Document:

Exhibit 4.2

    
      

    

    Exhibit
      4.2

    

    PLEDGE
      AND SECURITY AGREEMENT

    

    THIS
      PLEDGE AND SECURITY AGREEMENT (this “Agreement”)
      is
      entered into as of June __, 2006 by and among CNL
      REAL
      ESTATE GROUP, INC., a
      Florida
      corporation (“CREG”),
      JAMES
      M.
      SENEFF, JR.,
      a
      resident of the State of Florida, ROBERT
      A.
      BOURNE,
      a
      resident of the State of Florida, C.
      BRIAN
      STRICKLAND,
      a
      resident of the State of Florida, THOMAS
      J.
      HUTCHISON
      III, a
      resident of the State of Florida, JOHN
      A.
      GRISWOLD,
      a
      resident of the State of Florida, BARRY
      A.N. BLOOM,
      a
      resident of the State of Florida, and MARCEL VERBAAS, a resident of the State
      of
      Florida (each of the foregoing parties are referred to individually herein
      as an
“Individual
      Pledgor,”
and
      collectively, “Pledgors”),
      CNL
      HOTELS & RESORTS, INC., a Maryland corporation (“CHR”),
      and
CNL
      HOTELS & RESORTS ACQUISITION, LLC,
      a
      Florida limited liability company (together with CHR and their successors and
      assigns, “Secured
      Parties”).

     

    WHEREAS,
      Secured Parties and Pledgors, among other parties, have entered into an Amended
      and Restated Agreement and Plan of Merger, entered into as of April 3, 2006
      (the
“Merger
      Agreement”),
      pursuant to which Pledgors have agreed, on a several basis, to indemnify Secured
      Parties on the terms and conditions set forth in the Merger Agreement;

     

    WHEREAS,
      pursuant to Section 8.20 of the Merger Agreement, Pledgors are required to
      execute and deliver this Agreement and to pledge and grant a continuing security
      interest in the Collateral (as defined herein) as additional security for the
      Secured Obligations (as defined herein); and

     

    WHEREAS,
      all capitalized terms used herein which are not herein defined shall have the
      meanings ascribed to them in the Merger Agreement.

     

    NOW,
      THEREFORE, in consideration of the foregoing and of the mutual covenants and
      agreements hereinafter set forth, and for other good and valuable consideration,
      the receipt and sufficiency of which are hereby acknowledged, the parties hereto
      hereby agree as follows:

     

     

    
      	1.  	
              DEFINITIONS

            

    

     

    For
      the
      purposes of this Agreement:

     

    (a) “Collateral”
means
      (i) an aggregate of 750,000 common shares, $.01 par value per share, of CHR
      owned by Pledgors (“Stock”)
      in the
      proportions set forth on Schedule A on the date hereof, (ii) any dividends
      or distributions, distributions in property, returns of capital or other
      distributions made on or with respect to any of the foregoing shares,
      and
      (iii) all proceeds of the foregoing. 

     

    (b) “Event
      of Default”
means
      (i) any failure by an Individual Pledgor to fully and punctually pay or perform
      one or more of its obligations pursuant to Section 9.8 or Article 12 of the
      Merger Agreement (collectively, the “Secured
      Obligations”),
      as
      determined by at
      least
      a majority of all of CHR’s disinterested directors who are non-employee
      directors,
      regardless of whether either of the Secured Parties has exercised its rights
      under Section 13.2 of the Merger Agreement, (ii) the unenforceability of Secured
      Parties’ security interest in the Collateral with the priority set forth herein
      for any reason whatsoever, or (iii) any breach by an Individual Pledgor of
      any
      of its obligations under this Agreement that is not cured within five (5)
      business days after such Individual Pledgor’s receipt of Secured Parties’
written notice thereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	2.  	
              PLEDGE
                OF COLLATERAL

            

    

     

    (a) As
      additional security for the payment and performance by Pledgors of all of the
      Secured Obligations and all of their obligations under this Agreement, each
      Individual Pledgor hereby pledges, assigns and grants to Secured Parties a
      first
      priority security interest in all of its or his right, title and interest in
      and
      to the Collateral and the proceeds thereof (the “Pledge”).

     

    (b) In
      the
      event the shares of Stock included in the Collateral are
      certificated:

     

    (i) simultaneously
      with the execution and delivery of this Agreement, each Individual Pledgor
      is
      delivering to Secured Parties certificates representing the shares of Collateral
      described in clause (i) of Section 1(a) and
      according to the listing of shares of Collateral set forth in the attached
      Schedule A, and will deliver to Secured Parties all certificates relating to
      the
      Collateral described in clause (ii) of Section 1(a) within five (5) days after
      each Individual Pledgor’s acquisition thereof, all of which certificates shall
      be registered in the name of the appropriate Individual Pledgor, duly endorsed
      in blank or accompanied by stock powers duly executed by the appropriate
      Individual Pledgor in blank, together with any documentary tax stamps and any
      other documents necessary to cause Secured Parties to have a good, valid and
      perfected first pledge of, lien on and security interest in the Collateral,
      free
      and clear of any mortgage, pledge, lien, security interest, hypothecation,
      assignment, charge, right, encumbrance or restriction (individually,
“Encumbrance,”
and
      collectively, “Encumbrances”),
      but
      subject to restrictions set forth in state and federal securities laws or
      restrictions set forth in the Registration Rights Agreement and accompanying
      Lock-Up Agreement executed in connection with the Closing (as defined in the
      Merger Agreement). At any time following an Event of Default, any or all of
      the
      shares of the Collateral held by Secured Parties hereunder may, at the option
      of
      Secured Parties exercised in accordance with Sections 3(b) and
      5(c),
      be registered in the names of Secured Parties or in the name of their nominee;
      and

     

    (ii) Secured
      Parties hereby confirm receipt of the certificates representing the Collateral
      described in clause (i) of Section 1(a) and agree to hold such certificates
      in
      accordance with the terms of this Agreement.

     

    (c) In
      the
      event the shares of Stock included in the Collateral are uncertificated, each
      Individual Pledgor agrees to take such actions and execute, deliver and file
      such instruments and documents, including without limitation, one or more
      financing statements, as the Secured Parties may request to perfect the Secured
      Parties’ interest in the Collateral pursuant to this Agreement.

     

     

    
      	3.  	
              RIGHTS
                OF PLEDGORS WITH RESPECT TO THE
                COLLATERAL

            

    

     

    (a) So
      long
      as no Event of Default shall have occurred and be continuing:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

      (i) Each
      Individual Pledgor shall be entitled to exercise any and all voting and/or
      consensual rights and powers relating or pertaining to such Individual Pledgor’s
      portion of the Collateral, subject to the terms hereof, including any and all
      rights under the Registration Rights Agreement.

     

    (ii) Each
      Individual Pledgor shall be entitled to receive and retain cash dividends or
      distributions payable on such Individual Pledgor’s portion of the Collateral;
provided,
      however,
      that
      all other dividends or distributions (including, without limitation, stock
      and
      liquidating dividends or distributions), distributions in property, returns
      of
      capital and other distributions made on or in respect of the Collateral, whether
      resulting from a subdivision, combination or reclassification of the outstanding
      capital stock of CHR or received in exchange for the Collateral or any part
      thereof or as a result of any merger, consolidation, acquisition or other
      exchange of assets to which CHR may be a party or otherwise, and any and all
      cash and other property received in exchange for or redemption of any of the
      Collateral, shall be retained by Secured Parties, or, if delivered to Pledgors,
      shall be held in trust for the benefit of Secured Parties and forthwith
      delivered to Secured Parties within five (5) days of the acquisition thereof
      and
      shall be considered as part of the Collateral for all purposes of this
      Agreement.

