “**Restricted Party**” shall meanBorrower, Mortgage Borrower, Affiliated Lessee, Borrower Principal, any SPEComponent 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, Mortgage Borrower, Affiliated Lessee, Borrower Principal,any SPE Component Entity (if any), any Affiliated Manager or any non-membermanager; and a “**Sale or Pledge**” shall mean a voluntary or involuntary sale,conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant ofany options with respect to, or any other transfer or disposition of (directlyor indirectly, voluntarily or involuntarily, by operation of law or otherwise,and whether or not for consideration or of record) of a legal or beneficialinterest.

 

Section 7.2.            NO SALE/ENCUMBRANCE

 

### (a)           Borrower shall not cause or permit aSale or Pledge of the Collateral or any Property or any part thereof or anylegal or beneficial interest therein held by Borrower nor permit a Sale orPledge 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)           A Prohibited Transfer shall include,but not be limited to, (i) an installment sales agreement wherein MortgageBorrower agrees to sell any Property or any part thereof for a price to be paidin installments; (ii) other than an Operating Lease, an agreement by MortgageBorrower leasing all or a substantial part of any Property for other thanactual occupancy by a Tenant thereunder or a sale, assignment or other transferof, or the grant of a security interest in, Mortgage Borrower’s right, title andinterest in and to any Leases or any Rents; (iii) if a Restricted Party is acorporation, any merger, consolidation or Sale or Pledge of such corporation’sstock or the creation or issuance of new stock in one or a series oftransactions; (iv) if a Restricted Party is a limited or general partnership orjoint venture, any merger or consolidation or the change, removal, resignationor addition of a general partner or the Sale or Pledge of the partnershipinterest of any general or limited partner or any profits or proceeds relatingto such partnership interests or the creation or issuance of new partnershipinterests; (v) if a Restricted Party is a limited liability company, any mergeror consolidation or the change, removal, resignation or addition of a managingmember or non-member manager (or if no managing member, any member) or the Saleor Pledge of the membership interest of any member or any profits or proceedsrelating to such membership interest; (vi) if a Restricted Party

 

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### is a trust ornominee trust, any merger, consolidation or the Sale or Pledge of the legal orbeneficial interest in a Restricted Party or the creation or issuance of newlegal or beneficial interests; or (vii) the removal of Manager, the acceptanceby Borrower of the resignation of Manager when such Manager was not entitledunder the applicable Management Agreement to resign or the resignation of theManager in collusion with the Borrower, in each case other than in accordance withSection 5.14.

 

Section 7.3.            PERMITTED TRANSFERS

 

Notwithstanding theprovisions of Section 7.2, the following transfers shall not be deemed tobe a Prohibited Transfer:  (a) atransfer by devise or descent or by operation of law upon the death of a member,partner or shareholder of a Restricted Party; (b) the transfer, in one or aseries of transactions, of not more than forty-nine percent (49%) of the stock,limited partnership interests or non-managing membership interests (as the casemay be) in a Restricted Party (other than a transfer or issuance of anyinterests in the Mortgage Borrower or the Mortgage Borrower GP which shall be aProhibited Transfer); provided, however, no such transfers shall result in achange in Control in the Restricted Party or change in control of any Property,and as a condition to each such transfer, Lender shall receive not less thanthirty (30) days prior written notice of such proposed transfer; (c) thepledge by Borrower of its interest in Mortgage Borrower and Borrower itsinterest in Mortgage Borrower GP pursuant to the Pledge Agreement; (d) atransfer permitted under the Intercreditor Agreement; (e) a transfer in atransaction (including, without limitation, a merger or consolidation) wherebyCNL Rose Acquisition Corp., CNL Rose GP Corp. or CNL Hospitality Properties,Inc. transfer their interests in Borrower Principal provided that followingsuch transaction a majority of the interests in Borrower Principal continue tobe owned, directly or indirectly, by CNL Hospitality Properties, Inc. and CNLHospitality Properties, Inc. shall continue to Control Borrower Principal; or(f) other than as to Borrower Principal or any of Borrower Principal’sSubsidiaries any transaction, including, without limitation, a merger or consolidationinvolving a Restricted Party, whereby, immediately following such transaction(i) a majority of the ownership interests in such Restricted Party are owned,directly or indirectly, by Persons who owned, directly or indirectly, amajority of the ownership interests of such Restricted Party immediately priorto such transaction, and (ii) as to any entity other than CNL HospitalityProperties, Inc., there is no resulting change in Control. Notwithstanding theforegoing, any transfer 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 or a transferpermitted under items (e) or (f) above, shall comply with the requirements ofSection 7.4 hereof.

 

Section 7.4.            LENDER’S RIGHTS

 

All expenses incurred byLender shall be payable by Borrower whether or not Lender consents to theProhibited Transfer.  Lender shall notbe required to demonstrate any actual impairment of its security or anyincreased risk of default hereunder in order to declare the Debt immediatelydue and payable upon a Prohibited Transfer made without Lender’s consent. Thisprovision shall apply to each and every Prohibited Transfer, whether or notLender has consented to any previous Prohibited Transfer.  Notwithstanding anything to the contrarycontained in this Section 7.4, in the event a substantivenon-consolidation opinion was delivered to Lender and the Rating Agencies inconnection with the closing of the Loan, and if any Sale or Pledge permitted

 

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under this Article 7 results in any Person and itsAffiliates owning in excess of forty-nine percent (49%) of the ownershipinterests in a Restricted Party, Borrower shall, prior to such transfer, and inaddition to any other requirement for Lender consent contained herein, delivera revised substantive non-consolidation opinion to Lender reflecting suchProhibited Transfer, which opinion shall be in form, scope and substanceacceptable in all respects to Lender and the Rating Agencies.

 

Section 7.5.            ASSUMPTION

 

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

 

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

 

Section 8.1.            INSURANCE

 

### (a)           Borrower shall cause MortgageBorrower to obtain and maintain, at all times insurance for Mortgage Borrowerand for each Property required by the Mortgage Lender, and if for any reasonnot being provided, Borrower shall cause Mortgage Borrower to provide at leastthe following coverages for each Property:

 

#### (i)            comprehensive “all risk” insuranceon the Improvements and the Personal Property, in each case (A) in an amountequal to one hundred percent (100%) of the “Full Replacement Cost,” which forpurposes of this Agreement shall mean actual replacement value (exclusive ofcosts of excavations, foundations, underground utilities and footings) with awaiver of depreciation; (B) containing an agreed amount endorsement withrespect to the Improvements and Personal Property waiving all co-insuranceprovisions; (C) providing for no deductible in excess of $50,000 for all suchinsurance coverage; and (D)  if any ofthe Improvements or the use of such Property shall at any time constitute legalnon-conforming structures or uses, providing coverage for contingent liabilityfrom Operation of Building Laws, Demolition Costs and Increased Cost ofConstruction Endorsements and containing an “Ordinance or Law Coverage” or“Enforcement” endorsement.  In addition,Borrower shall obtain: (y) if any portion of the Improvements is currently orat any time in the future located in a “special flood hazard area” designated by the Federal EmergencyManagement Agency, flood hazard insurance in an amount equal to the maximumamount of such insurance available under the National Flood Insurance Act of1968, the Flood Disaster Protection Act of 1973 or the National Flood InsuranceReform Act of 1994, as each may be amended; and (z) earthquake insurance inamounts and in form and substance reasonably satisfactory to Lender in theevent such Property is located in an area with a high degree of seismic risk,provided that the insurance pursuant to clauses (y) and (z) hereof shall be onterms consistent with the comprehensive all risk insurance policy requiredunder this subsection (i);

 

#### (ii)           Commercial General Liability insuranceagainst claims for personal injury, bodily injury, death or property damageoccurring upon, in or about such

 

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#### Property, including “DramShop” or other liquor liability coverage if alcoholic beverages are sold fromor 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; (3) independentcontractors; (4) blanket contractual liability; and (5) contractual liabilitycovering the indemnities contained in clauses (a) through (e) and (f) inSection 14.01 hereof to the extent the same is available;

 

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

 

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

 

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

 

#### (vi)          comprehensive boiler and machineryinsurance, if applicable, in amounts as shall be reasonably required by Lenderon terms consistent with the commercial property insurance policy requiredunder subsection (i) above;

 

#### (vii)         excess liability insurance in an amountnot less than $50,000,000 per occurrence on terms consistent with thecommercial general liability insurance required under subsection (ii) above oras otherwise approved by Lender;

 

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

 

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

 

#### (x)            motor vehicle liability coverage forall owned and non-owned vehicles, including rented and leased vehiclescontaining minimum limits per occurrence, including umbrella coverage, of OneMillion and No/100 Dollars ($1,000,000)

 

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

 

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

 

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

 

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

 

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### or better byS&P (or such other ratings approved by Lender) and a general policy ratingof “A” or better and a financial class of VIII or better by A.M. Best Company, Inc.  To the extent such Policies are notavailable as of the Closing Date, Borrower shall deliver to Lender certifiedcopies of all Policies or other evidence of insurance reasonably acceptable toLender not later than thirty (30) days after the Closing Date.  Not less than ten (10) days prior to theexpiration dates of the Policies theretofore furnished to Lender, renewalPolicies or other evidence of insurance reasonably acceptable to Lenderaccompanied by evidence satisfactory to Lender of payment of the premiums duethereunder (the “**Insurance Premiums**”) shall be delivered by Borrower to Lender.

 

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

 

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

 

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

 

#### (i)            except as may otherwise prohibitedby applicable law, no act or negligence of Mortgage Borrower, or anyone actingfor Mortgage Borrower, or of any Tenant or other occupant, or failure to complywith the provisions of any Policy, which might otherwise result in a forfeitureof the insurance or any part thereof, shall in any way affect the validity orenforceability of the insurance insofar as Lender is concerned;

 

#### (ii)           the Policies shall not be materiallychanged (other than to increase the coverage provided thereby) or canceledwithout at least thirty (30) days’ prior written notice to Lender and any otherparty named therein as an additional insured;

 

#### (iii)          the issuers thereof shall give writtennotice to Lender if the Policies have not been renewed thirty (30) days priorto its expiration;

 

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

 

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

 

### (f)            If at any time Lender is not inreceipt of written evidence that all insurance required hereunder is in fullforce and effect, Lender shall have the right, without notice to Borrower, totake such action as Lender deems necessary to protect its interest in theapplicable

 

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

 

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

 

Section 8.2.            CASUALTY

 

If any Property shall bedamaged or destroyed, in whole or in part, by fire or other casualty (a “**Casualty**”),Borrower shall give prompt notice of such damage to Lender to the extentrequired hereunder and shall cause Mortgage Borrower to promptly commence anddiligently prosecute the Restoration of such Property in accordance withSection 8.4 hereof and Section 8.4 of the Mortgage Loan Agreement,whether or not Mortgage Lender or Lender makes any Net Proceeds availablepursuant to said Section 8.4. Borrower shall cause Mortgage Borrower to pay all costs of suchRestoration whether or not such costs are covered by insurance.

