Document:

Exhibit 10.20

 

AMENDED
AND RESTATED LOAN AGREEMENT

 

 

Dated as of December 4, 2003

 

 

Between

 

 

ROSE
SPE 1, LP,

as Borrower

 

 

and

 

 

BANK
OF AMERICA, N.A.,

as Lender

 

 

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE
  1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  1.1.

  	
  DEFINITIONS

  	
   

  
	
  SECTION
  1.2.

  	
  PRINCIPLES
  OF CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2 GENERAL TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.1.

  	
  LOAN
  COMMITMENT; DISBURSEMENT TO BORROWER

  	
   

  
	
  SECTION
  2.2.

  	
  INTEREST
  RATE

  	
   

  
	
  SECTION
  2.3.

  	
  LOAN
  PAYMENTS

  	
   

  
	
  SECTION
  2.4.

  	
  PREPAYMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3 CONDITIONS PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.1.

  	
  REPRESENTATIONS
  AND WARRANTIES; COMPLIANCE WITH CONDITIONS

  	
   

  
	
  SECTION
  3.2.

  	
  DELIVERY
  OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES

  	
   

  
	
  SECTION
  3.3.

  	
  RELATED
  DOCUMENTS

  	
   

  
	
  SECTION
  3.4.

  	
  ORGANIZATIONAL
  DOCUMENTS

  	
   

  
	
  SECTION
  3.5.

  	
  OPINIONS
  OF BORROWER’S COUNSEL

  	
   

  
	
  SECTION
  3.6.

  	
  ANNUAL
  BUDGET

  	
   

  
	
  SECTION
  3.7.

  	
  TAXES
  AND OTHER CHARGES

  	
   

  
	
  SECTION
  3.8.

  	
  COMPLETION
  OF PROCEEDINGS

  	
   

  
	
  SECTION
  3.9.

  	
  PAYMENTS

  	
   

  
	
  SECTION
  3.10.

  	
  TRANSACTION
  COSTS

  	
   

  
	
  SECTION
  3.11.

  	
  NO
  MATERIAL ADVERSE CHANGE

  	
   

  
	
  SECTION
  3.12.

  	
  OPERATING
  LEASES

  	
   

  
	
  SECTION
  3.13.

  	
  LEASES;
  RENT ROLLS

  	
   

  
	
  SECTION
  3.14.

  	
  TENANT
  ESTOPPELS

  	
   

  
	
  SECTION
  3.15.

  	
  REA
  ESTOPPELS

  	
   

  
	
  SECTION
  3.16.

  	
  SUBORDINATION
  AND ATTORNMENT

  	
   

  
	
  SECTION
  3.17.

  	
  TAX
  LOT

  	
   

  
	
  SECTION
  3.18.

  	
  PHYSICAL
  CONDITIONS REPORT; PIP REPORT

  	
   

  
	
  SECTION
  3.19.

  	
  MANAGEMENT
  AGREEMENT

  	
   

  
	
  SECTION
  3.20.

  	
  APPRAISAL

  	
   

  
	
  SECTION
  3.21.

  	
  FINANCIAL
  STATEMENTS

  	
   

  
	
  SECTION
  3.22.

  	
  NET
  OPERATING INCOME

  	
   

  
	
  SECTION
  3.23.

  	
  FRANCHISE
  AGREEMENTS

  	
   

  
	
  SECTION
  3.24.

  	
  GROUND
  LEASE

  	
   

  
	
  SECTION
  3.25.

  	
  FURTHER
  DOCUMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4 REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.1.

  	
  ORGANIZATION

  	
   

  
	
  SECTION
  4.2.

  	
  STATUS
  OF BORROWER; AFFILIATED LESSEE

  	
   

  
	
  SECTION
  4.3.

  	
  VALIDITY
  OF DOCUMENTS

  	
   

  
	
  SECTION
  4.4.

  	
  NO
  CONFLICTS

  	
   

  
	
  SECTION
  4.5.

  	
  LITIGATION

  	
   

  
	
  SECTION
  4.6.

  	
  AGREEMENTS

  	
   

  
	
  SECTION
  4.7.

  	
  SOLVENCY

  	
   

  
	
  SECTION
  4.8.

  	
  FULL
  AND ACCURATE DISCLOSURE

  	
   

  
	
  SECTION
  4.9.

  	
  NO
  PLAN ASSETS

  	
   

  
	
  SECTION
  4.10.

  	
  NOT
  A FOREIGN PERSON

  	
   

  
	
  SECTION
  4.11.

  	
  ENFORCEABILITY

  	
   

  
	
  SECTION
  4.12.

  	
  BUSINESS
  PURPOSES

  	
   

  

 

i

 

	
  SECTION
  4.13.

  	
  COMPLIANCE

  	
   

  
	
  SECTION
  4.14.

  	
  FINANCIAL
  INFORMATION

  	
   

  
	
  SECTION
  4.15.

  	
  CONDEMNATION

  	
   

  
	
  SECTION
  4.16.

  	
  UTILITIES
  AND PUBLIC ACCESS; PARKING

  	
   

  
	
  SECTION
  4.17.

  	
  SEPARATE
  LOTS

  	
   

  
	
  SECTION
  4.18.

  	
  ASSESSMENTS

  	
   

  
	
  SECTION
  4.19.

  	
  INSURANCE

  	
   

  
	
  SECTION
  4.20.

  	
  USE
  OF PROPERTY

  	
   

  
	
  SECTION
  4.21.

  	
  CERTIFICATE
  OF OCCUPANCY; LICENSES

  	
   

  
	
  SECTION
  4.22.

  	
  FLOOD
  ZONE

  	
   

  
	
  SECTION
  4.23.

  	
  PHYSICAL
  CONDITION

  	
   

  
	
  SECTION
  4.24.

  	
  BOUNDARIES

  	
   

  
	
  SECTION
  4.25.

  	
  LEASES
  AND RENT ROLL

  	
   

  
	
  SECTION
  4.26.

  	
  FILING
  AND RECORDING TAXES

  	
   

  
	
  SECTION
  4.27.

  	
  MANAGEMENT
  AGREEMENT

  	
   

  
	
  SECTION
  4.28.

  	
  ILLEGAL
  ACTIVITY

  	
   

  
	
  SECTION
  4.29.

  	
  CONSTRUCTION
  EXPENSES

  	
   

  
	
  SECTION
  4.30.

  	
  PERSONAL
  PROPERTY

  	
   

  
	
  SECTION
  4.31.

  	
  TAXES

  	
   

  
	
  SECTION
  4.32.

  	
  PERMITTED
  ENCUMBRANCES

  	
   

  
	
  SECTION
  4.33.

  	
  FEDERAL
  RESERVE REGULATIONS

  	
   

  
	
  SECTION
  4.34.

  	
  INVESTMENT
  COMPANY ACT

  	
   

  
	
  SECTION
  4.35.

  	
  RECIPROCAL
  EASEMENT AGREEMENTS

  	
   

  
	
  SECTION
  4.36.

  	
  NO
  CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE

  	
   

  
	
  SECTION
  4.37.

  	
  INTELLECTUAL
  PROPERTY

  	
   

  
	
  SECTION
  4.38.

  	
  SURVEY

  	
   

  
	
  SECTION
  4.39.

  	
  EMBARGOED
  PERSON

  	
   

  
	
  SECTION
  4.40.

  	
  PATRIOT
  ACT

  	
   

  
	
  SECTION
  4.41.

  	
  FRANCHISE
  AGREEMENTS.

  	
   

  
	
  SECTION
  4.42.

  	
  GROUND
  LEASE REPRESENTATIONS

  	
   

  
	
  SECTION
  4.43.

  	
  SURVIVAL;
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5 BORROWER COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.1.

  	
  EXISTENCE;
  COMPLIANCE WITH LEGAL REQUIREMENTS

  	
   

  
	
  SECTION
  5.2.

  	
  MAINTENANCE
  AND USE OF PROPERTY

  	
   

  
	
  SECTION
  5.3.

  	
  WASTE

  	
   

  
	
  SECTION
  5.4.

  	
  TAXES
  AND OTHER CHARGES

  	
   

  
	
  SECTION
  5.5.

  	
  LITIGATION

  	
   

  
	
  SECTION
  5.6.

  	
  ACCESS
  TO PROPERTY

  	
   

  
	
  SECTION
  5.7.

  	
  NOTICE
  OF DEFAULT

  	
   

  
	
  SECTION
  5.8.

  	
  COOPERATE
  IN LEGAL PROCEEDINGS

  	
   

  
	
  SECTION
  5.9.

  	
  PERFORMANCE
  BY BORROWER

  	
   

  
	
  SECTION
  5.10.

  	
  AWARDS;
  INSURANCE PROCEEDS

  	
   

  
	
  SECTION
  5.11.

  	
  FINANCIAL
  REPORTING

  	
   

  
	
  SECTION
  5.12.

  	
  ESTOPPEL
  STATEMENT

  	
   

  
	
  SECTION
  5.13.

  	
  OPERATING
  LEASE; LEASING MATTERS

  	
   

  
	
  SECTION
  5.14.

  	
  PROPERTY
  MANAGEMENT

  	
   

  
	
  SECTION
  5.15.

  	
  LIENS

  	
   

  
	
  SECTION
  5.16.

  	
  DEBT
  CANCELLATION

  	
   

  
	
  SECTION
  5.17.

  	
  ZONING

  	
   

  
	
  SECTION
  5.18.

  	
  ERISA

  	
   

  
	
  SECTION
  5.19.

  	
  NO
  JOINT ASSESSMENT

  	
   

  
	
  SECTION
  5.20.

  	
  RECIPROCAL
  EASEMENT AGREEMENTS

  	
   

  
	
  SECTION
  5.21.

  	
  ALTERATIONS

  	
   

  

 

ii

 

	
  SECTION
  5.22.

  	
  FRANCHISE
  AGREEMENTS

  	
   

  
	
  SECTION
  5.23.

  	
  GROUND
  LEASE

  	
   

  
	
  SECTION
  5.24.

  	
  INTEREST
  RATE CAP AGREEMENT

  	
   

  
	
  SECTION
  5.25.

  	
  MANAGER
  OF FLINT PROPERTY

  	
   

  
	
  SECTION
  5.26.

  	
  CONSOLIDATED
  TANGIBLE NET WORTH

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6 ENTITY COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.1.

  	
  SINGLE
  PURPOSE ENTITY/SEPARATENESS

  	
   

  
	
  SECTION
  6.2.

  	
  CHANGE
  OF NAME, IDENTITY OR STRUCTURE

  	
   

  
	
  SECTION
  6.3.

  	
  BUSINESS
  AND OPERATIONS

  	
   

  
	
  SECTION
  6.4.

  	
  INDEPENDENT
  DIRECTOR

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7 NO SALE OR ENCUMBRANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.1.

  	
  TRANSFER
  DEFINITIONS

  	
   

  
	
  SECTION
  7.2.

  	
  NO
  SALE/ENCUMBRANCE

  	
   

  
	
  SECTION
  7.3.

  	
  PERMITTED
  TRANSFERS

  	
   

  
	
  SECTION
  7.4.

  	
  LENDER’S
  RIGHTS

  	
   

  
	
  SECTION
  7.5.

  	
  ASSUMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8 INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.1.

  	
  INSURANCE

  	
   

  
	
  SECTION
  8.2.

  	
  CASUALTY

  	
   

  
	
  SECTION
  8.3.

  	
  CONDEMNATION

  	
   

  
	
  SECTION
  8.4.

  	
  RESTORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9 RESERVE FUNDS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  9.1.

  	
  REQUIRED
  REPAIRS

  	
   

  
	
  SECTION
  9.2.

  	
  REPLACEMENTS

  	
   

  
	
  SECTION
  9.3.

  	
  INTENTIONALLY
  OMITTED

  	
   

  
	
  SECTION
  9.4.

  	
  REQUIRED
  WORK

  	
   

  
	
  SECTION
  9.5.

  	
  RELEASE
  OF RESERVE FUNDS

  	
   

  
	
  SECTION
  9.6.

  	
  TAX
  AND INSURANCE RESERVE FUNDS

  	
   

  
	
  SECTION
  9.7.

  	
  EXCESS
  CASH RESERVE

  	
   

  
	
  SECTION
  9.8.

  	
  OPERATING
  EXPENSES; EXTRAORDINARY EXPENSES

  	
   

  
	
  SECTION
  9.9.

  	
  RESERVE
  FUNDS GENERALLY

  	
   

  
	
  SECTION 9.10.

  	
  GROUND RENT RESERVE FUNDS.

  	
   

  
	
  SECTION
  9.11.

  	
  LEASE
  ENHANCEMENT FUNDS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10 CASH MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.1.

  	
  CASH MANAGEMENT AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11 EVENTS OF DEFAULT; REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 11.1.

  	
  EVENT OF DEFAULT

  	
   

  
	
  SECTION 11.2.

  	
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12 ENVIRONMENTAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  12.1.

  	
  ENVIRONMENTAL
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  SECTION 12.2.

  	
  ENVIRONMENTAL COVENANTS

  	
   

  
	
  SECTION 12.3.

  	
  LENDER’S RIGHTS

  	
   

  
	
  SECTION 12.4.

  	
  OPERATIONS AND MAINTENANCE PROGRAMS

  	
   

  
	
  SECTION 12.5.

  	
  ENVIRONMENTAL DEFINITIONS

  	
   

  
	
  SECTION 12.6.

  	
  INDEMNIFICATION

  	
   

  

 

iii

 

	
  ARTICLE
  13 SECONDARY MARKET

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 13.1.

  	
  TRANSFER OF LOAN

  	
   

  
	
  SECTION 13.2.

  	
  DELEGATION OF SERVICING

  	
   

  
	
  SECTION 13.3.

  	
  DISSEMINATION OF INFORMATION

  	
   

  
	
  SECTION
  13.4.

  	
  COOPERATION

  	
   

  
	
  SECTION 13.5.

  	
  SECURITIZATION INDEMNIFICATION

  	
   

  
	
  SECTION
  13.6.

  	
  INTENTIONALLY
  DELETED

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  14 INDEMNIFICATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  14.1.

  	
  GENERAL
  INDEMNIFICATION

  	
   

  
	
  SECTION
  14.2.

  	
  MORTGAGE
  AND INTANGIBLE TAX INDEMNIFICATION

  	
   

  
	
  SECTION
  14.3.

  	
  ERISA
  INDEMNIFICATION

  	
   

  
	
  SECTION
  14.4.

  	
  SURVIVAL

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  15 EXCULPATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  15.1.

  	
  EXCULPATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  16 NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  16.1.

  	
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  17 FURTHER ASSURANCES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  17.1.

  	
  REPLACEMENT
  DOCUMENTS

  	
   

  
	
  SECTION
  17.2.

  	
  RECORDING
  OF MORTGAGE, ETC.

  	
   

  
	
  SECTION
  17.3.

  	
  FURTHER
  ACTS, ETC.

  	
   

  
	
  SECTION
  17.4.

  	
  CHANGES
  IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS

  	
   

  
	
  SECTION
  17.5.

  	
  EXPENSES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  18 WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  18.1.

  	
  REMEDIES
  CUMULATIVE; WAIVERS

  	
   

  
	
  SECTION
  18.2.

  	
  MODIFICATION,
  WAIVER IN WRITING

  	
   

  
	
  SECTION
  18.3.

  	
  DELAY
  NOT A WAIVER

  	
   

  
	
  SECTION
  18.4.

  	
  TRIAL
  BY JURY

  	
   

  
	
  SECTION
  18.5.

  	
  WAIVER
  OF NOTICE

  	
   

  
	
  SECTION
  18.6.

  	
  REMEDIES
  OF BORROWER

  	
   

  
	
  SECTION
  18.7.

  	
  WAIVER
  OF MARSHALLING OF ASSETS

  	
   

  
	
  SECTION
  18.8.

  	
  WAIVER
  OF STATUTE OF LIMITATIONS

  	
   

  
	
  SECTION
  18.9.

  	
  WAIVER
  OF COUNTERCLAIM

  	
   

  
	
  SECTION
  18.10.

  	
  GRADSKY
  WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  19 GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  19.1.

  	
  CHOICE
  OF LAW

  	
   

  
	
  SECTION
  19.2.

  	
  SEVERABILITY

  	
   

  
	
  SECTION
  19.3.

  	
  PREFERENCES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  20 MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  20.1.

  	
  SURVIVAL

  	
   

  
	
  SECTION
  20.2.

  	
  LENDER’S
  DISCRETION

  	
   

  
	
  SECTION
  20.3.

  	
  HEADINGS

  	
   

  
	
  SECTION
  20.4.

  	
  COST
  OF ENFORCEMENT

  	
   

  
	
  SECTION
  20.5.

  	
  SCHEDULES
  INCORPORATED

  	
   

  
	
  SECTION
  20.6.

  	
  OFFSETS,
  COUNTERCLAIMS AND DEFENSES

  	
   

  
	
  SECTION
  20.7.

  	
  NO
  JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES

  	
   

  
	
  SECTION
  20.8.

  	
  PUBLICITY

  	
   

  
	
  SECTION
  20.9.

  	
  CONFLICT;
  CONSTRUCTION OF DOCUMENTS; RELIANCE

  	
   

  
	
  SECTION
  20.10.

  	
  ENTIRE
  AGREEMENT

  	
   

  

 

iv

 

	
  SECTION
  20.11.

  	
  CROSS
  COLLATERALIZATION

  	
   

  
	
  SECTION
  20.12.

  	
  TAX
  DISCLOSURE

  	
   

  
	
  SECTION
  20.13.

  	
  MEZZANINE
  LOAN AGREEMENTS

  	
   

  

 

v

 

AMENDED
AND RESTATED LOAN AGREEMENT

 

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

 

RECITALS:

 

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

 

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

 

WHEREAS, on even date
herewith Bridge Lender and Original Borrowers entered into that certain Amended
and Restated Renewal Promissory Note in the amount of $130,000,000 (as the same
may be amended, restated, replaced, supplemented or otherwise modified from
time to time, the “Note”), which amended and restated the
Bridge Note in its entirety.

 

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

 

WHEREAS, Original Lenders
assigned all of their right, title and interest in and to the Bridge Loan, the
Amended and Restated Note, the Credit Agreement, the Mortgages and the other
Bridge Loan Documents to Lender; and

 

 

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

 

ARTICLE 1

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1.        DEFINITIONS

 

For all purposes of this
Agreement, except as otherwise expressly required or unless the context clearly
indicates a contrary intent:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

“Agent” shall mean Bank
of America, N.A. or any successor Eligible Institution acting as Agent under
the Cash Management Agreement.

 

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

 

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

 

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

 

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

 

“Annex” shall have the
meaning set forth in Section 4.40 hereof.

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

“Bridge Loan” shall
have the meaning set forth in the Recitals hereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

“Debt Service” shall
mean, with respect to any particular period of time, scheduled principal and/or
interest payments under the Note.

 

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

 

“Default” shall mean
the occurrence of any event hereunder or under any other Loan Document which,
but for the giving of notice or passage of time, or both, would be an Event of
Default.

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Excess Cash” shall
mean an amount equal to all funds remaining in the Cash Management Account on
each Payment Date following the disbursements and application of funds pursuant
to the terms of the Cash Management Agreement.

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Fitch” shall mean
Fitch, Inc.

 

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

 

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

 

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

 

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

 

“Franchisor” shall mean,
individually or collectively, as the context may require, each franchisor under
a Franchise Agreement.  As of the date
hereof, each Franchisor of each Property is set forth on Schedule B attached
hereto.  No replacement or substitute
Franchisor shall be selected, approved or consented to by Borrower or
Affiliated Lessee other than in accordance with the terms hereof.

 

7

 

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

 

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

 

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

 

“Ground Rent” means all
amounts payable to the landlords under each Ground Lease.

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

“Indemnified Parties”
shall mean (a) Lender, (b) any prior owner or holder of the Loan or
Participations in the Loan, (c) any servicer or prior servicer of the Loan, (d)
any Investor or any prior Investor in any Securities, (e) any trustees,
custodians or other fiduciaries who hold or who have held a full or partial
interest in the Loan for the benefit of any Investor or other third party, (f)
any receiver  or other fiduciary
appointed in a foreclosure or other Creditors Rights Laws proceeding, (g) any
officers, directors, shareholders, partners, members, employees, agents,
servants, representatives, contractors, subcontractors, Affiliates or
subsidiaries of any and all of the foregoing, and (h) the heirs, legal
representatives, successors and assigns of any and all of the foregoing
(including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of the Indemnified Parties’ assets
and business), in all cases whether during the term of the Loan or as part of
or following a foreclosure of any or all of the Mortgages.

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

“Internal Revenue Code”
shall mean the Internal Revenue Code of 1986, as amended, as it may be further
amended from time to time, and any successor statutes thereto, and applicable
U.S. Department of Treasury regulations issued pursuant thereto in temporary or
final form.

 

“Interstate” shall mean
Interstate Management Company, L.L.C.

 

“Interstate Managed Properties”
shall mean each Property managed by Interstate pursuant to a Management
Agreement in effect as of the Closing Date and approved by Lender and shall
include the Flint Property regardless of whether it is managed by Interstate or
Flagstone.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Letter of Credit”  shall mean an irrevocable, unconditional,
transferable, clean sight draft letter of credit acceptable to Lender and the
Rating Agencies (either an evergreen letter of credit or one which does not
expire until at least (a) thirty (30) Business Days after the Maturity Date, as
the same may be extended or (b) such other applicable date in the event of a
Letter of Credit delivered pursuant to the provisions of Section 5.21,
Section 9.6, Section 9.10 or Section 9.11 

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

“LIBOR Margin” shall
mean 1.89%.

 

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

 

“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, any Property, any portion thereof or any interest therein, including,
without limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic’s, materialmen’s
and other similar liens and encumbrances.

 

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

 

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

 

“Loan Documents” shall
mean, collectively, this Agreement, the Note, the Mortgages, each Assignment of
Management Agreement, the Cash Management Agreement, the Collateral Assignment
of Interest Rate Cap, each Subordination, Non-Disturbance and Attornment
Agreement, each Subordination, Attornment and Security Agreement and any and
all other documents, agreements and certificates executed and/or delivered in
connection with the Loan,

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Manager” shall mean,
individually or collectively, as the context may require, each manager of a
Property under the terms of a Management Agreement.  As of the date hereof, each Manager of each Property is set forth
on Schedule B attached hereto.  No
replacement or substitute Manager shall be selected other than in accordance
with the terms hereof.

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

“Maximum Legal Rate”
shall mean the maximum nonusurious interest rate, if any, that at any time or
from time to time may be contracted for, taken, reserved, charged or received
on the indebtedness evidenced by the Note and as provided for herein or the
other Loan Documents, under the laws of such state or states whose laws are
held by any court of competent jurisdiction to govern the interest rate
provisions of the Loan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

“Net Operating Income”
shall mean, with respect to any period of time, the amount obtained by
subtracting Operating Expenses from Operating Income, as such amount may be
adjusted by Lender in its good faith discretion based on Lender’s current
underwriting standards and any underwriting standards then in use by any of the
Rating Agencies, including without limitation, adjustments for vacancy
allowance.

 

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

 

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

 

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

 

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

 

“Note Rate” shall mean
(a) with respect to the Interim Interest Period, an interest rate per annum
equal to 3.060%; and (b) with respect to each Interest Period thereafter,
through and including the Interest Period in which the Maturity Date or
Extended Maturity Date, as applicable, shall occur, an interest rate per annum
equal to (i) the LIBOR Rate (in all cases where clause (ii) below does not
apply), or (ii) the Static LIBOR Rate, to the extent provided in accordance
with the provisions of Section 2.2(b).

 

“OFAC” shall have the
meaning set forth in Section 4.40 hereof.

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

“Patriot Act” shall
have the meaning set forth in Section 4.40 hereof.

 

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

 

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

 

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

 

(a)           obligations of, or obligations fully
guaranteed as to payment of principal and interest by, the United States or any
agency or instrumentality thereof provided such obligations are backed by the
full faith and credit of the United States of America, including, without

 

16

 

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

 

(b)           Federal Housing Administration
debentures;

 

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

 

(d)           federal funds, unsecured certificates
of deposit, time deposits, bankers’ acceptances and repurchase agreements with
maturities of not more than 365 days of any bank, the short term obligations of
which at all times are rated in the highest short term rating category by each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency in the highest short term rating category and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial, or, if higher, then current ratings assigned to the
Securities); provided, however, that the investments described in this clause
must (i) have a predetermined fixed dollar of principal due at maturity that
cannot vary or change, (ii) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (iii) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (iv) such investments must not be subject to liquidation prior to
their maturity;

 

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

 

17

 

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

 

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

 

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

 

(h)           units of taxable money market funds
or mutual funds, with maturities of not more than 365 days and which funds are
regulated investment companies, seek to maintain a constant net asset value per
share and invest solely in obligations backed by the full faith and credit of
the United States, which funds have the highest rating available from each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) for money market funds or mutual
funds; and

 

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

 

18

 

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

 

provided, however, that no obligation or
security shall be a Permitted Investment if (A) such obligation or security
evidences a right to receive only interest payments, (B) the right to receive
principal and interest payments on such obligation or security are derived from
an underlying investment that provides a yield to maturity in excess of one
hundred twenty percent (120%) of the yield to maturity at par of such
underlying investment or (C) such obligation or security has a remaining term
to maturity in excess of one (1) year.

 

“Person” shall mean any
individual, corporation, partnership, joint venture, limited liability company,
estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any
fiduciary acting in such capacity on behalf of any of the foregoing.

 

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

 

“Physical Conditions Report”
shall mean a report prepared by a company reasonably satisfactory to Lender
regarding the physical condition of each Property, satisfactory in form and
substance to Lender in its reasonable discretion (the form  of reports accepted by Lender as of the
Closing Date shall be presumed to be in acceptable form for reports to be
submitted thereafter in accordance with the terms hereof).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Properties” shall mean
each parcel of real property (or leasehold interest in real property demised
under either Ground Lease, as the case may be), the Improvements thereon and all
Personal Property owned by Borrower and encumbered by the Mortgages, together
with all rights pertaining to such property and Improvements, as more
particularly described in the

 

19

 

granting clause of the Mortgages and referred to
therein as the “Property”.  “Property”
means any of the Properties.

 

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

 

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

 

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

 

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

 

20

 

accordance with the above provisions, the current
provider will continue to perform its obligations under the Rate Cap; and provided,
further, any replacement Rate Cap shall be accompanied by legal opinions
regarding the Rate Cap, in form and substance acceptable to Lender, including,
without limitation opinions with respect to (i) enforceability, (ii) payment
priority, (iii) choice of law and (iv) enforcement of judgments.  Furthermore, each Rate Cap shall provide for
(i) the calculation of interest, (ii) the determination of the interest rate,
(iii) the modification of the Interest Period and (iv) the distribution of
payments thereunder to be identical to the definition of Interest Period set
forth herein.

 

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

 

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

 

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

 

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

 

 “REMIC Trust” shall mean a “real estate
mortgage investment conduit” (within the meaning of Section 860D, or
applicable successor provisions, of the Code) that holds the Note.