     

    (iii) Secured
      Parties shall execute and deliver (or cause to be executed and delivered) to
      Pledgors all such proxies, powers of attorney, dividend or distribution orders,
      and other instruments as Pledgors may reasonably request for the purpose of
      enabling each Individual Pledgor to exercise its or his voting and/or consensual
      rights and powers which such Individual Pledgor is entitled to exercise pursuant
      to Section 3(a)(i) above and/or to receive the dividends or distributions which
      such Individual Pledgor is authorized to receive and retain pursuant to Section
      3(a)(ii), and each Individual Pledgor shall execute and deliver to Secured
      Parties such instruments as may be required or may be requested by Secured
      Parties to enable Secured Parties to receive and retain the dividends or
      distributions, distributions in property, returns of capital and other
      distributions it is authorized to receive and retain pursuant to Section
      3(a)(ii).

     

    (b) Upon
      the
      occurrence and during the continuance of an Event of Default, all rights of
      each
      Individual Pledgor to exercise the voting and/or consensual rights and powers
      which such Individual Pledgor is entitled to exercise pursuant to Section
      3(a)(i) and/or to receive the dividends or distributions which such Individual
      Pledgor is authorized to receive and retain pursuant to Section
      3(a)(ii) shall
      cease, at the option of Secured Parties, on not less than one (1) day’s written
      notice to Pledgors, and all such rights shall thereupon become vested in Secured
      Parties, who shall have the sole and exclusive right and authority to exercise
      such voting and/or consensual rights and powers and/or to receive and retain
      such dividends or distributions. In such case, each Individual Pledgor shall
      execute and deliver such documents as Secured Parties may request to enable
      Secured Parties to exercise such rights and receive such dividends or
      distributions. In addition, Secured Parties are hereby appointed the
      attorney-in-fact of each Individual Pledgor, with full power of substitution,
      which appointment as attorney-in-fact is irrevocable and coupled with an
      interest, to take all such actions after the occurrence and during the
      continuance of an Event of Default, whether in the name of Secured Parties
      or an
      Individual Pledgor, as Secured Parties may consider necessary or desirable for
      the purpose of exercising such rights and receiving such dividends or
      distributions. Any and all money and other property paid over to or received
      by
      Secured Parties pursuant to the provisions of this Section 3(b) shall be
      retained by Secured Parties as part of the Collateral and shall be applied
      in
      accordance with the provisions hereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) In
      the
      event the shares of Stock included in the Collateral are uncertificated or
      are
      not delivered to Secured Parties pursuant to Section 2(b)(i), the shares of
      Stock included in the Collateral shall be segregated in CHR’s share register
      from other common shares, $.01 par value per share, of CHR owned by an
      Individual Pledgor, and the registration of such shares of Stock in CHR’s share
      register shall include, and each Individual Pledgor hereby instructs CHR to
      so
      include, an annotation of the letters “PL” until the Collateral is returned to
      Pledgors pursuant to this Agreement, provided that the Secured Parties’ security
      interests in the Collateral created pursuant to this Agreement and the
      continuation of such security interest shall not be impaired or otherwise
      adversely affected in the event CHR’s transfer agent does not so annotate or
      segregate (or continue to annotate or segregate) the shares of Stock included
      in
      the Collateral following CHR’s written request therefor.

     

    
      	4.  	
              SUBSTITUTION
                OF COLLATERAL

            

    

     

    Provided
      that no Event of Default shall then have occurred and be continuing, any
      Individual Pledgor may at any time propose that Secured Parties accept
      substitute collateral and/or credit support (e.g.,
      an
      irrevocable standby letter of credit) in lieu of any of such Individual
      Pledgor’s portion of the Collateral as may be specified in writing by such
      Individual Pledgor. If, in the sole judgment of Secured Parties, such proposed
      substitute collateral or credit support (hereinafter referred to as
“Replacement
      Assurances”)
      is
      satisfactory in form and comfort to Secured Parties and affords Secured Parties
      protection at least equivalent to the protection afforded by such Individual
      Pledgor’s portion of the Collateral, then the Individual Pledgor and Secured
      Parties shall cooperate, at the Individual Pledgor’s sole cost and expense, to
      effect the substitution of such Replacement Assurances for such Individual
      Pledgor’s portion of the Collateral, including (i) the preparation, execution,
      delivery and filing of such agreements and other documents as may be requested
      by Secured Parties in order to create and perfect in favor of Secured Parties
      a
      perfected first-priority security interest in the proposed substitute collateral
      and/or to establish Secured Parties’ recourse to the proposed credit support,
      and (ii) execution and delivery of such documents as may be necessary to release
      the Secured Parties’ security interest in such Collateral.

     

    
      	5.  	
              REMEDIES
                OF DEFAULT

            

    

     

    (a) If
      at any
      time an Event of Default shall have occurred and be continuing, then, in
      addition to having the right to exercise any right or remedy of a secured party
      upon default under the Uniform Commercial Code as then in effect in the
      jurisdiction in which the Collateral is held by Secured Parties and the right
      to
      exercise any right or remedy of Secured Parties under the Merger Agreement
      or
      otherwise, Secured Parties shall, to the extent permitted by law, without being
      required to give any notice to Pledgors except as provided below:

     

    (i) Apply
      any
      cash held by them hereunder in the manner provided in Section 5(g);

     

    (ii) If
      there
      shall be no such cash or if the cash so applied shall be insufficient to pay
      in
      full the items specified in Sections 5(g)(i) and (ii), collect, receive,
      appropriate and realize upon the Collateral or any part thereof, and/or sell,
      assign, contract to sell or otherwise dispose of and deliver the Collateral
      or
      any part thereof, in its entirety or in portions, at public or private sale
      or
      at any broker’s board, on any securities exchange or at any of Secured Parties’
places of business or elsewhere, for cash, upon credit or for future delivery,
      and at such price or prices as Secured Parties may deem best, and Secured
      Parties may (except as otherwise provided by law) be the purchaser of any or
      all
      of the Collateral so sold and thereafter may hold the same, absolutely, free
      from any right or claim of whatsoever kind, but shall in each case be subject
      to
      the terms and conditions of the Lock-Up Agreement; and

     

    (iii) Upon
      the
      occurrence of an Event of Default, Secured Parties or their nominee shall have
      the right, upon not less than one (1) day’s notice to Pledgors, to exercise any
      and all rights of conversion, exchange, subscription or any other rights,
      privileges or options pertaining to any shares of the Collateral as if it were
      the absolute owner thereof, including, without limitation, the right to
      exchange, at their discretion, any or all of the Collateral upon the merger,
      consolidation, reorganization, recapitalization or other readjustment of CHR,
      or
      upon the exercise by CHR of any right, privilege or option pertaining to any
      such shares of the Collateral, and, in connection therewith, to deposit and
      deliver any and all of the Collateral with any committee, depository, transfer
      agent, registrar or other designated agency upon such terms and conditions
      as
      Secured Parties may determine.

     

    (b) In
      the
      event of a sale as aforesaid, Secured Parties are authorized to, at any such
      sale, if they deem it advisable to do so, restrict the number of prospective
      bidders or purchasers and/or further restrict such prospective bidders or
      purchasers to persons who will represent and agree that they meet such
      suitability standards as Secured Parties may deem appropriate, are purchasing
      for their own account, for investment, and not with a view to the distribution
      or resale of the Collateral, and may otherwise require that such sale be
      conducted subject to restrictions as to such other matters as Secured Parties
      may deem necessary in order that such sale may be effected in such manner as
      to
      comply with all applicable state and federal securities laws. Upon any such
      sale, Secured Parties shall have the right to deliver, assign and transfer
      to
      the purchaser thereof the Collateral so sold.