 

Section 8.3.            CONDEMNATION

 

Borrower shall promptlygive Lender notice of the actual or threatened commencement of any proceedingfor the Condemnation of any Property of which Borrower has knowledge and shallcause Mortgage Borrower to deliver to Lender copies of any and all papersserved in connection with such proceedings. Subject to the rights of Mortgage Lender under the Mortgage LoanAgreement, Lender may participate in any such proceedings, and Borrower shallfrom time to time deliver to Lender all instruments requested by it to permitsuch participation.  Borrower shallcause Mortgage Borrower to, at its expense, diligently prosecute any suchproceedings, and shall consult with Lender, its attorneys and experts, andcooperate with them in the carrying on or defense of any such proceedings.  Notwithstanding any taking by any public orquasi-public authority through Condemnation or otherwise (including but notlimited to any transfer made in lieu of or in anticipation of the exercise ofsuch taking), Borrower shall continue to pay the Debt at the time and in themanner provided for its payment in the Note and in this Agreement and the Debtshall not be reduced until any Award shall have been actually received andapplied by Lender, after the deduction of expenses of collection, to thereduction or discharge of the Debt. Lender shall not be limited to the interest paid on the Award by thecondemning authority but shall be entitled to receive out of the Award interestat the rate or rates provided herein or in the Note.  If any Property or any portion thereof is taken by a condemningauthority, Borrower shall promptly commence and diligently prosecute theRestoration of such Property and otherwise comply with the provisions ofSection 8.4 hereof and Section 8.4 of the Mortgage Loan Agreement,whether or not Lender or Mortgage Lender makes any Net Proceeds availablepursuant to Section 8.4 hereof or Section 8.4 of the Mortgage LoanAgreement (as applicable).  Subject tothe terms and provisions of the Mortgage Loan Documents, to the extent Lenderis entitled to receive any Award as Net Liquidation Proceeds after Debt Servicepursuant to the terms hereof, if the Collateral is sold, through foreclosure orotherwise, prior to the receipt by Lender of the Award, Lender shall have theright, whether or not a deficiency judgment on the

 

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

 

Section 8.4.            RESTORATION

 

Subject to the rights ofMortgage Lender and the obligations of Mortgage Borrower and the Mortgage LoanDocuments and only to the extent the Mortgage Loan is not outstanding and hasbeen paid in full, the following provisions shall apply in connection with anyRestoration of a Property:

 

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

 

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

 

#### (i)            The Net Proceeds shall be madeavailable to Borrower or Mortgage Borrower for Restoration provided that eachof the following conditions are met:

 

##### (A)          no Event of Default shall haveoccurred and be continuing;

 

##### (B)           (1) in the event the Net Proceeds areInsurance Proceeds, less than ten percent (10%) of the aggregate fair marketvalue of the Improvements at all the Properties (immediately prior to theapplicable Casualty) has been damaged, destroyed or rendered unusable as aresult of a Casualty or (2) in the event the Net Proceeds are CondemnationProceeds, less than ten percent (10%) of the land constituting the affectedProperty is taken, such land is located along the perimeter or periphery of theaffected Property, and no portion of the Improvements is located on such land;

 

##### (C)           the Operating Leases of the affectedProperty in effect as of the date of the occurrence of such Casualty orCondemnation, whichever the case may be, and each other Major Lease, if any, ineffect as of such date shall remain in full force and effect during and afterthe completion of the Restoration without abatement of rent beyond the timerequired for Restoration;

 

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

 

##### (E)           Lender shall be satisfied that anyoperating deficits, including all scheduled payments of principal and interestunder the Note, which will be incurred with respect to the affected Property asa result of the occurrence of any such Casualty or Condemnation, whichever thecase may be, will be covered out of the insurance coverage referred to inSection 8.1(a)(iii) above;

 

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

 

##### (G)           the affected Property and the usethereof after the Restoration will be in compliance with and permitted underall Legal Requirements;

 

##### (H)          the Restoration shall be done andcompleted by Borrower or Mortgage Borrower in an expeditious and diligentfashion and in compliance with all applicable Legal Requirements;

 

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

 

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

 

##### (K)          the Net Proceeds together with anycash or cash equivalent deposited by Borrower or Mortgage Borrower with Lenderare sufficient in Lender’s reasonable judgment to cover the cost of theRestoration.

 

#### (ii)           The Net Proceeds shall be held byLender until disbursements commence, and, until disbursed in accordance withthe provisions of this Section 8.4, shall constitute additional securityfor the Debt and other obligations under the Loan Documents.  The Net Proceeds shall be disbursed byLender to, or as directed by, Borrower or Mortgage Borrower from time to timeduring the course of the Restoration, upon receipt of evidence satisfactory toLender that (A) all the conditions precedent to such advance, including thoseset forth 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

 

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#### or materialman’s liens ornotices of intention to file same, or any other liens or encumbrances of anynature whatsoever on the affected Property which have not either been fullybonded to the satisfaction of Lender and discharged of record or in thealternative fully insured to the satisfaction of Lender by the title companyissuing the Title Insurance Policy. Notwithstanding the foregoing, Insurance Proceeds from the Policiesrequired to be maintained by Borrower or Mortgage Borrower pursuant toSection 8.1(a)(iii) shall be controlled by Lender at all times, shall notbe subject to the provisions of this Section 8.4 and shall be used solelyfor the payment of the obligations under the Loan Documents and OperatingExpenses.

 

#### (iii)          All plans and specifications requiredin connection with the Restoration shall be subject to prior review andacceptance in all respects by Lender and by an independent consulting engineerselected 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 theRestoration, as well as the contracts in excess of $100,000 under which theyhave been engaged, shall be subject to prior review and acceptance by Lenderand the Restoration Consultant.  Allcosts and expenses 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 or Mortgage Borrower.

 

#### (iv)          In no event shall Lender be obligatedto make disbursements of the Net Proceeds in excess of an amount equal to thecosts actually incurred from time to time for work in place as part of theRestoration, as certified by the Restoration Consultant, minus the RestorationRetainage.  The term “RestorationRetainage” shall mean an amount equal to ten percent (10%) of the costsactually incurred for work in place as part of the Restoration, as certified bythe Restoration Consultant, until the Restoration has been completed.  The Restoration Retainage shall be reducedto five percent (5%) of the costs incurred upon receipt by Lender ofsatisfactory evidence that fifty percent (50%) of the Restoration has beencompleted.  The Restoration Retainageshall in no event, and notwithstanding anything to the contrary set forth abovein this Section 8.4(b), be less than the amount actually held back byBorrower or Mortgage 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

 

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#### materialman engaged inthe Restoration as of the date upon which the Restoration Consultant certifiesto Lender that the contractor, subcontractor or materialman has satisfactorilycompleted all work and has supplied all materials in accordance with theprovisions of the contractor’s, subcontractor’s or materialman’s contract, thecontractor, subcontractor or materialman delivers the lien waivers and evidenceof payment in full of all sums due to the contractor, subcontractor ormaterialman as may be reasonably requested by Lender.  If required by Lender, the release of any such portion of theRestoration Retainage shall be approved by the surety company, if any, whichhas issued a payment or performance bond with respect to the contractor,subcontractor or materialman.

 

#### (v)           Lender shall not be obligated to makedisbursements of the Net Proceeds more frequently than once every calendarmonth.

 

#### (vi)          If at any time the Net Proceeds or theundisbursed balance thereof shall not, in the reasonable opinion of Lender inconsultation with the Restoration Consultant, be sufficient to pay in full thebalance of the costs which are estimated by the Restoration Consultant to beincurred in connection with the completion of the Restoration, Borrower orMortgage Borrower shall deposit without duplication the deficiency (the “**Net ProceedsDeficiency**”) with Lender, before any further disbursement of the NetProceeds shall be made.  The NetProceeds Deficiency, if any, deposited with Lender shall be held by Lender inan interest bearing account (with interest credited to Borrower) 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)         The excess, if any, of the Net Proceedsand the remaining balance, if any, of the Net Proceeds Deficiency depositedwith Lender after the Restoration Consultant certifies to Lender that theRestoration has been completed in accordance with the provisions of thisSection 8.4(b), and the receipt by Lender of evidence satisfactory toLender that all costs incurred in connection with the Restoration have beenpaid in full, shall be remitted by Lender to Borrower (or as directed byBorrower), provided no Event of Default shall have occurred and shall becontinuing under the Note, this Agreement or any of the other Loan Documents.

 

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

 

### (d)           Notwithstanding anything herein tothe contrary, in the event that the Property is being restored by MortgageBorrower pursuant to the Mortgage Loan Documents, Lender shall agree to therelease of the Net Proceeds for Restoration of the Property pursuant to theterms and provisions of the Mortgage Loan Documents, subject to Lender’s rightsto receive and approve in its discretion all deliverables set forth in thisSection 8.4.

 

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# **ARTICLE 9**RESERVE FUNDS

 

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

 

# **ARTICLE 10**CASH MANAGEMENT

# ** **

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

 

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

 

Section 11.1.          EVENTOF DEFAULT

 

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

 

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

 

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

###  

### (b)           except as otherwise expresslyprovided in the Loan Documents, if any of the Taxes or Other Charges (includingGround Rents as defined in the Mortgage Loan Agreement) are not paid when thesame are due and payable, unless there is sufficient money in the Tax andInsurance Reserve Account or (as defined in the Mortgage Loan Agreement) GroundRent Reserve Account (as defined in the Mortgage Loan Agreement), as applicablefor payment of amounts then due and payable and Lender’s access to such moneyhas not been constrained or restricted in any manner;

###  

### (c)           if the Policies are not kept in fullforce and effect, or if certified copies of the Policies are not delivered toLender as provided in Section 8.1;

###  

### (d)           if Borrower breaches any covenantwith respect to Borrower, Mortgage Borrower, Mortgage Borrower GP or any SPEComponent Entity (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)           if any representation or warranty of,or with respect to, Borrower, Mortgage Borrower, Affiliated Lessee, BorrowerPrincipal, any SPE Component Entity, or any member, general partner, principalor beneficial owner of any of the foregoing, made herein, in any other LoanDocument, or in any certificate, report, financial statement or otherinstrument or document furnished to Lender at the time of the closing of theLoan or during the term of the Loan shall have been false or misleading in anymaterial respect when made;

###  

### (f)            if (i) Borrower, any managing memberor general partner of Borrower, Mortgage Borrower, Operating Lessee, BorrowerPrincipal or any SPE Component Entity (if any) shall commence any case, proceedingor other action (A) under any Creditors Rights Laws, seeking to have an orderfor relief entered with respect to it, or seeking to adjudicate it a bankruptor insolvent, or seeking reorganization, or (B) seeking appointment of areceiver, trustee, custodian, conservator or other similar official for it orfor all or any substantial part of its assets, or Borrower, Mortgage Borrower,Operating Lessee, any managing member or general partner of Borrower, MortgageBorrower, Operating Lessee, Borrower Principal, or any SPE Component Entity (ifany) shall make a general assignment for the benefit of its creditors; or (ii)there shall be commenced against Borrower, Mortgage Borrower, Operating Lessee,any managing member or general partner of Borrower, Mortgage Borrower,Operating Lessee, Borrower Principal, or any SPE Component Entity (if any) anycase, proceeding or other action of a nature referred to in clause (i) abovewhich (A) results in the entry of an order for relief or any such adjudicationor appointment or (B) remains undismissed, undischarged or unbonded for aperiod of ninety (90) days; or (iii) there shall be commenced against Borrower,Mortgage Borrower, Operating Lessee, any managing member or general partner ofBorrower, Mortgage Borrower, Operating Lessee, Borrower Principal, or any SPEComponent Entity (if any) any case, proceeding or other action seeking issuanceof a warrant of attachment, execution, distraint or similar process against allor any substantial part of its assets which results in the entry of any orderfor any such relief which

 