 

“Rent Roll” shall have
the meaning set forth in Section 4.25 hereof.

 

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

 

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

 

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

 

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

 

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

 

“Replacements” shall
have the meaning set forth in Section 9.2(a) hereof.

 

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

 

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

 

21

 

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

 

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

 

“Required Work” shall
have the meaning set forth in Section 9.4 hereof.

 

“Reserve Accounts”
shall mean the Tax and Insurance Reserve Account, the Replacement Reserve
Account, the Required Repair Account, the Excess Cash Reserve Account (if
applicable), Operating Expense Account, the Extraordinary Expense Reserve
Account,  Ground
Rent Reserve Account, Lease Enhancement Account, the PIP Reserve Account and
any other escrow account established by the Loan Documents.

 

“Reserve Funds” shall
mean the Tax and Insurance Reserve Funds, the Replacement Reserve Funds, the
Required Repair Funds, the Ground Rent Reserve Funds, the Excess Cash Reserve
Funds (if applicable), the Operating Expense Reserve Funds, the Extraordinary
Expense Reserve Funds, the Lease Enhancement Funds, the PIP Reserve Funds and
any other escrow funds established by the Loan Documents.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

“Securitization Closing Date”
shall mean a date selected by Lender in its sole discretion by providing not
less than forty-eight (48) hours prior notice to Borrower.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Subordination, Attornment and
Security Agreement” shall mean for each Operating Lease with an
Affiliated Lessee, a Subordination, Attornment and Security Agreement or other
similar agreement among Lender, Borrower and the Affiliated Lessee, in the form
acceptable to Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified in accordance with the terms hereof.

 

“Subordination, Non-Disturbance and
Attornment Agreement” shall mean with respect to the Operating
Leases between Borrower and any Non-Affiliated Lessee, a Subordination,
Non-Disturbance and Attornment Agreement, by and among Lender, Borrower and the
applicable Non-Affiliated Lessee, in the form acceptable to Lender, as the same
may be amended, restated, replaced, supplemented or otherwise modified in
accordance with the terms hereof.

 

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

 

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

 

23

 

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

 

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

 

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

 

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

 

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

 

“Transferee” shall have
the meaning set forth in Section 7.5 hereof.

 

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

 

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

 

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

 

Section 1.2.        PRINCIPLES OF CONSTRUCTION

 

All references to
sections and schedules are to sections and schedules in or to this Agreement
unless otherwise specified.  All uses of
the word “including” shall mean “including, without limitation” unless the context
shall indicate otherwise.  Unless
otherwise specified, the words “hereof,” “herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.  Unless otherwise specified, all meanings
attributed to defined terms herein shall be equally applicable to both the
singular and plural forms of the terms so defined.

 

ARTICLE 2

GENERAL TERMS

 

Section 2.1.        LOAN COMMITMENT; DISBURSEMENT TO
BORROWER

 

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

 

24

 

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

 

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

 

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

 

Section 2.2.        INTEREST RATE

 

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

 

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

 

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

 

(c)           Computations and Determinations.  All interest shall be computed on the basis
of a year of 360 days and paid for the actual number of days elapsed during an
Interest Period.  Lender shall determine
each interest rate applicable to the Debt in accordance with this Agreement and
its determination thereof shall be conclusive in the absence of manifest
error.  The books and records of Lender
shall be prima facie evidence of all sums owing to Lender from time to time
under this Agreement, but the failure to record any such information shall not
limit or affect the obligations of Borrower under the Loan Documents.

 

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

 

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

 

25

 

interest from the
date due and payable until paid, payable on demand, at a rate per annum (the
“Default Rate”) equal to the Note Rate plus four percent (4%).

 

(f)            Usury Savings.  This Agreement and the Note are subject to
the express condition that at no time shall Borrower be obligated or required
to pay interest on the principal balance of the Loan at a rate which could
subject Lender to either civil or criminal liability as a result of being in
excess of the Maximum Legal Rate.  If,
by the terms of this Agreement or the other Loan Documents, Borrower is at any time
required or obligated to pay interest on the principal balance due hereunder at
a rate in excess of the Maximum Legal Rate, the LIBOR Rate, the Static LIBOR
Rate or the Default Rate, as the case may be, shall be deemed to be immediately
reduced to the Maximum Legal Rate and all previous payments in excess of the
Maximum Legal Rate shall be deemed to have been payments in reduction of
principal and not on account of the interest due hereunder.  All sums paid or agreed to be paid to Lender
for the use, forbearance, or detention of the sums due under the Loan, shall,
to the extent permitted by applicable law, be amortized, prorated, allocated,
and spread throughout the full stated term of the Loan until payment in full so
that the rate or amount of interest on account of the Loan does not exceed the
Maximum Legal Rate of interest from time to time in effect and applicable to
the Loan for so long as the Loan is outstanding.

 

Section 2.3.        LOAN PAYMENTS

 

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

 

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

 

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

 

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

 

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

 

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

 

26

 

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

 

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

 

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

 

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

 

(c)           Payments after Default.  Upon the occurrence and during the
continuance of an Event of Default, (i) interest on the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest and
other amounts due in respect of the Loan shall accrue at the Default Rate, and
(ii) Lender shall be entitled to receive and Borrower shall pay to Lender all
cash flow from the Properties in accordance with the terms of the Cash
Management Agreement, such amount to be applied by Lender to the payment of the
Debt in such order as Lender shall determine in its sole discretion, including,
without limitation, alternating applications thereof between interest and
principal.  Interest at the Default Rate
shall be computed from the occurrence of the Event of Default until the earlier
of (x) the actual receipt and collection of the Debt (or that portion thereof
that is then due) and (y) the cure of such Event of Default.  To the extent permitted by applicable law,
interest at the Default Rate shall be added to the Debt, shall itself accrue
interest at the same rate as the Loan and shall be secured by the Mortgages.  This paragraph shall not be construed as an
agreement or privilege to extend the date of the payment of the Debt, nor as a
waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default; the acceptance of any payment from Borrower
shall not be deemed to cure or constitute a waiver of any Event of Default; and
Lender retains its rights under this Agreement to accelerate and to continue to
demand payment of the Debt upon the happening of and during the continuance any
Event of Default, despite any payment by Borrower to Lender.

 

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

 

27

 

by Lender in
handling and processing such delinquent payment and to compensate Lender for
the loss of the use of such delinquent payment.  Any such amount shall be secured by the Mortgages and the other
Loan Documents to the extent permitted by applicable law.

 

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

 

(f)            Additional Payment Provisions.

 

(i)            If at any time after the date
hereof, Lender (which shall include, for purposes of this Section, any
corporation controlling Lender) reasonably determines that due to the adoption
or modification of any Legal Requirement regarding taxation, Lender’s required
levels of reserves, deposits, Federal Deposit Insurance Corporation insurance
or capital (including any allocation of capital requirements or conditions), or
similar requirements, or any interpretation or administration thereof by any
Tribunal or compliance of Lender with any of such requirements, has or would
have the effect of (a) increasing Lender’s costs relating to the Loan, or (b)
reducing the yield or rate of return of Lender on the Loan, to a level below
that which Lender could have achieved but for the adoption or modification of
any such Legal Requirements, Borrower shall, within fifteen (15) days of any
request by Lender, pay to Lender such additional amounts as (in Lender’s sole
judgment, after good faith and reasonable computation) will compensate Lender
for such increase in costs or reduction in yield or rate of return of Lender (a
“Consequential
Loss”).  No failure by Lender
to immediately demand payment of any additional amounts payable hereunder shall
constitute a waiver of Lender’s right to demand payment of such amounts at any
subsequent time.  Nothing herein
contained shall be construed or so operate as to require Borrower to pay any
interest, fees, costs or charges greater than is permitted by applicable Law.

 

(ii)           All payments made by Borrower
hereunder shall be made free and clear of, and without reduction for or on
account of, income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions, reserves or withholdings imposed, levied, collected, withheld
or assessed by any Governmental Authorities, which are imposed, enacted or
become effective on or after the date hereof (such non-excluded taxes being
referred to collectively as “Foreign Taxes”), excluding income and
franchise taxes of the

 

28

 

United States of
America or any political subdivision or taxing authority thereof or
therein.  If any Foreign Taxes are
required to be withheld from any amounts payable to Lender hereunder and such
Foreign Taxes are not a result of activities of Lender unrelated to the Loan or
Borrower, the amounts so payable to Lender shall be increased to the extent
necessary to yield to Lender (after payment of all Foreign Taxes) interest or
any such other amounts payable hereunder at the rate or in the amounts
specified hereunder. Whenever any Foreign Tax is payable pursuant to applicable
law by Borrower, as promptly as possible thereafter, Borrower shall send to
Lender an original official receipt, if available, or certified copy thereof
showing payment of such Foreign Tax. Borrower hereby indemnifies Lender for any
incremental taxes, interest or penalties that may become payable by Lender
which may result from any failure by Borrower to pay any such Foreign Tax when
due to the appropriate taxing authority of which Lender shall have provided
Borrower with prior written notice, if possible, or any failure by Borrower to
remit to Lender the required receipts or other required documentary evidence.
Lender’s inability to notify Borrower of any such Foreign Tax in accordance
with the immediately preceding sentence shall in no way relieve Borrower of its
obligations under this Section 2.3(f)(ii).

 

(iii)          If any requirement of law or any
change therein or in the interpretation or application thereof, shall hereafter
make it unlawful for Lender to make or maintain a Loan with the Note Rate being
based on LIBOR as contemplated hereunder, (i) the obligation of Lender
hereunder to make such Loan based on LIBOR or to convert the Loan from the
Static LIBOR Rate to the LIBOR Rate shall be canceled forthwith and (ii) any
outstanding LIBOR Loan shall be converted automatically to a loan bearing
interest at the Static LIBOR Rate (the “Static LIBOR Rate Loan”) on the next
succeeding Payment Date or within such earlier period as required by law.  Borrower hereby agrees promptly to pay
Lender, upon demand, any additional amounts necessary to compensate Lender for
any costs incurred by Lender in making any conversion in accordance with this
Agreement, including, without limitation, any interest or fees payable by
Lender to lenders of funds obtained by it in order to make or maintain the
LIBOR Loan hereunder.  If Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.3(f)(iii),
Lender shall provide Borrower with not less than ninety (90) days written
notice specifying in reasonable detail the event by reason of which it has
become so entitled and the additional amount required to fully compensate
Lender for such additional costs. 
Lender’s notice of such costs, as certified to Borrower, shall be
conclusive absent manifest error.

 

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

 

(A)          shall hereafter impose, modify or hold
applicable any reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by, any office of Lender

 

29

 

which is not otherwise
included in the determination of the LIBOR Rate hereunder;

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

Section 2.4.        PREPAYMENTS.

 

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

 

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

 

31

 

(c)           Payments After the Lockout Period.

 

(i)            Full Prepayment.

 

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

 

(B)           In addition to the foregoing
requirements for a full prepayment of the Loan, prior to Lender’s obligation to
accept a prepayment pursuant to the foregoing Section 2.4(c)(i)(A)
Borrower shall have paid any amounts required to be paid under
Section 2.4(c)(i) of the Mezzanine Loan Agreement to Mezzanine Lender in
connection with the full prepayment of the Mezzanine Loan.

 

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

 

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

 

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

 

32

 

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

 

(D)          After giving effect to the release of
the Lien of the Mortgage encumbering the Release Property, (i) the Debt Service
Coverage Ratio shall be no less than the greater of (A) the Debt Service
Coverage Ratio as of the Closing Date or (B) the Debt Service Coverage Ratio
immediately prior to such release, provided that in the event Borrower is not
able to meet such Debt Service Coverage Ratio test, Borrower shall be entitled
to “cure” the same by (1) pledging cash to Lender or delivering to Lender a
Letter of Credit as additional security for the Loan, in which instance the
amount of the Loan equal to the amount of such cash or the face value of the
Letter of Credit, shall be disregarded for the purpose of determining the then
outstanding principal balance of the Loan in connection with Lender’s
determination of the Debt Service Coverage Ratio from and after the date of
such pledge, through the date on which such additional collateral is no longer
available and/or any such Letter of Credit no longer meets the definitional
requirements for a Letter of Credit as set forth in Article 1 hereof, or (2)
prepaying so much of the Loan as is necessary to meet the above-stated Debt
Service Coverage Ratio test, provided that any such prepayment shall be accompanied
by any amounts due under Section 2.4(e) hereof in connection with the
prepayment of such additional amounts;

 

(E)           In connection with clause (D) above,
Borrower shall have delivered to Lender and the Rating Agencies (1) statements
of Net Operating Income and Debt Service and Mezzanine Debt Service (in both
cases assuming a mortgage constant equal to ten and one-quarter percent
(10.25%)) (both on a consolidated basis and a separate basis with respect to
the Release Property) for the applicable measuring period and (2) based on the
foregoing statements of Net Operating Income and Debt Service and Mezzanine
Debt Service, calculations of the Debt Service Coverage Ratio both with and
without giving effect to the proposed release, and (3) calculations of the ratios
referred to in clause (D) above, accompanied by an Officer’s Certificate
stating that such statements, calculations and information are true, correct
and complete in all material respects;

 

(F)           Borrower shall deliver to Lender
written confirmation from each of the applicable Rating Agencies that the
proposed release will not result in the qualification, withdrawal or downgrade
of any rating of any of the Securities;

 

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

 

(H)          Borrower shall execute (a) amendments
to the Loan Documents to the extent necessary (as determined by and reasonably
acceptable

 

33

 

to Lender) and shall
agree to corresponding adjustments of the reserves and escrow accounts with
respect to the remaining Properties as Lender shall reasonably determine and
(b) amendments to the Operating Lease or any other document related to the
Release Property to the extent necessary (as determined by and reasonably
acceptable to Lender) to ensure that (i) such Operating Lease or other
document shall not continue to govern or relate to the Release Property and any
other Property which shall act as collateral for the Loan from and after the
date of the Release and (ii) the Affiliated Lessee will not be the tenant
of such Release Property following the release of such Release Property from
the Lien of the related Mortgage;

 

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

 

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

 

(K)          Borrower shall have distributed to
Mezzanine Borrower and Mezzanine Borrower shall have paid any amounts required
to be paid under the Mezzanine Loan Agreement to Mezzanine Lender in connection
with the release of the Release Property and shall have satisfied all
conditions for the release of the Release Property set forth in the Mezzanine
Loan Documents;

 

(L)           Borrower shall submit to Lender for
execution, not less than fifteen (15) days prior to the date of the proposed
release, a release of Lien (and related Loan Documents) for the Release
Property.  Such release documentation
shall be in form appropriate in the jurisdiction in which the Release Property
is located and reasonably satisfactory to Lender.  In addition, Borrower shall provide all other documentation
Lender reasonably requires to be delivered by Borrower in connection with such
release;

 

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

 

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

 

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

 

34

 

prepayments made pursuant
to Section 2.4(d) hereof) shall include in the event that any such
repayment or prepayment is made on a day other than a Payment Date, a sum equal
to the amount of interest which would have accrued under this Agreement through
the end of the Interest Period in which the next Payment Date occurs.  For purposes of this Agreement, an
involuntary prepayment shall be deemed to include, but not be limited to, a
prepayment of the Loan in connection with or following the Lender’s
acceleration of the outstanding balance of the Loan, whether or not the
Mortgage is satisfied or released by foreclosure (whether by power of sale or
judicial proceeding), deed in lieu of foreclosure or by other means, including,
without limitation, repayment of the Loan by the Borrower or any other Person
pursuant to any statutory or common law right of  redemption.

 

(d)           Insurance and Condemnation
Proceeds; Excess Interest. 
Notwithstanding any other provision herein to the contrary, and provided
no Default exists, Borrower shall not be required to pay any prepayment premium
in connection with any prepayment occurring solely as a result of (i) the
application of Insurance Proceeds or Condemnation Proceeds pursuant to the
terms of the Loan Documents, or (ii) the application of any interest in excess
of the maximum rate permitted by applicable law to the reduction of the Loan.  Without limiting any other rights contained
herein, Borrower may obtain a release of a Property in accordance and upon
compliance with the provisions of Section 2.4(c)(ii), in the event in
which such Property is affected by a Casualty or Condemnation and Lender, pursuant
to the terms hereof, applies the Insurance Proceeds or Condemnation Proceeds
toward repayment of the Debt.

 

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

 

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

 

35

 

ARTICLE
3

CONDITIONS PRECEDENT

 

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

 

Section 3.1.        REPRESENTATIONS AND WARRANTIES;
COMPLIANCE WITH CONDITIONS

 

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

 

Section 3.2.        DELIVERY
OF LOAN DOCUMENTS; TITLE INSURANCE; REPORTS; LEASES

 

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

 

(b)           Title Insurance.  Lender shall have received a Title Insurance
Policy with respect to each Property issued by a title company acceptable to
Lender and dated as of the Closing Date, with reinsurance and direct access
agreements acceptable to Lender.  Each
such Title Insurance Policy shall (i) provide coverage in the applicable
Allocated Loan Amount with tie-in endorsements with respect to the other
Properties, provided that in the instance of any Property(ies) located in the
State of New York or the State of Florida, no tie-in endorsement shall be
required and the coverage shall be limited to the aggregate Allocated Loan
Amounts of such Property(ies) located in each such state, (ii) insure Lender
that the Mortgage creates a valid lien on the Properties of the requisite
priority, free and clear of all exceptions from coverage other than Permitted
Encumbrances and standard exceptions and exclusions from coverage (as modified
by the terms of any endorsements), (iii) contain such endorsements and
affirmative coverages as Lender may reasonably request, and (iv) name Lender as
the insured.  Each Title

 

36

 

Insurance Policy
shall be assignable.  Lender also shall
have received evidence that all premiums in respect of each Title Insurance
Policy have been paid.

 

(c)           Survey.  Lender shall have received a current title
survey for each Property, certified to the title company and Lender and their
successors and assigns, in form and content satisfactory to Lender and prepared
by a professional and properly licensed land surveyor satisfactory to Lender in
accordance with the 1999 Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys.  Each survey shall
meet the classification of an “Urban Survey” and the following additional items
from the list of “Optional Survey Responsibilities and Specifications” (Table
A) should be added to each survey:  2,
3, 4, 6, 8, 9, 10, 11 and 13.  Each such
survey shall reflect the same legal description contained in the corresponding
Title Insurance Policy referred to in subsection (b) above and shall include,
among other things, a metes and bounds description of the real property
comprising part of each Property reasonably satisfactory to Lender.  The surveyor’s seal shall be affixed to each
survey and the surveyor shall provide a certification for each survey in form
and substance acceptable to Lender. 
Notwithstanding the foregoing, Lender hereby acknowledges (i) receipt of
surveys with respect to each Property, delivered to Bank of America, N.A. in
connection with the Bridge Loan and (ii) that absent any material adverse
change to any Property from and after the date of such survey, each such survey
shall be deemed to be acceptable for all purposes hereunder.

 

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

 

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

 

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

 

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

 

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

 

37

 

SPE Component
Entity as reasonably required by Lender for state and federal tax liens,
bankruptcy, judgment, litigation and state and local UCC filings.

 

Section 3.3.        RELATED DOCUMENTS

 

Each additional document
not specifically referenced herein, but relating to the transactions
contemplated herein, shall have been duly authorized, executed and delivered by
all parties thereto and at Lender’s written request, Lender shall have received
and approved certified copies thereof.

 

Section 3.4.        ORGANIZATIONAL
DOCUMENTS

 

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

 

Section 3.5.        OPINIONS
OF BORROWER’S COUNSEL

 

Lender shall have
received opinions of Borrower’s counsel (a) with respect to non-consolidation issues
and (b) with respect to due execution, authority, enforceability of the Loan
Documents and such other matters as Lender may require, all such opinions in
form, scope and substance satisfactory to Lender and Lender’s counsel in their
sole discretion.

 

Section 3.6.        ANNUAL
BUDGET

 

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

 

Section 3.7.        TAXES AND OTHER CHARGES

 

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

 

Section 3.8.        COMPLETION
OF PROCEEDINGS

 

All corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated by this Agreement and other Loan Documents and all documents
incidental thereto shall be satisfactory in form and substance to Lender, and
Lender shall have received all such counterpart originals or certified copies
of such documents as Lender may reasonably request.

 

38

 

Section 3.9.        PAYMENTS

 

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

 

Section 3.10.      TRANSACTION
COSTS

 

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

 

Section 3.11.      NO
MATERIAL ADVERSE CHANGE

 

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

 

Section 3.12.      OPERATING
LEASES

 

Lender shall have
received (i) a certified copy of each Operating Lease, (ii) fully executed estoppels
from the applicable Operating Lessee of each Property, and (iii) fully executed
counterparts signed by Borrower and the applicable Operating Lessee of a
Subordination, Non-Disturbance and Attornment Agreement, with respect to the
Operating Leases of the Miami Lakes Property and the Miami Airport West
Property, and a Subordination, Attornment and Security Agreement, with respect
to each of the remaining Operating Leases, in all instances in form and
substance acceptable to Lender.

 

Section 3.13.      LEASES;
RENT ROLLS

 

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

 

39

 

Section 3.14.      TENANT
ESTOPPELS

 

Lender shall have
received an executed tenant estoppel letter, which shall be in form and
substance satisfactory to Lender, from such Tenants (in addition to the
Operating Lessees) as Lender shall require.

 

Section 3.15.      REA
ESTOPPELS

 

Borrower shall have
delivered to Lender an executed REA estoppel letter, which shall be in form and
substance satisfactory to Lender, from each party to any REA with respect to
any Property.

 

Section 3.16.      SUBORDINATION AND ATTORNMENT

 

Borrower shall have delivered
to Lender executed instruments acceptable to Lender subordinating to the
applicable Mortgage all of the Leases (other than the Operating Leases, which
are addressed in Section 3.12) affecting each Property, to the extent
designated by Lender.  Lender hereby
agrees to provide upon request a reasonable and customary non-disturbance
agreement as a condition to receipt of any such subordination agreement.

 

Section 3.17.      TAX LOT

 

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

 

Section 3.18.      PHYSICAL CONDITIONS REPORT; PIP REPORT

 

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

 

Section 3.19.      MANAGEMENT
AGREEMENT

 

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

 

Section 3.20.      APPRAISAL

 

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

 

40

 

Section 3.21.      FINANCIAL STATEMENTS

 

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

 

Section 3.22.      NET OPERATING INCOME

 

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

 

Section 3.23.      FRANCHISE AGREEMENTS

 

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

 

Section 3.24.      GROUND LEASE

 

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

 

Section 3.25.      FURTHER DOCUMENTS

 

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

 

ARTICLE
4

REPRESENTATIONS AND WARRANTIES

 

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

 

41

 

Section 4.1.        ORGANIZATION

 

Each of Borrower,
Borrower Principal (when not an individual) and Affiliated Lessee (a) has been
duly organized and is validly existing and in good standing with requisite
power and authority to own its properties and to transact the businesses in
which it is now engaged, (b) is duly qualified to do business and is in good
standing in each jurisdiction where it is required to be so qualified in
connection with its properties, businesses and operations, (c) possesses all
rights, licenses, permits and authorizations, governmental or otherwise,
necessary to entitle it to own its properties and to transact the businesses in
which it is now engaged, and the sole business of (i) Borrower is the
ownership, management and operation of the Properties and (ii) Affiliated
Lessee is to act as lessee of certain of the Properties and manage and operate
the same under and in accordance with the terms of the applicable Operating
Lease, and (d) in the case of Borrower, has full power, authority and legal
right to mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and
convey the Properties pursuant to the terms of the Loan Documents, and in the
case of Borrower, each Borrower Principal and Affiliated Lessee, has full
power, authority and legal right to keep and observe all of the terms of the
Loan Documents to which it is a party. 
Borrower, each Borrower Principal and Affiliated Lessee represent and
warrant that the chart attached hereto as Exhibit B sets forth an accurate
listing of the direct and indirect owners of the equity interests in Borrower,
Affiliated Lessee, each SPE Component Entity (if any) and each Borrower
Principal (when not an individual).

 

Section 4.2.        STATUS OF BORROWER; AFFILIATED LESSEE

 

Borrower’s exact legal
name is correctly set forth on the first page of this Agreement, on each
Mortgage and on any UCC-1 Financing Statements filed in connection with the
Loan.  Affiliated Lessee’s exact legal
name is correctly set forth in all Loan Documents to which it is a party.  Borrower is an organization of the type
specified on the first page of this Agreement and Affiliated Lessee is a
corporation.  Each of Borrower and
Affiliated Lessee is incorporated in or organized under the laws of the state
of Delaware.  Each of Borrower’s and
Affiliated Lessee’s  principal place of
business and chief executive office, and the place where each of Borrower and Affiliated
Lessee keeps their respective books and records, including recorded data of any
kind or nature, regardless of the medium of recording, including software,
writings, plans, specifications and schematics, has been for the preceding four
months (or, if less, the entire period of the existence of Borrower and/or
Affiliated Lessee) the address of Borrower set forth on the first page of this
Agreement.  The organizational
identification number, if any, assigned by the state of incorporation or
organization of (a) Borrower is 3721068 and (b) Affiliated Lessee is 370194.

 

Section 4.3.        VALIDITY OF DOCUMENTS

 

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

 

42

 

bankruptcy, insolvency and similar laws affecting
rights of creditors generally, and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).

 

Section 4.4.        NO CONFLICTS

 

The execution, delivery
and performance of this Agreement and the other Loan Documents to be executed
by Borrower, each Borrower Principal and/or Affiliated Lessee will not conflict
with or result in a breach of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien, charge or
encumbrance (other than pursuant to the Loan Documents) upon any of the
property or assets of Borrower, Borrower Principal or Affiliated Lessee pursuant
to the terms of any agreement or instrument to which Borrower, Borrower
Principal or Affiliated Lessee is a party or by which any of Borrower’s,
Borrower Principal’s or Affiliated Lessee’s property or assets is subject, nor
will such action result in any violation of the provisions of any statute or
any order, rule or regulation of any Governmental Authority having jurisdiction
over Borrower, Borrower Principal or Affiliated Lessee or any of Borrower’s,
Borrower Principal’s or Affiliated Lessee’s properties or assets, and any
consent, approval, authorization, order, registration or qualification of or
with any Governmental Authority required for the execution, delivery and
performance by Borrower, Borrower Principal or Affiliated Lessee of this Agreement
or any of the other Loan Documents has been obtained and is in full force and
effect.

 

Section 4.5.        LITIGATION

 

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

 

Section 4.6.        AGREEMENTS

 

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

 

43

 

Section 4.7.        SOLVENCY

 

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

 

Section 4.8.        FULL AND ACCURATE DISCLOSURE

 

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

 

Section 4.9.        NO PLAN ASSETS

 

Neither Borrower nor
Affiliated Lessee is an “employee benefit plan,” as defined in Section 3(3)
of ERISA, subject to Title I of ERISA, and none of the assets of Borrower or
Affiliated Lessee constitutes or will constitute “plan assets” of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101.  In addition, (a) neither Borrower nor
Operating Lessee is a “governmental plan” within the meaning of
Section 3(32) of ERISA and (b) transactions by or with Borrower or
Affiliated Lessee are not subject to state statutes regulating investment of,
and fiduciary obligations with respect to, governmental plans similar to the
provisions of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code currently in effect, which prohibit or otherwise restrict the
transactions contemplated by this Agreement.