     

    (c) Notwithstanding
      anything to the contrary contained herein, in the event Secured Parties exercise
      any of their remedies hereunder against any portion of the Collateral
      representing less than all of the Collateral, Secured Parties agree to do so
      on
      a pro-rata basis according to each Individual Pledgor’s proportionate share of
      the Collateral.

     

    (d) (i) Pledgors
      hereby acknowledge that, notwithstanding that a higher price might be obtained
      for the Collateral at a public sale than at a private sale or sales, the making
      of a public sale of the Collateral may be subject to registration requirements
      under applicable securities laws and similar other legal restrictions,
      compliance with which would require such actions on the part of Pledgors, would
      entail such expenses, and would subject Secured Parties, any underwriter through
      whom the Collateral may be sold and any controlling person of any of the
      foregoing to such liabilities, as would make a public sale of the Collateral
      impractical or inadvisable. Accordingly, Pledgors hereby agree that private
      sales made by Secured Parties in good faith in accordance with the provisions
      of
      Sections 5(a) or (b) may
      be at
      prices and on other terms less favorable to the seller than if the Collateral
      were sold at public sale, and that Secured Parties shall not have any obligation
      to take any steps in order to permit the Collateral to be sold at public sale,
      a
      private sale being considered or deemed to be a sale in a commercially
      reasonable manner.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii) Each
      purchaser at any such sale shall hold the property sold, absolutely, free from
      any claim or right of whatsoever kind, including any equity or right of
      redemption of any Individual Pledgor, each of whom hereby specifically waives
      all rights of redemption, stay or appraisal which any Individual Pledgor has
      or
      may have under any rule of law or statute now existing or hereafter adopted.
      Secured Parties shall give Pledgors not less than five (5) days’ written notice
      of its intention to make any such public or private sale. Such notice, in case
      of a public sale, shall state the time and place fixed for such sale, and,
      in
      case of a sale at broker’s board, on a securities exchange, at one or more of
      Secured Parties’ places of business or elsewhere, shall state the board,
      exchange or other location at which such sale is to be made and the day on
      which
      the Collateral, or that portion thereof so being sold, will first be offered
      for
      sale at such location. Such notice, in case of a private sale, shall state
      only
      the date on or after which such sale may be made. Any such notice given as
      aforesaid shall be deemed to be reasonable notification. Notwithstanding the
      above, all sales of the Collateral shall be subject to applicable state and
      federal securities laws.

     

    (iii) Any
      such
      public sale shall be held at such time or times within ordinary business hours
      and at such place or places as Secured Parties may fix in the notice of such
      sale. At any sale the Collateral may be sold in one lot as an entirety or in
      parts, as Secured Parties may determine, but in all cases subject to Section
      5(c). Secured Parties shall not be obligated to make any sale pursuant to any
      such notice. Secured Parties may, without notice or publication, adjourn any
      sale or cause the same to be adjourned from time to time by announcement at
      the
      time and place fixed for the sale, and such sale may be made at any time or
      place to which the same may be so adjourned. In case of any sale of all or
      any
      part of the Collateral on credit or for future delivery, the Collateral so
      sold
      may be retained by Secured Parties until the selling price is paid by the
      purchaser thereof, but Secured Parties shall not incur any liability in case
      of
      the failure of such purchaser to take up and pay for the Collateral so sold
      and,
      in case of any such failure, such Collateral may again be sold upon like
      notice.

     

    (iv) On
      any
      sale of the Collateral, Secured Parties are hereby authorized to comply with
      any
      limitation or restriction in connection with such sale that it may be advised
      by
      counsel is necessary in order to avoid any violation of applicable law or in
      order to obtain any required approval of the purchaser or purchasers by any
      governmental regulatory authority or officer or court.

     

    (v) Subject
      to Section 5(c), it is expressly understood and agreed by Pledgors that Secured
      Parties may proceed against all or any portion or portions of the Collateral
      and
      all other collateral securing the Secured Obligations in such order and at
      such
      time as Secured Parties, in their sole discretion, see fit, and Pledgors hereby
      expressly waive any rights under the doctrine of marshalling of
      assets.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (vi) Compliance
      with the foregoing procedures shall result in such sale or disposition being
      considered or deemed to have been made in a commercially reasonable
      manner.

     

    (e) Secured
      Parties, instead of exercising the power of sale herein conferred upon them,
      may
      proceed by a suit or suits at law or in equity to foreclose their lien or
      security interest arising from this Agreement and sell the Collateral, or any
      portion thereof in a manner consistent with Section 5(c), under a judgment
      or
      decree of a court or courts of competent jurisdiction.

     

    (f) Each
      of
      the rights, powers, and remedies provided herein or now or hereafter existing
      at
      law or in equity or by statute or otherwise shall be cumulative and concurrent
      and shall be in addition to every other right, power or remedy provided for
      herein or therein or now or hereafter existing at law or in equity or by statute
      or otherwise. The exercise of any such right, power or remedy shall not preclude
      the simultaneous or later exercise of any or all other such rights, powers
      or
      remedies, including under the Merger Agreement, except there shall be no
      duplication of recovery. No notice to or demand on Pledgors in any case shall
      entitle Pledgors to any other notice or demand in similar or other
      circumstances.

     

    (g) The
      proceeds of any collection, recovery, receipt, appropriation, realization or
      sale as aforesaid shall be applied by Secured Parties in the following
      order:

     

    (i) First,
      to
      the payment of all costs and expenses of every kind incurred by Secured Parties
      in connection therewith or incidental to the care, safekeeping or otherwise
      of
      any of the Collateral, including, without limitation, reasonable attorneys’ fees
      and expenses;

     

    (ii) Second,
      to the payment of all other Secured Obligations; and

     

    (iii) Finally,
      to the payment to Pledgors of any surplus then remaining from such proceeds
      unless otherwise required by law or directed by a court of competent
      jurisdiction. The payment of any such surplus to Pledgors shall be made in
      proportion to each Individual Pledgor’s share of the Collateral. 

     

     

    
      	6.  	
              REPRESENTATIONS,
                WARRANTIES AND COVENANTS OF
                PLEDGORS

            

    

     

    (a) Each
      Individual Pledgor, severally, but not jointly, represents, warrants and
      covenants that:

     

    (i)
       CREG
      is a
      corporation duly incorporated, validly existing and in good standing under
      the
      laws of the State of Florida and has the full legal power and authority to
      own
      the Collateral.

     

    (ii)
       Each
      Individual Pledgor has all requisite capacity, power and authority, being under
      no legal restriction, limitation or disability, to own the Collateral.

     

    (iii) Each
      Individual Pledgor has full power and authority to execute and deliver this
      Agreement and to perform its or his obligations hereunder. The execution, and
      delivery of this Agreement has been duly and validly authorized by the Board
      of
      Directors of CREG. No other corporate proceedings on the part of CREG are
      necessary to authorize the consummation of the transactions contemplated hereby
      on behalf of CREG. This Agreement has been duly and validly executed and
      delivered by each Individual Pledgor and constitutes the valid and legally
      binding obligation of each Individual Pledgor, enforceable against each
      Individual Pledgor in accordance with its terms and conditions. No consents,
      approvals, orders or authorizations of, or registration, declaration or filing
      with, any government or governmental agency is required by or with respect
      to
      any Individual Pledgor in connection with the execution and delivery of this
      Agreement or the consummation of the transactions contemplated hereby.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (iv) Each
      Individual Pledgor is or, with respect to the Collateral described in clause
      (ii) of Section 1(a), not later than the time of each Individual Pledgor’s
      acquisition thereof will be, the direct record and beneficial owner of each
      share of the Individual Pledgor’s portion of the Collateral. Each Individual
      Pledgor has and will have good, valid and marketable title thereto, free and
      clear of all Encumbrances other than the security interest created by this
      Agreement.