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

###  

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

###  

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

###  

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

###  

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

###  

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

###  

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

###  

### (m)          if Borrower shall cause MortgageBorrower to permit any event within Mortgage Borrower’s control to occur thatwould cause any REA to terminate without notice or action by any party theretoor would entitle any party to terminate any REA and the term thereof by givingnotice to Mortgage Borrower; or any REA shall be surrendered, terminated orcanceled for any reason or under any circumstance whatsoever except as providedfor in such REA; or any term of any REA shall be modified or supplementedwithout Lender’s prior written consent; or Borrower shall fail to causeMortgage Borrower, within ten (10) Business Days after demand by Lender, toexercise Mortgage Borrower’s option to renew or extend the term of any REA orshall fail or neglect to pursue diligently all actions necessary to exercisesuch renewal rights pursuant to such REA except as provided for in such REA andthe same shall have (or shall be reasonably

 

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

###  

### (n)           if Borrower breaches any of itscovenants contained in Section 5.24;

###  

### (o)           if a default has occurred and iscontinuing beyond any applicable cure period under any Franchise Agreement orManagement Agreement, which entitles such Franchisor or Manager, as the casemay be, to terminate or cancel such Franchise Agreement or ManagementAgreement;

###  

### (p)           if Borrower shall breach any of thematerial terms of:

###  

#### (i)            Section 2.4(g) (Payments upon aLiquidation Event);

####  

#### (ii)           Intentionally Omitted;

####  

#### (iii)          Section 5.25 (Notices), to the extentsuch default shall continue for a period of five (5) days after Lender’s noticethereof to Borrower;

####  

#### (iv)          Section 5.27 (SpecialDistributions);

####  

#### (v)           Section 5.28 (Limitations onSecurities Issuances);

####  

#### (vi)          Section 5.29 (Limitations onDistributions);

####  

#### (vii)         Section 5.30 (Other Limitations);

####  

#### (viii)        Section 5.31 (ContractualObligations); or

####  

#### (ix)           Section 5.34 (Refinancing);

####  

### (q)           if Borrower shall cause MortgageBorrower, without Lender’s consent, to modify, amend, terminate or cancel (orto permit or direct Operating Lessee to modify, amend, terminate or cancel) anyFranchise Agreement or to operate any Property under the name of any hotelchain or system other than the name such Property is operated under as of thedate hereof

###  

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

###  

### (s)           if any Affiliated Lessee is indefault beyond any applicable notice or cure period under the applicableOperating Lease;

###  

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

 

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

###  

### (u)           if there shall occur any default byMortgage Borrower, as tenant under either Ground Lease, in the observance orperformance of any term, covenant or condition of the applicable Ground Leaseon the part of Mortgage Borrower to be observed or performed and said defaultis not cured following the expiration of any applicable grace and noticeperiods therein provided, or if the leasehold estate created by the applicableGround Lease shall be surrendered or if the applicable Ground Lease shall ceaseto be in full force and effect or the applicable Ground Lease shall beterminated or canceled for any reason or under any circumstances whatsoever, orif 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;

###  

### (v)           if Borrower Principal breaches itscovenant set forth in Section 5.33 unless within five (5) days of writtennotice from Lender, CNL Hospitality Properties, Inc. executes this Agreementassuming all obligations of Borrower Principal hereunder and in connectiontherewith provides Lender with a corporate and enforceability opinion withrespect to such execution and the obligations so assumed, all acceptable toLender in its reasonable discretion;

###  

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

###  

### (x)            if a Mortgage Loan Event of Defaultoccurs.

 

Section 11.2.          REMEDIES

 

### (a)           Upon the occurrence of an Event ofDefault (other than an Event of Default described in Section 11.1(f)above) and at any time thereafter during the continuance of such Event ofDefault Lender may, in addition to any other rights or remedies available to itpursuant to this Agreement and the other Loan Documents or at law or in equity,take such action, without notice or demand, that Lender deems advisable toprotect and enforce its rights against Borrower and in the Collateral,including, without limitation, declaring the Debt to be immediately due andpayable, and Lender may enforce or avail itself of any or all rights or remediesprovided in the Loan Documents and may exercise all the rights and remedies ofa secured party under the UCC, as adopted and enacted by the State of New York,against Borrower and the Collateral (or any portion thereof), including,without limitation, all rights or remedies available at law or in equity; andupon any Event of Default described in Section 11.1(f) above, the Debt andall other obligations of Borrower hereunder and under the other Loan Documentsshall immediately and

 

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automatically become due and payable, without notice or demand, andBorrower hereby expressly waives any such notice or demand, anything containedherein or in any other Loan Document to the contrary notwithstanding.

###  

### (b)           Upon the occurrence and during thecontinuance of an Event of Default, all or any one or more of the rights,powers, privileges and other remedies available to Lender against Borrowerunder this Agreement or any of the other Loan Documents executed and deliveredby, or applicable to, Borrower or at law or in equity may be exercised byLender at any time and from time to time, whether or not all or any of the Debtshall be declared due and payable, and whether or not Lender shall havecommenced any foreclosure proceeding or other action for the enforcement of itsrights and remedies under any of the Loan Documents with respect to theCollateral.  Any such actions taken byLender shall be cumulative and concurrent and may be pursued independently,singularly, successively, together or otherwise, at such time and in such orderas Lender may determine in its sole discretion, to the fullest extent permittedby law, without impairing or otherwise affecting the other rights and remediesof Lender permitted by law, equity or contract or as set forth herein or in theother Loan Documents.

###  

# **ARTICLE 12**ENVIRONMENTAL PROVISIONS

 

Section 12.1.          ENVIRONMENTALREPRESENTATIONS AND WARRANTIES

 

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

 

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Section 12.2.          ENVIRONMENTALCOVENANTS

 

Borrower covenants andagrees that so long as Mortgage Borrower owns, manages, is in possession of, orotherwise controls the operation of the Properties (but not any time after thedate on which Lender (or any purchaser at a foreclosure sale) actually acquirestitle to the equity interest of Borrower in Mortgage Borrower and MortgageBorrower’s general partner):  (a)all uses and operations on or of each Property, whether by Mortgage Borrower orany other Person, shall be in compliance in all material respects with allEnvironmental Laws and permits issued pursuant thereto; (b) there shall be noReleases of Hazardous Materials in, on, under or from any Property; (c) thereshall be no Hazardous Materials in, on, or under any Property, except thosethat are both (i) in compliance with all Environmental Laws and with permitsissued pursuant thereto, if and to the extent required, and (ii) (A) in amountsnot in excess of that necessary to operate any Property for the purposes setforth herein or (B) fully disclosed to and approved by Lender in writing; (d)cause Mortgage Borrower to keep each Property free and clear of allEnvironmental Liens; (e) cause Mortgage Borrower to, at its sole cost andexpense, fully and expeditiously cooperate in all activities pursuant toSection 12.4 below, including but not limited to providing all relevantinformation and making knowledgeable persons available for interviews; (f)Borrower shall cause Mortgage Borrower to, at its sole cost and expense,perform any environmental site assessment or other investigation ofenvironmental conditions in connection with each Property, pursuant to anyreasonable written request of Lender, upon Lender’s reasonable belief that suchProperty is not in full compliance with all Environmental Laws, and share withLender the reports and other results thereof, and Lender and other IndemnifiedParties shall be entitled to rely on such reports and other results thereof;(g) Borrower shall cause Mortgage Borrower to, at its sole cost and expense,comply with all reasonable written requests of Lender to (i) reasonablyeffectuate remediation of any Hazardous Materials in, on, under or from suchProperty; and (ii) comply with any Environmental Law; (h) Borrower shall causeMortgage Borrower not to allow any tenant or other user of any Property toviolate any Environmental Law; and (i) Borrower shall cause Mortgage Borrowerto immediately notify Lender in writing after it has become aware of (A) anypresence or Release or threatened Release of Hazardous Materials in, on, under,from or migrating towards any Property; (B) any non-compliance with anyEnvironmental 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 cause MortgageBorrower to perform such obligations pursuant to this Section 12.2 shallconstitute bad faith waste with respect to the Properties.

 

Section 12.3.          LENDER’SRIGHTS

 

Lender and any otherPerson designated by Lender, including but not limited to any representative ofa Governmental Authority, and any environmental consultant, and any receiverappointed by any court of competent jurisdiction, shall have the right, but notthe obligation, to enter upon any Property at all reasonable times to assessany and all aspects of the environmental condition of each Property and itsuse, including but not limited to conducting any environmental assessment oraudit (the scope of which shall be determined in Lender’s reasonablediscretion) and taking samples of soil, groundwater or other water, air, orbuilding materials, and conducting

 

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

 

Section 12.4.          OPERATIONSAND MAINTENANCE PROGRAMS

 

If recommended by theEnvironmental Report or any other environmental assessment or audit of anyProperty,  Borrower shall cause MortgageBorrower to establish and comply with an operations and maintenance programwith respect to any such Property, in form and substance reasonably acceptableto Lender, prepared by an environmental consultant reasonably acceptable toLender, which program shall address any asbestos-containing material or leadbased paint that may now or in the future be detected at or on any suchProperty.  Without limiting thegenerality of the preceding sentence, Lender may require (a) periodic noticesor reports to Lender in form, substance and at such intervals as Lender mayspecify, (b) an amendment to such operations and maintenance program to addresschanging circumstances, laws or other matters, (c) at Borrower’s sole expense,supplemental examination of any such Property by consultants specified byLender, (d) access to each Property by Lender, its agents or servicer, toreview and assess the environmental condition of each Property and Borrower’scompliance with any operations and maintenance program, and (e) variation ofthe operations and maintenance program in response to the reports provided byany such consultants.

 

Section 12.5.          ENVIRONMENTALDEFINITIONS

 

“**Environmental Law**” means anypresent and future federal, state and local laws, statutes, ordinances, rules,regulations, standards, policies and other government directives orrequirements, as well as common law, including but not limited to theComprehensive Environmental Response, Compensation and Liability Act and theResource Conservation and Recovery Act, that apply to Borrower or any Propertyand relate to Hazardous Materials or protection of human health or theenvironment.  “**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.

 

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Section 12.6.          INDEMNIFICATION

 

### (a)           Borrower and Borrower Principalcovenant and agree at their sole cost and expense, to protect, defend,indemnify, release and hold Indemnified Parties harmless from and against anyand all Losses imposed upon or incurred by or asserted against any IndemnifiedParties and directly or indirectly arising out of or in any way relating to anyone or more of the following:  (i) anypresence of any Hazardous Materials in, on, above, or under any Property; (ii)any past, present or threatened Release of Hazardous Materials in, on, above,under or from any Property; (iii) any activity by Borrower or MortgageBorrower, any Person Affiliated with Borrower or Mortgage Borrower, and any Tenantor other user of any Property in connection with any actual, proposed orthreatened use, treatment, storage, holding, existence, disposition or otherRelease, generation, production, manufacturing, processing, refining, control,management, abatement, removal, handling, transfer or transportation to or fromany Property of any Hazardous Materials at any time located in, under, on orabove any Property or any actual or proposed remediation of any HazardousMaterials at any time located in, under, on or above any Property, whether ornot such remediation is voluntary or pursuant to court or administrative order,including but not limited to any removal, remedial or corrective action; (iv)any past, present or threatened non-compliance or violations of any EnvironmentalLaws (or permits issued pursuant to any Environmental Law) in connection withany Property or operations thereon, including but not limited to any failure byBorrower or Mortgage Borrower, any person or entity Affiliated with Borrower orMortgage Borrower, and any tenant or other user of any Property to comply withany order of any Governmental Authority in connection with any EnvironmentalLaws; (v) the imposition, recording or filing or the threatened imposition,recording or filing of any Environmental Lien encumbering any Property; (vi)any acts of Borrower or Mortgage Borrower, any person or entity Affiliated withBorrower or Mortgage Borrower, and any tenant or other user of any Property in(A) arranging for disposal or treatment, or arranging with a transporter fortransport for disposal or treatment, of Hazardous Materials at any facility orincineration vessel containing such or similar Hazardous Materials or (B)accepting any Hazardous Materials for transport to disposal or treatment facilities,incineration vessels or sites from which there is a Release, or a 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)           Upon written request by anyIndemnified Party, Borrower and Borrower Principal shall defend same (ifrequested by any Indemnified Party, in the name of the Indemnified Party) byattorneys and other professionals reasonably approved by the IndemnifiedParties.  Notwithstanding the foregoing,any Indemnified Parties may, in their sole discretion, engage their own attorneysand other professionals to defend or assist them, and, at the option ofIndemnified Parties, their attorneys shall control the resolution of any claimor proceeding.  Upon demand, Borrowerand Borrower Principal shall pay or, in the sole discretion of the IndemnifiedParties, reimburse, the Indemnified Parties for the payment of reasonable feesand disbursements of attorneys, engineers, environmental consultants,laboratories and other professionals in connection therewith.