 

44

 

Section 4.10.      NOT A FOREIGN PERSON

 

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

 

Section 4.11.      ENFORCEABILITY

 

The Loan Documents are
not subject to any right of rescission, set-off, counterclaim or defense by
Borrower, Borrower Principal or Affiliated Lessee, including the defense of
usury, nor would the operation of any of the terms of the Loan Documents, or
the exercise of any right thereunder, render the Loan Documents unenforceable,
and neither Borrower, Borrower Principal nor Affiliated Lessee has asserted any
right of rescission, set-off, counterclaim or defense with respect
thereto.  No Default or Event of Default
exists under or with respect to any Loan Document.

 

Section 4.12.      BUSINESS PURPOSES

 

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

 

Section 4.13.      COMPLIANCE

 

Borrower, Affiliated
Lessee and each Property, and the use and operation thereof, comply in all
material respects with all Legal Requirements, including, without limitation,
building and zoning ordinances and codes and the Americans with Disabilities
Act.  Neither Borrower nor Affiliated
Lessee has any knowledge that either is in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority and neither
Borrower nor Affiliated Lessee has received any written notice of any such
default or violation.  There has not
been committed by Borrower or Affiliated Lessee or, to Borrower’s or Affiliated
Lessee’s respective knowledge, any other Person in occupancy of or involved
with the operation or use of any Property, any act or omission affording any
Governmental Authority the right of forfeiture as against any Property or any
part thereof or any monies paid in performance of Borrower’s obligations under
any of the Loan Documents.

 

Section 4.14.      FINANCIAL INFORMATION

 

All financial data,
including, without limitation, the balance sheets, statements of cash flow,
statements of income and operating expense and rent rolls, that have been
delivered to Lender in respect of Borrower, Borrower Principal, Affiliated
Lessee and/or the Properties (a) are true, complete and correct in all material
respects, (b) accurately represent the financial condition of Borrower,
Borrower Principal, Affiliated Lessee or the Properties, as applicable, as of
the date of such reports, and (c) to the extent prepared or audited by an independent
certified public accounting firm, have been prepared in accordance with GAAP
throughout the periods covered, except as disclosed therein.  Neither Borrower nor Affiliated Lessee has
any contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower or Affiliated Lessee and reasonably
likely to have a material adverse effect on any Property or the current and/or
intended operation thereof, except as referred to or reflected in said
financial statements.

 

45

 

Since the date of such financial statements, there has
been no materially adverse change in the financial condition, operations or
business of Borrower, Borrower Principal or Affiliated Lessee from that set
forth in said financial statements.

 

Section 4.15.      CONDEMNATION

 

No Condemnation or other
proceeding has been commenced or, to Borrower’s or Affiliated Lessee’s best
knowledge, is threatened or contemplated with respect to all or any portion of
any Property or for the relocation of roadways providing access to any
Property.

 

Section 4.16.      UTILITIES AND PUBLIC ACCESS; PARKING

 

Each Property has
adequate rights of access to public ways and is served by water, sewer,
sanitary sewer and storm drain facilities adequate to service each Property for
full utilization of each Property for its intended uses.  All public utilities necessary to the full
use and enjoyment of each Property as currently used and enjoyed are located
either in the public right-of-way abutting each Property (which are connected
so as to serve such Property without passing over other property) or in
recorded easements serving such Property and such easements are set forth in
and insured by the applicable Title Insurance Policy.  All roads necessary for the use of each Property for its current
purposes have been completed and dedicated to public use and accepted by all
Governmental Authorities.  Each Property
has, or is served by, parking to the extent required to comply in all material
respects with all Legal Requirements.

 

Section 4.17.      SEPARATE LOTS

 

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

 

Section 4.18.      ASSESSMENTS

 

To Borrower’s knowledge
after due inquiry, except as disclosed in any Title Insurance Policy provided
pursuant to Section 3.2(b) hereof, there are no pending or proposed
special or other assessments for public improvements or otherwise affecting any
Property, nor are there any contemplated improvements to any Property that may
result in such special or other assessments.

 

Section 4.19.      INSURANCE

 

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

 

46

 

Section 4.20.      USE OF PROPERTY

 

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

 

Section 4.21.      CERTIFICATE OF OCCUPANCY; LICENSES

 

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

 

Section 4.22.      FLOOD ZONE

 

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

 

Section 4.23.      PHYSICAL CONDITION

 

To Borrower’s and
Affiliated Lessee’s knowledge after due inquiry and except as disclosed in the
Property Condition Reports or PIP’s provided to Lender provided pursuant to
Section 3.18 hereof, each Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping,
irrigation systems and all structural components, are in good condition, order
and repair in all material respects.  To
Borrower’s and Affiliated Lessee’s knowledge after due inquiry, there exists no
structural or other material defects or damages in or to any Property, as a
result of a Casualty or otherwise, and whether latent or otherwise.  Neither Borrower nor Affiliated Lessee has
received any notice from any insurance company or bonding company of any
defects or inadequacies in any Property, or any part thereof, which would
adversely affect the insurability of the same or cause the imposition of extraordinary
premiums or charges thereon or of any termination or threatened termination of
any policy of insurance or bond.

 

47

 

Section 4.24.      BOUNDARIES

 

(a)           Except as disclosed in any survey
provided pursuant to Section 3.2(c) hereof, none of the Improvements which
were included in determining the appraised value of any Property lie outside
the boundaries and building restriction lines of any Property to any material
extent, and (b) no improvements on adjoining properties encroach upon any
Property and no easements or other encumbrances upon any Property encroach upon
any of the Improvements so as to materially affect the value or marketability
of any Property.

 

Section 4.25.      LEASES AND RENT ROLL

 

Borrower has delivered to
Lender a true, correct and complete rent roll or lease summary in form
acceptable to Lender for each Property (a “Rent Roll”) which includes all Leases
affecting each Property (including, but not limited to, the applicable
Operating Lease and schedules for all executed Leases for Tenants not yet in
occupancy or under which the rent commencement date has not occurred).  Except as set forth in the Rent Roll (as
same has been updated by written notice thereof to Lender) and estoppel
certificates delivered to Lender on or prior to the Closing Date:  (a) each Lease is in full force and effect;
(b) the premises demised under the Leases have been completed and the Tenants
under the Leases have accepted possession of and are in occupancy of all of
their respective demised premises; (c) the Tenants under the Leases have
commenced the payment of rent under the Leases, there are no offsets, claims or
defenses to the enforcement thereof, and neither Borrower nor to Borrower’s
knowledge any Operating Lessee (with respect to any Lease other than the
Operating Lease) has any monetary obligations to any Tenant under any Lease;
(d) all Rents due and payable under the Leases have been paid and no portion
thereof has been paid for any period more than thirty (30) days in advance; (e)
the rent payable under each Lease is the amount of fixed or other rent set
forth in the Rent Roll, and there is no claim or basis for a claim by the
Tenant thereunder for an offset or adjustment to the rent; (f) no Tenant has
made any written claim of a material default against the landlord under any
Lease which remains outstanding nor has Borrower, or to Borrower’s knowledge
Operating Lessee, Manager or any other Person involved in the operation and/or
management of any Property received, by telephonic, in-person, e-mail or other
communication, any notice of a material default under any Lease; (g) to
Borrower’s knowledge there is no present material default by any Tenant under
any Lease; (h) all security deposits under the Leases have been collected by
Borrower or the applicable Operating Lessee, as landlord thereunder; (i)
Borrower is the sole owner of the entire landlord’s interest in each Operating
Lease and the applicable Operating Lessee is the sole owner of the entire
landlord’s interest in each other Lease (other than either Ground Lease); (j)
each Operating Lease is the valid, binding and enforceable obligation of
Borrower and there are no agreements with any Operating Lessee than as
expressly set forth in the Operating Leases; (k) no Person (other than Manager)
has any possessory interest in, or right to occupy, any Property or any portion
thereof except under the terms of any Lease; (l) none of the Leases contains
any option or offer to purchase or right of first refusal to purchase any
Property or any part thereof; and (m) neither the Leases nor the Rents have
been assigned, pledged or hypothecated except to Lender, and no other Person
has any interest therein except the Tenants thereunder.

 

48

 

Section 4.26.      FILING AND RECORDING TAXES

 

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

 

Section 4.27.      MANAGEMENT AGREEMENT

 

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

 

Section 4.28.      ILLEGAL ACTIVITY

 

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

 

Section 4.29.      CONSTRUCTION EXPENSES

 

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

 

Section 4.30.      PERSONAL PROPERTY

 

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

 

Section 4.31.      TAXES

 

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

 

49

 

Section 4.32.      PERMITTED ENCUMBRANCES

 

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

 

Section 4.33.      FEDERAL RESERVE REGULATIONS

 

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

 

Section 4.34.      INVESTMENT COMPANY ACT

 

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

 

Section 4.35.      RECIPROCAL EASEMENT AGREEMENTS

 

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

 

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

 

(c)           All sums due and owing by Borrower to
the other parties to any REA (or by the other parties to any REA to the
Borrower) pursuant to the terms of the applicable REA, including without
limitation, all sums, charges, fees, assessments, costs, and expenses in
connection with any taxes, site preparation and construction, non-shareholder
contributions, and common area and other property management activities have
been paid, are current, and no lien has attached on any Property (or threat
thereof been made) for failure to pay any of the foregoing;

 

50

 

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

 

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

 

Section 4.36.      NO CHANGE IN FACTS OR CIRCUMSTANCES;
DISCLOSURE

 

All information submitted
by Borrower or its agents to Lender and in all financial statements, rent
rolls, reports, certificates and other documents submitted in connection with
the Loan or in satisfaction of the terms thereof and all statements of fact made
by Borrower in this Agreement or in any other Loan Document, are accurate,
complete and correct in all material respects. 
There has been no material adverse change in any condition, fact,
circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading in any material respect or that otherwise
materially and adversely affects or might materially and adversely affect any
Property or the business operations or the financial condition of Borrower.  Borrower has disclosed to Lender all
material facts and has not failed to disclose any material fact that could
cause any representation or warranty made herein to be materially misleading.

 

Section 4.37.      INTELLECTUAL PROPERTY

 

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

 

Section 4.38.      SURVEY

 

To the knowledge of
Borrower, the survey for each Property does not fail to reflect any material
matter affecting such Property or the title thereto.

 

Section 4.39.      EMBARGOED PERSON

 

As of the date hereof and
at all times throughout the term of the Loan, including after giving effect to
any transfers of interests permitted pursuant to the Loan Documents, (a) none
of the funds or other assets of Borrower, Borrower Principal or Affiliated
Lessee constitute property

 

51

 

of, or are beneficially owned, directly or indirectly,
by any person, entity or government subject to trade restrictions under U.S.
law, including but not limited to, the International Emergency Economic Powers
Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App.
1 et seq., and any Executive Orders or regulations promulgated thereunder with
the result that the investment in Borrower, Borrower Principal or Affiliated
Lessee, as applicable (whether directly or indirectly), is prohibited by law or
the Loan made by Lender is in violation of law (“Embargoed Person”); (b) no
Embargoed Person has any interest of any nature whatsoever in Borrower,
Borrower Principal or Affiliated Lessee, as applicable, with the result that
the investment in Borrower, Borrower Principal or Affiliated Lessee, as
applicable (whether directly or indirectly), is prohibited by law or the Loan
is in violation of law; and (c) none of the funds of Borrower, Borrower
Principal or Affiliated Lessee, as applicable, have been derived from any
unlawful activity with the result that the investment in Borrower, Borrower
Principal or Affiliated Lessee, as applicable (whether directly or indirectly),
is prohibited by law or the Loan is in violation of law.

 

Section 4.40.      PATRIOT ACT

 

All capitalized words and
phrases and all defined terms used in the USA Patriot Act of 2001, 107 Public
Law 56 (October 26, 2001) and in other statutes and all orders, rules and
regulations of the United States government and its various executive
departments, agencies and offices related to the subject matter of the Patriot
Act, including Executive Order 13224 effective September 24, 2001 (collectively
referred to in this Section only as the “Patriot Act”) and are
incorporated into this Section.  Each of
Borrower, Borrower Principal and Affiliated Lessee hereby represents and
warrants that Borrower, Borrower Principal and Affiliated Lessee and each and
every Person Affiliated with Borrower, Borrower Principal or Affiliated Lessee
or that to Borrower’s or Affiliated Lessee’s knowledge has an economic interest
in Borrower, Borrower Principal or Affiliated Lessee, or, to Borrower’s,
Borrower Principal’s, or Affiliated Lessee’s knowledge, that has or will have
an interest in the transaction contemplated by this Agreement or in any
Property or will participate, in any manner whatsoever, in the Loan (excluding
any holders of publicly traded shares in CNL Hospitality Properties, Inc., a
publicly traded real estate investment trust), is:  (i) not a “blocked” person listed in the Annex to Executive Order
Nos. 12947, 13099 and 13224 and all modifications thereto or thereof (as used
in this Section only, the “Annex”); (ii) in full compliance with the
requirements of the Patriot Act and all other requirements contained in the
rules and regulations of the Office of Foreign Assets Control, Department of
the Treasury (as used in this Section only, “OFAC”); (iii) operated under
policies, procedures and practices, if any, that are in compliance with the
Patriot Act and available to Lender for Lender’s review and inspection during
normal business hours and upon reasonable prior notice; (iv) not in receipt of
any notice from the Secretary of State or the Attorney General of the United
States or any other department, agency or office of the United States claiming
a violation or possible violation of the Patriot Act; (v) not listed as a
Specially Designated Terrorist or as a “blocked” person on any lists maintained
by the OFAC pursuant to the Patriot Act or any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and regulations
of the OFAC issued pursuant to the Patriot Act or on any other list of
terrorists or terrorist organizations maintained pursuant to the Patriot Act;
(vi) not a person who has been determined by competent authority to be subject
to any of the prohibitions contained in the Patriot Act; and (vii) not owned or
controlled by or now acting and or will in the future act for or on behalf of
any person named in the Annex or any other list promulgated under the Patriot
Act

 

52

 

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

 

Section 4.41.      FRANCHISE AGREEMENTS.

 

Borrower and Affiliated
Lessee hereby represent that to their respective knowledge, each Franchise
Agreement is in full force and effect, there is no default thereunder by any
party thereto and no event has occurred that, with the passage of time and/or
the giving of notice would constitute a default thereunder, and no fees under
any Franchise Agreement are accrued and unpaid.

 

Section 4.42.      GROUND LEASE REPRESENTATIONS

 

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

 

(a)           The Ground Lease is in full force and
effect and has not been modified or amended in any manner whatsoever (with the
exception of written instruments which have been recorded or otherwise
disclosed to Lender in writing);

 

(b)           There are no defaults under the
Ground Lease by Borrower, or, to the best of Borrower’s knowledge, ground
lessor thereunder, and, to the best of Borrower’s knowledge, no event has
occurred which but for the passage of time, or notice, or both would constitute
a default under the Ground Lease;

 

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

 

(d)           Neither Borrower nor the ground
lessor under the Ground Lease has commenced any action or given or received any
notice for the purpose of terminating the Ground Lease;

 

(e)           The Ground Lease or a memorandum
thereof has been duly recorded.  The
Ground Lease permits the interest of Borrower to be encumbered by a
mortgage.  The Ground Lease may not be
canceled, terminated, surrendered or amended without the prior written consent
of Lender;

 

(f)            Except for the Permitted
Encumbrances, Borrower’s interest in the Ground Lease is not subject to any
Liens or encumbrances superior to, or of equal priority with, the related
Security Instrument other than the ground lessor’s related fee interest;

 

53

 

(g)           Borrower’s interest in the Ground
Lease is assignable to Lender upon notice to, but without the consent of, the
ground lessor thereunder (or, if any such consent is required, it has been
obtained prior to the date hereof).  The
Ground Lease is further assignable by Lender, and its successors and assigns,
without the consent of the ground lessor or, where such consent is required, it
cannot be unreasonably withheld by the ground lessor;

 

(h)           The Wilmington Ground Lease requires
the ground lessor to give notice of any default by Borrower to Lender.  The Wilmington Ground Lease further provides
that notice of termination given under the Wilmington Ground Lease is not
effective as against Lender unless a copy of such notice has been delivered to
Lender in the manner described in the Wilmington Ground Lease;

 

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

 

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

 

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

 

(l)            Under the terms of the Wilmington
Ground Lease, the related Security Instrument and the estoppel certificate from
the ground lessor under the Wilmington Ground Lease, any related insurance and
condemnation proceeds will be applied either to the repair or restoration of
all or part of the related Property, with Lender having the right to hold and
disburse the proceeds as the repair or restoration progresses, or to the
payment of the outstanding principal balance of the Loan together with any
accrued interest thereon; and

 

(m)          The Wilmington Ground Lease does not
impose any restrictions on subleasing.

 

Section 4.43.      SURVIVAL; MISCELLANEOUS

 

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

 

54

 

ARTICLE
5

BORROWER COVENANTS

 

From the date hereof and
until repayment of the Debt in full and performance in full of all obligations
of Borrower under the Loan Documents or the earlier release of the Lien of each
Mortgage (and all related obligations) in accordance with the terms of this
Agreement and the other Loan Documents, Borrower Principal (as to Sections 5.11
and  5.26 only) and Borrower hereby each covenants and agrees with Lender
that:

 

Section 5.1.        EXISTENCE; COMPLIANCE WITH LEGAL
REQUIREMENTS

 

(a)           Borrower shall do or cause to be done
all things necessary to preserve, renew and keep in full force and effect its
existence, rights, licenses, permits and franchises and comply with all Legal
Requirements applicable to it and each Property.  Borrower hereby covenants and agrees not to commit, permit or
suffer to exist any act or omission affording any Governmental Authority the
right of forfeiture as against any Property or any part thereof or any monies
paid in performance of Borrower’s obligations under any of the Loan
Documents.  Borrower shall at all times
maintain, preserve and protect all franchises and trade names used by it, its
Affiliated Lessees and any Affiliated Manager in connection with the operation
of each Property.

 

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

 

Section 5.2.        MAINTENANCE AND USE OF PROPERTY

 

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

 

55

 

Section 5.3.        WASTE

 

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

 

Section 5.4.        TAXES AND OTHER CHARGES

 

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

 

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

 

56

 

lost or there
shall be any danger of the Lien of the related Mortgage being primed by any
related Lien.

 

Section 5.5.        LITIGATION

 

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

 

Section 5.6.        ACCESS TO PROPERTY

 

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

 

Section 5.7.        NOTICE OF DEFAULT

 

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

 

Section 5.8.        COOPERATE IN LEGAL PROCEEDINGS

 

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

 

Section 5.9.        PERFORMANCE BY BORROWER

 

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

 

Section 5.10.      AWARDS; INSURANCE PROCEEDS

 

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

 

57

 

Section 5.11.      FINANCIAL REPORTING

 

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

 

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

 

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

 

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

 

(iv)          an Annual Budget in form reasonably
satisfactory to Lender with respect to the operations of each Property, not
later than the later of (i) five (5) Business Days after Borrower of any
Affiliates receipt thereof and (ii) thirty (30) days or in the instance of each
Marriott Managed Property fifteen (15) days prior to the commencement of each
fiscal year of Borrower, but in no event later than February 15th of
any calendar year.  In the event that
Lender reasonably objects to a proposed Annual Budget submitted by Borrower,
Lender shall advise Borrower of such objections within fifteen (15) days after
receipt thereof (and deliver to Borrower a reasonably detailed description of
such objections) and Borrower shall promptly revise such Annual Budget and
resubmit the same to Lender.  Lender
shall advise Borrower of any reasonable objections to such revised Annual
Budget within ten (10) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall promptly
revise

 

58

 

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

 

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

 

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

 

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

 

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

 

(c)           Borrower shall comply with the
following:

 

59

 

(i)            If requested by Lender in connection
with a Securitization involving a public offering, and the filing of any
related Disclosure Document, Borrower shall provide Lender, promptly upon
request, with the following financial statements if, at the time a Disclosure
Document is being prepared for a Securitization, it is expected that the
principal amount of the Loan when combined with the principal amount of any
Affiliated Loans at the time of Securitization may, or if the principal amount
of the Loan when combined with the principal amount of any Affiliated Loans at
any time during which the Loan and any Affiliated Loans are included in a
Securitization does, equal or exceed 20% of the aggregate principal amount of
all mortgage loans included or expected to be included, as applicable, in the
Securitization:

 

(A)          A balance sheet for Borrower for the
two most recent fiscal years, meeting the requirements of Section 210.3-01
of Regulation S-X of the Securities Act and statements of income and statements
of cash flows with respect to each Property for the three most recent fiscal
years, meeting the requirements of Section 210.3-02 of Regulation S-X,
and, to the extent that such balance sheet is more than 135 days old as of the
date of the document in which such financial statements are included, interim
financial statements of each Property meeting the requirements of
Section 210.3-01 and 210.3-02 of Regulation S-X (all of such financial
statements, collectively, the “Standard Statements”); provided, however,
that with respect to a Property (other than properties that are hotels, nursing
homes, or other properties that would be deemed to constitute a business and
not real estate under Regulation S-X or other legal requirements) that has been
acquired by Borrower from an unaffiliated third party (such Property, “Acquired
Property”), as to which the other conditions set forth in
Section 210.3-14 of Regulation S-X for provision of financial statements
in accordance with such Section have been met, in lieu of the Standard
Statements otherwise required by this section, Borrower shall instead provide
the financial statements required by such Section 210.3-14 of Regulation
S-X (“Acquired
Property Statements”).

 

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

 

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

 

60

 

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

 

(D)          Within ten Business Days after notice
from Lender in connection with the Securitization of this Loan, such additional
financial statements, such that, as of the date (each an “Offering Document Date”) of
each Disclosure Document, Borrower shall have provided Lender with all
financial statements as described in this subsection (c)(i); provided that the
fiscal year and interim periods for which such financial statements shall be
provided shall be determined as of such Offering Document Date.

 

(ii)           If requested by Lender, Borrower
shall provide Lender, promptly upon request, with summaries of the financial
statements referred to in Section 5.11(c) hereof if, at the time a
Disclosure Document is being prepared for a Securitization, it is expected that
the principal amount of the Loan and any Affiliated Loans at the time of
Securitization may, or if the principal amount of the Loan and any Affiliated
Loans at any time during which the Loan and any Affiliated Loans are included
in a Securitization does, equal or exceed 10% (but is less than 20%) of the
aggregate principal amount of all mortgage loans included or expected to be
included, as applicable, in a Securitization. 
Such summaries shall meet the requirements for “summarized financial
information,” as defined in Section 210.1-02(bb) of Regulation S-X, or
such other requirements as may be determined to be necessary or appropriate by
Lender.

 

(iii)          All financial statements provided by
Borrower hereunder pursuant to Section 5.11(c)(i) and (ii) hereof shall be
prepared in accordance with GAAP, and shall meet the requirements of Regulation
S-X and other applicable legal requirements. 
All financial statements referred to in Section 5.11(c)(i)(A)and
(C) above shall be audited by Acceptable Accountants in accordance with
Regulation S-X and all other applicable legal requirements, shall be
accompanied by the manually executed report of the independent accountants
thereon, which report shall meet the requirements of Regulation S-X and all
other applicable legal requirements, and shall be further accompanied by a
manually executed written consent of the Acceptable Accountants, in form and
substance acceptable to Lender, to the inclusion of such financial statements
in any Disclosure Document and any Exchange Act Filing and to the use of the
name of such Acceptable Accountants and the reference to such Acceptable
Accountants as “experts” in any Disclosure Document and Exchange Act Filing (as
defined below), all of which shall be provided at the same time as the related
financial statements are required to be provided.  All financial statements (audited or unaudited) provided by
Borrower under this Section 5.11 shall be certified by the chief financial
officer or administrative member of Borrower, which certification shall state
that such financial statements meet the requirements set forth in the first
sentence of this Section 5.11(c)(iii).

 

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

 

61

 

Exchange Act in
connection with or relating to a Securitization (hereinafter an “Exchange Act
Filing”) or as shall otherwise be reasonably requested by Lender.

 

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

 

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

 

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

 

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

 

Section 5.12.      ESTOPPEL STATEMENT

 

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

 

(b)           Borrower shall use its best efforts to
deliver to Lender, promptly upon request, duly executed estoppel certificates
from (i) the applicable lessor under either Ground Lease pursuant to the
applicable terms and conditions of the applicable ground lease estoppel and
agreement executed in connection herewith, and (ii) any one or more Tenants as
required by

 

62

 

Lender attesting
to such facts regarding the related Lease as Lender may require, including, but
not limited to attestations that each Lease covered thereby is in full force
and effect with no defaults thereunder on the part of any party, that none of
the Rents have been paid more than one month in advance, except as security,
and that the Tenant claims no defense or offset against the full and timely
performance of its obligations under the Lease.

 

Section 5.13.      OPERATING LEASE; LEASING MATTERS

 

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

 

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

 

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

 

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

 

63

 

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

 

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

 

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

 

64

 

(or cause or
permit any Operating Lessee to consent) to any assignment of or subletting
under any Leases not in accordance with their terms, without the prior written
consent of Lender.

 

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

 

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

 

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

 

Section 5.14.      PROPERTY MANAGEMENT

 

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

 

65

 

its management of
the applicable Property; and (v) promptly enforce the performance and
observance of all of the covenants required to be performed and observed by
Manager under the Management Agreement.

 

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

 

(c)           Borrower shall not, without the prior
written consent of Lender (which consent shall not be unreasonably withheld,
conditioned or delayed): (i) surrender, terminate or cancel the Management
Agreement or otherwise replace any Manager or enter into any other management
agreement with respect to any Property (or cause or permit the applicable
Operating Lessee to do any of the foregoing); (ii) reduce or consent to the
reduction of the term of any Management Agreement (or cause or permit the
applicable Operating Lessee to do any of the foregoing); (iii) increase or
consent to the increase of the amount of any charges under any Management
Agreement (or cause or permit the applicable Operating Lessee to do any of the
foregoing); or (iv) otherwise modify, change, supplement, alter or amend, or
waive or release any of its rights and remedies under, any Management Agreement
in any material respect (or cause or permit the applicable Operating Lessee to
do any of the foregoing).

 

(d)           Any replacement Manager shall in all
events be a Qualified Manager, and shall be a party to a Management Agreement
approved in writing by Lender, in its reasonable discretion.  In the event any new Management Agreement
does not provide for the payment of Operating Expenses prior to the
distribution of any amounts to Operating Lessee or Borrower and/or for a
reserve for Replacements that may be controlled by Lender, in all instances
acceptable to Lender in its reasonable discretion, the Lender shall have the
right to require adequate Operating Expenses to be reserved pursuant to
Section 9.8(a) hereof with respect to such Properties and/or, as
applicable, require additional Replacement Reserve Funds in accordance with Section 9.2(b)
hereof to be deposited with Lender based on Lender’s reasonable determination
with respect to the Replacement needs of such Property(ies).  In addition, any new or replacement Manager
shall execute the form of assignment and subordination of management agreement
in a form as may be approved by Lender in its reasonable discretion.