     

    (v) The
      Collateral is and will be duly and validly pledged to Secured Parties in
      accordance with law, and Secured Parties have a good, valid, and perfected
      first
      lien on and security interest in the Collateral and the proceeds
      thereof.

     

    (vi) Neither
      the execution and the delivery of this Agreement, nor the consummation of the
      transactions contemplated hereby, by Pledgors, will (A) violate any
      constitution, statute, regulation, rule, injunction, judgment, order, decree,
      ruling, charge, or other restriction of any government, governmental agency,
      or
      court to which any Individual Pledgor is subject or any provision of its
      articles of incorporation, certificate of formation, by-laws, limited liability
      company agreement or other organizational documents, as applicable, or (B)
      result in a breach of, constitute a default under, result in the acceleration
      of, create in any person the right to accelerate, terminate, modify, or cancel,
      or require any notice under any agreement, contract, lease, license, instrument,
      or other arrangement to which any Individual Pledgor is a party or by which
      it
      or he is bound or to which any of its or his assets is subject.

     

    (vii) There
      is
      no action, claim, suit, proceeding or investigation pending, or to the knowledge
      of Pledgors, threatened or reasonably anticipated, against or affecting any
      Individual Pledgor, this Agreement, or the transactions contemplated hereby,
      before or by any court, arbitrator or governmental authority which might
      adversely affect any Individual Pledgor’s ability to perform its obligations
      under this Agreement or might adversely affect the value of the
      Collateral. 

     

    (b) Until
      all
      Secured Obligations have been paid and performed in full or until all of the
      Collateral is returned to Pledgors pursuant to Section 8 hereof, Pledgors
      hereby covenant that, unless Secured Parties otherwise consent in advance in
      writing:

     

    (i) Each
      Individual Pledgor shall (A) at the request of Secured Parties, execute,
      deliver and file any and all financing statements, continuation statements,
      stock powers, instruments, and other documents necessary or desirable, in
      Secured Parties’ opinion, to create, perfect, preserve, validate or otherwise
      protect the pledge of the Collateral to Secured Parties and Secured Parties’
lien on and security interest in the Collateral and the first priority thereof,
      (B) maintain or cause to be maintained at all times the pledge of the
      Collateral to Secured Parties and Secured Parties’ lien on and security interest
      in the Collateral and the first priority thereof, and (C) defend the
      Collateral and Secured Parties’ lien on and security interest therein and the
      first priority thereof against all claims and demands of all persons at any
      time
      claiming the same or any interest therein adverse to Secured Parties, and pay
      pro rata all costs and expenses (including, without limitation, reasonable
      attorneys’ fees and expenses) in connection with such defense.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii) No
      Individual Pledgor shall sell, transfer, pledge, assign or otherwise dispose
      of
      any of the Collateral or any interest therein, and no Individual Pledgor shall
      create, incur, assume or suffer to exist any Encumbrance with respect to such
      Individual Pledgor’s portion of the Collateral or any interest therein (except
      pursuant hereto).

     

    (iii) 
      No
      Individual Pledgor shall take any action in connection with the Collateral
      or
      otherwise which would impair the value of the interests or rights of such
      Individual Pledgor therein or which would impair the interests or rights of
      Secured Parties therein or with respect thereto.

     

     

    
      	7.  	
              RESPONSIBILITIES
                OF SECURED PARTIES IN POSSESSION OF THE
                COLLATERAL

            

    

     

    (a) Secured
      Parties shall have no duty with respect to the Collateral other than the duty
      to
      use reasonable care in the custody and preservation of the Collateral.

     

    (b) Secured
      Parties shall be protected in acting upon any written notice, request, waiver,
      consent, certificate, receipt, authorization, power of attorney or other paper
      or document which Secured Parties in good faith believe to be
      genuine.

     

     

    
      	8.  	
              RETURN
                OF COLLATERAL

            

    

     

    Upon
      the
      later of (i) the fourth (4th)
      anniversary of the date first written above or (ii) the resolution of all Events
      of Default or CHP Indemnity Claims asserted prior to the date set forth in
      the
      immediately preceding clause (i), if any, this Agreement shall terminate and
      the
      Collateral then held by Secured Parties shall promptly be returned to Pledgors
      at the address of Pledgors set forth herein or at such other address as Pledgors
      may direct in writing. Secured Parties shall not be deemed to have made any
      representation or warranty with respect to any Collateral so returned, except
      that such Collateral is free and clear, on the date of such return, of any
      and
      all liens, charges and encumbrances arising from Secured Parties’ own
      acts.

     

     

    
      	9.  	
              ADDITIONAL
                ACTIONS AND DOCUMENTS

            

    

     

    Each
      Individual Pledgor hereby agrees to take or cause to be taken such further
      actions (including, without limitation, the delivery of certificates for all
      of
      CHR’s shares hereafter acquired by such Pledgor), to execute, deliver and file
      or cause to be executed, delivered and filed such further documents and
      instruments, and to obtain such consents as may be necessary or desirable,
      in
      the opinion of Secured Parties, in order to fully effectuate the purposes,
      terms
      and conditions of this Agreement, whether before, at or after the occurrence
      of
      an Event of Default.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	10.  	
              SURVIVAL

            

    

     

    It
      is the
      express intention and agreement of the parties hereto that all covenants,
      agreements, statements, representations, warranties and indemnities made by
      Pledgors herein shall survive the execution and delivery of this
      Agreement.

     

     

    
      	11.  	
              ENTIRE
                AGREEMENT

            

    

     

    This
      Agreement and the Merger Agreement constitutes the entire agreement between
      the
      parties hereto and supersedes all prior understandings, agreements, or
      representations by or among the parties hereto, written or oral.

     

     

    
      	12.  	
              NOTICES

            

    

     

    All
      notices, demands, requests, claims and other communications hereunder will
      be in
      writing. Any notice, demand, request, claim or other communication hereunder
      shall be deemed duly given if (and then effective three business days after)
      it
      is sent by registered or certified mail, return receipt requested, postage
      prepaid, and addressed to the intended recipient as set forth
      below:

     

    If
      to an
      Individual Pledgor:

    

    c/o
      James
      M. Seneff, Jr.

    CNL
      Center at City Commons

    450
      South
      Orange Avenue, 14th
      Floor

    Orlando,
      Florida 32801

    Telecopy:
      (407) 650-1011

    

    With
      copy
      to:

    

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

    450
      South
      Orange Avenue, Suite 800

    Orlando,
      Florida 32801

    Attn:
      Richard Davidson, Esq.

    Telecopy:
      (407) 843-4444 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    If
      to
      Secured Parties:

    

    Audit
      Committee of the Board of Directors

     

    CNL
      Hotels & Resorts, Inc.

     

    CNL
      Center II at City Commons

     

    420
      South
      Orange Avenue

     

    Orlando,
      Florida 32801

     

    Telecopy:
      (407) 835-3229

     

    Attn:
      Chairman of the Audit Committee

     

    With
      copy
      to:

     

    Greenberg
      Traurig, LLP

     

    The
      MetLife Building

     

    200
      Park
      Avenue

     

    New
      York,
      NY 10166

     

    Attn:
      Judith D. Fryer, Esq.

     

    Telecopy:
      (212) 801-6400

     

    Hogan
      & Hartson L.L.P.

     

    555
      Thirteenth Street, N.W.

     

    Washington,
      D.C. 20004

     

    Attn:
      J.
      Warren Gorrell, Jr., Esq.