 

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

 

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subsection (a) above to the extent that Borrower can conclusively proveboth that such Losses were caused solely by actions, conditions or events thatfirst occurred after the date that Lender (or any purchaser at a foreclosuresale) actually acquired title to the equity interest of Borrower in MortgageBorrower and Mortgage Borrower’s general partner and that such Losseswere not caused by the direct or indirect actions of Borrower, BorrowerPrincipal, or any partner, member, principal, officer, director, trustee ormanager of Borrower or Borrower Principal or any employee, agent, contractor orAffiliate of Borrower or Borrower Principal (other than Mortgage Borrower tothe extent arising after the Foreclosure Date (as defined in Section15.1(e))).  The obligations and liabilitiesof Borrower and Borrower Principal under this Section 12.6 shall fullysurvive indefinitely notwithstanding any termination, satisfaction orassignment of the Pledge Agreement.

###  

# **ARTICLE 13**SECONDARY MARKET

 

Section 13.1.          TRANSFEROF LOAN

 

Lender may, at any time,sell, transfer or assign the Loan Documents, or grant participations therein (“**Participations**”)or syndicate the Loan (“**Syndication**”) or issue 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 of Lender,the Loan may be serviced by a servicer/trustee selected by Lender and Lender maydelegate all or any portion of its responsibilities under this Agreement andthe other Loan Documents to such servicer/trustee pursuant to a servicingagreement between Lender and such servicer/trustee.

 

Section 13.3.          DISSEMINATIONOF INFORMATION

 

Lender may forward toeach purchaser, transferee, assignee, or servicer of, and each participant, orinvestor in, the Loan, or any Participations and/or Securities or any of theirrespective successors (collectively, the “**Investor**”) or any Rating Agency rating theLoan, or any Participations and/or Securities, each prospective Investor, andany organization maintaining databases on the underwriting and performance ofcommercial mortgage loans, all documents and information which Lender now hasor may hereafter acquire relating to the Debt and to Borrower, any managingmember or general partner thereof, Mortgage Borrower, Borrower Principal, anySPE Component Entity (as defined herein and in the Mortgage Loan Agreement) (ifany) and any Property, including financial statements, whether furnished byBorrower or otherwise, as Lender determines necessary or desirable.  Borrower irrevocably waives any and allrights it may have under applicable Legal Requirements to prohibit suchdisclosure, including but not limited to any right of privacy.

 

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Section 13.4.          COOPERATION

 

Borrower and BorrowerPrincipal agree to cooperate with Lender in connection with any sale ortransfer of the Loan, Syndication or any Participation and/or Securitiescreated pursuant to this Article 13.  Atthe request of the holder of the Note and, to the extent not already requiredto be provided by Borrower under this Agreement, Borrower and BorrowerPrincipal shall take such reasonable actions for the benefit of, and usereasonable efforts to provide information not in the possession of the holderof the Note in order to satisfy the market standards (which may include suchholder’s delivery of information with respect to Borrower, Mortgage Borrower, BorrowerPrincipal, the Collateral and the Property to any Investor or prospectiveInvestor) to which the holder of the Note customarily adheres or which may bereasonably required in the marketplace or by the Rating Agencies in connectionwith such sales or transfers, including, without limitation, to:

 

### (a)           provide or cause the MortgageBorrower to provide, (i) updated financial, budget and other information(including, but not limited to, updated Rent Rolls meeting the requirements setforth in Section 5.11(a)(i) hereof and operating statements for each Propertymeeting the requirements set forth in Section 5.11(a)(ii) hereof) with respectto each Property, Borrower, Mortgage Borrower, Borrower Principal and Managerand (ii) 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)           make reasonable changes to theorganizational documents of Borrower, Mortgage Borrower or any SPE ComponentEntity and their respective principals, including, but not limited to, changesto the ownership structure of Borrower as may be necessary to create a secondBorrower acceptable to Lender in its reasonable discretion;

###  

### (c)           Intentionally Omitted;

###  

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

###  

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

###  

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

 

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

###  

### (g)           deliver to Lender and/or any RatingAgency, (i) one or more certificates executed by an officer of the Borrowercertifying as to the accuracy, as of the closing date of the Securitization, ofall representations made by Borrower in the Loan Documents as of the ClosingDate in all relevant jurisdictions or, if such representations are no longeraccurate, certifying as to what modifications to the representations would berequired to make such representations accurate as of the closing date of theSecuritization, and (ii) certificates of the relevant Governmental Authoritiesin all relevant jurisdictions indicating the good standing and qualification ofBorrower as of the date of the closing date of the Securitization;

###  

### (h)           have reasonably appropriate personnelparticipate in a bank meeting and/or presentation for the Rating Agencies orInvestors; and

###  

### (i)            cooperate with and assist Lender inobtaining ratings of the Securities from two (2) or more of the RatingAgencies.

###  

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.

 

Borrower shall not beresponsible for any costs and expenses incurred by Borrower or Lender inconnection with Borrower’s complying with the requests and requirements madeunder this Section 13.4 (including, without limitation, the fees andexpenses of the Rating Agencies).

 

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)           Borrower and Borrower Principalunderstand that certain of the Provided Information may be included indisclosure documents in connection with the Securitization, including, withoutlimitation, a prospectus, prospectus supplement, offering memorandum or privateplacement memorandum (each, a “Disclosure Document”) and may also be includedin filings with the Securities and Exchange Commission pursuant to theSecurities Act or the

 

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Exchange Act, or provided or made available to investors or prospectiveinvestors in the Securities, the Rating Agencies, and service providersrelating to the Securitization.  In theevent that the Disclosure Document is required to be revised prior to the saleof all Securities, Borrower and Borrower Principal will cooperate with theholder of the Note in updating the Disclosure Document by providing all currentinformation necessary to keep the Disclosure Document accurate and complete inall material respects.

###  

### (b)           Borrower and Borrower Principal agreein connection with each of (i) a preliminary and a final offering memorandum orprivate placement memorandum or similar document (including any Investor orRating Agency “term sheets” or presentations relating to any Property, theCollateral and/or the Loan) or (ii) a preliminary and final prospectus orprospectus supplement, as applicable, (A) that Borrower and BorrowerPrincipal will provide a certificate certifying that Borrower and BorrowerPrincipal have carefully examined such memorandum or prospectus or otherdocument (including any Investor or Rating Agency “term sheets” orpresentations relating to any Property, the Collateral and/or the Loan), asapplicable, including without limitation, the sections entitled “SpecialConsiderations,” and/or “Risk Factors,” and “Certain Legal Aspects of theMortgage Loan,” or similar sections, and all sections relating to Borrower,Borrower Principal, Manager, their Affiliates, the Loan, the Loan Documents,the Collateral, and any Property, and any risks or special 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 providean indemnification certificate (1) indemnifying Lender (and for purposesof this 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”), andeach director and officer of any Issuer Person, and each Person or entity whocontrols any Issuer Person within the meaning of Section 15 of the SecuritiesAct 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 towhich Lender, the Issuer Group or the Underwriter Group may become subjectinsofar as the Losses arise out of or are based upon any untrue statement oralleged untrue statement of any material fact which is in fact untrue containedin such sections (including any Investor or Rating Agency “term sheets” or presentationsrelating to any Property and/or the Loan) or arise out of or are based upon theomission or alleged omission which is in fact an omission to state therein amaterial fact required to be stated in such sections (including any Investor orRating Agency “term sheets” or presentations relating to any Property, theCollateral and/or the Loan) or necessary in order to make the statements insuch sections (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

 

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clauses (1) or (2) above only to the extent that any such SecuritiesLiabilities arise out of or is based upon any such untrue statement or omissionmade therein in reliance upon and in conformity with information furnished toLender or any member of the Issuer Group or Underwriter Group by or on behalfof Borrower or Borrower Principal with respect to the Borrower, MortgageBorrower, Borrower Principal, Affiliated Lessee, the Property and/or the Loanin connection 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 notcertificate 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.

###  

### (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 any legalor other expenses subsequently incurred by such indemnified party in connectionwith the defense thereof other than reasonable costs of investigation;provided, however, if the defendants in any such action include both theindemnified party and the indemnifying party and the indemnified party shallhave reasonably concluded that there are any legal defenses available to itand/or other indemnified parties that are different from or additional to thoseavailable to the indemnifying party, the indemnified party or parties shallhave the right to select separate counsel to assert such legal defenses and tootherwise participate in the defense of such action on

 

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behalf of such indemnified party or parties.  The indemnifying party shall not be liable for the expenses ofmore than one such separate counsel unless an indemnified party shall havereasonably concluded that there may be legal defenses available to it that aredifferent from or additional 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 the indemnifiedparty as a result of such losses, claims, damages or liabilities (or action inrespect thereof); provided, however, that no Person guilty of fraudulentmisrepresentation (within the meaning of Section 11(f) of the SecuritiesAct) shall be entitled to contribution from any Person who was not guilty ofsuch fraudulent misrepresentation.  Indetermining the amount of contribution to which the respective parties areentitled, the following factors shall be considered:  (i) the indemnified party’s, Borrower’s and Borrower Principal’srelative knowledge and access to information concerning the matter with respectto which claim was asserted; (ii) the opportunity to correct and prevent anystatement or omission; and (iii) any other equitable considerations appropriatein the circumstances.  Lender andBorrower hereby agree that it would not be equitable if the amount of suchcontribution were 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.          INTENTIONALLYOMITTED.

 

# **ARTICLE 14**INDEMNIFICATIONS

 

Section 14.1.          GENERALINDEMNIFICATION

 

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

 

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

 

Section 14.2.          INTANGIBLETAX 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 orindirectly arising out of or in any way relating to any tax on the making ofthe Pledge Agreement, the Note or any of the other Loan Documents, butexcluding any income, franchise or other similar taxes.

 

Section 14.3.          ERISAINDEMNIFICATION

 

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 prohibited transactionor in the sale of a prohibited loan, and in obtaining any individual prohibitedtransaction exemption under ERISA that may be required, in Lender’s solediscretion) that Lender may incur, directly or indirectly, as a result of adefault under Section 4.8 or Section 5.18 of this Agreement.