 

66

 

Section 5.15.      LIENS

 

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

 

Section 5.16.      DEBT CANCELLATION

 

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

 

Section 5.17.      ZONING

 

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

 

Section 5.18.      ERISA

 

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

 

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

 

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

 

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

 

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

 

67

 

Section 5.19.      NO JOINT ASSESSMENT

 

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

 

Section 5.20.      RECIPROCAL EASEMENT AGREEMENTS

 

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

 

Section 5.21.      ALTERATIONS

 

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

 

Section 5.22.      FRANCHISE AGREEMENTS.

 

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

 

68

 

Agreement on the
part of the franchisee thereunder to be performed and observed and deliver to
Lender a true copy of each such notice, and (iv) promptly deliver to Lender a
copy of each financial statement, business plan, capital expenditure plan,
notice of a default under the Franchise Agreement, report regarding operations
at the related Property, estimates of any monetary nature and any other items
reasonably requested by Lender, in each case received by Borrower or Affiliated
Lessee under any Franchise Agreement.

 

(b)           Borrower shall not (and shall not
cause or permit any Operating Lessee to), without the prior consent of the
Lender, surrender any Franchise Agreement or terminate or cancel any Franchise
Agreement or modify, change, supplement, alter or amend any Franchise
Agreement, in any respect, either orally or in writing, and Borrower hereby
assigns to Lender as further security for the payment of the Debt and for the
performance and observance of the terms, covenants and conditions of this
Agreement, any and all rights, privileges and prerogatives of Borrower to
surrender any Franchise Agreement or to terminate, cancel, modify, change,
supplement, alter or amend any Franchise Agreement in any respect, and any such
surrender of any Franchise Agreement or termination, cancellation,
modification, change, supplement, alteration or amendment of any Franchise
Agreement without the prior consent of Lender shall be void and of no force and
effect.

 

(c)           If any franchisee shall default in
the performance or observance of any material term, covenant or condition of
any Franchise Agreement on the part of the franchisee thereunder to be
performed or observed, then, without limiting the generality of the other
provisions of this Agreement, and without waiving or releasing Borrower from
any of its obligations hereunder, Lender shall have the right, but shall be
under no obligation, to pay any sums and to perform any act or take any action
as may be appropriate to cause all the terms, covenants and conditions of such
Franchise Agreement on the part of the franchisee to be performed or observed
to be promptly performed or observed on behalf of Borrower, to the end that the
rights of said franchisee (and/or Borrower and/or Operating Lessee) in, to and
under such Franchise Agreement shall be kept unimpaired and free from default.  Any such amounts so advanced by Lender
together with interest thereon from the date expended by Lender of the Default
Rate shall be part of the Debt and Borrower shall immediately repay such
amounts to Lender upon demand.  Pursuant
to the terms of the applicable Subordination Non-Disturbance Attornment
Agreement, Subordination Attornment and Security Agreement and/or Assignment of
Management Agreement, Lender and any person designated by Lender shall have,
and are hereby granted, the right to enter upon the applicable Property at any
time and from time to time for the purpose of taking any such action.  If any Franchisor shall deliver to Lender a
copy of any notice sent to Borrower and/or Operating Lessee of any default
under any Franchise Agreement, such notice shall constitute full protection to
Lender for any action taken or omitted to be taken by Lender in good faith, in
reliance thereon.

 

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

 

69

 

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

 

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

 

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

 

Section 5.23.      GROUND LEASE

 

(a)           With respect to each Ground Lease,
Borrower shall (i) subject to Section 9.10 pay all rents, additional rents
and other sums required to be paid by Borrower, as tenant under and pursuant to
the provisions of the Ground Lease, (ii) diligently perform and observe all of
the terms, covenants and conditions of the Ground Lease on the part of
Borrower, as tenant thereunder, (iii) promptly notify Lender of the giving of
any notice by the landlord under the Ground Lease to Borrower of any default by
Borrower, as tenant thereunder, and deliver to Lender a true copy of each such
notice within five (5) Business Days of receipt and (iv) promptly notify Lender
of any bankruptcy, reorganization or insolvency of the landlord under the
Ground Lease or of any notice thereof, and deliver to Lender a true copy of
such notice within five (5) Business Days of Borrower’s receipt.  Borrower shall not, without the prior
written consent of Lender, surrender the leasehold estate created by the Ground
Lease or terminate or cancel the Ground Lease or modify, change, supplement,
alter or amend the Ground Lease, either orally or in writing, and if Borrower
shall default in the performance or observance of any term, covenant or
condition of the Ground Lease on the part of Borrower, as tenant thereunder,
and shall fail to cure the same prior to the expiration of any applicable cure
period provided thereunder, Lender shall have the right, but shall be under no
obligation, to pay any sums and to perform any act or take any action as may be
appropriate to cause all of the terms, covenants and conditions of the Ground
Lease on the part of Borrower to be performed or observed on behalf of
Borrower, to the end that the rights of Borrower in, to and under the Ground
Lease shall be kept unimpaired and free from default.  If the landlord under the Ground Lease shall deliver to Lender a
copy of any notice of default under the Ground Lease, such notice shall
constitute full protection to Lender for any action taken or omitted to be
taken by Lender, in good faith, in reliance thereon.

 

70

 

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

 

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

 

Section 5.24.      INTEREST RATE CAP AGREEMENT

 

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

 

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

 

(c)           Borrower shall comply with all of its
obligations under the terms and provisions of the Rate Cap and any Replacement
Rate Cap.  All amounts paid by the
Acceptable Counterparty under the Rate Cap to Borrower or Lender shall be
deposited immediately into the

 

71

 

Cash Management
Account.  Borrower shall take all
actions reasonably requested by Lender to enforce Lender’s rights under the
Rate Cap and any Replacement Rate Cap in the event of a default by the
Acceptable Counterparty and shall not waive, amend or otherwise modify any of
its rights thereunder.

 

(d)           In the event that Borrower fails to
purchase and deliver to Lender the Rate Cap or any Replacement Rate Cap as and
when required hereunder, or fails to maintain such agreement in accordance with
the terms and provisions of this Agreement, Lender may purchase the Rate Cap or
any Replacement Rate Cap, as applicable, and the cost incurred by Lender in
purchasing the Rate Cap or any Replacement Rate Cap, as applicable, shall be
paid by Borrower to Lender with interest thereon at the Default Rate from the
date such cost was incurred by Lender until such cost is reimbursed by Borrower
to Lender.

 

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

 

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

 

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

 

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

 

(iv)          the Rate Cap or the Replacement Cap,
as applicable, and any other agreement which the Acceptable Counterparty has
executed and delivered pursuant thereto, has been duly executed and delivered
by the Acceptable Counterparty and constitutes the legal, valid and binding
obligation of the Acceptable Counterparty, enforceable against the Acceptable
Counterparty in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally, and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

72

 

Section 5.25.      MANAGER OF FLINT PROPERTY

 

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

 

Section 5.26.      CONSOLIDATED TANGIBLE NET WORTH

 

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

 

ARTICLE
6

ENTITY COVENANTS

 

Section 6.1.        SINGLE PURPOSE ENTITY/SEPARATENESS

 

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

 

(a)           Borrower has not and will not:

 

(i)            engage in any business or activity
other than the ownership, operation and maintenance of the Properties, and
activities incidental thereto;

 

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

 

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

 

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

 

73

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

74

 

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

 

(xiii)         fail to file its own tax returns or
fails to file a consolidated federal income tax return with any Person (unless
prohibited or required, as the case may be, by applicable Legal Requirements);

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

75

 

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

 

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

 

76

 

Member shall
execute a counterpart to the LLC Agreement. 
Prior to its admission to Borrower as Special Member, Special Member
shall not be a member of Borrower.

 

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

 

Section 6.2.        CHANGE OF NAME, IDENTITY OR STRUCTURE

 

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

 

Section 6.3.        BUSINESS AND OPERATIONS

 

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

 

77

 

Section 6.4.                       INDEPENDENT
DIRECTOR

 

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

 

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

 

ARTICLE 7

NO SALE OR ENCUMBRANCE

 

Section 7.1.                       TRANSFER
DEFINITIONS

 

For purposes of
this Article 7 an “Affiliated Manager” shall mean any managing
agent in which Borrower, Affiliated Lessee, Borrower Principal, any SPE
Component Entity (if any) or any Affiliate of such entities has, directly or
indirectly, any legal, beneficial or economic interest;

 

78

 

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

 

Section 7.2.                       NO
SALE/ENCUMBRANCE

 

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

 

(b)                                 A
Prohibited Transfer shall include, but not be limited to, (i) an installment
sales agreement wherein Borrower agrees to sell any Property or any part
thereof for a price to be paid in installments; (ii) other than an Operating
Lease, an agreement by Borrower leasing all or a substantial part of any
Property for other than actual occupancy by a Tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower’s right, title and interest in and to any Leases or any Rents; (iii)
if a Restricted Party is a corporation, any merger, consolidation or Sale or
Pledge of such corporation’s stock or the creation or issuance of new stock in
one or a series of transactions; (iv) if a Restricted Party is a limited or
general partnership or joint venture, any merger or consolidation or the
change, removal, resignation or addition of a general partner or the Sale or
Pledge of the partnership interest of any general or limited partner or any
profits or proceeds relating to such partnership interests or the creation or
issuance of new partnership interests; (v) if a Restricted Party is a limited
liability company, any merger or consolidation or the change, removal,
resignation or addition of a managing member or non-member manager (or if no
managing member, any member) or the Sale or Pledge of the membership interest
of any member or any profits or proceeds relating to such membership interest;
(vi) if a Restricted Party is a trust or nominee trust, any merger,
consolidation or the Sale or Pledge of the legal or beneficial interest in a
Restricted Party or the creation or issuance of new legal or beneficial interests;
or (vii) the removal of Manager, the acceptance by Borrower of the resignation
of Manager when such Manager was not entitled under the applicable Management
Agreement to resign or the resignation of the Manager in collusion with the
Borrower, in each case other than in accordance with Section 5.14.

 

Section 7.3.                       PERMITTED
TRANSFERS

 

Notwithstanding
the provisions of Section 7.2, the following transfers shall not be deemed
to be a Prohibited Transfer: (a) a transfer by devise or descent or by
operation of law

 

79

 

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

 

Section 7.4.                       LENDER’S
RIGHTS

 

Lender reserves
the right to condition the consent to a Prohibited Transfer requested hereunder
upon (a) a modification of the terms hereof and an assumption of the Note and
the other Loan Documents as so modified by the proposed Prohibited Transfer,
(b) receipt of payment of a transfer fee equal to one percent (1%) of the
outstanding principal balance of the Loan and all of Lender’s expenses incurred
in connection with such Prohibited Transfer, (c) receipt of written
confirmation from the Rating Agencies that the Prohibited Transfer will not
result in a downgrade, withdrawal or qualification of the initial, or if higher,
then current ratings issued in connection with a Securitization, or if a
Securitization has not occurred, any ratings to be assigned in connection with
a Securitization, (d) the proposed transferee’s continued compliance with the
covenants set forth in this Agreement (including, without limitation, the
covenants in Article 6) and the other Loan Documents, and (e) the
satisfaction of such other conditions and/or legal opinions as Lender shall
determine in its sole discretion to be in the interest of Lender.  All expenses incurred by Lender shall be
payable by Borrower whether or not Lender consents to the Prohibited
Transfer.  Lender shall not be required
to demonstrate any

 

80

 

actual impairment of its security or any increased risk of default
hereunder in order to declare the Debt immediately due and payable upon a
Prohibited Transfer made without Lender’s consent. This provision shall apply
to each and every Prohibited Transfer, whether or not Lender has consented to
any previous Prohibited Transfer. 
Notwithstanding anything to the contrary contained in this
Section 7.4, in the event a substantive non-consolidation opinion was
delivered to Lender and the Rating Agencies in connection with the closing of
the Loan, and if any Sale or Pledge permitted under this Article 7 results
in any Person and its Affiliates owning in excess of forty-nine percent (49%)
of the ownership interests in a Restricted Party, Borrower shall, prior to such
transfer, and in addition to any other requirement for Lender consent contained
herein, deliver a revised substantive non-consolidation opinion to Lender
reflecting such Prohibited Transfer, which opinion shall be in form, scope and
substance acceptable in all respects to Lender and the Rating Agencies.

 

Section 7.5.                       ASSUMPTION

 

Notwithstanding
the foregoing provisions of this Article 7, following the date which is
six (6) months from the Closing Date, Lender shall not unreasonably withhold
consent to a transfer of the Properties in its entirety to, and the related
assumption of the Loan by, any Person (a “Transferee”) provided that each of the
following terms and conditions are satisfied:

 

(a)                                  no
Default or Event of Default has occurred;

 

(b)                                 Borrower
shall have (i) delivered written notice to Lender of the terms of such
prospective transfer not less than sixty (60) days before the date on which
such transfer is scheduled to close and, concurrently therewith, all such
information concerning the proposed Transferee as Lender shall reasonably
require and (ii) paid to Lender a non-refundable processing fee in the amount
of $25,000.  Lender shall have the right
to approve or disapprove the proposed transfer based on its then current
underwriting and credit requirements for similar loans secured by similar
properties which loans are sold in the secondary market, such approval not to
be unreasonably withheld.  In
determining whether to give or withhold its approval of the proposed transfer,
Lender shall consider the experience and track record of Transferee and its
principals in owning and operating facilities similar to the Properties, the
financial strength of Transferee and its principals, the general business
standing of Transferee and its principals and Transferee’s and its principals’
relationships and experience with contractors, vendors, tenants, lenders and
other business entities; provided, however, that, notwithstanding Lender’s
agreement to consider the foregoing factors in determining whether to give or
withhold such approval, such approval shall be given or withheld based on what
Lender determines to be commercially reasonable and, if given, may be given
subject to such conditions as Lender may deem reasonably appropriate;

 

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

 

(d)                                 Transferee
assumes and agrees to pay the Debt as and when due subject to the provisions of
Article 15 hereof and, prior to or concurrently with the closing of such
transfer,

 

81

 

Transferee and its
constituent partners, members or shareholders as Lender may require,  shall execute, without any cost or expense
to Lender, such documents and agreements as Lender shall reasonably require to
evidence and effectuate said assumption;

 

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

 

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

 

(g)                                 Transferee
shall have furnished to Lender, if Transferee is a corporation, partnership,
limited liability company or other entity, all appropriate papers evidencing
Transferee’s organization and good standing, and the qualification of the
signers to execute the assumption of the Debt, which papers shall include
certified copies of all documents relating to the organization and formation of
Transferee and of the entities, if any, which are partners or members of
Transferee.  Transferee and such
constituent partners, members or shareholders of Transferee (as the case may
be), as Lender shall require, shall comply with the covenants set forth in
Article 6 hereof;

 

(h)                                 Transferee
shall assume the obligations of Borrower under any Management Agreement or
provide a new management agreement with a new manager which meets with the
requirements of Section 5.14 hereof and assign to Lender as additional
security such new management agreement;

 

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

 

(j)                                     if
required by Lender, Lender shall have received confirmation in writing from the
Rating Agencies that rate the Securities to the effect that the transfer will
not result in a qualification, downgrade or withdrawal of any rating initially
assigned or to be assigned to the Securities;

 

(k)                                  Borrower’s
obligations under the contract of sale pursuant to which the transfer is
proposed to occur shall expressly be subject to the satisfaction of the terms
and conditions of this Section 7.5; and

 

82

 

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

 

A consent by
Lender with respect to a transfer of the Properties in its entirety to, and the
related assumption of the Loan by, a Transferee pursuant to this
Section 7.5 shall not be construed to be a waiver of the right of Lender
to consent to any subsequent transfer of any Property.

 

ARTICLE 8

INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

 

Section 8.1.                       INSURANCE

 

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

 

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

 

(ii)                                  Commercial
General Liability insurance against claims for personal injury, bodily injury,
death or property damage occurring upon, in or about such Property, including
“Dram Shop” or other liquor liability coverage if alcoholic beverages are sold
from or may be consumed at such Property, with such insurance (A) to be on the
so-called “occurrence” form with a general aggregate limit of not less than
$2,000,000 and a per occurrence limit of not less than $1,000,000; (B) to
continue at not less than the aforesaid limit until required to be changed by
Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations;

 

83

 

(3) independent
contractors; (4) blanket contractual liability; and (5) contractual liability
covering the indemnities contained in Article 12 and Article 14
hereof to the extent the same is available;

 

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

 

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

 

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

 

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

 

84

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)                                 All
insurance provided for in Section 8.1(a) shall be obtained under valid and
enforceable policies (collectively, the “Policies” or in the singular, the “Policy”),
and shall be subject to the approval of Lender as to insurance companies,
amounts, deductibles, loss payees and insureds.  The Policies shall be issued by financially sound and responsible
insurance companies authorized to do business in the State and having a claims
paying ability rating of “A” or better by S&P (or such other ratings
approved by Lender) and a general policy rating of “A” or better and a
financial class of VIII or better by A.M. Best Company, Inc.  The Policies described in
Section 8.1(a) shall designate Lender and its successors and assigns as
additional insureds, mortgagees and/or loss payee as deemed appropriate by
Lender.  To the extent such Policies are
not available as of the Closing Date, Borrower shall deliver to Lender
certified copies of all Policies or other evidence of insurance reasonably
acceptable to Lender not later than thirty (30) days after the Closing
Date.  Not less than ten (10) days prior
to the expiration

 

85

 

dates of the Policies
theretofore furnished to Lender, renewal Policies or other evidence of
insurance reasonably acceptable to Lender accompanied by evidence satisfactory
to Lender of payment of the premiums due thereunder (the “Insurance Premiums”) shall be
delivered by Borrower to Lender.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)                                    If
at any time Lender is not in receipt of written evidence that all insurance
required hereunder is in full force and effect, Lender shall have the right,
without notice to Borrower, to take such action as Lender deems necessary to
protect its interest in the applicable Property, including, without limitation,
obtaining such insurance coverage as Lender in its sole discretion deems
appropriate.  All premiums incurred by
Lender in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Borrower to Lender upon demand and, until
paid, shall be secured by the Mortgages and shall bear interest at the Default
Rate.

 

86

 

(g)                                 Borrower
shall cause any payments paid under the Policy described in
Section 8.1(a)(xi) to be paid to Lender.

 

Section 8.2.                       CASUALTY

 

If any Property
shall be damaged or destroyed, in whole or in part, by fire or other casualty
(a “Casualty”),
Borrower shall give prompt notice of such damage to Lender and shall promptly
commence and diligently prosecute the Restoration of such Property in
accordance with Section 8.4, whether or not Lender makes any Net Proceeds
available pursuant to Section 8.4. 
Borrower shall pay all costs of such Restoration whether or not such
costs are covered by insurance.  Lender
may, but shall not be obligated to make proof of loss if not made promptly by
Borrower.  Borrower shall adjust all
claims for Insurance Proceeds in consultation with, and approval of, Lender;
provided, however, if an Event of Default has occurred and is continuing,
Lender shall have the exclusive right to participate in the adjustment of all
claims for Insurance Proceeds.  Without
limiting any other provision contained herein, in the event Lender shall not
make Net Proceeds available to Borrower for the restoration of any Property,
Borrower may obtain a partial release of such Property in accordance with and
to the extent permitted under Section 2.4(c)(ii).

 

Section 8.3.                       CONDEMNATION

 

Borrower shall
promptly give Lender notice of the actual or threatened commencement of any
proceeding for the Condemnation of any Property of which Borrower has knowledge
and shall deliver to Lender copies of any and all papers served in connection
with such proceedings.  Lender may
participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.  Borrower shall, at its expense, diligently
prosecute any such proceedings, and shall consult with Lender, its attorneys
and experts, and cooperate with them in the carrying on or defense of any such
proceedings.  Notwithstanding any taking
by any public or quasi-public authority through Condemnation or otherwise
(including but not limited to any transfer made in lieu of or in anticipation
of the exercise of such taking), Borrower shall continue to pay the Debt at the
time and in the manner provided for its payment in the Note and in this
Agreement and the Debt shall not be reduced until any Award shall have been
actually received and applied by Lender, after the deduction of expenses of
collection, to the reduction or discharge of the Debt.  Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the
Note.  If any Property or any portion
thereof is taken by a condemning authority, Borrower shall promptly commence
and diligently prosecute the Restoration of such Property and otherwise comply
with the provisions of Section 8.4, whether or not Lender makes any Net
Proceeds available pursuant to Section 8.4.  If such Property is sold, through foreclosure or otherwise, prior
to the receipt by Lender of the Award, Lender shall have the right, whether or
not a deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the Award, or a portion thereof sufficient to pay the Debt.  Without limiting any other provision
contained herein, in the event Lender shall not make Net Proceeds available to
Borrower for the restoration of any Property, Borrower may obtain a partial
release of such Property in accordance with and to the extent permitted under
Section 2.4(c)(ii).

 

87

 

Section 8.4.                       RESTORATION

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

88

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ii)                                  The
Net Proceeds shall be held by Lender until disbursements commence, and, until
disbursed in accordance with the provisions of this Section 8.4, shall
constitute additional security for the Debt and other obligations under the
Loan Documents.  The Net Proceeds shall
be disbursed by Lender to, or as directed by, Borrower from time to time during
the course of the Restoration, upon receipt of evidence satisfactory to Lender
that (A) all the conditions precedent to such advance, including those set
forth in Section 8.4(b)(i), have been satisfied, (B) all materials
installed and work and labor performed (except to the extent that they are to
be paid for out of the requested disbursement) in connection with the related
Restoration item have been paid for in full, and (C) there exist no notices of
pendency, stop orders, mechanic’s or materialman’s liens or notices of
intention to file same, or any other liens or encumbrances of any nature
whatsoever on the affected Property which have not either been fully bonded to
the satisfaction of Lender and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company issuing the Title
Insurance Policy.  

 

89

 

Notwithstanding
the foregoing, Insurance Proceeds from the Policies required to be maintained
by Borrower pursuant to Section 8.1(a)(iii) shall be controlled by Lender
at all times, shall not be subject to the provisions of this Section 8.4
and shall be used solely for the payment of the obligations under the Loan
Documents and Operating Expenses.

 

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

 

(iv)                              In
no event shall Lender be obligated to make disbursements of the Net Proceeds in
excess of an amount equal to the costs actually incurred from time to time for
work in place as part of the Restoration, as certified by the Restoration
Consultant, minus the Restoration Retainage. 
The term “Restoration Retainage” shall mean an amount equal to ten
percent (10%) of the costs actually incurred for work in place as part of the
Restoration, as certified by the Restoration Consultant, until the Restoration
has been completed.  The Restoration
Retainage shall be reduced to five percent (5%) of the costs incurred upon
receipt by Lender of satisfactory evidence that fifty percent (50%) of the
Restoration has been completed.  The
Restoration Retainage shall in no event, and notwithstanding anything to the
contrary set forth above in this Section 8.4(b), be less than the amount
actually held back by Borrower from contractors, subcontractors and materialmen
engaged in the Restoration.  The
Restoration Retainage shall not be released until the Restoration Consultant
certifies to Lender that the Restoration has been completed in accordance with
the provisions of this Section 8.4(b) and that all approvals necessary for
the re-occupancy and use of the affected Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence satisfactory
to Lender that the costs of the Restoration have been paid in full or will be
paid in full out of the Restoration Retainage; provided, however, that Lender
will release the portion of the Restoration Retainage being held with respect
to any contractor, subcontractor or materialman engaged in the Restoration as
of the date upon which the Restoration Consultant certifies to Lender that the
contractor, subcontractor or materialman has satisfactorily completed all work
and has supplied all materials in accordance with the provisions of the
contractor’s, subcontractor’s or materialman’s contract, the contractor,
subcontractor or materialman delivers the lien waivers and evidence of payment
in full of all sums due to the contractor, subcontractor or materialman as may
be reasonably requested by Lender or by the title company issuing the Title
Insurance Policy, and Lender receives an endorsement to the Title Insurance
Policy insuring the continued priority of the lien of each Mortgage and
evidence of payment of any premium payable for such endorsement.  If required by Lender, the release of any
such portion of the Restoration Retainage shall be approved by the surety
company, if any, which has issued

 

90

 

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

 

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

 

(vi)                              If
at any time the Net Proceeds or the undisbursed balance thereof shall not, in
the reasonable opinion of Lender in consultation with the Restoration
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Restoration Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the “Net Proceeds
Deficiency”) with Lender before any further disbursement of the Net
Proceeds shall be made.  The Net
Proceeds Deficiency deposited with Lender shall be held by Lender and shall be
disbursed for costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net Proceeds, and until
so disbursed pursuant to this Section 8.4(b) shall constitute additional
security for the Debt and other obligations under the Loan Documents.

 

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

 

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

 

(d)                                 In
the event of foreclosure of any Mortgage, or other transfer of title to the affected
Property in extinguishment in whole or in part of the Debt, all right, title
and interest of Borrower in and to the Policies then in force concerning each
Property and all proceeds payable thereunder shall thereupon vest in the
purchaser at such foreclosure, Lender or other transferee in the event of such
other transfer of title.

 

ARTICLE 9

RESERVE FUNDS

 

Section 9.1.                       REQUIRED
REPAIRS

 

(a)                                  Borrower
shall make (or cause to be made) the repairs and improvements set forth on
Schedule I and as more particularly described in the Physical Conditions
Report or any Environmental Report delivered in connection with the Closing of
the Loan prepared in

 

91

 

connection with the
closing of the Loan (such repairs hereinafter referred to as “Required
Repairs”).  Borrower shall
complete (or cause to be completed) the Required Repairs in a good and
workmanlike manner on or before the date that is twelve (12) months from the
date hereof or within such other time frame for completion specifically set
forth on Schedule I.

 

(b)                                 Borrower
shall establish on the date hereof an Eligible Account with Lender or Lender’s
agent to fund the Required Repairs (the “Required Repair Account”) into which
Borrower shall deposit on the date hereof the amount of $288,750.00, which
amount equals 125% of the estimated cost for the completion of the Required
Repairs.  Amounts so deposited shall
hereinafter be referred to as the “Required Repair Funds.”