     

    Telecopy:
      (202) 637-5910

     

     

    Any
      party
      hereto may send any notice, demand, request, claim, or other communication
      hereunder to the intended recipient at the address set forth above using any
      other means (including personal delivery, expedited courier, messenger service,
      telecopy, ordinary mail, or electronic mail), but no such notice, demand,
      request, claim, or other communication shall be deemed to have been duly given
      unless and until it actually is received by the intended recipient. Any party
      hereto may change the address to which notices, requests, demands, claims,
      and
      other communications hereunder are to be delivered by giving the other parties
      hereto notice in the manner herein set forth.

     

     

    
      	13.  	
              AMENDMENT
                AND WAIVERS

            

    

     

    This
      Agreement may not be amended except by an instrument in writing signed by the
      parties hereto. No waiver by any party hereto of any default, misrepresentation,
      or breach of warranty or covenant hereunder, whether intentional or not, shall
      be deemed to extend to any prior or subsequent default, misrepresentation,
      or
      breach of warranty or covenant hereunder or affect in any way any rights arising
      by virtue of any prior or subsequent such occurrence. No delay or failure on
      the
      part of Secured Parties in exercising any right, power or privilege under this
      Agreement or under any other instruments given in connection with or pursuant
      to
      this Agreement shall impair any such right, power or privilege or be construed
      as a waiver of any default or any acquiescence therein. No single or partial
      exercise of any such right, power or privilege shall preclude the further
      exercise of such right, power or privilege, or the exercise of any other right,
      power or privilege. No waiver shall be valid against any party hereto unless
      made in writing and signed by such party, as the case may be, and then only
      to
      the extent expressly specified therein.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      	14.  	
              SUCCESSION
                AND ASSIGNMENT

            

    

     

    This
      Agreement shall be binding upon and shall inure to the benefit of the parties
      hereto and their respective successors and permitted assigns. This Agreement
      may
      not be assigned by any Individual Pledgor without the prior written consent
      of
      CHR or by a Secured Party without the prior written consent of CREG.

     

     

    
      	15.  	
              SEVERABILITY

            

    

     

    Any
      term
      or provision of this Agreement or any other agreement, document or writing
      given
      pursuant to or in connection with this Agreement that is invalid or
      unenforceable in any situation in any jurisdiction shall not affect the validity
      or enforceability of the remaining terms and provisions hereof or the validity
      or enforceability of the offending term or provision in any other situation
      or
      in any other jurisdiction. 

     

     

    
      	16.  	
              GOVERNING
                LAW

            

    

     

    THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC
      LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT
      OF
      LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER
      JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
      OTHER THAN THE STATE OF NEW YORK.

     

     

    
      	17.  	
              PRONOUNS

            

    

     

    All
      pronouns and any variations thereof in this Agreement shall be deemed to refer
      to the masculine, feminine, neuter, singular or plural, as the identity of
      the
      person or entity may require.

     

     

    
      	18.  	
              HEADINGS

            

    

     

    The
      section headings contained in this Agreement are inserted for convenience only
      and shall not affect in any way the meaning or interpretation of this
      Agreement.

     

     

    
      	19.  	
              COUNTERPARTS

            

    

     

    This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original but all of which together will constitute one and the same
      instrument.

    

    [Remainder
      of page intentionally left blank.]

    
      
        -
          -

         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, each of the parties hereto has duly executed and delivered
      this
      Pledge and Security Agreement, or has caused this Pledge and Security Agreement
      to be duly executed and delivered on its behalf, as of the day and year first
      above written.

     

    

    PLEDGORS:
      

    

    CNL
      REAL
      ESTATE GROUP, INC.

    

    

    By:
      James M. Seneff,
      Jr.                    

    Name:
      James M. Seneff, Jr.

    Title:
      Chief Executive Officer

    

    

                                                                            James
      M.
      Seneff,
      Jr.                    

    James
      M.
      Seneff, Jr.

    

    

    

                                                                           Robert
      A.
      Bourne                               

    Robert
      A.
      Bourne

    

    

    

                                                                           C.
      Brian
      Strickland                             

    C.
      Brian
      Strickland

    

    

    

                                                                            Thomas
      J. Hutchison
      III                    

    Thomas
      J.
      Hutchison III

    

    

    

                                                                           John
      A.
      Griswold                                 

    John
      A.
      Griswold

    

    

    

                                                                           
Barry
      A.N.
      Bloom                      
 

    Barry
      A.N. Bloom

    

    

    Marcel
      Verbaas                                    

    Marcel
      Verbaas

     

    SECURED PARTIES:
      

    

    
      	 	 	 
	 	CNL
              HOTELS
              & RESORTS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Greerson
              G. McMullen
	 	
              
Name:
              Greerson
              G. McMullen
	 	Title:
              Senior Vice President, General Counsel and Corporate
              Secretary

     

    
      	 	 	 
	 	

              CNL
                HOTELS & RESORTS ACQUISITION, LLC

            
	 
 	 
 	 
 
	 	By:  	/s/ Greerson
              G. McMullen
	 	
              
Name:Greerson
              G. McMullen
	 	Title:
              Senior
              Vice President, General Counsel and Corporate
              Secretary

    

    

    
      
         

         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    SCHEDULE
      A

    

    
      	
               

              Pledgor

            	
               

              Number
                of Shares Pledged

            	
              Proportionate
                

              Share
                of Collateral

            
	
              CNL
                Real Estate Group, Inc.

               

            	
              477,299.00

            	
              63.6399%

            
	
              James
                M. Seneff, Jr.

               

            	
              56,062.00

            	
              7.4749%

            
	
              Robert
                A. Bourne

            	
              100,079.00

            	
              13.3438%

            
	
              C.
                Brian Strickland

               

            	
              31,483.00

            	
              4.1977%

            
	
              Thomas
                J. Hutchison III

               

            	
              52,316.00

            	
              6.9755%

            
	
              John
                A. Griswold

               

            	
              20,831.00

            	
              2.7775%

            
	
              Barry
                A.N. Bloom

               

            	
              7,764.00

            	
              1.0352%

            
	
              Marcel
                Verbaas

            	
              4,166.00

            	
              0.5555%

            
	
              Total:

            	
              750,000.00

            	
              100.00%Exhibit 10.1

    
      
        
          

        

        Exhibit 10.1

        TRANSITION
          SERVICES AGREEMENT

        THIS TRANSITION SERVICES
          AGREEMENT (this “Agreement”) is made and entered into as of this ___
          day of June, 2006 (the “Effective Date”), by and between CNL HOTELS
& RESORTS, INC. (“Customer”), and CNL FINANCIAL GROUP,
          INC. (“Service Provider”).  (Customer and Service Provider may be
          referred to herein as a “Party” and collectively as the “Parties”).

        Preliminary Statement

        WHEREAS,
          Customer desires that Service Provider provide certain services to Customer
          upon
          the terms and subject to the conditions of this Agreement; and

        WHEREAS,
          Service Provider is willing to provide such services to Customer upon the
          terms
          and subject to the conditions of this Agreement.