 

Section 14.4.          SURVIVAL

 

The obligations andliabilities of Borrower under this Article 14 shall fully survive indefinitelynotwithstanding any termination, satisfaction or assignment of the PledgeAgreement.

 

# **ARTICLE 15**EXCULPATION

 

Section 15.1.          EXCULPATION

 

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

 

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judgment in any such action or proceeding shall be enforceable againstBorrower or Borrower Principal, as applicable, only to the extent of Borrower’sor Borrower Principal’s interest in the Collateral and in any other collateralgiven to Lender.  Lender, by acceptingthis Agreement, the Note, the Pledge Agreement and the other Loan Documents,agrees that it shall not, except as otherwise provided in thisSection 15.1, sue for, seek or demand any deficiency judgment against anyBorrower, its members, partners, shareholders, officers or directors orBorrower Principal or its members, partners, shareholders, officers or directorsin any such action or proceeding, under or by reason of or under or inconnection with this Agreement, the Note, the Pledge Agreement or the otherLoan Documents.  The provisions of thisSection 15.1 shall not, however, (i) constitute a waiver, release orimpairment of any obligation evidenced or secured by this Agreement, the Note,the Pledge Agreement or the other Loan Documents; (ii) impair the right ofLender to name Borrower or Borrower Principal as a party defendant in anyaction or suit for judicial foreclosure and sale under this Agreement and thePledge Agreement; (iii) affect the validity or enforceability of any indemnity(including, without limitation, those contained in the Article 12 and inSection 13.5 and Article 14 of this Agreement), guaranty, master lease orsimilar instrument made in connection with this Agreement, the Note, the PledgeAgreement and the other Loan Documents; (iv) impair the right of Lender toobtain the appointment of a receiver; (v) impair the enforcement of the assignmentof leases provisions contained in the Pledge Agreement; (vi) impair the rightof Lender to obtain a deficiency judgment or other judgment on the Note againstBorrower or Borrower Principal if necessary to obtain any Insurance Proceeds orAwards to which Lender would otherwise be entitled under this Agreement; or(vii) impair the right of Lender to enforce its rights under theIndemnity; provided however, Lender shall only enforce such judgment to theextent of the Insurance Proceeds and/or Awards.

 

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

 

#### (i)            fraud or intentionalmisrepresentation by Borrower, Mortgage Borrower, Borrower Principal or anyother Affiliate of Borrower, Mortgage Borrower or Borrower Principal inconnection with the execution and the delivery of this Agreement, the Note, thePledge Agreement, the Mortgage Note, the Mortgage Loan Agreement, the SecurityInstrument and any of the other Loan Documents or the Mortgage Loan Documents,or any certificate, report, financial statement or other instrument or documentfurnished to Lender at the time of the closing of the Loan or during the termof the Loan;

 

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

 

#### (iii)          Mortgage Borrower’s or Borrower’smisapplication or misappropriation of tenant security deposits or Rentscollected in advance;

####  

#### (iv)          the misapplication or misappropriationof Insurance Proceeds or Awards;

 

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#### (v)           Borrower’s or Mortgage Borrower’sfailure to pay Taxes or Other Charges (except to the extent that sumssufficient to pay such amounts have been deposited in escrow with MortgageLender pursuant to the terms of the Mortgage Loan Agreement and there exists noimpediment to Mortgage Lender’s utilization thereof), charges for labor ormaterials or other charges that can create liens on any property beyond anyapplicable notice and each cure period specified herein and in the MortgageLoan Agreement;

####  

#### (vi)          Borrower’s or Mortgage Borrower’sfailure to return or to reimburse Lender for all Personal Property taken fromthe Property by or on behalf of Mortgage Borrower or Borrower and not replacedwith Personal Property of the same utility and of the same or greater value;

####  

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

####  

#### (viii)        the misappropriation by MortgageBorrower or Borrower of any Net Liquidation Proceeds or other amounts due toLender;

####  

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

####  

#### (x)            any violation of the environmentalcovenants contained in Article 12 of this Agreement;

####  

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

####  

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

####  

#### (xiii)         Mortgage Borrower or any AffiliatedLessee shall take any action of any kind or nature whatsoever, either directlyor indirectly to oppose, impede, obstruct, challenge, hinder, frustrate, enjoinor otherwise interfere with (A) any termination of any Operating Leasewith any Affiliated Lessee, (B) the Mortgage Borrower (in full substitution ofthe applicable Affiliated Lessee) being deemed the “Owner” under the ManagementAgreements, (C) the execution, delivery or effectiveness of a replacementManagement Agreement directly between the Mortgage Borrower and the applicableManager or (D)  any payment or other transfer by Manager of funds whichwould otherwise be paid to any Affiliated Lessee under any Operating Lease directlyto Mortgage Borrower, in each case after or as a result of the automatictermination of the applicable Operating Lease pursuant to the applicableSubordination and Attornment Agreement, or shall, either directly orindirectly, cause or permit any other person to take any action which, if takenby such Affiliated Lessee would constitute an event described in thisSection 15.1(b)(xiii).

 

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### (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 of thisAgreement (other than the covenants set forth in Sections 6.1(xv) and 6.1(xviii) hereof) or a breach by Affiliated Lessee of any of the covenants set forthin Section 6 of the Subordination and Attornment Agreement (other than thecovenants set forth in Sections 6(o) and 6(q) of the Subordination andAttornment Agreement), in all events except to the extent that any such breachwas inadvertent, immaterial and is promptly cured, (ii) of a breach of any ofthe covenants set forth in Article 7 hereof, or (iii) the Property, theCollateral or any part thereof shall become an asset in (A) a voluntarybankruptcy or insolvency proceeding of Mortgage Borrower, Borrower, AffiliatedLessee or Borrower Principal, or (B) an involuntary bankruptcy or insolvencyproceeding of Mortgage Borrower, Borrower, Affiliated Lessee or BorrowerPrincipal in connection with which Mortgage Borrower, Borrower, AffiliatedLessee, Borrower Principal, SPE Component Entity or any Affiliate of any of theforegoing has or have colluded in any way with the creditors commencing orfiling such proceeding and such proceeding is not dismissed in ninety (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 Pledge Agreement or torequire that all collateral shall continue to secure all of the indebtednessowing to Lender in accordance with this Agreement, the Note, the PledgeAgreement or the other Loan Documents.

###  

### (e)           Notwithstanding the foregoing,Borrower and Borrower Principal shall have no liability for any Losses underSection 15.1(b) (other than 15.1(b)(i)), or recourse liability as a result ofany action, of Mortgage Borrower or Mortgage Borrower’s general partnerdescribed in Section 15.1(c)(iii) (any such event, a “**Recourse Event**”), to the extentthat a court finally determines, after the exhaustion of all applicable appealperiods, both that (i) such Losses were caused solely by, or such RecourseEvent relates solely to, actions of Mortgage Borrower or Mortgage Borrower’sgeneral partners taken or conditions or events conclusively proven to havefirst occurred after the date that Lender (or any purchaser at a foreclosuresale) actually acquired title to the equity interest of Borrower in MortgageBorrower and Mortgage Borrower’s general partner (such date, the “**ForeclosureDate**”), and (ii) such Losses were not, or Recourse Event was not,caused by (A) the direct or indirect actions or failures to act of Borrower,Borrower Principal or any Affiliate of Borrower or Borrower Principal, or anypartner, member, principal, officer, director, trustee or manager of Borroweror Borrower Principal or any Affiliate of Borrower or Borrower Principal or anyemployee, agent or contractor of Borrower, Borrower Principal or any Affiliateof Borrower or Borrower Principal (other than Mortgage Borrower or MortgageBorrower’s general partner to the extent conclusively proven to have firstarisen after the Foreclosure Date), or (B) by any other actions, conditions,occurrence or circumstance giving rise to liability under Section 15.1(b)occurring or existing prior to the Foreclosure Date.  Without limiting any other provision contained herein, Borrowerand Borrower Principal hereby agree that the foregoing shall not excuse Borroweror Borrower Principal from any liability for any Losses or recourse liabilityrelating to the actions or failure to act of Borrower, Borrower Principal orany employee, agent, contractor or Affiliate of Borrower or Borrower Principal(other than Mortgage Borrower or Mortgage Borrower’s general partner to theextent

 

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conclusively proven to have first arisen after the Foreclosure Date)which relate to any act or failure to act arising after the ForeclosureDate.  Nothing contained in this Section15.1(c) shall in any way limit, alter or otherwise modify (a) Borrower orBorrower Principal’s liability for Losses due to the events described inSection 15.1(b)(xii) hereof or (b) the terms and conditions of, and theobligations of Borrower Principal under the Indemnity.

 

# **ARTICLE 16**NOTICES

 

Section 16.1.          NOTICES

 

All notices, consents,approvals and requests required or permitted hereunder or under any other LoanDocument shall be given in writing and shall be effective for all purposes ifhand delivered or sent by (a) certified or registered United States mail,postage prepaid, return receipt requested, (b) expedited prepaid overnightdelivery service, either commercial or United States Postal Service, with proofof attempted delivery, or by (c) telecopier (with answer back acknowledgedprovided an additional notice is given pursuant to subsection (b) above),addressed as follows (or at such other address and Person as shall bedesignated from time to time by any party hereto, as the case may be, in awritten notice to the other parties hereto in the manner provided for in thisSection):

 
| If to Lender:   |   | Fleet National Bank                                |
|-----------------|--------|----------------------------------------------------|
|            |   | Structured Real Estate                             |
|            |   | 100 Federal Street                                 |
|            |   | MA DE 10009A                                       |
|            |   | Boston, Massachusetts 02110                        |
|            |   | Attention:   James B. McLaughlin              |
|            |   | Facsimile No.: (617) 434-7108                      |
|            |   |                                               |
| With a copy to: |   | McKenna Long & Aldridge LLP                    |
|            |   | 303 Peachtree Street, Suite 5300                   |
|            |   | Atlanta, Georgia 30308                             |
|            |   | Attention:   William Timmons, Esq.            |
|            |   | Facsimile No.: (404) 527-4198                      |
|            |   |                                               |
| If to Borrower: |   | c/o CNL Hospitality Properties                     |
|            |   | 450 South Orange Avenue, 12th Floor                |
|            |   | Orlando, Florida 32801-3336                        |
|            |   | Attention:   Chief Financial Officer          |
|            |   | Facsimile No.: (407) 650-1085                      |
|            |   |                                               |
| With a copy to: |   | Lowndes, Drosdick, Doster, Kantor & Reed, P.A. |
|            |   | 215 North Eola Drive                               |
|            |   | Orlando, Florida 32801-3336                        |
|            |   | Attention:   Richard J. Fildes, Esq.          |
|            |   | Facsimile No.: (407) 843-4444                      |

 

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| If to Borrower  |   |                                               |
|-----------------|--------|----------------------------------------------------|
| Principal:      |   | CNL Hospitality Properties                         |
|            |   | 450 South Orange Avenue, 12th Floor                |
|            |   | Orlando, Florida 32810-3336                        |
|            |   | Attention: Chief Financial Officer                 |
|            |   | Facsimile No.: (407) 650-1085                      |
|            |   |                                               |
| With a copy to: |   | Lowndes, Drosdick, Doster, Kantor & Reed, P.A. |
|            |   | 215 North Eola Drive                               |
|            |   | Orlando, Florida 32801-3336                        |
|            |   | Attention:   Richard J. Fildes, Esq.          |
|            |   | Facsimile No.: (407) 843-4444                      |

 

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

 

# **ARTICLE 17**FURTHER ASSURANCES

 

Section 17.1.          REPLACEMENTDOCUMENTS

 

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.          INTENTIONALLYOMITTED

 

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 may hereafter become bound to convey or assign toLender, or for carrying out the intention or facilitating the performance ofthe terms of this Agreement or for filing or registering the Pledge Agreement,or for complying with all Legal Requirements. Borrower, on demand, will execute and deliver, and in the event it shallfail to so execute and deliver, hereby authorizes Lender to execute in the nameof Borrower or without the signature of Borrower to the extent Lender maylawfully do so, one or more financing statements and financing statementamendments to

 

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evidence more effectively, perfect and maintain the priority of thesecurity interest of Lender in any Property. Borrower grants to Lender an irrevocable power of attorney coupled withan interest for the purpose of exercising and perfecting any and all rights andremedies available to Lender at law and in equity, including withoutlimitation, such rights and remedies available to Lender pursuant to thisSection 17.3.