 

Section 9.2.                       REPLACEMENTS

 

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

 

(b)                                 Borrower
shall establish on the date hereof Eligible Accounts with Lender or Lender’s
agent to fund the Replacements (i) with respect to the Marriott Managed
Properties (such account, the “Marriott Replacement Reserve Account”),
(ii) with respect to the Hilton Managed Properties (other than the Doubletree
Property) (such account, the “Hilton Replacement Reserve Account”), (iii)
with respect to the Doubletree Property (such account, the “Doubletree
Replacement Reserve Account”), (ii) with respect to the Interstate
Managed Properties (such account, the “Interstate Replacement Reserve Account” and
together with the Marriott Replacement Reserve Account, the Hilton Replacement
Reserve Account, the Doubletree Replacement Reserve Account and any other
reserve for Replacements provided for in any Management Agreement approved by
Lender, in accordance with the terms hereof, collectively, the “Manager
Replacement Reserve Accounts”), and (v) with respect to each other
Property (such account, the “Other Replacement Reserve Account” and
together with the Marriott Replacement Reserve Account, the Hilton Replacement
Reserve Account, the Doubletree Replacement Reserve Account and the Interstate
Replacement Reserve Account, collectively, the “Replacement Reserve Account”).  Borrower shall (or shall cause the
applicable Manager to) timely deposit into each Manager Replacement Reserve
Account (A)  on the Closing Date $0.00 into the Marriott Replacement
Reserve Account, $125,835.00 into the Hilton Replacement Reserve Account, $0.00
into the Doubletree Replacement Reserve Account and $0.00 into the Interstate
Replacement Reserve Account and (B) thereafter, the applicable amounts
required to be reserved from time to time with respect to Replacements under
the applicable Management Agreement (the aggregate amount of such deposits, the
“Manager
Replacement Reserve Monthly Deposit”).  In addition, Borrower shall deposit into the Other

 

92

 

Replacement Reserve Account (A)
$0.00 on the Closing Date and (B) five percent (5%) of total gross revenues
from the operations of each Property not subject to a Management Agreement
providing for a reserve for Replacements acceptable to Lender, including, but
not limited to, any Property operated by a Non-Affiliated Lessee (the aggregate
amount of such deposits, the “Other
Replacement Reserve Monthly Deposit” and together with the Manager
Replacement Reserve Monthly Deposit, collectively, the “Replacement Reserve Monthly Deposit”).  On or before the twenty-first (21st) day of
each calendar month during the term of the Loan, Borrower shall provide to
Lender an accounting of all amounts deposited into each Replacement Reserve
Account during such month.  Amounts so
deposited in each Replacement Reserve Account shall hereinafter be referred to
collectively as “Replacement Reserve Funds.”  Lender may, in its reasonable discretion,
adjust the Other Replacement Reserve Monthly Deposit from time to time to an
amount sufficient to maintain the proper maintenance and operation of the
applicable Property and Borrower shall deposit or cause to be deposited any
additional amounts not deposited by the applicable Manager.  In the event Lender shall at any time
increase the Other Replacement Reserve Monthly Deposit, Borrower may, at its
election, request that Lender obtain, at the sole cost and expense of Borrower,
a Physical Conditions Report prepared by an engineer selected by Lender in its
reasonable discretion, in which case the Other Replacement Reserve Monthly
Deposit shall be adjusted by Lender based on the results of such report,
provided that in no event shall such amounts be reduced below the greater of
(a) the aggregate Other Replacement Reserve Monthly Deposit then required by
Lender with respect to the Other Replacement Reserve Account or (b) the amount
necessary to perform any work required in any PIP Report or by any Legal
Requirement with respect to the applicable Property.  Furthermore, in the event of a default by Manager under any
Management Agreement relating to the maintenance and repair of one or more
Properties, Lender shall have the right to cause Borrower to deposit additional
funds in an amount sufficient to remedy such defaults into the Other
Replacement Reserve Account, provided that Borrower shall have the right to
contest such additional deposit requirement in the same manner set forth in the
preceding sentence, with respect to any contest to any additional fundings with
respect to the Other Replacement Reserve Monthly Deposit.

 

(c)                                  Borrower
shall establish on the date hereof an Eligible Account with Lender or Lender’s
agent to fund certain Replacements described in the PIP reports delivered in
connection with the closing of the Loan as summarized on Schedule IV
attached hereto (the “Closing PIP Reports”) to the extent not
covered by the applicable Replacement Reserve Accounts (such account, the “PIP Reserve
Account”).  Borrower shall
timely deposit into the PIP Reserve Account (A) on the Closing Date
$4,100,000.00 and (B) thereafter, an amount equal to $265,000.00 or such lower
amount as Lender may reasonably require taking into account Replacements made
and performed by Borrower as required by the Closing PIP Reports and any
releases of Properties pursuant to the terms of this Loan Agreement (the
aggregate amount of such deposits, the “PIP Reserve Monthly Deposit”).  Additionally, in connection with any release
of a Release Property pursuant to Section 2.4(c), Lender may require
Borrower to make a deposit into the PIP Reserve Account in an amount as Lender
deems is reasonably necessary to cause the amounts in the PIP Reserve Account
(taking into account any future PIP Reserve Monthly Deposits and amounts in the
applicable Replacement Reserve Account and any future deposits therein as
required hereunder) to be sufficient to pay the Required PIP Replacements for
the remaining Properties.  Amounts so
deposited in the PIP Reserve Account shall hereinafter be referred to
collectively as “PIP Reserve Funds”. 
Borrower shall complete (or cause to be

 

93

 

completed) the
Replacements described in the Closing PIP Reports in a good and workmanlike
manner on or before the date specified in Schedule IV attached hereto (the
“Required
PIP Replacements”).  Upon the
earlier to occur (i) payment in full of the Debt and (ii) completion of the
Required PIP Replacements, any PIP Reserve Funds remaining in the PIP Reserve
Account shall be released to Borrower and the obligation to make the PIP
Reserve Monthly Deposit shall cease.

 

Section 9.3.                       INTENTIONALLY
OMITTED

 

Section 9.4.                       REQUIRED
WORK

 

Borrower shall
diligently pursue (or cause to be pursued) all Required Repairs and
Replacements, including any Required PIP Replacements (collectively, the “Required
Work”) to completion in accordance with the following requirements:

 

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

 

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

 

(c)                                  In
order to facilitate Lender’s completion of the Required Work, Borrower grants
Lender the right to enter onto the applicable Property and perform any and all
work and labor necessary to complete the Required Work and/or employ watchmen
to protect such Property from damage. 
All sums so expended by Lender, to the extent not from the Reserve Funds,
shall be deemed to have been advanced under the Loan to Borrower and secured by
each Mortgage.  For this purpose
Borrower constitutes and appoints Lender its true and lawful attorney-in-fact
with full power of substitution to complete or undertake the Required Work in
the name of Borrower upon Borrower’s failure to do so in a workmanlike and
timely manner.  Such power of attorney
shall be deemed to be a power coupled with an interest and cannot be
revoked.  Borrower empowers said
attorney-in-fact as follows: (i) to use any of the Reserve Funds for the
purpose of making or completing the Required Work; (ii) to make such additions,
changes and corrections to the Required Work as shall be necessary or desirable
to complete the Required Work; (iii) to employ such contractors,
subcontractors, agents, architects and inspectors as shall be required for such
purposes; (iv) to pay, settle or compromise all existing bills and claims which
are or may become Liens against the applicable Property, or as may be necessary
or desirable for the completion of the Required Work, or for clearance of
title; (v) to execute all

 

94

 

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

 

(d)                                 Nothing
in this Section 9.4 shall: (i) make Lender responsible for making or
completing the Required Work; (ii) require Lender to expend funds in addition
to the Reserve Funds to make or complete any Required Work; (iii) obligate
Lender to proceed with the Required Work; or (iv) obligate Lender to demand
from Borrower additional sums to make or complete any Required Work.

 

(e)                                  Borrower
shall permit Lender and Lender’s agents and representatives (including, without
limitation, Lender’s engineer, architect, or inspector) or third parties
performing Required Work pursuant to this Section 9.4 after reasonable
notice to Borrower to enter onto any Property during normal business hours
(subject to the rights of tenants under Leases approved, if required) in
accordance with the terms hereof and Managers under approved Management
Agreements to inspect the progress of any Required Work and all materials being
used in connection therewith, to examine all plans and shop drawings relating
to such Required Work which are or may be kept at any Property, and to complete
any Required Work made pursuant to this Section 9.4.  Borrower shall cause all contractors and
subcontractors to cooperate with Lender and Lender’s representatives or such
other persons described above in connection with inspections described in this
Section 9.4 or the completion of Required Work pursuant to this
Section 9.4.

 

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

 

(g)                                 The
Required Work and all materials, equipment, fixtures, or any other item comprising
a part of any Required Work shall be constructed, installed or completed, as
applicable, free and clear of all mechanic’s, materialman’s or other Liens
(except for Permitted Encumbrances).

 

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

 

95

 

(i)                                     All
Required Work shall comply with all Legal Requirements and applicable insurance
requirements including, without limitation, applicable building codes, special
use permits, environmental regulations, and requirements of insurance
underwriters.

 

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

 

Section 9.5.                       RELEASE
OF RESERVE FUNDS

 

(a)                                  With
respect to a Property upon written request from Borrower and in all instances
satisfaction of the requirements set forth in this Agreement, Lender shall
promptly disburse to Borrower amounts from (i) the applicable Required Repair
Account to the extent necessary to reimburse Borrower for the actual costs of
each Required Repair (but not exceeding 125% of the original estimated cost of
such Required Repair as set forth on Schedule I, unless Lender has agreed
to reimburse Borrower for such excess cost pursuant to Section 9.5(f)),
(ii) the applicable Replacement Reserve Account to the extent necessary to
reimburse Borrower for the actual costs of any approved Replacements or (iii)
the PIP Reserve Account to the extent necessary to reimburse Borrower for the
actual costs of any Required PIP Replacements to the extent funds in the
applicable Replacement Reserve Account are insufficient for such Required PIP
Replacements.  Notwithstanding the
preceding sentence, with respect to any Property, in no event shall Lender be
required to (x) disburse any amounts which would cause the amount of funds
remaining in the applicable Required Repair Account after any disbursement
(other than with respect to the final disbursement) to be less than 125% of the
then current estimated cost of completing all remaining Required Repairs for
such Property, (y) disburse funds from any of the Reserve Accounts if an Event
of Default exists, or (z) disburse funds from any Replacement Reserve Account
or the PIP Reserve Account to reimburse Borrower for the costs of routine
repairs or maintenance to such Property (other than FF&E Replacements
required pursuant to any PIP Report) or for costs which are to be reimbursed
from funds held in the related Required Repair Account or the PIP Reserve
Account.

 

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

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

 

96

 

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

 

(c)                                  Borrower
shall pay all invoices in connection with the Required Work with respect to
which a disbursement is requested prior to submitting such request for
disbursement from the applicable Reserve Accounts or shall have given undertakings
and assurances acceptable to Lender that Borrower shall pay all such amounts
from Lender’s disbursements or, if acceptable assurances are not provided, at
the request of Borrower, Lender will issue joint checks, payable to Borrower
and the contractor, supplier, materialman, mechanic, subcontractor or other
party to whom payment is due in connection with the Required Work.  In the case of payments made by joint check,
Lender may require a waiver of lien from each Person receiving payment prior to
Lender’s disbursement of the Reserve Funds. 
In addition, as a condition to any disbursement, Lender may require
Borrower to obtain lien waivers from each contractor, supplier, materialman,
mechanic or subcontractor who receives payment in an amount equal to or greater
than $100,000 for completion of its work or delivery of its materials.  Any lien waiver delivered hereunder shall
conform to all Legal Requirements and shall cover all work performed and
materials supplied (including equipment and fixtures) for the applicable
Property by that contractor, supplier, subcontractor, mechanic or materialman
through the date covered by the current disbursement request (or, in the event
that payment to such contractor, supplier, subcontractor, mechanic or
materialmen is to be made by a joint check, the release of lien shall be
effective through the date covered by the previous release of funds request).

 

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

 

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

 

(f)                                    In
the event any Borrower requests a disbursement from the Required Repair Account
to reimburse Borrower for the actual cost of labor or materials used in
connection with repairs or improvements other than the Required Repairs
specified on Schedule I, or for a Required Repair to the extent the cost
of such Required Repair exceeds 125% of the estimated cost of such Required
Repair as set forth on Schedule I (in either case, an “Additional
Required Repair”), Borrower shall disclose in writing to Lender the
reason why funds in the Required

 

97

 

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

 

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

 

(h)                                 Lender’s
disbursement of any Reserve Funds or other acknowledgment of completion of any
Required Work in a manner satisfactory to Lender shall not be deemed a
certification or warranty by Lender to any Person that the Required Work has
been completed in accordance with Legal Requirements.

 

(i)                                     If
the funds in any Reserve Account should exceed the amount of payments actually
applied by Lender for the purposes of the account, Lender in its reasonable
discretion shall either return any excess to Borrower or credit such excess
against future payments to be made to that Reserve Account.  In allocating any such excess, Lender may
deal with the Person shown on Lender’s records as being the owner of each
applicable Property.  If at any time
Lender reasonably determines that the Reserve Funds are not or will not be
sufficient to make the required payments, Lender shall notify Borrower of such
determination and Borrower shall pay to Lender any amount necessary to make up
the deficiency within ten (10) days after notice from Lender to Borrower
requesting payment thereof.

 

(j)                                     The
insufficiency of any balance in any of the Reserve Accounts shall not relieve
Borrower from its obligation to fulfill all preservation and maintenance
covenants in the Loan Documents.

 

(k)                                  Upon
the earlier to occur of (i) the timely completion of all Required Repairs and
any Additional Required Repairs, if any, in accordance with the requirements of
this Agreement, as verified by Lender in its reasonable discretion, or (ii) the
payment in full of the Debt,

 

98

 

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

 

(l)                                     Upon
payment in full of the Debt, all amounts remaining on deposit, if any, in each
Replacement Reserve Account and the PIP Reserve Account shall be returned to
Borrower or the Person shown on Lender’s records as being the owner of each
applicable Property to which such Replacement Reserve Account relates and no
other party shall have any right or claim thereto.

 

(m)                               Notwithstanding
anything contained herein to the contrary, from and after the completion of the
“Initial Renovations” as defined in the Marriott Pooling Agreement, Lender
shall upon prior written notice from Borrower permit Marriott Manager to access
the Marriott Replacement Reserve Account for the purpose of making
disbursements therefrom under and in accordance with terms of the applicable
Marriott Management Agreement, without regard to any contrary or additional
disbursement requirements set forth herein.

 

Section 9.6.                       TAX
AND INSURANCE RESERVE FUNDS

 

Borrower shall
establish on the date hereof an Eligible Account with Lender or Lender’s agent
sufficient to discharge Borrower’s obligations for the payment of Taxes and
Insurance Premiums pursuant to Section 5.4 and Section 8.1 hereof
(the “Tax
and Insurance Reserve Account”) into which Borrower shall deposit on
the date hereof $577,200.15, which amount, when added to the required monthly
deposits set forth in the next sentence, is sufficient to make the payments of
Taxes and Insurance Premiums as required herein.  Borrower shall deposit into the Tax and Insurance Reserve Account
on each Payment Date (a) one-twelfth of the Taxes that Lender estimates will be
payable during the next ensuing twelve (12) months or such higher amount
necessary to accumulate with Lender sufficient funds to pay all such Taxes at
least thirty (30) days prior to the earlier of (i) the date that the same will
become delinquent and (ii) the date that additional charges or interest will
accrue due to the non-payment thereof, and (b) except to the extent Lender has
waived the insurance escrow because the insurance required hereunder is
maintained under a blanket insurance Policy acceptable to Lender in accordance
with Section 8.1(c), one-twelfth of the Insurance Premiums that Lender
estimates will be payable during the next ensuing twelve (12) months for the
renewal of the coverage afforded by the Policies upon the expiration thereof or
such higher amount necessary to accumulate with Lender sufficient funds to pay
all such Insurance Premiums at least thirty (30) days prior to the expiration
of the Policies (said amounts in (a) and (b) above hereinafter called the “Tax and
Insurance Reserve Funds”). 
Lender will apply the Tax and Insurance Reserve Funds to payments of
Taxes and Insurance Premiums required to be made by Borrower pursuant to
Section 5.4 and Section 8.1 hereof. 
In making any disbursement from the Tax and Insurance Reserve Account,
Lender may do so according to any bill, statement or estimate procured from the
appropriate public office or tax lien service (with respect to Taxes) or
insurer or agent (with respect to Insurance Premiums), without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax,
assessment, sale, forfeiture, tax lien or title or claim thereof.  If the amount of the Tax and Insurance
Reserve Funds shall exceed the amounts due for Taxes and Insurance Premiums
pursuant to Section 5.4 and Section 8.1 hereof, Lender shall, in its
reasonable discretion, return any excess to Borrower or credit such excess
against future

 

99

 

payments to be made to the Tax and Insurance Reserve Account.  In allocating any such excess, Lender may
deal with the person shown on Lender’s records as being the owner of the
applicable Property.  Any amount
remaining in the Tax and Insurance Reserve Account after the Debt has been paid
in full shall be returned to Borrower and no other party shall have any right
or claim thereto.  If at any time Lender
reasonably determines that the Tax and Insurance Reserve Funds are not or will
not be sufficient to pay Taxes and Insurance Premiums by the dates set forth in
(a) and (b) above, Lender shall notify Borrower of such determination and
Borrower shall pay to Lender any amount necessary to make up the deficiency
within ten (10) days after notice from Lender to Borrower requesting payment
thereof.  Notwithstanding any of the
foregoing to the contrary, in lieu of funding the Tax and Insurance Escrow
Reserve in accordance with the terms hereof, Borrower may from time to time
provide a Letter of Credit to Lender in an amount sufficient to fund the Tax
and Insurance Funds with respect to any calendar year(s) as determined from
time to time by Lender in its discretion, in such instance Borrower’s escrow
obligations under this Section 9.6 shall cease until such time as said
Letter of Credit expires, is drawn upon or otherwise fails to meet the
definitional requirements for a Letter of Credit as set forth in Article 1
hereof.

 

Section 9.7.                       EXCESS
CASH RESERVE

 

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

 

Section 9.8.                       OPERATING
EXPENSES; EXTRAORDINARY EXPENSES

 

(a)                                  Borrower
shall establish on the date hereof an Eligible Account with Lender or Lender’s
agent into which Borrower shall deposit, on each Payment Date during the term
of the Loan, funds sufficient to pay all Operating Expenses required to be
incurred during the following month in accordance with the Annual Budget
approved by Lender (the “Operating Expense Reserve Account.”)  Amounts so deposited shall hereinafter be
referred to as the “Operating Expense Reserve Funds.”  Provided no Event of Default has occurred
and is continuing, sums from the Operating Expense Reserve Account shall be
disbursed by Lender to Borrower following receipt and approval of Borrower’s
written request for the payment of such Operating

 

100

 

Expenses.  Notwithstanding the foregoing, Borrower
shall not be required to make any deposits into the Operating Expense Reserve
Account for so long as each Property continues to be operated by (a) a
Qualified Manager pursuant to a Management Agreement acceptable to Lender which
provides for the payment of Operating Expenses of the applicable Property prior
to the disbursement of any amounts due the Operating Lessee or Borrower or (b)
a Qualified Lessee (which is not an Affiliate of Borrower) pursuant to an
Operating Lease acceptable to Lender which provides for the payment of
Operating Expenses of the applicable Property pursuant to an Annual Budget
approved by Lender prior to the disbursement of any amounts due Borrower.

 

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

 

Section 9.9.                       RESERVE
FUNDS GENERALLY

 

(a)                                  All
earnings or interest on the Reserve Accounts shall be payable to Borrower.  Lender or its servicer shall maintain the
Reserve Accounts and any funds deposited therein in interest-bearing accounts,
which in all instances shall be an Eligible Account(s) and (A) such funds shall
not be invested except in Permitted Investments, and (B) all interest earned or
accrued thereon shall be for the account of and be retained by Borrower.  In no event shall Lender or any loan
servicer that at any time holds or maintains any Reserve Account be required to
select any particular interest-bearing account or the account that yields the
highest rate of interest, provided that selection of the account shall be
consistent with the general standards at the time being utilized by Lender or
the loan servicer, as applicable, in establishing similar accounts for loans of
comparable type.  All such interest
shall be and become part of the applicable Reserve Account and shall be
disbursed in accordance with the applicable provisions of this Article 9;
provided, however, that Lender may, at its election, retain any such interest
for its own account during the occurrence and continuance of a monetary Event
of Default.  Borrower agrees that it
shall include all interest on Reserve Funds as the income of Borrower (and, if
Borrower is a partnership or other pass-through entity, the partners, members
or beneficiaries of Borrower, as the case may be), and Borrower shall be shall
be the owner of the applicable Reserve Funds for federal and applicable state
and local tax purposes, except to the extent that Lender retains any interest
for its own account during the occurrence and continuance of a monetary Event
of Default as provided herein.

 

(b)                                 Borrower
grants to Lender a first-priority perfected security interest in, and assigns
and pledges to Lender, each of the Reserve Accounts and any and all Reserve
Funds now or hereafter deposited in the Reserve Accounts as additional security
for payment of the Debt.  Until expended
or applied in accordance herewith, the Reserve Accounts and the Reserve Funds
shall constitute additional security for the Debt.  The provisions of this Section 9.9 are intended

 

101

 

to give Lender or any
subsequent holder of the Loan “control” of the Reserve Accounts within the
meaning of the UCC.

 

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

 

(d)                                 Lender
shall furnish or cause to be furnished to Borrower, without charge, an annual
accounting of each Reserve Account in the normal format of Lender or its loan
servicer, showing credits and debits to such Reserve Account and the purpose
for which each debit to each Reserve Account was made.

 

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

 

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

 

102

 

portion of the Reserve
Funds to effect a cure of any Event of Default, or to pay the Debt, or in any
specific order of priority.  The
exercise of any or all of Lender’s rights and remedies under this Agreement or
under any of the other Loan Documents shall not in any way prejudice or affect
Lender’s right to initiate and complete a foreclosure under any or all of the
Mortgages.

 

(g)                                 Notwithstanding
anything contained herein or in any other Loan Document to the contrary, Lender
shall not be permitted to apply funds in the Marriott, Hilton or Interstate
Replacement Reserve Accounts toward the payment of any amounts other than
Replacements with respect to the applicable Property(ies), unless and until the
applicable Management Agreement pursuant to which such Replacement Reserve
Account relates shall expire or otherwise terminate.

 

(h)                                 The
Reserve Funds shall not constitute escrow or trust funds (except for the
Replacement Reserve Accounts relating to the Marriott Managed Properties, the
Hilton Managed Properties and the Interstate Managed Properties) and may be
commingled with other monies held by Lender. 
Notwithstanding anything else herein to the contrary, Lender may
commingle in one or more Eligible Accounts any and all funds controlled by
Lender, including, without limitation, funds pledged in favor of Lender by
other borrowers, whether for the same purposes as the Reserve Accounts or
otherwise.  Without limiting any other
provisions of this Agreement or any other Loan Document, the Reserve Accounts
may be established and held in such name or names as Lender or its loan
servicer, as agent for Lender, shall deem appropriate, including, without
limitation, in the name of Lender or such loan servicer, as agent for
Lender.  In the case of any Reserve
Account which is held in a commingled account, Lender or its loan servicer, as
applicable, shall maintain records sufficient to enable it to determine at all
times which portion of such account is related to the Loan.  The Reserve Accounts are solely for the
protection of Lender.  With respect to
the Reserve Accounts, Lender shall have no responsibility beyond the allowance
of due credit for the sums actually received by Lender or beyond the
reimbursement or payment of the costs and expenses for which such accounts were
established in accordance with their terms. 
Upon assignment of the Loan by Lender, any Reserve Funds shall be turned
over to the assignee and any responsibility of Lender as assignor shall
terminate.  The requirements of this
Agreement concerning Reserve Accounts in no way supersede, limit or waive any
other rights or obligations of the parties under any of the Loan Documents or
under applicable law.

 

(i)                                     Borrower
shall not, without obtaining the prior written consent of Lender, further
pledge, assign or grant any security interest in the Reserve Accounts or the
Reserve Funds deposited therein or permit any Lien to attach thereto, except
for the security interest granted in this Section 9.9, or any levy to be
made thereon, or any UCC Financing Statements, except those naming Lender as
the secured party, to be filed with respect thereto.

 

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

 

103

 

for the purpose of
obtaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted.

 

Section 9.10.                 GROUND
RENT RESERVE FUNDS.

 

Borrower shall
establish on the date hereof an Eligible Account with Lender or Lender’s agent
sufficient to discharge Borrower’s obligations for the payment of Rent under
each Ground Lease (the “Ground Rent Reserve Account”) into which
Borrower shall deposit on the date hereof $0.00, which amount, when added to
the required monthly deposits set forth in the next sentence, is sufficient to
make the payments of Ground Rent as required under each Ground Lease
(collectively, the “Ground Rent Reserve Funds”).  Borrower shall deposit into the Ground Rent
Reserve Account on each Payment Date (the “Ground Rent Monthly Deposit”) one-twelfth
of the annual Ground Rent that Lender estimates will be payable during the next
ensuing twelve (12) months.  Lender will
apply the Ground Rent Reserve Funds to payments of Ground Rent required to be
made by Borrower pursuant to each Ground Lease.  In making any disbursement from the Ground Rent Reserve Account,
Lender may do so according to any bill, statement or estimate procured from the
ground lessor under each Ground Lease, without inquiry into the accuracy of
such bill, statement or estimate or into the validity of any rent, additional
rent or other charge thereof.  If the
amount of the Ground Rent Reserve Funds shall exceed the amounts due for Rent
under the Ground Leases, Lender shall, in its sole discretion, return any
excess to Borrower or credit such excess against future payments to be made to
the Ground Rent Reserve Account.  In
allocating any such excess, Lender may deal with the person shown on Lender’s
records as being the owner of the leasehold title to the applicable
Property.  Any amount remaining in the
Ground Rent Reserve Account after the Debt has been paid in full shall be
returned to Borrower or the person shown on Lender’s records as being the owner
of the leasehold title to the applicable Property and no other party shall have
any right or claim thereto.  If at any
time Lender reasonably determines that the Ground Rent Reserve Funds are not or
will not be sufficient to pay Ground Rent by the due date, Lender shall notify
Borrower of such determination and Borrower shall pay to Lender any amount
necessary to make up the deficiency within ten (10) days after notice from
Lender to Borrower requesting payment thereof. 
Notwithstanding any of the foregoing to the contrary, in lieu of funding
the Ground Rent Reserve Account in accordance with the terms set forth above,
Borrower may from time to time provide a Letter of Credit to Lender in an
amount sufficient to fund the Ground Rent Reserve Funds with sufficient funds to
pay Ground Rents with respect to an entire calendar year(s) as determined from
time to time by Lender in its discretion; in such instance Borrowers escrow
obligations under this Section 9.10 shall cease until such time as said
Letter of Credit expires, is drawn upon or otherwise fails to meet the
definitional requirements for a Letter of Credit as set forth in Article 1
hereof.