        NOW,
          THEREFORE, for and in consideration of the foregoing premises and the
          mutual covenants and agreements hereinafter set forth, Customer and Service
          Provider agree as follows:

        1.                 
Services.  Service Provider, directly
          or through its
          subsidiaries, shall provide, or cause to be provided, the services for
          Customer
          as are more particularly described in Schedule “A” attached hereto and made a
          part hereof (collectively, the “Services”).  (As used herein, the term
“Service Provider” shall include any such subsidiaries providing any
          Services.).  The Services and Fees set forth on Schedule “A” attached
          hereto accurately describe the Services being provided to Customer by Service
          Provider and/or its subsidiaries, and the fees being charged for such Services
          as of the Effective Date (as defined in Section 3 below).  The Fees and
          rates payable by Customer hereunder for all of the Services other than
          Legal
          Services are at Service Provider’s historical cost without any profit mark-up
          and are the same Fees or rates that Service Provider charges to its other
          customers (which are all either subsidiaries or other affiliates of Service
          Provider), and the Fees payable by Customer hereunder for Legal Services
          are an
          annual fixed amount agreed upon in advance by Customer and Service Provider
          without any profit mark-up.  All Services provided by Service Provider
          hereunder shall be provided promptly and in a first-class, professional
          manner,
          consistent with the manner and level of care with which such services were
          provided by Service Provider to Customer on March 31, 2006 and consistent
          with
          industry standards for provision of such services.  Notwithstanding
          anything in this Agreement to the contrary, all Services to be provided
          by
          Service Provider pursuant to this Agreement will be rendered solely for
          purposes
          of providing operational and other support to Customer in the conduct of
          Customer’s business, and all decisions requiring the business judgment of the
          officers, directors and other appropriate management personnel of Customer
          shall
          at all times remain in their sole and exclusive discretion.

        2.                 
Compensation.  As compensation for
          the Services to be
          provided by Service Provider to Customer hereunder, Customer shall pay
          those
          fees on Schedule “A” (collectively, the “Fees”).  Within fifteen (15) days
          after the end of each month, Service Provider will submit one invoice to
          Customer for the Fees (the “Invoice’), together with reasonable documentation
          supporting each of the invoiced amounts.  Service Provider shall maintain
          accurate and complete books of account necessary to support the amounts
          set
          forth on all Invoices, and Service Provider shall furnish to Customer such
          additional documentation supporting an Invoice or the calculation of the
          Fees
          thereon as Customer shall reasonably request in writing.  All Fees shall be
          payable monthly within thirty (30) days after receipt by Customer of the
          Invoice
          for the Services provided.  Any delinquent Fees shall accrue interest at
          the “prime rate”, as published in The Wall Street Journal from time to time,
          plus two percent (2%), per annum, until paid in full.

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        3.                 
Term and Termination.  The term of this Agreement
          shall
          commence on the Effective Date, and shall continue for an initial term
          terminating the later of nine (9) months from the Effective Date or March
          31,
          2007 (the “Initial Term”).  Customer, at its option, may terminate this
          Agreement in its entirety at the end of any term upon ninety (90) days
          prior
          written notice to Service Provider (the “Termination Notice”).  Following
          the Initial Term, if no Termination Notice is timely given, then, solely
          with
          respect to any Services not otherwise previously terminated as provided
          hereunder, the term of this Agreement shall automatically be extended for
          successive six (6) month periods until a Termination Notice is timely
          given.  Subject to its obligations to make payments pursuant to this
          Agreement for Services previously rendered, Customer, at its sole option,
          may
          terminate any or all Services, other than the Investor Relations / Call
          Center
          and Legal Services, either in whole or in part, under this Agreement upon
          thirty
          (30) business days prior written notice to Service Provider, and Customer,
          at
          its sole option, may terminate the Investor Relations / Call Center
          and/or the Legal Services (part (A) or part (B) or both), upon ninety (90)
          days
          written notice to Service Provider.  Upon the termination of all Services
          by Customer, this Agreement shall automatically terminate provided that
          Customer
          has paid in full for all Services previously rendered.  Notwithstanding the
          foregoing, (a) Service Provider may terminate this entire Agreement at
          any time
          in its sole discretion, without penalty or other cost, upon giving at least
          one
          hundred and eighty (180) days prior written notice to Customer; (b) either
          Party
          may terminate this Agreement upon giving written notice to the other Party
          in
          the event that (i) the other Party becomes insolvent, (ii) the other Party
          makes
          a general assignment for the benefit of its creditors, or (iii) if a voluntary
          or involuntary petition under the United States Bankruptcy Code is filed
          regarding the other Party; or (c) if the Customer fails to pay the Fees
          within
          the time specified under this Agreement, then Service Provider may terminate
          this Agreement upon giving written notice to Customer if such default has
          continued for a period of thirty (30) days after Service Provider gave
          written
          notice of such default to Customer.  Notwithstanding the foregoing, (y) the
          Service Provider shall not be obligated to provide the Software Services
          (as
          described on Schedule “A” attached hereto) to Customer after September 30, 2006;
          and (z) in the event of any termination of this Agreement or any of the
          Services
          for any reason, Service Provider shall use commercially reasonable efforts
          to
          cooperate with any third-party and/or Customer in the transition of such
          Services for a reasonable period of time following such termination not
          to
          exceed thirty (30) days from such termination date.  Nothing in this
          Agreement shall prevent Customer from engaging other service providers
          to
          provide any or all of the Services or from “in-sourcing” any or all of the
          Services, and any such activity shall not waive or alter any of Customer’s
          rights under this Agreement; provided, however, that this
          provision shall not relieve Customer of its obligation to provide Service
          Provider with the appropriate notice of termination of any such Services
          within
          the time periods specified above and to pay the Fees for Services rendered
          by
          Service Provider pursuant to this Agreement.

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        4.                 
Indemnification.  Service Provider agrees
          to indemnify
          Customer, its subsidiaries and their officers, directors, employees, agents,
          successors and assigns for and hold them harmless from any liabilities,
          losses,
          damages, costs and expenses (including reasonable attorney’s fees) incurred by
          them arising out of the provision of the Services by Service Provider or
          its
          officers, directors, employees or other representatives and resulting from
          its
          or their gross negligence or willful misconduct.  The provisions of this
          Section 4 shall survive the termination or expiration of this
          Agreement.

        5.                 
Insurance.  During the term of this
          Agreement and for
          two (2) years after the termination or expiration of this Agreement, Service
          Provider shall maintain in full force and effect on its behalf, and on
          behalf of
          any of its subsidiaries providing the Services hereunder (the “Subsidiaries”),
          insurance with responsible and reputable insurance companies with respect
          to its
          and their respective properties and business, in such amounts and covering
          such
          risks as is carried generally in accordance with sound business practice
          by
          companies in similar businesses similarly situated, including, without
          limitation, a general commercial liability insurance policy which shall
          insure
          Service Provider and the Subsidiaries against claims for up to $2,000,000. 
Upon written request by Customer, Service Provider shall furnish Customer
          a
          certificate of insurance evidencing the insurance coverage required under
          this
          Section 5.  Service Provider shall notify Customer in advance of any
          termination, cancellation, nonrenewal or material modification of any such
          insurance coverage.  The provisions of this Section 5 shall survive the
          termination or expiration of this Agreement.

        6.                 
Limitation of Liability.  IN NO EVENT SHALL EITHER
          PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, PUNITIVE,
          SPECIAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS ARISING OUT OF OR RELATED
          TO
          THIS AGREEMENT OR THE PERFORMANCE OR BREACH THEREOF.  SERVICE PROVIDER’S
          LIABILITY TO CUSTOMER, IF ANY, SHALL IN NO EVENT EXCEED THE TOTAL AMOUNT
          OF
          COMPENSATION PAID TO SERVICE PROVIDER HEREUNDER BY CUSTOMER EXCEPT IN THE
          EVENT
          OF FRAUD, WILLFUL MISCONDUCT, GROSS NEGLIGENCE OR BAD FAITH BY SERVICE
          PROVIDER
          OR THE APPLICABLE SUBSIDIARY, AS THE CASE MAY BE.  FURTHERMORE, IN NO EVENT
          SHALL SERVICE PROVIDER BE LIABLE TO CUSTOMER FOR ANY DAMAGES RESULTING
          FROM OR
          RELATED TO ANY DELAY BY SERVICE PROVIDER IN THE PERFORMANCE OF SERVICES
          UNDER
          THIS AGREEMENT SOLELY DUE TO EVENTS OR ACTS BEYOND SERVICE PROVIDER’S CONTROL
          AND SO LONG AS SERVICE PROVIDER SHALL HAVE USED COMMERCIALLY REASONABLE
          EFFORTS
          TO MITIGATE THE EFFECTS OF SUCH EVENTS OR ACTS TO THE EXTENT SERVICE PROVIDER
          WAS ABLE TO DO SO.