 

Section 17.4.          CHANGESIN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS

 

### (a)           If any law is enacted or adopted oramended after the date of this Agreement which deducts the Debt from the valueof the Property or the Collateral for the purpose of taxation or which imposesa tax, either directly or indirectly, on the Debt or Lender’s interest in anyProperty or the Collateral (other than taxes imposed on Lender’s receipt ofamounts payable hereunder), Borrower will pay the tax, with interest andpenalties thereon, if any.  If Lender isadvised by counsel chosen by it that the payment of tax by Borrower would beunlawful or taxable to Lender or unenforceable or provide the basis for adefense of usury then Lender shall have the option by written notice of notless than one hundred twenty (120) days to declare the Debt immediately due andpayable.

###  

### (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 the Collateral, or anypart thereof, and no deduction shall otherwise be made or claimed from theassessed value of any Property or the Collateral, or any part thereof, for realestate tax purposes by reason of the Mortgage, the Pledge Agreement or theDebt.  If such claim, credit ordeduction 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 PledgeAgreement, or any of the other Loan Documents or impose any other tax or chargeon the same, Borrower will pay for the same, with interest and penaltiesthereon, 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, the Pledge Agreement and the other Loan Documentsand the consummation of the transactions contemplated hereby and thereby andall the costs of furnishing all opinions by counsel for Borrower (includingwithout limitation any opinions requested by Lender as to any legal mattersarising under this Agreement or the other Loan Documents with respect to anyProperty or the Collateral); (b) any default by Borrower in Borrower’s ongoingperformance of and compliance with Borrower’s respective agreements andcovenants contained in this Agreement, the Pledge Agreement and the other LoanDocuments on its part to be performed or complied with after the Closing Date,including, without limitation, confirming compliance with environmental andinsurance requirements; (c) following a request

 

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by Borrower, Lender’s ongoing performance and compliance with allagreements and conditions contained in this Agreement, the Pledge Agreement andthe other Loan Documents on its part to be performed or complied with after theClosing Date; (d) the negotiation, preparation, execution, delivery andadministration of any consents, amendments, waivers or other modifications tothis Agreement and the other Loan Documents and any other documents or mattersrequested by Lender; (e) securing Borrower’s compliance with any requests madepursuant to the provisions of this Agreement; (f) the filing and recording feesand expenses, title insurance and reasonable fees and expenses of counsel forproviding to Lender all required legal opinions, and other similar expensesincurred in creating and perfecting the Lien in favor of Lender pursuant tothis Agreement, the Pledge Agreement and the other Loan Documents; (g)enforcing or preserving any rights, in response to third party claims or theprosecuting or defending of any action or proceeding or other litigation, ineach case against, under or affecting Borrower, this Agreement, the other LoanDocuments, the Collateral, or any other security given for the Loan; and (h)enforcing any obligations of or collecting any payments due from Borrower underthis Agreement, the other Loan Documents or with respect to any Property or inconnection with any refinancing or restructuring of the credit arrangementsprovided under this Agreement in the nature of a “work-out” or of anyinsolvency or bankruptcy proceedings; provided, however, that Borrower shallnot be liable for the payment of any such costs and expenses to the extent thesame arise by reason of the gross negligence, illegal acts, fraud or willfulmisconduct of Lender.

 

# **ARTICLE 18**WAIVERS

 

Section 18.1.          REMEDIESCUMULATIVE; 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.

 

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

 

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

 

Section 18.3.          DELAYNOT 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.          TRIALBY 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 TO ENCOMPASSINDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BYJURY WOULD OTHERWISE ACCRUE.  EACH OFLENDER, BORROWER PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OFTHIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BYBORROWER, BORROWER PRINCIPAL AND LENDER.**

 

Section 18.5.          WAIVEROF 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 Documentsspecifically and expressly provide for the giving of notice by Lender toBorrower and except with respect to matters for which Borrower is not, pursuantto applicable Legal Requirements, permitted to waive the giving of notice.  Borrower hereby expressly waives the rightto receive any notice from Lender with respect to any matter for which thisAgreement or the other Loan Documents do not specifically and expressly providefor the giving of notice by Lender to Borrower.

 

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Section 18.6.          REMEDIESOF 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 declaratoryjudgment.  Lender agrees that, in suchevent, it shall cooperate in expediting any action seeking injunctive relief ordeclaratory judgment.

 

Section 18.7.          WAIVEROF 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, Mortgage Borrower,Borrower’s partners and others with interests in Borrower or Mortgage Borrower,the Collateral and of any Property, and agrees not to assert any right underany laws pertaining to the marshalling of assets, the sale in inverse order ofalienation, homestead exemption, the administration of estates of decedents, orany other matters whatsoever to defeat, reduce or affect the right of Lenderunder the Loan Documents to a sale of the Collateral for the collection of theDebt without any prior or different resort for collection or of the right ofLender to the payment of the Debt out of the net proceeds of the Collateral inpreference to every other claimant whatsoever.

 

Section 18.8.          WAIVEROF 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.          WAIVEROF 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.

 

# **ARTICLE 19**GOVERNING LAW

 

Section 19.1.          CHOICEOF 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 inaccordance with the laws of the State of New York.

 

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

 

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prohibited by or invalid under applicable law, such provision shall beineffective to the extent of such prohibition or invalidity, withoutinvalidating the remainder of such provision or the remaining provisions ofthis 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’SDISCRETION

 

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.

 

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.

 

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Section 20.4.          COSTOF ENFORCEMENT

 

In the event (a) that thePledge Agreement is foreclosed in whole or in part, (b) of the bankruptcy,insolvency, rehabilitation or other similar proceeding in respect of MortgageBorrower or Borrower or any of its constituent Persons or an assignment byMortgage Borrower or Borrower or any of its constituent Persons for the benefitof its creditors, or (c) Lender exercises any of its other remedies under thisAgreement or any of the other Loan Documents pursuant to its rights under anyLoan Document, Borrower shall be chargeable with and agrees to pay all costs ofcollection and defense, including attorneys’ fees and costs, incurred by Lenderor 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.          SCHEDULESINCORPORATED

 

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 by anysuch assignee upon such documents and any such right to interpose or assert anysuch unrelated offset, counterclaim or defense in any such action or proceedingis hereby expressly waived by Borrower.

 

Section 20.7.          NOJOINT VENTURE OR PARTNERSHIP; NO THIRD 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 Lender nor to grant Lenderany interest in the Collateral other than that of secured party, pledge orlender.

###  

### (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 Lender will refuse to make the Loan in the absence ofstrict compliance with any or all thereof and no other Person shall under anycircumstances be deemed to be a beneficiary of such conditions, any or all of whichmay be freely waived in whole or in part by Lender if, in Lender’s solediscretion, Lender deems it advisable or desirable to do so.

 

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### (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 the Collateral, and Borrower and Lender are relying solely uponsuch expertise and business plan in connection with the ownership and operationof any Property and the Collateral. Borrower is not relying on Lender’s expertise, business acumen or advicein connection with any Property or the Collateral.

###  

### (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 Pledge Agreement, 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 Pledge Agreement and the otherLoan Documents, Lender is expressly and primarily relying on the truth andaccuracy of the representations and warranties set forth in Article 4 of thisAgreement without any obligation to investigate any Property or the Collateraland notwithstanding any investigation of any Property or the Collateral by Lender;that such reliance existed on the part of Lender prior to the date hereof, thatthe warranties and representations are a material inducement to Lender inmaking the Loan; and that Lender would not be willing to make the Loan andaccept this Agreement, the Note, the Pledge Agreement and the other LoanDocuments in the absence of the warranties and representations as set forth inArticle 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, or anyof its Affiliates shall be subject to the prior written approval of Lender, notto be unreasonably withheld.  Lendershall be permitted to make any news, releases, publicity or advertising byLender or its Affiliates through any media intended to reach the general publicwhich refers to the Loan, the Collateral, any Property, Mortgage Borrower,Affiliated Lessee, Borrower, Borrower Principal and their respective Affiliateswithout the approval of Borrower or any such Persons.  Borrower also agrees that Lender may share any informationpertaining to the Loan with its Affiliates, in connection with the sale ortransfer of the Loan or any Participations and/or Securities created.

 

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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 theownership by it or any parent, subsidiary or Affiliate of Lender of any equityinterest any of them may acquire in Borrower, and Borrower hereby irrevocablywaives the right to raise any defense or take any action on the basis of theforegoing with respect to Lender’s exercise of any such rights orremedies.  Borrower acknowledges thatLender engages in the business of real estate financings and other real estatetransactions and investments which may be viewed as adverse to or competitivewith the business of Borrower or its Affiliates.

 

Section 20.10.        ENTIREAGREEMENT

 

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.        TAXDISCLOSURE

 

Notwithstanding anythingherein 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.

 

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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 MEZZANINE SPE, LP, a Delaware limited  partnership                                                                                                                                     |
|   |                                                                                                                                                                                        |
|   | By:                                                                                                                                                                                         | Rose Mezzanine SPE 1 GP, LLC, a Delaware limited  liability company, its general partner |
|   |                                                                                                                                                                                        |   |
|   |                                                                                                                                                                                        | By: |   |
|   |                                                                                                                                                                                        |   | Paul H. Williams |
|   |                                                                                                                                                                                        |   | Senior Vice President |
|   |                                                                                                                                                                                        |
|   |                                                                                                                                                                                        |
|   | BORROWER PRINCIPAL:                                                                                                                                                                         |
|   |                                                                                                                                                                                        |
|   | Acknowledged and agreed to with respect to its  obligations set forth in Article 4, Section 5.11, Section 5.33,  Section 12.6, Article 13, Article 15 and Article 18 hereof: |
|   |                                                                                                                                                                                        |
|   |                                                                                                                                                                                        |
|   | RFS PARTNERSHIP, L.P., a Tennessee limited  partnership                                                                                                                                     |
|   |                                                                                                                                                                                        |
|   | By:                                                                                                                                                                                         | CNL Rose GP CORP., a Delaware corporation, its  general partner |
|   |                                                                                                                                                                                        |   |
|   |                                                                                                                                                                                        |   |
|   |                                                                                                                                                                                        | By: |   |
|   |                                                                                                                                                                                        |   | Paul H. Williams |
|   |                                                                                                                                                                                        |   | Senior Vice President |
|        |                                                                                                                                                                                             |  |  |  |

 

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|   | LENDER:                                             |
|--------|-----------------------------------------------------|
|   |                                                |
|   | FLEET NATIONAL BANK, a national banking association |
|   |                                                |
|   |                                                |
|   | By:                                                 |   |
|   |                                                | Name: |   |
|   |                                                | Title: |   |
|        |                                                     |  |  |  |