 

Section 9.11.                 LEASE
ENHANCEMENT FUNDS

 

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

 

104

 

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

 

ARTICLE 10

CASH MANAGEMENT

 

Section 10.1.                 CASH
MANAGEMENT AGREEMENT

 

On or prior to the
Closing Date, Borrower, Lender and Agent shall enter into the Cash Management
Agreement for the operation of the Cash Management Account and the subaccounts
for the Reserve Funds, which Cash Management Agreement shall, among other
things, provide that (a) the Managers shall deposit all Rents from each
Property to the Affiliated Lessee is entitled to under the applicable
Management Agreement, directly into the Cash Management Account, (b) the
Non-Affiliated Lessee shall deposit Rents payable to the Borrower under the
applicable Operating Lease directly into the Cash Management Account and (c) in
the event that an Excess Cash Flow Sweep Period occurs and is continuing and
only as to Properties where the Operating Lessee or Manager is not paying
Operating Expenses pursuant to the applicable Operating Lease or Management
Agreement, Operating Expenses shall be disbursed by Lender pursuant to the
Annual Budget approved by Lender, and (d) all amounts in the Cash
Management Account shall be applied by Lender in accordance with the Cash
Management Agreement.

 

ARTICLE 11

EVENTS OF DEFAULT; REMEDIES

 

Section 11.1.                 EVENT
OF DEFAULT

 

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

 

(a)                                  if
any portion of the Debt is not paid on or prior to the date the same is due or
if the entire Debt is not paid on or before the Maturity Date; provided,
however, Borrower shall not be in default so long as there is sufficient money
in the Cash Management Account for payment of all amounts then due and payable
(including any deposits into Reserve Accounts) and Lender’s access to such
money has not been constrained or constricted in any manner;

 

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

 

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

 

105

 

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

 

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

 

(f)                                    if
(i) Borrower, or any managing member (which shall not include Mezzanine
Borrower as long as the Mezzanine Loan is outstanding) or general partner of
Borrower, Operating Lessee, Borrower Principal or any SPE Component Entity (if
any) shall commence any case, proceeding or other action (A) under any
Creditors Rights Laws, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part
of its assets, or Borrower, Operating Lessee, any managing member (which shall
not include Mezzanine Borrower as long as the Mezzanine Loan is outstanding) or
general partner of Borrower, Operating Lessee, Borrower Principal, or any SPE
Component Entity (if any) shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against Borrower, Operating
Lessee, any managing member (which shall not include Mezzanine Borrower as long
as the Mezzanine Loan is outstanding) or general partner of Borrower, Operating
Lessee, Borrower Principal, or any SPE Component Entity (if any) any case,
proceeding or other action of a nature referred to in clause (i) above which
(A) results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period
of ninety (90) days; or (iii) there shall be commenced against Borrower,
Operating Lessee, any managing member (which shall not include Mezzanine
Borrower as long as the Mezzanine Loan is outstanding) or general partner of
Borrower, Operating Lessee, Borrower Principal, or any SPE Component Entity (if
any) any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of any order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within ninety (90) days from the entry thereof; or (iv)
Borrower, Operating Lessee, any managing member (which shall not include the
Mezzanine Borrower as long as the Mezzanine Loan is outstanding) or general
partner of Borrower, Operating Lessee, Borrower Principal, or any SPE Component
Entity (if any) shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) Borrower, Operating Lessee, any
managing member (which shall not include Mezzanine Borrower as long as the
Mezzanine Loan is outstanding) or general partner of Borrower, Operating
Lessee, Borrower Principal, or any SPE Component Entity (if any) shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due;

 

106

 

(g)                                 if
Borrower shall be in default beyond applicable notice and grace periods under
any other mortgage, deed of trust, deed to secure debt or other security
agreement covering any part of any Property, whether it be superior or junior
in lien to any or all of the Mortgages;

 

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

 

(i)                                     if
any federal tax lien is filed against Borrower, any managing member (which
shall not include Mezzanine Borrower as long as the Mezzanine Loan is
outstanding) or general partner of Borrower, Affiliated Lessee, Borrower
Principal, or any SPE Component Entity (if any) or any Property and same is not
discharged of record within thirty (30) days after same is filed;

 

(j)                                     if
a judgment is filed against the Borrower in excess of $100,000 which is not
vacated or discharged within 30 days;

 

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

 

(l)                                     if
Borrower shall permit any event within its control to occur that would cause
any REA to terminate without notice or action by any party thereto or would
entitle any party to terminate any REA and the term thereof by giving notice to
Borrower; or any REA shall be surrendered, terminated or canceled for any
reason or under any circumstance whatsoever except as provided for in such REA;
or any term of any REA shall be modified or supplemented without Lender’s prior
written consent; or Borrower shall fail, within ten (10) Business Days after
demand by Lender, to exercise its option to renew or extend the term of any REA
or shall fail or neglect to pursue diligently all actions necessary to exercise
such renewal rights pursuant to such REA except as provided for in such
REA  and the same shall have (or shall
be reasonably expected to have) a material and adverse affect on the value,
use, operation or enjoyment of the applicable Property as a hotel of a similar
type as the hotel situated on such Property as of the Closing Date or on the
ability of Borrower to perform its obligations (including its payment
obligations under this Agreement, the Note and the other Loan Documents);

 

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

 

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

 

(o)                                 if
Borrower, without Lender’s consent, modifies, amends, terminates or cancels (or
permits or directs Operating Lessee to modify, amend, terminate or cancel) any
Franchise Agreement or operates any Property under the name of any hotel chain
or system other than the name such Property is operated under as of the date
hereof;

 

107

 

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

 

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

 

(r)                                    if
an “Event of Default” shall occur under any Subordination, Attornment and
Security Agreement;

 

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

 

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

 

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

 

Section 11.2.                 REMEDIES

 

(a)                                  Upon
the occurrence of an Event of Default (other than an Event of Default described
in Section 11.1(f) above) and at any time thereafter during the continuance
of such Event of Default Lender may, in addition to any other rights or
remedies available to it pursuant to this Agreement and the other Loan
Documents or at law or in equity, take such action, without notice or demand,
that Lender deems advisable to protect and enforce its rights against Borrower
and in the Properties or any of them, including, without limitation, declaring
the Debt to be immediately due and payable, and Lender may enforce or avail
itself of any or all rights or remedies provided in the Loan Documents against
Borrower and any Property, including, without limitation, all rights or
remedies available at law or in equity; and upon any Event of Default described
in Section 11.1(f) above, the Debt and all other obligations of Borrower
hereunder and under the other Loan Documents shall immediately and
automatically become due

 

108

 

and payable, without
notice or demand, and Borrower hereby expressly waives any such notice or
demand, anything contained herein or in any other Loan Document to the contrary
notwithstanding.

 

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

 

ARTICLE 12

ENVIRONMENTAL PROVISIONS

 

Section 12.1.                 ENVIRONMENTAL
REPRESENTATIONS AND WARRANTIES

 

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

 

109

 

Section 12.2.                 ENVIRONMENTAL
COVENANTS

 

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

 

Section 12.3.                 LENDER’S
RIGHTS

 

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

 

110

 

Section 12.4.                 OPERATIONS
AND MAINTENANCE PROGRAMS

 

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

 

Section 12.5.                 ENVIRONMENTAL
DEFINITIONS

 

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

 

Section 12.6.                 INDEMNIFICATION

 

(a)                                  Borrower
and Borrower Principal covenant and agree at their sole cost and expense, to
protect, defend, indemnify, release and hold Indemnified Parties harmless from
and against any and all Losses imposed upon or incurred by or asserted against
any Indemnified

 

111

 

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

 

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

 

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

 

112

 

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

 

ARTICLE 13

SECONDARY MARKET

 

Section 13.1.                 TRANSFER
OF LOAN

 

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

 

Section 13.2.                 DELEGATION
OF SERVICING

 

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

 

Section 13.3.                 DISSEMINATION
OF INFORMATION

 

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

 

Section 13.4.                 COOPERATION

 

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

 

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

 

113

 

statements for each
Property meeting the requirements set forth in Section 5.11(a)(ii) hereof)
with respect to each Property, Borrower, Borrower Principal and Manager and
provide modifications and/or updates to the appraisals, market studies,
environmental reviews and reports and engineering reports of any Property
obtained in connection with the making of the Loan (all of the foregoing being
referred to as the “Provided Information”), together, if
customary, with appropriate verification and/or consents of the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys acceptable to Lender and the Rating Agencies;;

 

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

 

(c)                                  at
Borrower’s expense, cause counsel to render or update existing opinion letters
as to enforceability and non-consolidation, and a 10b-5 comfort letter, which
may be relied upon by the holder of the Note, the Rating Agencies and their
respective counsel, which shall be dated as of the closing date of the
Securitization;

 

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

 

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

 

(f)                                    execute
such amendments to the Loan Documents as may be requested by the holder of the
Note or the Rating Agencies or otherwise to effect the Securitization
including, without limitation, bifurcation of the Loan into two or more
components and/or separate notes and/or creating a senior/subordinate note
structure; provided, however, that Borrower shall not be required to modify or
amend any Loan Document if such modification or amendment would (i) change the
interest rate or the stated maturity, except in connection with a bifurcation
of the Loan which may result in varying LIBOR Rates for each component thereof,
but which shall have the same weighted average coupon of the LIBOR Rate that
existed immediately prior to such modification, or (ii) in the reasonable
judgment of Borrower, modify or amend any other material economic term of the
Loan, or (iii) in the reasonable judgment of Borrower, materially increase
Borrower’s obligations and liabilities under the Loan Documents;

 

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

 

114

 

Governmental Authorities
in all relevant jurisdictions indicating the good standing and qualification of
Borrower as of the date of the closing date of the Securitization;

 

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

 

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

 

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

 

All reasonable
third party costs and expenses incurred by Borrower in connection with
Borrower’s complying with the requests and requirements made under this
Section 13.4 shall be paid by Borrower.

 

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

 

Section 13.5.                 SECURITIZATION
INDEMNIFICATION

 

(a)                                  Borrower
and Borrower Principal understand that certain of the Provided Information may
be included in disclosure documents in connection with the Securitization,
including, without limitation, a prospectus, prospectus supplement, offering
memorandum or private placement memorandum (each, a “Disclosure Document”) and may
also be included in filings with the Securities and Exchange Commission
pursuant to the Securities Act or the Exchange Act, or provided or made
available to investors or prospective investors in the Securities, the Rating
Agencies, and service providers relating to the Securitization.  In the event that the Disclosure Document is
required to be revised prior to the sale of all Securities, Borrower and
Borrower Principal will cooperate with the holder of the Note in updating the
Disclosure Document by providing all current information necessary to keep the
Disclosure Document accurate and complete in all material respects.

 

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

 

115

 

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

 

116

 

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

 

(d)           Promptly after receipt by an
indemnified party under this Section 13.5 of notice of the commencement of
any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 13.5, notify the
indemnifying party in writing of the commencement thereof, but the omission to
so notify the indemnifying party will not relieve the indemnifying party from
any liability which the indemnifying party may have to any indemnified party
hereunder except to the extent that failure to notify causes prejudice to the
indemnifying party.  In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein
and, to the extent that it (or they) may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. 
After notice from the indemnifying party to such indemnified party under
this Section 13.5 the indemnifying party shall be responsible for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party or parties.  The
indemnifying party shall not be liable for the expenses of more than one such
separate counsel unless an indemnified party shall have reasonably concluded
that there may be legal defenses available to it that are different from or
additional to those available to another indemnified party.

 

(e)           In order to provide for just and
equitable contribution in circumstances in which the indemnity agreements
provided for in  Section 13.5(c) or
Section 13.5(d) is or are for any reason held to be unenforceable by an
indemnified party in respect of any losses, claims, damages or liabilities (or
action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 13.5(c) or Section 13.5(d), the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities
(or action in respect thereof); provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. 
In determining the amount of contribution to which the respective
parties are entitled, the following factors shall be considered:  (i) the indemnified party’s, Borrower’s and

 

117

 

Borrower Principal’s relative
knowledge and access to information concerning the matter with respect to which
claim was asserted; (ii) the opportunity to correct and prevent any statement
or omission; and (iii) any other equitable considerations appropriate in the
circumstances.  Lender and Borrower
hereby agree that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation.

 

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

 

Section 13.6.      INTENTIONALLY DELETED.

 

ARTICLE 14

INDEMNIFICATIONS

 

Section 14.1.      GENERAL
INDEMNIFICATION

 

Borrower shall indemnify,
defend and hold harmless the Indemnified Parties from and against any and all Losses
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or more
of the following: (a) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about any Property or any part thereof
or on the adjoining sidewalks, curbs, adjacent property or adjacent parking
areas, streets or ways; (b) any use, nonuse or condition in, on or about any
Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (c) performance of any
labor or services or the furnishing of any materials or other property in
respect of any Property or any part thereof; (d) any failure of any Property to
be in compliance with any Applicable Legal Requirements; (e) any and all claims
and demands whatsoever which may be asserted against Lender by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the terms, covenants, or agreements contained in any Lease; (f) the holding or
investing of the Reserve Accounts or the performance of the Required Work,
Additional Required Repairs or Additional Replacements, or (g) the payment of
any commission, charge or brokerage fee to anyone which may be payable in
connection with the funding of the Loan (collectively, the “Indemnified
Liabilities”); provided, however, that Borrower shall not have any
obligation to Lender hereunder to the extent that such Indemnified Liabilities
arise from the gross negligence, illegal acts, fraud or willful misconduct of
Lender.  To the extent that the
undertaking to indemnify, defend and hold harmless set forth in the preceding
sentence may be unenforceable because it violates any law or public policy,
Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.

 

Section 14.2.      MORTGAGE
AND INTANGIBLE TAX INDEMNIFICATION

 

Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses imposed upon or
incurred by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any

 

118

 

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

 

Section 14.3.      ERISA INDEMNIFICATION

 

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

 

Section 14.4.      SURVIVAL

 

The obligations and
liabilities of Borrower under this Article 14 shall fully survive indefinitely
notwithstanding any termination, satisfaction, assignment, entry of a judgment
of foreclosure, exercise of any power of sale, or delivery of a deed in lieu of
foreclosure of any or all of the Mortgages.

 

ARTICLE 15

EXCULPATION

 

Section 15.1.      EXCULPATION

 

(a)           Except as otherwise provided herein
or in the other Loan Documents, Lender shall not enforce the liability and
obligation of Borrower or Borrower Principal, as applicable, to perform and
observe the obligations contained herein or in the other Loan Documents by any
action or proceeding wherein a money judgment shall be sought against Borrower
or Borrower Principal, except that Lender may bring a foreclosure action,
action for specific performance or other appropriate action or proceeding to
enable Lender to enforce and realize upon this Agreement, the Note, any or all
of the Mortgages and the other Loan Documents, and the interest in any
Property, the Rents and any other collateral given to Lender created by this
Agreement, the Note, the Mortgages and the other Loan Documents; provided,
however, that any judgment in any such action or proceeding shall be
enforceable against Borrower or Borrower Principal, as applicable, only to the
extent of Borrower’s or Borrower Principal’s interest in any Property, in the
Rents and in any other collateral given to Lender.  Lender, by accepting this Agreement, the Note, the Mortgages and
the other Loan Documents, agrees that it shall not, except as otherwise
provided in this Section 15.1, sue for, seek or demand any deficiency
judgment against Borrower or Borrower Principal in any such action or
proceeding, under or by reason of or under or in connection with this
Agreement, the Note, the Mortgages or the other Loan Documents.  The provisions of this Section 15.1
shall not, however, (i) constitute a waiver, release or impairment of any
obligation evidenced or secured by this Agreement, the Note, the Mortgages or
the other Loan Documents; (ii) impair the right of Lender to name Borrower or
Borrower Principal as a party defendant in any action or suit for judicial
foreclosure and sale under this Agreement and any or all of the Mortgages;
(iii) affect the validity or enforceability of any indemnity (including,
without limitation, those contained in Section 12.6, Section 13.5 and
Article 14 of this

 

119

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(viii)        Borrower’s failure following any Event
of Default to deliver to Lender upon demand all Rents and books and records
relating to any Property;

 

(ix)           Borrower’s gross negligence or
willful misconduct; or

 

120

 

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

 

(c)           Notwithstanding the foregoing, the
agreement of Lender not to pursue recourse liability as set forth in subsection
(a) above SHALL BECOME NULL AND VOID and shall be of no further force and
effect and the Debt shall become fully recourse to Borrower and Borrower
Principal, jointly and severally, in the event (i) of a breach by Borrower or
SPE Component Entity of any of the covenants set forth in Article 6 (excluding
Sections 6.1(xv) and 6.1(xviii)(A) thereof) or a breach by Affiliated
Lessee of any of the covenants set forth in Section 15 of the
Subordination, Attornment and Security Agreement, except the extent that such
breach was inadvertent, immaterial and is promptly cured, (ii) of a breach of
any of the covenants set forth in Article 7 hereof, (iii) any Property or any
part thereof shall become an asset in (A) a voluntary bankruptcy or insolvency
proceeding or Borrower Principal, or (B) an involuntary bankruptcy or
insolvency proceeding of Borrower or Borrower Principal in connection with
which Borrower, Borrower Principal, SPE Component Entity or any Affiliate of
any of the foregoing has or have colluded in any way with the creditors
commencing or filing such proceeding and such proceeding is not dismissed in
ninety (90) days.

 

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

 

ARTICLE 16

NOTICES

 

Section 16.1.      NOTICES

 

All notices, consents,
approvals and requests required or permitted hereunder or under any other Loan
Document shall be given in writing and shall be effective for all purposes if
hand

 

121

 

delivered or sent by (a)
certified or registered United States mail, postage prepaid, return receipt requested,
(b) expedited prepaid overnight delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, or by (c) telecopier
(with answer back acknowledged provided an additional notice is given pursuant
to subsection (b) above), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the
case may be, in a written notice to the other parties hereto in the manner
provided for in this Section):

 

	
  If to Lender:

  	
   

  	
  Bank of
  America, N.A.

  
	
   

  	
   

  	
  Capital
  Markets Servicing Group

  
	
   

  	
   

  	
  555 South
  Flower Street, 6th Floor

  
	
   

  	
   

  	
  CA9-706-06-42

  
	
   

  	
   

  	
  Los Angeles,
  California 90071

  
	
   

  	
   

  	
  Attn:  Servicing Manager

  
	
   

  	
   

  	
  Telephone
  No: (800) 462-0505

  
	
   

  	
   

  	
  Facsimile
  No.: (213) 345-6587

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Bank of
  America Legal Department

  
	
   

  	
   

  	
  GCIB/CMBS

  
	
   

  	
   

  	
  NC1-007-20-01

  
	
   

  	
   

  	
  100 North
  Tyron Street

  
	
   

  	
   

  	
  Charlotte,
  North Carolina 28255-0001

  
	
   

  	
   

  	
  Attention:  Glenn J. Reid, Esq.

  
	
   

  	
   

  	
  Facsimile
  No.: (704) 387-0922

  
	
   

  	
   

  	
   

  
	
  If to Borrower:

  	
   

  	
  c/o CNL
  Hospitality Properties

  
	
   

  	
   

  	
  450 South
  Orange Avenue, 12th Floor

  
	
   

  	
   

  	
  Orlando,
  Florida 32801-3336

  
	
   

  	
   

  	
  Attention:  Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile
  No.: (407) 650-1085

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

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

  
	
   

  	
   

  	
  215 North
  Eola Drive

  
	
   

  	
   

  	
  Orlando, Florida
  32801-3336

  
	
   

  	
   

  	
  Attention:  Richard J. Fildes, Esq.

  
	
   

  	
   

  	
  Facsimile
  No.: (407) 843-4444

  
	
   

  	
   

  	
   

  
	
  If to Borrower

  	
   

  	
   

  
	
  Principal:

  	
   

  	
  CNL
  Hospitality Properties

  
	
   

  	
   

  	
  450 South
  Orange Avenue, 12th Floor

  
	
   

  	
   

  	
  Orlando,
  Florida 32810-3336

  
	
   

  	
   

  	
  Attention:  Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile
  No.: (407) 650-1085

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

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

  
	
   

  	
   

  	
  215 North
  Eola Drive

  
	
   

  	
   

  	
  Orlando,
  Florida 32801-3336

  

 

122

 

	
   

  	
   

  	
  Attention:  Richard J. Fildes, Esq.

  
	
   

  	
   

  	
  Facsimile
  No.: (407) 843-4444

  

 

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

 

ARTICLE 17

FURTHER ASSURANCES

 

Section 17.1.      REPLACEMENT DOCUMENTS

 

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

 

Section 17.2.      RECORDING OF MORTGAGE, ETC.

 

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

 

Section 17.3.      FURTHER ACTS, ETC.

 

Borrower will, at the
cost of Borrower, and without expense to Lender, do, execute, acknowledge and
deliver all and every further acts, deeds, conveyances, deeds of trust,
mortgages, assignments, security agreements, control agreements, notices of
assignments, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender any Property and rights hereby
mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged,
assigned, warranted and transferred or intended now or hereafter so to be, or
which Borrower may be or

 

123

 

may hereafter become bound to
convey or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Agreement or for filing, registering or
recording the Mortgages, or for complying with all Legal Requirements.  Borrower, on demand, will execute and
deliver, and in the event it shall fail to so execute and deliver, hereby
authorizes Lender to execute in the name of Borrower or without the signature
of Borrower to the extent Lender may lawfully do so, one or more financing
statements and financing statement amendments to evidence more effectively,
perfect and maintain the priority of the security interest of Lender in any
Property.  Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender
at law and in equity, including without limitation, such rights and remedies
available to Lender pursuant to this Section 17.3.

 

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

 

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

 

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

 

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

 

Section 17.5.      EXPENSES

 

Borrower covenants and
agrees to pay or, if Borrower fails to pay, to reimburse, Lender within ten
(10) days of receipt of written notice from Lender for all reasonable costs and
expenses (including reasonable, actual attorneys’ fees and disbursements and
the allocated costs of internal legal services and all actual disbursements of
internal counsel) reasonably incurred by Lender in accordance with this
Agreement in connection with (a) the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby and all the costs of
furnishing all opinions by counsel for Borrower (including without limitation
any opinions requested by Lender as to

 

124

 

any legal matters arising under
this Agreement or the other Loan Documents with respect to any Property); (b)
any default by Borrower in Borrower’s ongoing performance of and compliance
with Borrower’s respective agreements and covenants contained in this Agreement
and the other Loan Documents on its part to be performed or complied with after
the Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (c) following a request by Borrower,
Lender’s ongoing performance and compliance with all agreements and conditions
contained in this Agreement and the other Loan Documents on its part to be
performed or complied with after the Closing Date; (d) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Lender; (e) securing Borrower’s
compliance with any requests made pursuant to the provisions of this Agreement;
(f) the filing and recording fees and expenses, title insurance and reasonable
fees and expenses of counsel for providing to Lender all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Lien in favor of Lender pursuant to this Agreement and the other Loan
Documents; (g) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, this Agreement,
the other Loan Documents, any Property, or any other security given for the
Loan; and (h) enforcing any obligations of or collecting any payments due from
Borrower under this Agreement, the other Loan Documents or with respect to any
Property or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or of
any insolvency or bankruptcy proceedings; provided, however, that Borrower
shall not be liable for the payment of any such costs and expenses to the
extent the same arise by reason of the gross negligence, illegal acts, fraud or
willful misconduct of Lender. 
Additionally, on the Closing Date Borrower shall pay Lender a
securitization fee in the amount of $520,000.00 (the “Securitization Fee”).

 

ARTICLE 18

WAIVERS

 

Section 18.1.      REMEDIES CUMULATIVE; WAIVERS

 

The rights, powers and
remedies of Lender under this Agreement shall be cumulative and not exclusive
of any other right, power or remedy which Lender may have against Borrower or
Borrower Principal pursuant to this Agreement or the other Loan Documents, or
existing at law or in equity or otherwise. 
Lender’s rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s sole discretion. 
No delay or omission to exercise any remedy, right or power accruing
upon an Event of Default shall impair any such remedy, right or power or shall
be construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient.  A waiver of one Default or Event of Default
with respect to Borrower shall not be construed to be a waiver of any subsequent
Default or Event of Default by Borrower or to impair any remedy, right or power
consequent thereon.

 

125

 

Section 18.2.      MODIFICATION, WAIVER IN WRITING

 

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

 

Section 18.3.      DELAY NOT A WAIVER

 

Neither any failure nor
any delay on the part of Lender in insisting upon strict performance of any
term, condition, covenant or agreement, or exercising any right, power, remedy
or privilege hereunder, or under the Note or under any other Loan Document, or
any other instrument given as security therefor, shall operate as or constitute
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege.  In particular, and not by
way of limitation, by accepting payment after the due date of any amount
payable under this Agreement, the Note or any other Loan Document, Lender shall
not be deemed to have waived any right either to require prompt payment when
due of all other amounts due under this Agreement, the Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.

 

Section 18.4.      TRIAL BY JURY

 

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

 

Section 18.5.      WAIVER OF NOTICE

 

Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or the other Loan Documents specifically
and expressly provide for the giving of notice by Lender to Borrower and except

 

126

 

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

 

Section 18.6.      REMEDIES OF BORROWER

 

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

 

Section 18.7.      WAIVER OF MARSHALLING OF ASSETS

 

To the fullest extent
permitted by law, Borrower, for itself and its successors and assigns, waives
all rights to a marshalling of the assets of Borrower, Borrower’s partners and
others with interests in Borrower, and of any Property, and agrees not to
assert any right under any laws pertaining to the marshalling of assets, the
sale in inverse order of alienation, homestead exemption, the administration of
estates of decedents, or any other matters whatsoever to defeat, reduce or
affect the right of Lender under the Loan Documents to a sale of any Property
for the collection of the Debt without any prior or different resort for
collection or of the right of Lender to the payment of the Debt out of the net
proceeds of any Property in preference to every other claimant whatsoever.

 

Section 18.8.      WAIVER OF STATUTE OF LIMITATIONS

 

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

 

Section 18.9.      WAIVER OF COUNTERCLAIM

 

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

 

Section 18.10.    GRADSKY WAIVERS.

 

Borrower Principal hereby
waives each of the following:

 

(a)           Any rights of Borrower Principal of
subrogation, reimbursement, indemnification, and/or contribution against
Borrower or any other person or entity, and any other rights and

 

127

 

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

 

(b)           Any rights or defenses that may be
available by reason of any election of remedies by Lender (including, without
limitation, any such election which in any manner impairs, effects, reduces,
releases, destroys or extinguishes Borrower Principal’s subrogation rights,
rights to proceed against Borrower for reimbursement, or any other rights of
Borrower Principal to proceed against any other person, entity or security,
including but not limited to any defense based upon an election of remedies by
Lender under the provisions of Section 580(d) of the California Code of
Civil Procedure or any similar law of California or of any other State or of
the United Sates); and

 

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

 

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

 

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

 

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

 

(1)           The Borrower Principal Obligations
shall not be reduced by the price for which the collateral sold at the
foreclosure sale or the value of the collateral at the time of the sale.

 

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

 

ARTICLE 19

GOVERNING LAW

 

Section 19.1.      CHOICE OF LAW

 

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

 

128

 

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

 

Section 19.2.      SEVERABILITY

 

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

 

Section 19.3.      PREFERENCES

 

Lender shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any portion of the obligations of Borrower
hereunder.  To the extent Borrower makes
a payment or payments to Lender, which payment or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party under
any Creditors Rights Laws, state or federal law, common law or equitable cause,
then, to the extent of such payment or proceeds received, the obligations
hereunder or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been
received by Lender.