        7.                 
Employees/Independent Contractor.  With respect to a
          particular Service, Service Provider shall be responsible for selecting
          the
          employees who will perform any particular Service and administering such
          employees (i.e. setting such employees’ hours of work, establishing compensation
          structure, work load balancing, etc.).  Customer shall have the right to
          assist Service Provider in directing the employees assigned to perform
          specific
          Services with respect to the substance of their work and for determining
          authorization levels governing each particular Service and the disbursement
          of
          any of Customer’s funds that Service Provider’s employees will have the right to
          commit for any Service hereunder.  Service Provider shall act as an
          independent contractor and not as the agent of Customer in performing the
          Services, maintaining control over its employees, its subcontractors and
          their
          employees and complying with all withholding of income at source requirements,
          whether federal, state, local or foreign.  No employee of Service Provider
          performing Services shall be considered an employee of Customer or any
          of its
          affiliates until such time, if ever, as they accept Customer’s offer of
          employment.  Furthermore, Service Provider shall not subcontract any of the
          Services without the prior written approval of Customer, provided,
however, that certain Services may be performed by one or more
          Subsidiaries (as defined in Section 5 above).  Service Provider shall, and
          shall cause its employees to, observe and comply in all material respects
          with
          any and all laws bearing on the performance of the Services, including
          but not
          limited to (as applicable), the Occupational Safety & Health Act of 1970, as
          amended, the Fair Labor Standards Act of 1938, as amended, Title VII of
          the
          Civil Rights Acts of 1964 and 1991, the Age Discrimination in Employment
          Act,
          the Americans with Disability Act and Executive Order 11246, as amended
          (including Equal Opportunity and Nondiscrimination provisions thereof),
          FIFRA
          and all environmental laws pertinent to the performance of the
          Services.

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        8.                 
Taxes.  Service Provider shall
          be paid the Fees
          provided for in Schedule "A” without withholding for any taxes.  In the
          event that there are any sales or similar taxes required to be paid on
          the
          Services or on this Agreement (other than federal or state income taxes)
          (“Taxes”), then Customer shall be responsible for payment of any such
          Taxes.  If any Taxes are paid by Service Provider on this Agreement or the
          Services, then Service Provider shall be entitled to provide reasonably
          detailed
          written invoices to Customer for the amount of such Taxes, and Customer
          shall
          pay such invoices within thirty (30) days following receipt thereof.  Any
          delinquent payment by Customer shall accrue interest as set forth in Section
          2
          above.

        9.                 
Sarbanes-Oxley Act Compliance.  In connection with
          Customer’s responsibility to maintain effective internal controls as required by
          the Sarbanes-Oxley Act of 2002, Service Provider shall furnish to Customer
          copies of Service Provider’s applicable policies, procedures, internal controls,
          and other such documentation as Customer shall reasonably request in writing
          pertaining to the Services provided hereunder as shall be necessary for
          Customer
          to comply with the Sarbanes-Oxley Act, including, but not limited to, activities
          required by the Public Company Accounting Oversight Board (the “PCAOB”) in its
          release 2004-1, or other similar guidance promulgated by the PCAOB or other
          regulatory agency having jurisdiction over Customer.  Customer shall
          promptly reimburse Service Provider for the reasonable out of pocket costs
          and
          expenses incurred by Service Provider in complying with this Section 9
          upon its
          receipt of an invoice from Service Provider.  Any documents or information
          furnished to Customer by Service Provider pursuant to this Section 9 shall
          be
          treated as “Confidential Information” pursuant to Section 19 below.

        10.             
Notices.  Any notice, approval,
          request, authorization,
          consent, or other communication required or permitted under this Agreement
          shall
          be given in writing and shall be deemed to be given when delivered in person,
          sent by facsimile transmission on a business day, with proof of receipt,
          or two
          (2) business days after being deposited in the United States mail, properly
          addressed and stamped with the required postage, registered or certified
          mail,
          return receipt requested, to the intended recipient as set forth
          below:

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

         

        	
                If to Customer:

                 

                CNL Hotels & Resorts, Inc.

                420 South Orange Avenue

                Suite 700

                Orlando, FL  32801-3313

                Attention:  Chief Financial
                  Officer

                Fax: 407-835-3229

                 

              	
                If to Service Provider:

                 

                CNL Financial Group, Inc.

                CNL Center at City Commons

                450 S. Orange Avenue

                14th Floor

                Orlando, FL 32801

                Attention:  Chief Financial
                  Officer

                Fax: 407-650-1199

              
	
                 

              	
                 

              
	
                With a copy to:

                 

                General Counsel

                Fax:  407-540-2702

                 

              	
                 

              

        Either Party may change its address or
          facsimile number specified above by giving the other Party notice of such
          change
          in accordance with this Section 10.

        11.             
No Third Party Beneficiaries.  Notwithstanding anything
          to the contrary in this Agreement, the Parties do not intend any person
          or
          entity not a party to this Agreement to be a beneficiary of any provision
          of
          this Agreement, and no provision of this Agreement shall be interpreted
          or
          construed as being for the benefit of any third party. Further, no third
          party
          shall by virtue of any provision of this Agreement have a right to action
          or an
          enforceable legal remedy against either Party to this Agreement.

        12.             
Non-Waiver.  The failure of either
          Party to insist upon
          or enforce strict performance by the other Party of any provision of this
          Agreement or to exercise any right under this Agreement shall not be construed
          as a waiver to any extent of such Party’s right to assert or rely upon any such
          provision or right in that or any other instance.

        13.             
Assignment; Binding Effect.  Neither Party shall
          assign
          this Agreement or any right, interest or benefit under this Agreement without
          the prior written consent of the other Party; provided, however,
          that (a) certain Services may be performed by one or more subsidiaries
          of
          Service Provider, and (b) Customer may assign its rights under this Agreement
          (i) to a direct or indirect wholly-owned subsidiary upon written notice
          to
          Service Provider, provided further, that in such event Customer shall
          remain liable for the payment of the Fees due hereunder, (ii) by operation
          of
          law, or (iii) to any successor corporate entity.  Subject to the foregoing,
          this Agreement shall be fully binding upon, inure to the benefit of and
          be
          enforceable by, the Parties and their respective successors and permitted
          assigns.

        14.             
Entire Agreement.  This Agreement and Schedule
“A”
attached hereto set
          forth the entire agreement of the Parties with regard to the
          subject matter hereof, and supersede any and all prior representations,
          statements or agreements of the Parties with respect to such subject
          matter.

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        15.             
Amendment.  No change, amendment
          or modification of any
          provision of this Agreement shall be valid unless set forth in a written
          instrument signed by both of the Parties hereto.

        16.             
Legal Compliance.  Service Provider will,
          at its sole
          cost and expense, comply with all federal, state, and local laws, rules,
          regulations, and ordinances affecting the Services provided under this
          Agreement.

        17.             
Governing Law.  This Agreement shall
          be interpreted and
          construed under the laws of the State of Florida, and will be deemed for
          such
          purposes to have been made, executed, and performed in the State of
          Florida.