 

[Signature Page 2 of 2 tothe Mezzanine Loan Agreement]

 

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EXHIBIT A

 

Annual Budget

 

----

 

EXHIBIT B

 

Borrower Equity OwnershipStructure

 

**Exhibit B to Loan Agreement**ROSE SPE Structure forCMBS (26 Pool)

 

~~* *~~

 

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 Miami AirportWest, FL;  TPS Miami Lakes, FL;  RI Orlando International Drive, FL; HOL CrystalLake, IL;  HOL Louisville Southwest, KY;RI Ann Arbor, MI;  CY Flint, MI;  HI Minneapolis Minnetonka, MN;  HI Hattiesburg, MS;  HI Lincoln Airport I-80, NE;  RI Fishkill, NY;  HI Oklahoma City Airport, OK; HI Tulsa, OK;  RI Warwick, RI; 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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**SCHEDULE A**

 

**Properties and Initial Allocated Loan Amounts and Percentages**

 
| **Property**                                                                                            |   | **Initial  Allocated  Loan Amount** |      | **Initial  Allocated  Loan Percentage** |   |
|---------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|-----------------------------------------|--------|
| Hampton Inn Phoenix Chandler  Chandler, Arizona                                                         |   | $                                   | 620,000   |                                    | 1.8    | % |
| Homewood Suites Phoenix Chandler  Chandler, Arizona                                                     |   | $                                   | 700,000   |                                    | 2.0    | % |
| Hampton Inn Sedona Sedona, Arizona                                                                      |   | $                                   | 630,000   |                                    | 1.8    | % |
| Residence Inn  Sacramento/Cal Expo Sacramento, California                                               |   | $                                   | 2,650,000 |                                    | 7.6    | % |
| Doubletree Hotel San Diego Del Mar  San Diego, California                                               |   | $                                   | 1,960,000 |                                    | 5.6    | % |
| Hampton Inn  Denver SW Lakewood Lakewood, Colorado                                                      |   | $                                   | 400,000   |                                    | 1.1    | % |
| Residence Inn  Wilmington/Newark (the “Wilmington  Newark Property”)  Wilmington, Delaware    |   | $                                   | 2,000,000 |                                    | 5.7    | % |
| Hampton Inn Ft. Lauderdale-Cypress Creek  Ft. Lauderdale, Florida                                       |   | $                                   | 750,000   |                                    | 2.1    | % |
| Towne Place Suites  Miami Airport West (the “Miami Airport  West Property”) Miami, Florida    |   | $                                   | 800,000   |                                    | 2.3    | % |
| Towne Place Suites Miami Lakes  (The “Miami Lakes Property”)  Miami, Florida                  |   | $                                   | 800,000   |                                    | 2.3    | % |
| Residence Inn by Marriott International Drive  Orlando, Florida                                         |   | $                                   | 2,020,000 |                                    | 5.8    | % |
| Holiday Inn Crystal Lake Crystal Lake,  Illinois                                                        |   | $                                   | 2,270,000 |                                    | 6.5    | % |
| Holiday Inn Southwest Louisville (the  “Louisville Southwest Property”) Louisville,  Kentucky |   | $                                   | 1,300,000 |                                    | 3.7    | % |
| Residence Inn Ann Arbor Ann  Arbor,  Michigan                                                           |   | $                                   | 1,175,000 |                                    | 3.4    | % |
| Courtyard Flint  Flint, Michigan (the “Flint Property”)                                       |   | $                                   | 1,076,000 |                                    | 3.1    | % |
| Hampton Inn  Minneapolis Minnetonka  Minnetonka, Minnesota                                              |   | $                                   | 370,000   |                                    | 1.1    | % |
| Hampton Inn Hattiesburg  Hattiesburg, Mississippi                                                       |   | $                                   | 1,240,000 |                                    | 3.5    | % |

 

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| **Property**                                                    |   | **Initial  Allocated  Loan Amount** |      | **Initial  Allocated  Loan Percentage** |   |
|-----------------------------------------------------------------|--------|-------------------------------------|-----------|-----------------------------------------|--------|
| Hampton Inn Lincoln  Airport I-80  Lincoln, Nebraska            |   | $                                   | 883,000   |                                    | 2.5    | % |
| Residence Inn Fishkill  Fishkill, New York                      |   | $                                   | 3,906,000 |                                    | 11.2   | % |
| Hampton Inn Oklahoma City-Airport I-40  Oklahoma City, Oklahoma |   | $                                   | 1,139,000 |                                    | 3.3    | % |
| Hampton Inn Tulsa  Tulsa, Oklahoma                              |   | $                                   | 800,000   |                                    | 2.3    | % |
| Residence Inn Warwick  Warwick, Rhode Island                    |   | $                                   | 1,700,000 |                                    | 4.9    | % |
| Ft. Worth Towne Place Suites-Southwest  Ft. Worth, Texas        |   | $                                   | 938,000   |                                    | 2.7    | % |
| Residence Inn - Ft. Worth River Plaza  Ft. Worth, Texas         |   | $                                   | 1,950,000 |                                    | 5.6    | % |
| Hampton Inn - Laredo  Laredo, Texas                             |   | $                                   | 1,820,000 |                                    | 5.2    | % |
| Residence Inns Tyler  Tyler, Texas                              |   | $                                   | 1,103,000 |                                    | 3.2    | % |

 

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**SCHEDULEB**

 

**Initial Property Manager and Franchisor**

 
| **Property**                                                                                             |   | **Initial  Property Manager**                                 |   | **Initial  Franchisor**                                       |   |
|----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|---------------------------------------------------------------|--------|
| Hampton Inn Phoenix Chandler  Chandler, Arizona                                                          |   | Promus Hotel, Inc.  (“Promus”)                      |   | Promus                                                        |   |
| Homewood Suites Phoenix Chandler  Chandler, Arizona                                                      |   | Promus                                                        |   | Promus                                                        |   |
| Hampton Inn Sedona  Sedona, Arizona                                                                      |   | Promus                                                        |   | Promus                                                        |   |
| Residence Inn Sacramento/Cal Expo  Sacramento, California                                                |   | Residence Inn by  Marriott,  Inc. (“Residence Inn”) |   | N/A                                                           |   |
| Doubletree Hotel San Diego Del Mar  San Diego, California                                                |   | DT Management, Inc.                                           |   | Double Tree Hotel  Systems, Inc.                              |   |
| Hampton Inn  Denver SW Lakewood  Lakewood, Colorado                                                      |   | Promus                                                        |   | Promus                                                        |   |
| Residence Inn  Wilmington/Newark  Wilmington, Delaware                                                   |   | Residence Inn                                                 |   | N/A                                                           |   |
| Hampton Inn Ft. Lauderdale-Cypress  Creek  Ft. Lauderdale, Florida                                       |   | Promus                                                        |   | Promus                                                        |   |
| Towne Place Suites  Miami Airport West (the “Miami Airport  West Property”)  Miami, Florida(1) |   | N/A                                                           |   | N/A                                                           |   |
| Towne Place Suites  Miami Lakes  (the “Miami Lakes Property”)  Miami, Florida(1)               |   | N/A                                                           |   | N/A                                                           |   |
| Residence Inn by Marriott International  Drive  Orlando, Florida                                         |   | Residence Inn                                                 |   | N/A                                                           |   |
| Holiday Inn Crystal Lake  Crystal Lake, Illinois                                                         |   | Interstate Management  Company, LLC (“Interstate”)  |   | Holiday Hospitality  Franchising, Inc.  (“Holiday”) |   |

 

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

 

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| **Property**                                                                              |   | **Initial  Property Manager**                                 |   | **Initial  Franchisor**       |   |
|-------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|--------|-------------------------------|--------|
| Holiday Inn Southwest Louisville  Louisville, Kentucky (“Louisville  Property”) |   | Interstate                                                    |   | Holiday                       |   |
| Residence Inn Ann Arbor  Ann Arbor, Michigan                                              |   | Residence Inn                                                 |   | N/A                           |   |
| Courtyard Flint  Flint, Michigan (the “Flint Property”)                         |   | Flagstone/Interstate(2)                                       |   | Marriott  International, Inc. |   |
| Hampton Inn Minneapolis  Minnetonka  Minnetonka, Minnesota                                |   | Promus                                                        |   | Promus                        |   |
| Hampton Inn Hattiesburg  Hattiesburg, Mississippi                                         |   | Promus                                                        |   | Promus                        |   |
| Hampton Inn Lincoln Airport I-80  Lincoln, Nebraska                                       |   | Promus                                                        |   | Promus                        |   |
| Residence Inn Fishkill  Fishkill, New York                                                |   | Residence Inn                                                 |   | N/A                           |   |
| Hampton Inn Oklahoma City-Airport I-40  Oklahoma City, Oklahoma                           |   | Promus                                                        |   | Promus                        |   |
| Hampton Inn Tulsa  Tulsa, Oklahoma                                                        |   | Promus                                                        |   | Promus                        |   |
| Residence Inn Warwick  Warwick, Rhode Island                                              |   | Residence Inn                                                 |   | N/A                           |   |
| Ft. Worth Towne Place Suites-Southwest  Ft. Worth, Texas                                  |   | Towne Place Management  Corporation (“Towne Place”) |   | N/A                           |   |
| Residence Inn - Ft. Worth River Plaza  Ft. Worth, Texas                                   |   | Residence Inn                                                 |   | N/A                           |   |
| Hampton Inn - Laredo  Laredo, Texas                                                       |   | Promus                                                        |   | Promus                        |   |
| Residence Inns Tyler  Tyler, Texas                                                        |   | Residence Inn                                                 |   | N/A                           |   |

 

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

 

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**SCHEDULE I**

 