 

ARTICLE 20

MISCELLANEOUS

 

Section 20.1.      SURVIVAL

 

This Agreement and all
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by Lender of
the Loan and the execution and delivery to Lender of the Note, and shall
continue in full force and effect so long as all or any of the Debt is
outstanding and unpaid unless a longer period is expressly set forth herein or
in the other Loan Documents.  Whenever
in this Agreement any of the parties hereto is referred to, such reference
shall be deemed to include the legal representatives, successors and assigns of
such party.  All covenants, promises and
agreements in this Agreement,  by or on
behalf of Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.

 

Section 20.2.      LENDER’S DISCRETION

 

Whenever pursuant to this
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.

 

129

 

Section 20.3.      HEADINGS

 

The Article and/or
Section headings and the Table of Contents in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.

 

Section 20.4.      COST OF ENFORCEMENT

 

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

 

Section 20.5.      SCHEDULES INCORPORATED

 

The Schedules annexed
hereto are hereby incorporated herein as a part of this Agreement with the same
effect as if set forth in the body hereof.

 

Section 20.6.      OFFSETS, COUNTERCLAIMS AND DEFENSES

 

Any assignee of Lender’s
interest in and to this Agreement, the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which
are unrelated to such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by
any such assignee upon such documents and any such right to interpose or assert
any such unrelated offset, counterclaim or defense in any such action or
proceeding is hereby expressly waived by Borrower.

 

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

 

(a)           Borrower and Lender intend that the
relationships created hereunder and under the other Loan Documents be solely
that of borrower and lender.  Nothing
herein or therein is intended to create a joint venture, partnership,
tenancy-in-common, or joint tenancy relationship between Borrower and Lender
nor to grant Lender any interest in any Property other than that of mortgagee,
beneficiary or lender.

 

(b)           This Agreement and the other Loan
Documents are solely for the benefit of Lender and Borrower and nothing
contained in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender and Borrower any right to insist upon or
to enforce the performance or observance of any of the obligations contained
herein or therein.  All conditions to
the obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing
to require satisfaction of such conditions in accordance with their terms or be
entitled to assume that

 

130

 

Lender will refuse to make the
Loan in the absence of strict compliance with any or all thereof and no other
Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable
to do so.

 

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

 

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

 

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

 

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

 

Section 20.8.      PUBLICITY

 

All news releases,
publicity or advertising by Borrower or its Affiliates through any media
intended to reach the general public which refers to the Loan, Lender, Banc of
America Securities LLC, or any of their Affiliates shall be subject to the
prior written approval of Lender, not to be unreasonably withheld.  Lender shall be permitted to make any news,
releases, publicity or advertising by Lender or its Affiliates through any
media intended to reach the general public which refers to the Loan, any
Property, Borrower, Borrower Principal and their respective Affiliates without
the approval of Borrower or any such Persons. 
Borrower also agrees that Lender may share any information pertaining to
the Loan with Bank of America Corporation, including its bank subsidiaries,
Banc of America Securities LLC and any other Affiliates of the foregoing, in
connection with the sale or transfer of the Loan or any Participations and/or
Securities created.

 

131

 

Section 20.9.      CONFLICT; CONSTRUCTION OF DOCUMENTS;
RELIANCE

 

In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control.  The parties hereto acknowledge that they
were represented by competent counsel in connection with the negotiation,
drafting and execution of the Loan Documents and that such Loan Documents shall
not be subject to the principle of construing their meaning against the party
which drafted same.  Borrower
acknowledges that, with respect to the Loan, Borrower shall rely solely on its
own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Lender or any
parent, subsidiary or Affiliate of Lender. 
Lender shall not be subject to any limitation whatsoever in the exercise
of any rights or remedies available to it under any of the Loan Documents or
any other agreements or instruments which govern the Loan by virtue of the ownership
by it or any parent, subsidiary or Affiliate of Lender of any equity interest
any of them may acquire in Borrower, and Borrower hereby irrevocably waives the
right to raise any defense or take any action on the basis of the foregoing
with respect to Lender’s exercise of any such rights or remedies.  Borrower acknowledges that Lender engages in
the business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business of
Borrower or its Affiliates.

 

Section 20.10.    ENTIRE AGREEMENT

 

This Agreement and the
other Loan Documents contain the entire agreement of the parties hereto and
thereto in respect of the transactions contemplated hereby and thereby, and all
prior agreements among or between such parties, whether oral or written between
Borrower and Lender are superseded by the terms of this Agreement and the other
Loan Documents.

 

Section 20.11.    CROSS COLLATERALIZATION

 

Without
limitation to any other right or remedy provided to Lender in this Agreement or
any of the other Loan Documents, Borrower acknowledges and agrees that to the
full extent permitted under applicable law, upon the occurrence of an Event of
Default (i) Lender shall have the right to pursue all of its rights and
remedies in one proceeding, or separately and independently in separate
proceedings which it, as Lender, in its sole and absolute discretion, shall
determine from time to time, (ii) Lender is not required to either marshal
assets, sell any of the collateral for the Loan in any inverse order of
alienation, or be subjected to any “one action” or “election of remedies” law
or rule, (iii) the exercise by Lender of any remedies against any of the
collateral for the Loan will not impede Lender from subsequently or
simultaneously exercising remedies against other collateral for the Loan, (iv)
all Liens and other rights, remedies and privileges provided to Lender in this
Agreement and in the other Loan Documents or otherwise shall remain in full
force and effect until Lender has exhausted all of its remedies against the
collateral for the Loan and all of the collateral for the Loan has been
foreclosed, sold and/or otherwise realized upon and (v) all of the Properties
shall be security for the performance of all of Borrower’s obligations
hereunder.

 

132

 

Section 20.12.    TAX DISCLOSURE

 

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

 

Section 20.13.    MEZZANINE LOAN AGREEMENTS.

 

As of the
Closing Date, the Mezzanine Lender has not made the Mezzanine Loan to Mezzanine
Borrower.  For so long as the Mezzanine
Loan has to not been entered into, this Agreement shall be interpreted without
reference to the Mezzanine Loan or any of the terms that relate to the
Mezzanine Loan including but not limited to “Mezzanine Debt Service”,
“Mezzanine Borrower”, “Mezzanine Lender” and “Mezzanine Loan”.

 

[Signatures Commence on Following Page]

 

133

 

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROSE SPE 1,
  L.P., a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Rose SPE 1
  GP, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER
  PRINCIPAL:

  
	
   

  	
   

  
	
   

  	
  Acknowledged
  and agreed to with respect to its obligations set forth in Article 4, Section
  5.11, Section 5.26, Section 12.6, Article 13, Article 15 and
  Article 18 hereof:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AFFILIATED
  LESSEE:

  
	
   

  	
   

  
	
   

  	
  Acknowledged
  and agreed to with respect to its obligations set forth in Article 4 hereof:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CNL ROSE SPE
  TENANT CORP.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
											

 

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BANK OF
  AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
						

 

2

 

EXHIBIT A

 

Annual Budget

 

 

EXHIBIT B

 

Borrower Equity Ownership Structure

 

Exhibit B to Loan Agreement

ROSE
SPE Structure for CMBS (26
Pool)

 

~~
 ~~

 

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

 

	
  

  

 

v.3.03  11-5-2003

 

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

 

 

SCHEDULE
A

 

Properties and
Initial Allocated Loan Amounts and Percentages

 

	
  Property

  	
   

  	
  Initial
  Allocated

  Loan Amount

  	
   

  	
  Initial
  Allocated

  Loan Percentage

  	
   

  
	
  Hampton Inn Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  $

  	
  2,302,857

  	
   

  	
  1.8

  	
  %

  
	
  Homewood Suites Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  $

  	
  2,600,000

  	
   

  	
  2.0

  	
  %

  
	
  Hampton Inn Sedona

  Sedona, Arizona

  	
   

  	
  $

  	
  2,340,000

  	
   

  	
  1.8

  	
  %

  
	
  Residence Inn Sacramento/Cal Expo

  Sacramento, California

  	
   

  	
  $

  	
  9,842,857

  	
   

  	
  7.6

  	
  %

  
	
  Doubletree Hotel San Diego Del Mar

  San Diego, California

  	
   

  	
  $

  	
  7,280,000

  	
   

  	
  5.6

  	
  %

  
	
  Hampton Inn

  Denver SW Lakewood

  Lakewood, Colorado

  	
   

  	
  $

  	
  1,485,714

  	
   

  	
  1.1

  	
  %

  
	
  Residence Inn

  Wilmington/Newark (the “Wilmington

  Newark Property”)

  Wilmington, Delaware

  	
   

  	
  $

  	
  7,428,571

  	
   

  	
  5.7

  	
  %

  
	
  Hampton Inn Ft. Lauderdale-Cypress Creek

  Ft. Lauderdale, Florida

  	
   

  	
  $

  	
  2,785,714

  	
   

  	
  2.1

  	
  %

  
	
  Towne Place Suites

  Miami Airport West (the “Miami Airport

  West Property”)

  Miami, Florida

  	
   

  	
  $

  	
  2,971,429

  	
   

  	
  2.3

  	
  %

  
	
  Towne Place Suites

  Miami Lakes

  (The “Miami Lakes Property”)

  Miami, Florida

  	
   

  	
  $

  	
  2,971,429

  	
   

  	
  2.3

  	
  %

  
	
  Residence Inn by Marriott International Drive

  Orlando, Florida

  	
   

  	
  $

  	
  7,502,857

  	
   

  	
  5.8

  	
  %

  
	
  Holiday Inn Crystal Lake

  Crystal Lake, Illinois

  	
   

  	
  $

  	
  8,431,429

  	
   

  	
  6.5

  	
  %

  
	
  Holiday Inn Southwest Louisville (the

  “Louisville Southwest Property”)

  Louisville, Kentucky

  	
   

  	
  $

  	
  4,828,571

  	
   

  	
  3.7

  	
  %

  
	
  Residence Inn Ann Arbor

  Ann Arbor, Michigan

  	
   

  	
  $

  	
  4,364,286

  	
   

  	
  3.4

  	
  %

  
	
  Courtyard Flint

  Flint, Michigan

  	
   

  	
  $

  	
  3,996,571

  	
   

  	
  3.1

  	
  %

  

 

 

	
  Property

  	
   

  	
  Initial
  Allocated

  Loan Amount

  	
   

  	
  Initial
  Allocated

  Loan Percentage

  	
   

  
	
  Hampton Inn Minneapolis
  Minnetonka

  Minnetonka, Minnesota

  	
   

  	
  $

  	
  1,374,286

  	
   

  	
  1.1

  	
  %

  
	
  Hampton Inn Hattiesburg

  Hattiesburg,Mississippi

  	
   

  	
  $

  	
  4,605,714

  	
   

  	
  3.5

  	
  %

  
	
  Hampton Inn Lincoln Airport I-80

  Lincoln, Nebraska

  	
   

  	
  $

  	
  3,279,714

  	
   

  	
  2.5

  	
  %

  
	
  Residence Inn Fishkill

  Fishkill, New York

  	
   

  	
  $

  	
  14,508,000

  	
   

  	
  11.2

  	
  %

  
	
  Hampton Inn Oklahoma City-Airport I-40

  Oklahoma City, Oklahoma

  	
   

  	
  $

  	
  4,230,571

  	
   

  	
  3.3

  	
  %

  
	
  Hampton Inn Tulsa

  Tulsa, Oklahoma

  	
   

  	
  $

  	
  2,971,429

  	
   

  	
  2.3

  	
  %

  
	
  Residence Inn Warwick

  Warwick, Rhode Island

  	
   

  	
  $

  	
  6,314,286

  	
   

  	
  4.9

  	
  %

  
	
  Ft. Worth Towne Place Suites-Southwest Ft.

  Worth, Texas

  	
   

  	
  $

  	
  3,484,000

  	
   

  	
  2.7

  	
  %

  
	
  Residence Inn - Ft. Worth River Plaza

  Ft. Worth, Texas

  	
   

  	
  $

  	
  7,242,857

  	
   

  	
  5.6

  	
  %

  
	
  Hampton Inn - Laredo

  Laredo, Texas

  	
   

  	
  $

  	
  6,760,000

  	
   

  	
  5.2

  	
  %

  
	
  Residence Inns Tyler

  Tyler, Texas

  	
   

  	
  $

  	
  4,096,857

  	
   

  	
  3.2

  	
  %

  

 

2

 

SCHEDULE B

 

Initial 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 (“Doubletree

  Property”)

  	
   

  	
  DT Management, Inc.

  	
   

  	
  Double Tree Hotel Systems, Inc.

  
	
  Hampton Inn

  Denver SW Lakewood

  Lakewood, Colorado

  	
   

  	
  Promus

  	
   

  	
  Promus

  
	
  Residence
  Inn

  Wilmington/Newark

  Wilmington, Delaware

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  
	
  Hampton Inn
  Ft. Lauderdale-Cypress Creek

  Ft. Lauderdale, Florida

  	
   

  	
  Promus

  	
   

  	
  Promus

  
	
  Towne Place
  Suites

  Miami Airport West (the “Miami Airport

  West Property”)

  Miami, Florida(1)

  	
   

  	
  N/A

  	
   

  	
  N/A

  
	
  Towne Place
  Suites

  Miami Lakes

  (The “Miami Lakes Property”)

  Miami, Florida(1)

  	
   

  	
  N/A

  	
   

  	
  N/A

  
	
  Residence
  Inn by Marriott International

  Drive

  Orlando, Florida

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  
	
  Holiday Inn
  Crystal Lake

  Crystal Lake, Illinois

  	
   

  	
  Interstate Management Company, LLC (“Interstate”)

  	
   

  	
  Holiday Hospitality Franchising, Inc. (“Holiday”)

  

 

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

 

 

	
  Property

  	
   

  	
  Initial
  Property Manager

  	
   

  	
  Initial
  Franchisor

  
	
  Holiday Inn
  Southwest Louisville

  Louisville, Kentucky (“Louisville

  Property”)

  	
   

  	
  Interstate

  	
   

  	
  Holiday

  
	
  Residence Inn Ann Arbor

  Ann Arbor, Michigan

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  
	
  Courtyard
  Flint Flint,

  Michigan (“Flint Property”)

  	
   

  	
  Flagstone/Interstate(2)

  	
   

  	
  Marriott International, Inc.

  
	
  Hampton Inn Minneapolis Minnetonka

  Minnetonka, Minnesota

  	
   

  	
  Promus

  	
   

  	
  Promus

  
	
  Hampton Inn
  Hattiesburg

  Hattiesburg, Mississippi

  	
   

  	
  Promus

  	
   

  	
  Promus

  
	
  Hampton Inn
  Lincoln Airport I-80

  Lincoln, Nebraska

  	
   

  	
  Promus

  	
   

  	
  Promus

  
	
  Residence
  Inn Fishkill

  Fishkill, New York

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  
	
  Hampton Inn
  Oklahoma City-Airport I-40

  Oklahoma City, Oklahoma

  	
   

  	
  Promus

  	
   

  	
  Promus

  
	
  Hampton Inn Tulsa

  Tulsa, Oklahoma

  	
   

  	
  Promus

  	
   

  	
  Promus

  
	
  Residence
  Inn Warwick

  Warwick, Rhode Island

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  
	
  Ft. Worth
  Towne Place Suites-Southwest

  Ft. Worth, Texas

  	
   

  	
  Towne Place Management Corporation (“Towne Place”)

  	
   

  	
  N/A

  
	
  Residence
  Inn - Ft. Worth River Plaza

  Ft. Worth, Texas

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  
	
  Hampton Inn
  - Laredo

  Laredo, Texas

  	
   

  	
  Promus

  	
   

  	
  Promus

  
	
  Residence
  Inns Tyler

  Tyler, Texas

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  

 

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

 

2

 

SCHEDULE I

 

REQUIRED REPAIRS

 

	
  Property

  Name

  	
   

  	
  Address

  	
   

  	
  Location

  	
   

  	
  Prop.
  Improvements

  	
   

  	
  ESA

  Information

  	
   

  	
  Environmental
  Concerns

  	
   

  	
  Recommendations

  	
   

  	
  Estimated
  Cost

  	
   

  	
  Reserve

  Amount

  (125%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Courtyard
  by Marriott

  	
   

  	
  5205

  Gateway

  Centre

  	
   

  	
  Flint,
  MI

  	
   

  	
  3-story hotel, 102 guest
  rooms, 2.58-acres, built in 1996, undeveloped and agricultural prior to 1996

  	
   

  	
  Phase I ESA by PSI 6/16/03,
  inspected 6/6/03

  	
   

  	
  Mold - PSI observed areas of moisture and mold
  growth in a pool room.  PSI issued a
  mold R&P Plan on November 25, 2003.

  	
   

  	
  Mold remediation required. 
  ESD recommends escrowing funds for remediation. ESD estimate is
  $10,000.

  	
   

  	
  10,000

  	
   

  	
  12,500

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Residence
  Inn

  	
   

  	
  3303

  Troup

  Highway

  	
   

  	
  Tyler,
  TX

  	
   

  	
  16 buildings with guest
  suites, one gatehouse/office building, 4.125 acres, built in 1985,
  undeveloped prior to 1985

  	
   

  	
  Phase I ESA by PSI 6/16/03,
  inspected 6/5/03

  	
   

  	
  Mold - Moisture intrusion and visible mold
  growth were observed in various areas - the gatehouse, closets in guest
  suites, and near commercial washing machines. PSI issued mold R&P Plan on
  October 20, 2003.

  	
   

  	
  Mold remediation required. ESD recommends escrowing funds
  for remediation. ESD estimate for mold remediation is $40,000.

  	
   

  	
  40,000

  	
   

  	
  50,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Residence
  Inn

  	
   

  	
  7975

  Canada

  Ave.

  	
   

  	
  Orlando,
  FL

  	
   

  	
  eleven 2-story hotel
  buildings, 176 guest rooms, built in 1984, undeveloped prior to 1984

  	
   

  	
  Phase I ESA by PSI 6/9/03,
  inspected 5/29/03

  	
   

  	
  Mold - Water damage and mold growth were
  observed in multiple buildings. PSI issued a mold R&P Plan on October 6,
  2003.

  	
   

  	
  Mold remediation required. ESD recommends funds be escrowed
  for remediation.  ESD estimate for
  mold remediation is $176,000.

  	
   

  	
  176,000

  	
   

  	
  220,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Residence
  Inn

  	
   

  	
  500

  Kilvert St.

  	
   

  	
  Warwick,
  RI

  	
   

  	
  twelve 2-story hotel buildings
  with 96 guest rooms, office and storage buildings, 3.80 acres, built in 1989,
  sand and gravel pit from 1936 to the mid-1980s

  	
   

  	
  Phase I ESA by PSI 6/19/03,
  inspected 5/30/03

  	
   

  	
  Mold - Water intrusions from roof leaks and
  small areas of mold growth were observed in six mechanical rooms. PSI issued
  a mold R&P Plan on September 22, 2003.

  	
   

  	
  Mold remediation required. 
  ESD recommends funds be escrowed for remediation. ESD estimate for
  mold remediation is $5,000.

  	
   

  	
  5,000

  	
   

  	
  6,250

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  TOTAL RESERVES

  	
   

  	
   

  	
   

  	
  288,750

  

 

 

SCHEDULE II

 

REPLACEMENTS

 

 

SCHEDULE III

 

COST BASIS 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

  	
   

  

 

 

SCHEDULE IV

 

CLOSING PIP REPORTS

 

CNL PIP SCHEDULE

 

	
  Flag

  	
   

  	
  Location

  	
   

  	
  State

  	
   

  	
  2004

  	
   

  	
  2005

  	
   

  	
  2006

  	
   

  	
  Total

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marriott

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Residence
  Inn

  	
   

  	
  Ann Arbor

  	
   

  	
  MI

  	
   

  	
  $

  	
  828,428

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  828,428

  
	
  Courtyard

  	
   

  	
  Flint

  	
   

  	
  MI

  	
   

  	
  $

  	
  771,743

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  771,743

  
	
  Residence
  Inn

  	
   

  	
  Orlando
  International Drive

  	
   

  	
  FL

  	
   

  	
  $

  	
  1,901,268

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  1,901,268

  
	
  Residence
  Inn

  	
   

  	
  Sacramento
  Cal Expo

  	
   

  	
  CA

  	
   

  	
  $

  	
  8,435

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  8,435

  
	
  Residence
  Inn

  	
   

  	
  Fishkill

  	
   

  	
  NY

  	
   

  	
  $

  	
  311,510

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  311,510

  
	
  Residence
  Inn

  	
   

  	
  Tyler

  	
   

  	
  TX

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  2,102,308

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  2,102,308

  
	
  Residence
  Inn

  	
   

  	
  Forth Worth
  River Plaza

  	
   

  	
  TX

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  1,912,123

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  1,912,123

  
	
  Residence
  Inn

  	
   

  	
  Warwick

  	
   

  	
  RI

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  851,595

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  851,595

  
	
  TownePlace
  Suites

  	
   

  	
  Forth Worth

  	
   

  	
  TX

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  409,327

  	
   

  	
  $

  	
  409,327

  
	
  Residence
  Inn

  	
   

  	
  Wilmington
  Newark

  	
   

  	
  DE

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  1,777,826

  	
   

  	
  $

  	
  1,777,826

  
	
  TownePlace
  Suites

  	
   

  	
  Miami Airport
  West

  	
   

  	
  FL

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  404,238

  	
   

  	
  $

  	
  404,238

  
	
  TownePlace
  Suites

  	
   

  	
  Miami Lakes

  	
   

  	
  FL

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  404,238

  	
   

  	
  $

  	
  404,238

  
	
  Internet Access

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  513,000

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  513,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  4,334,384

  	
   

  	
  $

  	
  4,866,026

  	
   

  	
  $

  	
  2,995,628

  	
   

  	
  $

  	
  12,196,038

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interstate

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Holiday Inn

  	
   

  	
  Crystal
  Lakes

  	
   

  	
  IL

  	
   

  	
  $

  	
  500,000

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  500,000

  
	
  Holiday Inn

  	
   

  	
  Louisville
  Southwest

  	
   

  	
  KY

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  778,484

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  778,484

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  500,000

  	
   

  	
  $

  	
  778,484

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  1,278,484

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hilton

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Homewood
  Suites

  	
   

  	
  Phoenix
  Chandler

  	
   

  	
  AZ

  	
   

  	
  $

  	
  441,246

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  441,246

  
	
  Hampton Inn

  	
   

  	
  Sedona

  	
   

  	
  AZ

  	
   

  	
  $

  	
  281,718

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  281,718

  
	
  Hampton Inn

  	
   

  	
  Laredo

  	
   

  	
  TX

  	
   

  	
  $

  	
  351,996

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  351,996

  
	
  Hampton Inn

  	
   

  	
  Lakewood

  	
   

  	
  CO

  	
   

  	
  $

  	
  200,613

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  200,613

  
	
  Hampton Inn

  	
   

  	
  Minneapolis
  Minnetonka

  	
   

  	
  MN

  	
   

  	
  $

  	
  805,028

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  805,028

  
	
  Hampton Inn

  	
   

  	
  Phoenix
  Chandler

  	
   

  	
  AZ

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  464,900

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  464,900

  
	
  Hampton Inn

  	
   

  	
  Ft.
  Lauderdale Cypress Creek

  	
   

  	
  FL

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  999,598

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  999,598

  
	
  Hampton Inn

  	
   

  	
  Lincoln
  Airport I-80

  	
   

  	
  NE

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  690,251

  	
   

  	
  $

  	
  690,251

  
	
  Hampton Inn

  	
   

  	
  Oklahoma
  City Airport I-40

  	
   

  	
  OK

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  871,054

  	
   

  	
  $

  	
  871,054

  
	
  Hampton Inn

  	
   

  	
  Hattiesburg

  	
   

  	
  MS

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  766,834

  	
   

  	
  $

  	
  766,834

  
	
  Hampton Inn

  	
   

  	
  Tulsa

  	
   

  	
  OK

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  690,897

  	
   

  	
  $

  	
  690,897

  
	
  Internet Access

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  336,000

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  336,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  2,416,602

  	
   

  	
  $

  	
  1,464,498

  	
   

  	
  $

  	
  3,019,036

  	
   

  	
  $

  	
  6,900,135

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hilton

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Doubletree

  	
   

  	
  San Diego
  Del Mar

  	
   

  	
  CA

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  —

  	
   

  	
  $

  	
  528,012

  	
   

  	
  $

  	
  528,012

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  7,250,985

  	
   

  	
  $

  	
  7,109,008

  	
   

  	
  $

  	
  6,542,676

  	
   

  	
  $

  	
  20,902,670Exhibit
10.21

 

 

MEZZANINE LOAN AGREEMENT

 

 

Dated as of
December 23, 2003

 

 

Between

 

 

ROSE MEZZANINE SPE, LP,

as Borrower

 

 

and

 

 

FLEET NATIONAL BANK,

as Lender

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1 DEFINITIONS;
  PRINCIPLES OF CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
  DEFINITIONS

  	
   

  
	
  SECTION 1.2.

  	
  PRINCIPLES OF CONSTRUCTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 GENERAL TERMS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
  LOAN
  COMMITMENT; DISBURSEMENT TO BORROWER

  	
   

  
	
  SECTION 2.2.

  	
  INTEREST RATE

  	
   

  
	
  SECTION 2.3.

  	
  LOAN PAYMENTS

  	
   

  
	
  SECTION 2.4.

  	
  PREPAYMENTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 CONDITIONS
  PRECEDENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
  REPRESENTATIONS
  AND WARRANTIES; COMPLIANCE WITH CONDITIONS

  	
   

  
	
  SECTION 3.2.

  	
  DELIVERY OF
  LOAN DOCUMENTS; REPORTS; LEASES

  	
   

  
	
  SECTION 3.3.

  	
  RELATED DOCUMENTS

  	
   

  
	
  SECTION 3.4.

  	
  ORGANIZATIONAL DOCUMENTS

  	
   

  
	
  SECTION 3.5.

  	
  OPINIONS OF BORROWER’S
  COUNSEL

  	
   

  
	
  SECTION 3.6.

  	
  ANNUAL BUDGET

  	
   

  
	
  SECTION 3.7.

  	
  TAXES AND OTHER CHARGES

  	
   

  
	
  SECTION 3.8.

  	
  COMPLETION OF PROCEEDINGS

  	
   

  
	
  SECTION 3.9.

  	
  PAYMENTS

  	
   

  
	
  SECTION 3.10.

  	
  TRANSACTION COSTS

  	
   

  
	
  SECTION 3.11.

  	
  NO MATERIAL ADVERSE CHANGE

  	
   

  
	
  SECTION 3.12.

  	
  OPERATING LEASES

  	
   

  
	
  SECTION 3.13.

  	
  LEASES; RENT ROLLS

  	
   

  
	
  SECTION 3.14.