        18.             
Savings Clause.  The invalidity or unenforceability
          of
          any particular provision of this Agreement shall not invalidate any other
          provision of this Agreement and the Agreement shall be construed in all
          respects
          as if such invalid or unenforceable provision had been omitted provided
          that all
          of the essential terms and conditions of this Agreement for each Party
          remain
          valid, binding, and enforceable.

        19.             
Confidentiality.

        (a)               
For purposes of this Section
          19:  (i) “Confidential
          Information” means all trade secrets or other confidential or proprietary
          information, financial or otherwise, about the business, affairs, and assets
          of
          a Party and its Affiliates; (ii) “Affiliate” means any entity that,
          directly or indirectly, is in control of, is controlled by, or is under
          common
          control with (A) a Party or (B) James M. Seneff, Jr., individually or jointly
          with his wife; (iii) “Controlled Affiliates” means with respect to a
          Party, any entity that directly or indirectly is controlled by such Party;
          (iv)
          an entity shall be deemed to be “controlled by” a person if the person
          possesses, directly or indirectly, the power to either (A) vote 50% or
          more of
          the securities (including, without limitation, convertible securities)
          having
          ordinary voting power, or (B) direct or cause the direction of the management
          or
          policies of such entity whether by contract or otherwise, and (v)
“Representative” means the employees, contractors, agents, directors,
          officers, legal counsel, accountants and financial advisors of a
          party.

        (b)              
A Party, a Party’s Controlled Affiliates, and
          the Representatives
          of a Party and the Party’s Controlled Affiliates will not disclose or use any
          Confidential Information which is furnished, or to be furnished, to it
          (each a
“Receiving Party”) by the other Party (the “Disclosing Party”) or any of the
          Representatives or Affiliates of the Disclosing Party at any time or in
          any
          manner other than as permitted by this Agreement.

        (c)               
Notwithstanding the prohibition
          in Section 19 above, the Receiving
          Party shall be entitled to disclose Confidential Information:  (i) to its
          Controlled Affiliates and to its and its Controlled Affiliates’ Representatives,
          to the extent necessary to permit such Controlled Affiliates and Representatives
          to assist the Receiving Party in performing the conduct of its business,
          (ii) to
          the extent such information becomes publicly available through no fault
          of the
          Receiving Party, any of Receiving Party’s Controlled Affiliates or the
          Representatives of the Receiving Party or the Receiving Party’s Controlled
          Affiliates; or (iii) as compelled or required by applicable law, a valid
          subpoena, or other legal mandate; provided, however, (A) in the
          event that the Receiving Party or any of Receiving Party’s Controlled Affiliates
          or the Representatives of the Receiving Party or the Receiving Party’s
          Controlled Affiliates receives such a subpoena or other legal mandate,
          it shall
          provide the Disclosing Party with prompt written notice of same as far
          in
          advance as practicable of the date such party is required to make such
          disclosure, and (B) Customer shall use commercially reasonable efforts
          to have
          the fees in Schedule “A” hereto redacted from any filing of this Agreement with
          a governmental body or agency.

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        (d)              
Upon a termination of this Agreement,
          each Receiving Party shall
          return, in the manner directed by the Disclosing Party, the Confidential
          Information that has been furnished to such Receiving Party, such Receiving
          Party shall destroy copies of all materials that contain Confidential
          Information or portions of Confidential Information, in whatever form or
          medium
          such copies or portions are contained (provided that, with respect to electronic
          copies, destruction shall be required only to the extent reasonably
          practicable), and the Receiving Party shall furnish to the Disclosing Party
          a
          certificate to the reasonable satisfaction of the Disclosing Party certifying
          that such destruction has taken place.

        (e)               
Notwithstanding anything herein
          to the contrary (including
          elsewhere in this Section 19), Service Provider shall take all commercially
          reasonable steps and follow all reasonable direction from Customer in order
          to
          protect the confidentiality, and any privileged nature of, any information
          provide to, or generated by, Service Provider in connection with the performance
          of the Legal Services.

        (f)                
The provisions of this Section
          19 shall survive the termination or
          expiration of this Agreement.

        20.             
Counterparts.  This Agreement may be
          executed in
          counterparts, each of which shall be deemed an original, and all of which
          shall
          constitute one and the same instrument.

        21.             
Attorneys Fees.  In connection with any
          litigation,
          including appellate proceedings or bankruptcy proceedings, arising under
          this
          Agreement, the prevailing party in such litigation shall be entitled to
          recover
          reasonable attorney’s fees and costs from the non-prevailing party.

         

         

         

         

        [SIGNATURE PAGE TO
          FOLLOW]

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        IN WITNESS WHEREOF, the
          Parties have duly executed this Transition Services Agreement effective
          as of
          the Effective Date.

         

         

        
          
            	 	 	 

                    “Customer”

                  
	 	

                    CNL
                      HOTELS & RESORTS, INC.

                  
	 
 	 
 	 
 
	 	By:  	/s/ Greerson
                    G. McMullen
	 	
                    
Name:
                    Greerson G. McMullen
	 	Title:
                    Senior Vice President, General Counsel and Corporate
                    Secretary

          

           

          
            	 	 	 

                    “Service
                      Provider”

                  
	 	
                    
                       

                    

                    
                      CNL
                        FINANCIAL GROUP, INC.

                    

                  
	 
 	 
 	 
 
	
                     

                     

                  	By:  	/s/ James
                    M.
                    Seneff, Jr.
	 	
                    
Name:
                    James M. Seneff, Jr.
	 	Title: Chief
                    Executive Officer

          

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

        

      

      SCHEDULE “A”

      SERVICES

      
        	
                Service

              	
                Summary
                  Description

              	
                Fee

              
	
                Software
                  Services

              	
                Provide
                  access to Oracle Financial enterprise resource planning system. 
                  Provide Oracle database administration support.

              	
                $155
                  per
                  hour for database administration based on actual hours used by
                  Customer;
                  33.33% allocation of Oracle outsourcing cost (Customer’s portion
                  approximately $6,000 per month)

              
	
                Investor
                  Relations / 

                Call
                  Center
                  Services

              	
                Investor
                  Relations: Maintain and update investor database as necessary (address
                  changes, etc.), facilitate transfers for investors, process distributions
                  to investors including calculation, payment and mailing, facilitate
                  redemptions and the Distribution Reinvestment Plan (DRP), facilitate
                  mailing to investors as necessary (such as quarterly mailings to
                  New York
                  investors and quarterly reports), assist with proxy solicitation
                  process
                  as necessary.

                Call
                  Center: Answer calls received from registered representatives of
                  broker/dealer firms and investors.  Questions range from answering
                  historical performance questions, questions re: distributions,
                  tax
                  information, current events, etc.  The Call Center also assists
                  investors or their financial advisors with processes, such as how
                  to
                  complete a transfer, how to participate in the DRP or how to redeem
                  shares, and provides items requested by investors and/or their
                  financial
                  advisors (such as copies of tax information).

              	
                Proportionate
                  allocation of the direct cost of compensation,
                  benefits and direct overhead expenses of the Service Provider’s associates
                  (employees) providing the services based upon the number of investors
                  attributable to Customer relative to the total number of investors
                  being
                  serviced by Service Provider.  (Estimated annual fee is
                  $850,000).

              
	
                Legal
                  Services

              	
                Service
                  Provider’s Office of General Counsel provides:  assistance with
                  retention and management of outside legal counsel; negotiation
                  of fee
                  discounts with outside legal counsel; bill review, billing guideline
                  compliance, and processing and tracking of bills from outside legal
                  counsel.

              	
                $80,000
                  annually paid in twelve equal monthly installments of $6,667.

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