**COST BASIS OF PROPERTIES**

 
|   |   | **Property Name**           |   | **Brand**         |   | **Total  Assigned  Value (from  Purch.  Accounting)** |   | **Land**   |   | **FF&E** |   | **Automobiles** |   | **Renovations  (Building)** |   | **Building** |   | **Total  Purchase  Acctg NBV  at 7/10/03** |   |
|--------|--------|-----------------------------|--------|-------------------|--------|-------------------------------------------------------|--------|------------|--------|--------------|--------|-----------------|--------|-----------------------------|--------|--------------|--------|--------------------------------------------|--------|
| CMBS   |   | Flint                       |   | Courtyard         |   | 9,769,249                                             |   | 963,479    |   | 155,919      |   | 4,397           |   | —                      |   | 8,645,454    |   | 9,769,249                                  |   |
| CMBS   |   | San Diego Del Mar           |   | Doubletree        |   | 23,284,953                                            |   | 1,896,074  |   | 1,628,247    |   | —          |   | 8,268                       |   | 19,752,364   |   | 23,284,953                                 |   |
| CMBS   |   | Phoenix Chandler            |   | Hampton Inn       |   | 7,773,222                                             |   | 737,860    |   | 213,707      |   | —          |   | 3,107                       |   | 6,818,548    |   | 7,773,222                                  |   |
| CMBS   |   | Sedona                      |   | Hampton Inn       |   | 6,028,695                                             |   | 1,469,150  |   | 152,093      |   | —          |   | —                      |   | 4,407,451    |   | 6,028,695                                  |   |
| CMBS   |   | Denver SW Lakewood          |   | Hampton Inn       |   | 11,273,212                                            |   | 745,794    |   | 471,465      |   | —          |   | 600,356                     |   | 9,455,597    |   | 11,273,212                                 |   |
| CMBS   |   | Ft. Lauderdale/Cypress      |   | Hampton Inn       |   | 10,045,221                                            |   | 931,111    |   | 712,839      |   | 12,627          |   | 8,642                       |   | 8,380,002    |   | 10,045,221                                 |   |
| CMBS   |   | Minneapolis Minnetonka      |   | Hampton Inn       |   | 9,872,521                                             |   | 959,038    |   | 274,303      |   | —          |   | 698,277                     |   | 7,940,904    |   | 9,872,521                                  |   |
| CMBS   |   | Hattiesburg                 |   | Hampton Inn       |   | 11,259,326                                            |   | 467,529    |   | 559,715      |   | —          |   | 8,152                       |   | 10,223,930   |   | 11,259,326                                 |   |
| CMBS   |   | Lincoln Airport I-80        |   | Hampton Inn       |   | 8,407,611                                             |   | 609,820    |   | 190,586      |   | 13,636          |   | 698,320                     |   | 6,895,250    |   | 8,407,611                                  |   |
| CMBS   |   | Oklahoma City Airport       |   | Hampton Inn       |   | 10,230,938                                            |   | 847,150    |   | 736,519      |   | 13,845          |   | 13,337                      |   | 8,620,088    |   | 10,230,938                                 |   |
| CMBS   |   | Tulsa                       |   | Hampton Inn       |   | 11,001,578                                            |   | 589,738    |   | 370,253      |   | —          |   | 1,047,440                   |   | 8,994,147    |   | 11,001,578                                 |   |
| CMBS   |   | Laredo                      |   | Hampton Inn       |   | 9,300,920                                             |   | 532,909    |   | 354,727      |   | —          |   | 7,439                       |   | 8,405,845    |   | 9,300,920                                  |   |
| CMBS   |   | Crystal Lake                |   | Holiday Inn       |   | 19,784,530                                            |   | 2,852,273  |   | 1,727,477    |   | —          |   | (3,027                      | )      | 15,207,807   |   | 19,784,530                                 |   |
| CMBS   |   | Louisville Southwest        |   | Holiday Inn       |   | 12,741,593                                            |   | 881,392    |   | 1,172,623    |   | 11,866          |   | 25,338                      |   | 10,650,374   |   | 12,741,593                                 |   |
| CMBS   |   | Phoenix Chandler            |   | Homewood Suites   |   | 8,205,405                                             |   | 905,563    |   | 536,048      |   | —          |   | —                      |   | 6,763,794    |   | 8,205,405                                  |   |
| CMBS   |   | Sacramento/Cal Expo         |   | Residence Inn     |   | 18,481,558                                            |   | 1,919,923  |   | 1,617,702    |   | —          |   | 1,201,158                   |   | 13,742,775   |   | 18,481,558                                 |   |
| CMBS   |   | Wilmington/Newark           |   | Residence Inn     |   | 12,293,398                                            |   | —     |   | 392,365      |   | 13,481          |   | 9,477                       |   | 11,878,075   |   | 12,293,398                                 |   |
| CMBS   |   | Orlando International Drive |   | Residence Inn     |   | 15,968,213                                            |   | 1,434,506  |   | 1,617,897    |   | —          |   | 5,255                       |   | 12,910,555   |   | 15,968,213                                 |   |
| CMBS   |   | Ann Arbor                   |   | Residence Inn     |   | 10,974,675                                            |   | 921,516    |   | 868,776      |   | —          |   | —                      |   | 9,184,383    |   | 10,974,675                                 |   |
| CMBS   |   | Fishkill                    |   | Residence Inn     |   | 15,215,711                                            |   | 2,093,959  |   | 477,646      |   | —          |   | 1,670,850                   |   | 10,973,257   |   | 15,215,711                                 |   |
| CMBS   |   | Warwick                     |   | Residence Inn     |   | 10,147,626                                            |   | 1,745,317  |   | 543,968      |   | 11,021          |   | 3,032                       |   | 7,844,288    |   | 10,147,626                                 |   |
| CMBS   |   | Ft. Worth River Plaza       |   | Residence Inn     |   | 13,075,233                                            |   | 1,928,207  |   | 720,221      |   | —          |   | 6,398                       |   | 10,420,407   |   | 13,075,233                                 |   |
| CMBS   |   | Tyler                       |   | Residence Inn     |   | 12,071,622                                            |   | 788,783    |   | 657,806      |   | —          |   | 103,007                     |   | 10,522,027   |   | 12,071,622                                 |   |
| CMBS   |   | Miami Airport West          |   | TownePlace Suites |   | 8,518,695                                             |   | 831,129    |   | 380,010      |   | —          |   | —                      |   | 7,307,556    |   | 8,518,695                                  |   |
| CMBS   |   | Miami Lakes                 |   | TownePlace Suites |   | 8,470,964                                             |   | 780,479    |   | 374,080      |   | —          |   | —                      |   | 7,316,405    |   | 8,470,964                                  |   |
| CMBS   |   | Ft. Worth Southwest         |   | TownePlace Suites |   | 8,532,580                                             |   | 835,181    |   | 447,378      |   | —          |   | 37,091                      |   | 7,212,930    |   | 8,532,580                                  |   |
|   |   | Total CMBS Properties       |   |              |   | 302,729,251                                           |   | 28,667,879 |   | 17,354,370   |   | 80,873          |   | 6,151,917                   |   | 250,474,213  |   | 302,729,251                                |   |

 
|   |   |                        |   | **Depreciation  7/10/03 through 9/30/03** |   | **Net Book  Value as of 9/30/03** |   |
|--------|--------|-----------------------------|--------|-------------------------------------------|--------|-----------------------------------|--------|
|   |   | **Property Name**           |   | **Land**                                  |   | **FF&E  (Including  Autos)**  |   | **Buildings  (Including  Renovations)** |   | **Land** |   | **FF&E  (Including  Autos)** |   | **Buildings  (Including  Renovations)** |   | **Total** |   |
| CMBS   |   | Flint                       |   | —                                    |   | (5,208                            | )      | (49,149 | ) | 963,479 |   | 155,108 |   | 8,596,305 |   | 9,714,892 |   |
| CMBS   |   | San Diego Del Mar           |   | —                                    |   | (52,894                           | )      | (112,338 | ) | 1,896,074 |   | 1,575,353 |   | 19,648,294 |   | 23,119,721 |   |
| CMBS   |   | Phoenix Chandler            |   | —                                    |   | (6,942                            | )      | (38,781 | ) | 737,860 |   | 206,765 |   | 6,782,875 |   | 7,727,499 |   |
| CMBS   |   | Sedona                      |   | —                                    |   | (4,941                            | )      | (25,056 | ) | 1,469,150 |   | 147,152 |   | 4,382,395 |   | 5,998,698 |   |
| CMBS   |   | Denver SW Lakewood          |   | —                                    |   | (15,316                           | )      | (57,167 | ) | 745,794 |   | 456,149 |   | 9,998,786 |   | 11,200,728 |   |
| CMBS   |   | Ft. Lauderdale/Cypress      |   | —                                    |   | (23,567                           | )      | (47,689 | ) | 931,111 |   | 701,899 |   | 8,340,955 |   | 9,973,965 |   |
| CMBS   |   | Minneapolis Minnetonka      |   | —                                    |   | (8,911                            | )      | (49,113 | ) | 959,038 |   | 265,392 |   | 8,590,068 |   | 9,814,498 |   |
| CMBS   |   | Hattiesburg                 |   | —                                    |   | (18,183                           | )      | (58,169 | ) | 467,529 |   | 541,532 |   | 10,173,913 |   | 11,182,975 |   |
| CMBS   |   | Lincoln Airport I-80        |   | —                                    |   | (6,634                            | )      | (43,169 | ) | 609,820 |   | 197,588 |   | 7,550,401 |   | 8,357,808 |   |
| CMBS   |   | Oklahoma City Airport       |   | —                                    |   | (24,376                           | )      | (49,080 | ) | 847,150 |   | 725,988 |   | 8,584,344 |   | 10,157,482 |   |
| CMBS   |   | Tulsa                       |   | —                                    |   | (12,028                           | )      | (57,086 | ) | 589,738 |   | 358,225 |   | 9,984,502 |   | 10,932,465 |   |
| CMBS   |   | Laredo                      |   | —                                    |   | (11,523                           | )      | (47,829 | ) | 532,909 |   | 343,204 |   | 8,365,455 |   | 9,241,568 |   |
| CMBS   |   | Crystal Lake                |   | —                                    |   | (56,118                           | )      | (86,438 | ) | 2,852,273 |   | 1,671,359 |   | 15,118,342 |   | 19,641,974 |   |
| CMBS   |   | Louisville Southwest        |   | —                                    |   | (38,479                           | )      | (60,691 | ) | 881,392 |   | 1,146,010 |   | 10,615,021 |   | 12,642,424 |   |
| CMBS   |   | Phoenix Chandler            |   | —                                    |   | (17,414                           | )      | (38,452 | ) | 905,563 |   | 518,634 |   | 6,725,343 |   | 8,149,540 |   |
| CMBS   |   | Sacramento/Cal Expo         |   | —                                    |   | (52,552                           | )      | (84,955 | ) | 1,919,923 |   | 1,565,150 |   | 14,858,978 |   | 18,344,051 |   |
| CMBS   |   | Wilmington/Newark           |   | —                                    |   | (13,184                           | )      | (67,580 | ) | — |   | 392,662 |   | 11,819,972 |   | 12,212,634 |   |
| CMBS   |   | Orlando International Drive |   | —                                    |   | (52,558                           | )      | (73,425 | ) | 1,434,506 |   | 1,565,339 |   | 12,842,385 |   | 15,842,230 |   |
| CMBS   |   | Ann Arbor                   |   | —                                    |   | (28,222                           | )      | (52,213 | ) | 921,516 |   | 840,554 |   | 9,132,171 |   | 10,894,240 |   |
| CMBS   |   | Fishkill                    |   | —                                    |   | (15,516                           | )      | (71,881 | ) | 2,093,959 |   | 462,130 |   | 12,572,226 |   | 15,128,314 |   |
| CMBS   |   | Warwick                     |   | —                                    |   | (18,029                           | )      | (44,611 | ) | 1,745,317 |   | 536,960 |   | 7,802,708 |   | 10,084,986 |   |
| CMBS   |   | Ft. Worth River Plaza       |   | —                                    |   | (23,397                           | )      | (59,276 | ) | 1,928,207 |   | 696,824 |   | 10,367,530 |   | 12,992,561 |   |
| CMBS   |   | Tyler                       |   | —                                    |   | (21,369                           | )      | (60,403 | ) | 788,783 |   | 636,437 |   | 10,564,631 |   | 11,989,851 |   |
| CMBS   |   | Miami Airport West          |   | —                                    |   | (12,345                           | )      | (41,543 | ) | 831,129 |   | 367,665 |   | 7,266,013 |   | 8,464,807 |   |
| CMBS   |   | Miami Lakes                 |   | —                                    |   | (12,152                           | )      | (41,593 | ) | 780,479 |   | 361,928 |   | 7,274,811 |   | 8,417,218 |   |
| CMBS   |   | Ft. Worth Southwest         |   | —                                    |   | (14,533                           | )      | (41,216 | ) | 835,181 |   | 432,845 |   | 7,208,805 |   | 8,476,831 |   |
|   |   | Total CMBS Properties       |   | —                                    |   | (566,389                          | )      | (1,458,902 | ) | 28,667,879 |   | 16,868,854 |   | 255,167,228 |   | 300,703,960 |   |

 

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