  	
  TENANT ESTOPPELS

  	
   

  
	
  SECTION 3.15.

  	
  REA ESTOPPELS

  	
   

  
	
  SECTION 3.16.

  	
  SUBORDINATION AND
  ATTORNMENT

  	
   

  
	
  SECTION 3.17.

  	
  TAX LOT

  	
   

  
	
  SECTION 3.18.

  	
  PHYSICAL
  CONDITIONS REPORT; PIP REPORT

  	
   

  
	
  SECTION 3.19.

  	
  MANAGEMENT AGREEMENT

  	
   

  
	
  SECTION 3.20.

  	
  APPRAISAL

  	
   

  
	
  SECTION
  3.21.

  	
  FINANCIAL
  STATEMENTS

  	
   

  
	
  SECTION
  3.22.

  	
  NET
  OPERATING INCOME

  	
   

  
	
  SECTION
  3.23.

  	
  FRANCHISE
  AGREEMENTS

  	
   

  
	
  SECTION
  3.24.

  	
  GROUND
  LEASE

  	
   

  
	
  SECTION
  3.25.

  	
  FURTHER
  DOCUMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.1.

  	
  ORGANIZATION

  	
   

  
	
  SECTION
  4.2.

  	
  STATUS
  OF BORROWER; AFFILIATED LESSEE

  	
   

  
	
  SECTION
  4.3.

  	
  VALIDITY
  OF DOCUMENTS

  	
   

  
	
  SECTION
  4.4.

  	
  NO
  CONFLICTS

  	
   

  
	
  SECTION
  4.5.

  	
  LITIGATION

  	
   

  
	
  SECTION
  4.6.

  	
  AGREEMENTS

  	
   

  
	
  SECTION
  4.7.

  	
  SOLVENCY

  	
   

  
	
  SECTION
  4.8.

  	
  FULL
  AND ACCURATE DISCLOSURE

  	
   

  
	
  SECTION
  4.9.

  	
  NO PLAN
  ASSETS

  	
   

  
	
  SECTION
  4.10.

  	
  NOT A
  FOREIGN PERSON

  	
   

  
	
  SECTION
  4.11.

  	
  ENFORCEABILITY

  	
   

  
	
  SECTION
  4.12.

  	
  BUSINESS
  PURPOSES

  	
   

  

 

i

 

	
  SECTION
  4.13.

  	
  COMPLIANCE

  	
   

  
	
  SECTION
  4.14.

  	
  FINANCIAL
  INFORMATION

  	
   

  
	
  SECTION
  4.15.

  	
  ILLEGAL
  ACTIVITY

  	
   

  
	
  SECTION
  4.16.

  	
  PERMITTED
  ENCUMBRANCES

  	
   

  
	
  SECTION
  4.17.

  	
  FEDERAL
  RESERVE REGULATIONS

  	
   

  
	
  SECTION
  4.18.

  	
  INVESTMENT
  COMPANY ACT

  	
   

  
	
  SECTION
  4.19.

  	
  NO
  CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE

  	
   

  
	
  SECTION
  4.20.

  	
  SPECIAL
  PURPOSE ENTITY

  	
   

  
	
  SECTION
  4.21.

  	
  INTELLECTUAL
  PROPERTY

  	
   

  
	
  SECTION
  4.22.

  	
  EMBARGOED
  PERSON

  	
   

  
	
  SECTION
  4.23.

  	
  PATRIOT
  ACT

  	
   

  
	
  SECTION
  4.24.

  	
  MORTGAGE
  LOAN REPRESENTATIONS

  	
   

  
	
  SECTION
  4.25.

  	
  NO
  CONTRACTUAL OBLIGATIONS

  	
   

  
	
  SECTION
  4.26.

  	
  PLEDGED
  SECURITIES

  	
   

  
	
  SECTION
  4.27.

  	
  TAXES

  	
   

  
	
  SECTION
  4.28.

  	
  SURVIVAL;
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5
  BORROWER COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.1.

  	
  EXISTENCE;
  COMPLIANCE WITH LEGAL REQUIREMENTS

  	
   

  
	
  SECTION
  5.2.

  	
  MAINTENANCE
  AND USE OF PROPERTY

  	
   

  
	
  SECTION
  5.3.

  	
  WASTE

  	
   

  
	
  SECTION
  5.4.

  	
  TAXES
  AND OTHER CHARGES

  	
   

  
	
  SECTION
  5.5.

  	
  LITIGATION

  	
   

  
	
  SECTION
  5.6.

  	
  ACCESS
  TO PROPERTY

  	
   

  
	
  SECTION
  5.7.

  	
  NOTICE
  OF DEFAULT

  	
   

  
	
  SECTION
  5.8.

  	
  COOPERATE
  IN LEGAL PROCEEDINGS

  	
   

  
	
  SECTION
  5.9.

  	
  PERFORMANCE
  BY BORROWER

  	
   

  
	
  SECTION
  5.10.

  	
  AWARDS;
  INSURANCE PROCEEDS

  	
   

  
	
  SECTION
  5.11.

  	
  FINANCIAL
  REPORTING

  	
   

  
	
  SECTION
  5.12.

  	
  ESTOPPEL
  STATEMENT

  	
   

  
	
  SECTION
  5.13.

  	
  OPERATING
  LEASE; LEASING MATTERS

  	
   

  
	
  SECTION
  5.14.

  	
  PROPERTY
  MANAGEMENT

  	
   

  
	
  SECTION
  5.15.

  	
  LIENS

  	
   

  
	
  SECTION
  5.16.

  	
  DEBT
  CANCELLATION

  	
   

  
	
  SECTION
  5.17.

  	
  ZONING

  	
   

  
	
  SECTION
  5.18.

  	
  ERISA

  	
   

  
	
  SECTION
  5.19.

  	
  NO
  JOINT ASSESSMENT

  	
   

  
	
  SECTION
  5.20.

  	
  RECIPROCAL
  EASEMENT AGREEMENTS

  	
   

  
	
  SECTION
  5.21.

  	
  ALTERATIONS

  	
   

  
	
  SECTION
  5.22.

  	
  FRANCHISE
  AGREEMENTS.

  	
   

  
	
  SECTION
  5.23.

  	
  GROUND
  LEASE

  	
   

  
	
  SECTION
  5.24.

  	
  INTEREST
  RATE CAP AGREEMENT

  	
   

  
	
  SECTION
  5.25.

  	
  NOTICES

  	
   

  
	
  SECTION
  5.26.

  	
  CURING

  	
   

  
	
  SECTION
  5.27.

  	
  SPECIAL
  DISTRIBUTIONS

  	
   

  
	
  SECTION
  5.28.

  	
  LIMITATION
  ON SECURITIES ISSUANCES

  	
   

  
	
  SECTION
  5.29.

  	
  LIMITATIONS
  ON DISTRIBUTIONS

  	
   

  
	
  SECTION
  5.30.

  	
  OTHER
  LIMITATIONS

  	
   

  
	
  SECTION
  5.31.

  	
  CONTRACTUAL
  OBLIGATIONS

  	
   

  
	
  SECTION
  5.32.

  	
  MANAGER
  OF FLINT PROPERTY

  	
   

  
	
  SECTION
  5.33.

  	
  CONSOLIDATED
  TANGIBLE NET WORTH

  	
   

  
	
  SECTION
  5.34.

  	
  REFINANCING

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6
  ENTITY COVENANTS

  	
   

  

 

ii

 

	
  SECTION
  6.1.

  	
  SINGLE
  PURPOSE ENTITY/SEPARATENESS

  	
   

  
	
  SECTION
  6.2.

  	
  CHANGE
  OF NAME, IDENTITY OR STRUCTURE

  	
   

  
	
  SECTION
  6.3.

  	
  BUSINESS
  AND OPERATIONS

  	
   

  
	
  SECTION
  6.4.

  	
  INDEPENDENT
  DIRECTOR

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 NO
  SALE OR ENCUMBRANCE

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.1.

  	
  TRANSFER
  DEFINITIONS

  	
   

  
	
  SECTION
  7.2.

  	
  NO
  SALE/ENCUMBRANCE

  	
   

  
	
  SECTION
  7.3.

  	
  PERMITTED
  TRANSFERS

  	
   

  
	
  SECTION
  7.4.

  	
  LENDER’S
  RIGHTS

  	
   

  
	
  SECTION
  7.5.

  	
  ASSUMPTION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8
  INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.1.

  	
  INSURANCE

  	
   

  
	
  SECTION
  8.2.

  	
  CASUALTY

  	
   

  
	
  SECTION
  8.3.

  	
  CONDEMNATION

  	
   

  
	
  SECTION
  8.4.

  	
  RESTORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9
  RESERVE FUNDS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10
  CASH MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11
  EVENTS OF DEFAULT; REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  11.1.

  	
  EVENT
  OF DEFAULT

  	
   

  
	
  SECTION
  11.2.

  	
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12
  ENVIRONMENTAL PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  12.1.

  	
  ENVIRONMENTAL
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  SECTION
  12.2.

  	
  ENVIRONMENTAL
  COVENANTS

  	
   

  
	
  SECTION
  12.3.

  	
  LENDER’S
  RIGHTS

  	
   

  
	
  SECTION
  12.4.

  	
  OPERATIONS
  AND MAINTENANCE PROGRAMS

  	
   

  
	
  SECTION
  12.5.

  	
  ENVIRONMENTAL
  DEFINITIONS

  	
   

  
	
  SECTION
  12.6.

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13
  SECONDARY MARKET

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  13.1.

  	
  TRANSFER
  OF LOAN

  	
   

  
	
  SECTION
  13.2.

  	
  DELEGATION
  OF SERVICING

  	
   

  
	
  SECTION
  13.3.

  	
  DISSEMINATION
  OF INFORMATION

  	
   

  
	
  SECTION
  13.4.

  	
  COOPERATION

  	
   

  
	
  SECTION
  13.5.

  	
  SECURITIZATION
  INDEMNIFICATION

  	
   

  
	
  SECTION
  13.6.

  	
  INTENTIONALLY
  OMITTED.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14
  INDEMNIFICATIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  14.1.

  	
  GENERAL
  INDEMNIFICATION

  	
   

  
	
  SECTION
  14.2.

  	
  INTANGIBLE
  TAX INDEMNIFICATION

  	
   

  
	
  SECTION
  14.3.

  	
  ERISA
  INDEMNIFICATION

  	
   

  
	
  SECTION
  14.4.

  	
  SURVIVAL

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15
  EXCULPATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  15.1.

  	
  EXCULPATION

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16
  NOTICES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  16.1.

  	
  NOTICES

  	
   

  

 

iii

 

	
  ARTICLE 17
  FURTHER ASSURANCES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  17.1.

  	
  REPLACEMENT
  DOCUMENTS

  	
   

  
	
  SECTION
  17.2.

  	
  INTENTIONALLY
  OMITTED

  	
   

  
	
  SECTION
  17.3.

  	
  FURTHER
  ACTS, ETC.

  	
   

  
	
  SECTION
  17.4.

  	
  CHANGES
  IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS

  	
   

  
	
  SECTION
  17.5.

  	
  EXPENSES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 18
  WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  18.1.

  	
  REMEDIES
  CUMULATIVE; WAIVERS

  	
   

  
	
  SECTION
  18.2.

  	
  MODIFICATION,
  WAIVER IN WRITING

  	
   

  
	
  SECTION
  18.3.

  	
  DELAY
  NOT A WAIVER

  	
   

  
	
  SECTION
  18.4.

  	
  TRIAL
  BY JURY

  	
   

  
	
  SECTION
  18.5.

  	
  WAIVER
  OF NOTICE

  	
   

  
	
  SECTION
  18.6.

  	
  REMEDIES
  OF BORROWER

  	
   

  
	
  SECTION
  18.7.

  	
  WAIVER
  OF MARSHALLING OF ASSETS

  	
   

  
	
  SECTION
  18.8.

  	
  WAIVER
  OF STATUTE OF LIMITATIONS

  	
   

  
	
  SECTION
  18.9.

  	
  WAIVER
  OF COUNTERCLAIM

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19
  GOVERNING LAW

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  19.1.

  	
  CHOICE
  OF LAW

  	
   

  
	
  SECTION
  19.2.

  	
  SEVERABILITY

  	
   

  
	
  SECTION
  19.3.

  	
  PREFERENCES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 20
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  20.1.

  	
  SURVIVAL

  	
   

  
	
  SECTION
  20.2.

  	
  LENDER’S
  DISCRETION

  	
   

  
	
  SECTION
  20.3.

  	
  HEADINGS

  	
   

  
	
  SECTION
  20.4.

  	
  COST OF
  ENFORCEMENT

  	
   

  
	
  SECTION
  20.5.

  	
  SCHEDULES
  INCORPORATED

  	
   

  
	
  SECTION
  20.6.

  	
  OFFSETS,
  COUNTERCLAIMS AND DEFENSES

  	
   

  
	
  SECTION
  20.7.

  	
  NO
  JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES

  	
   

  
	
  SECTION
  20.8.

  	
  PUBLICITY

  	
   

  
	
  SECTION
  20.9.

  	
  CONFLICT;
  CONSTRUCTION OF DOCUMENTS; RELIANCE

  	
   

  
	
  SECTION
  20.10.

  	
  ENTIRE
  AGREEMENT

  	
   

  
	
  SECTION
  20.11.

  	
  TAX
  DISCLOSURE

  	
   

  

 

iv

 

MEZZANINE LOAN AGREEMENT

 

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

 

RECITALS:

 

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

 

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

 

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

 

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

 

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

 

 

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

 

NOW THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:

 

ARTICLE 1

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1.                                   DEFINITIONS

 

For all purposes
of this Agreement, except as otherwise expressly required or unless the context
clearly indicates a contrary intent:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

“Debt
Service” shall mean, with respect to any particular period of
time, scheduled principal and/or interest payments under the Note.

 

“Default”
shall mean the occurrence of any event hereunder or under any other Loan
Document which, but for the giving of notice or passage of time, or both, would
be an Event of Default.

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Fitch”
shall mean Fitch, Inc.

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Internal
Revenue Code” shall mean the Internal Revenue Code of 1986, as
amended, as it may be further amended from time to time, and any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“LIBOR
Margin” shall mean 4.65%.

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

“Maximum
Legal Rate” shall mean the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the indebtedness evidenced by the Note and as
provided for herein or the other Loan Documents, under the laws of such state
or states whose laws are held by any court of competent jurisdiction to govern
the interest rate provisions of the Loan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 1.2.                                   PRINCIPLES
OF CONSTRUCTION

 

All references to
sections and schedules are to sections and schedules in or to this Agreement
unless otherwise specified.  All uses of
the word “including” shall mean “including, without limitation” unless the
context shall indicate otherwise. 
Unless otherwise specified, the words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.  Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.

 

19

 

ARTICLE 2

GENERAL TERMS

 

Section 2.1.                                   LOAN
COMMITMENT; DISBURSEMENT TO BORROWER

 

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

 

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

 

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

 

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

 

Section 2.2.                                   INTEREST
RATE

 

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

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

(f)                                    Usury
Savings.  This Agreement and the
Note are subject to the express condition that at no time shall Borrower be
obligated or required to pay interest on the principal balance of the Loan at a
rate which could subject Lender to either civil or criminal liability as a
result of being in excess of the Maximum Legal Rate.  If, by the terms of this Agreement or the other Loan Documents,
Borrower is at any time required or obligated to pay interest on the principal
balance due hereunder at a rate in excess of the Maximum Legal Rate, the LIBOR
Rate, the Static LIBOR Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all previous
payments in excess of the Maximum Legal Rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder.  All sums paid or agreed to
be paid to Lender for the use, forbearance, or detention of the sums due under
the Loan, shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full stated term of the Loan
until payment in full so that the rate or amount of interest on account of the
Loan does not exceed the Maximum Legal Rate of interest from time to time in
effect and applicable to the Loan for so long as the Loan is outstanding.

 

Section 2.3.                                   LOAN
PAYMENTS

 

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

 

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

 

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

 

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

 

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

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

(f)                                    Additional
Payment Provisions.

 

(i)                                     If
at any time after the date hereof, Lender (which shall include, for purposes of
this Section, any corporation controlling Lender) reasonably determines that
due to the adoption or modification of any Legal Requirement regarding
taxation, Lender’s required levels of reserves, deposits, Federal Deposit
Insurance Corporation insurance or capital (including any allocation of capital
requirements or conditions), or similar requirements, or any interpretation or
administration thereof by any Tribunal or compliance of Lender with any of such
requirements, has or would have the effect of (a) increasing Lender’s costs
relating to the Loan, or (b) reducing the yield or rate of return

 

23

 

of Lender on the
Loan, to a level below that which Lender could have achieved but for the
adoption or modification of any such Legal Requirements, Borrower shall, within
fifteen (15) days of any request by Lender, pay to Lender such additional
amounts as (in Lender’s sole judgment, after good faith and reasonable
computation) will compensate Lender for such increase in costs or reduction in
yield or rate of return of Lender (a “Consequential Loss”).  No failure by Lender to immediately demand
payment of any additional amounts payable hereunder shall constitute a waiver
of Lender’s right to demand payment of such amounts at any subsequent
time.  Nothing herein contained shall be
construed or so operate as to require Borrower to pay any interest, fees, costs
or charges greater than is permitted by applicable Law.

 

(ii)                                  All
payments made by Borrower hereunder shall be made free and clear of, and
without reduction for or on account of, income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions, reserves or withholdings imposed,
levied, collected, withheld or assessed by any Governmental Authorities, which
are imposed, enacted or become effective on or after the date hereof (such
non-excluded taxes being referred to collectively as “Foreign Taxes”), excluding
income and franchise taxes of the United States of America or any political
subdivision or taxing authority thereof or therein.  If any Foreign Taxes are required to be withheld from any amounts
payable to Lender hereunder and such Foreign Taxes are not a result of
activities of Lender unrelated to the Loan or Borrower, the amounts so payable
to Lender shall be increased to the extent necessary to yield to Lender (after
payment of all Foreign Taxes) interest or any such other amounts payable
hereunder at the rate or in the amounts specified hereunder. Whenever any
Foreign Tax is payable pursuant to applicable law by Borrower, as promptly as
possible thereafter, Borrower shall send to Lender an original official
receipt, if available, or certified copy thereof showing payment of such
Foreign Tax. Borrower hereby indemnifies Lender for any incremental taxes,
interest or penalties that may become payable by Lender which may result from
any failure by Borrower to pay any such Foreign Tax when due to the appropriate
taxing authority of which Lender shall have provided Borrower with prior
written notice, if possible, or any failure by Borrower to remit to Lender the
required receipts or other required documentary evidence. Lender’s inability to
notify Borrower of any such Foreign Tax in accordance with the immediately
preceding sentence shall in no way relieve Borrower of its obligations under
this Section 2.3(f)(ii).

 

(iii)                               If
any requirement of law or any change therein or in the interpretation or
application thereof, shall hereafter make it unlawful for Lender to make or
maintain a Loan with the Note Rate being based on LIBOR as contemplated
hereunder, (i) the obligation of Lender hereunder to make such Loan based on
LIBOR or to convert the Loan from the Static LIBOR Rate to the LIBOR Rate shall
be canceled forthwith and (ii) any outstanding LIBOR Loan shall be converted
automatically to a loan bearing interest at the Static LIBOR Rate (the “Static LIBOR
Rate Loan”) on the next succeeding Payment Date or within such
earlier period as required by law. 
Borrower hereby agrees promptly to pay Lender, upon demand, any
additional amounts necessary to compensate Lender for any costs incurred by
Lender in making any conversion in accordance with this Agreement, including,
without limitation, any interest or fees payable by Lender to lenders of funds
obtained by it in order to make or maintain the LIBOR Loan hereunder.

 

24

 

If Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.3(f)(iii),
Lender shall provide Borrower with not less than ninety (90) days written
notice specifying in reasonable detail the event by reason of which it has
become so entitled and the additional amount required to fully compensate
Lender for such additional costs. 
Lender’s notice of such costs, as certified to Borrower, shall be
conclusive absent manifest error.

 

(iv)                              In
the event that any change in any requirement of law or in the interpretation or
application thereof, or compliance by Lender with any request or directive
(whether or not having the force of law) hereafter issued from any central bank
or other Governmental Authority:

 

(A)                              shall
hereafter impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of Lender
which is not otherwise included in the determination of the LIBOR Rate
hereunder;

 

(B)                                shall
hereafter have the effect of reducing the rate of return on Lender’s capital as
a consequence of its obligations hereunder to a level below that which Lender
could have achieved but for such adoption, change or compliance (taking into
consideration Lender’s policies with respect to capital adequacy) by any amount
deemed by Lender to be material; or

 

(C)                                shall
hereafter impose on Lender any other condition and the result of any of the
foregoing is to increase the cost to Lender of making, renewing or maintaining
loans or extensions of credit or to reduce any amount receivable hereunder;

 

then, in any such
case, Borrower shall promptly pay Lender, upon demand, any additional amounts
necessary to compensate Lender for such additional cost or reduced amount
receivable which Lender deems to be material as determined by Lender. If Lender
becomes entitled to claim any additional amounts pursuant to this
Section 2.3(f)(iv), Lender shall provide Borrower with not less than ninety
(90) days written notice specifying in reasonable detail the event by reason of
which it has become so entitled and the additional amount required to fully
compensate Lender for such additional cost or reduced amount. A certificate as
to any additional costs or amounts payable pursuant to the foregoing sentence
submitted by Lender to Borrower shall be conclusive in the absence of manifest
error. This provision shall survive payment of the Note and the satisfaction of
all other obligations of Borrower under this Agreement and the Loan Documents.

 

(v)                                 Borrower
agrees to indemnify Lender and to hold Lender harmless from any loss or expense
which Lender sustains or incurs as a consequence of (i) any default by Borrower
in payment of the principal of or interest on a LIBOR Loan, including, without
limitation, any such loss or expense arising from interest or fees payable by
Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan
hereunder,

 

25

 

(ii) any
prepayment (whether voluntary or mandatory) of the LIBOR Loan that did not
include all interest which had accrued (or would have accrued) at the Note Rate
through the end of the related Interest Period, including, without limitation,
such loss or expense arising from interest or fees payable by Lender to lenders
of funds obtained by it in order to maintain the LIBOR Loan hereunder, and
(iii) the conversion (for any reason whatsoever, whether voluntary or
involuntary) of the Note Rate from the LIBOR Rate to the Static LIBOR Rate with
respect to any portion of the outstanding principal amount of the Loan then
bearing interest at the LIBOR Rate on a date other than the Payment Date
immediately following the last day of an Interest Period, including, without
limitation, such loss or expenses arising from interest or fees payable by
Lender to lenders of funds obtained by it in order to maintain a LIBOR Loan
hereunder (the amounts referred to in clauses (i), (ii) and (iii) are herein
referred to collectively as the “Breakage Costs”).  This provision shall survive payment of the Note in full and the
satisfaction of all other obligations of Borrower under this Agreement and the
other Loan Documents.

 

(vi)                              Lender
shall not be entitled to claim compensation pursuant to this
Section 2.3(f) for any Foreign Taxes, increased cost or reduction in
amounts received or receivable hereunder, or any reduced rate of return, which
was incurred or which accrued more than one hundred eighty (180) days before
the date Lender notified Borrower of the change in law or other circumstance on
which such claim of compensation is based and delivered to Borrower a written
statement setting forth in reasonable detail the basis for calculating the
additional amounts owed to Lender under this Section 2.3(f), which
statement shall be conclusive and binding upon all parties hereto absent
manifest error.

 

(vii)                           Within
fifteen (15) days after request by Lender (or at the time of any prepayment),
Borrower shall pay to Lender such amount or amounts as will compensate Lender
for any loss, cost, expense, penalty, claim or liability, including any loss
incurred in obtaining, prepaying, liquidating or employing deposits or other
funds from third parties and any loss of yield, as determined by Lender in its
judgment reasonably exercised, incurred by it with respect to the Loan as a
result of the payment or prepayment of any amount on a date other than the date
such amount is required or permitted to be paid or prepaid; provided that
Lender delivers to Borrower a certificate as to the amounts of such costs
described herein, which certificate shall be conclusive in the absence of
manifest error.  Lender shall have no
obligation to purchase, sell and/or match funds in connection with the funding
or maintaining of the Loan or any portion thereof.  The obligations of Borrower under this Section shall survive
any termination of the Loan Documents and payment of the Note and shall not be
waived by any delay by Lender in seeking such compensation.

 

(viii)                        All
payments made by Borrower  hereunder or
under the other Loan Documents shall be made irrespective of, and without any
deduction for, any setoff, defense or counterclaims.

 

(ix)                                Remittances
in payment of any part of the Loan in less than the required amount in
immediately available U.S. funds shall not, regardless of any receipt or credit
issued therefor, constitute payment until the required amount is actually
received by the holder hereof in immediately available U.S. funds and shall be
made and accepted subject

 

26

 

to the condition
that any check or draft may be handled for collection in accordance with the
practices of the collecting bank or banks.

 

Section 2.4.                                   PREPAYMENTS.

 

(a)                                  Voluntary
Prepayments.  Except as otherwise
expressly provided herein and in Section 2.4(c) hereof, Borrower shall not
have the right to prepay the Loan in whole or in part prior to the initial
Maturity Date. Any partial prepayment shall be applied to the last payments of
principal due under the Loan and shall reduce the outstanding principal balance
of the Loan for purposes of computing the Monthly Payment Amount.

 

(b)                                 Lockout.  The Loan shall only be prepayable after the
expiration of the Lockout Period.

 

(c)                                  Payments
After the Lockout Period.

 

(i)                                     Full
Prepayment.

 

(A)                              At
any time after the expiration of the Lockout Period other than during the time
period in any month from and including the day after the Payment Date through
and including the day prior to the Determination Date, Borrower may prepay the
Loan in whole but not in part at any time upon not less than thirty (30) days
prior written notice to Lender.  Any
such prepayment shall include (A) in the event the prepayment occurs at any time
during the period after the Payment Date occurring in June, 2005 through and
including the Payment Date occurring in December, 2005, a prepayment premium in
the amount of 1.75% of the then principal amount of the Loan, (B) all amounts
required to be paid by Borrower under Section 2.4(c)(iii) hereof and (C)
all other amounts owing by Borrower to Lender under this Agreement and the
other Loan Documents, including, without limitation, any Breakage Costs
incurred by Lender.

 

(B)                                In
addition to the foregoing requirements for a full prepayment of the Loan, prior
to Lender’s obligation to accept a prepayment pursuant to the foregoing
Section 2.4(c)(i)(A) Borrower shall have paid (or cause to be paid) any
amounts required to be paid under Section 2.4(c)(i) of the Mortgage Loan
Agreement to Mortgage Lender in connection with the full prepayment of the
Mortgage Loan, provided that, the requirements set forth in this
Section 2.4(c)(i)(B) shall not apply in the event (1) (x) such prepayment
is sourced solely from the funds of Mezzanine Borrower or any of its Affiliates
(other than Mortgage Borrower or any SPE Component Entity (as defined in the
Mortgage Loan Agreement)) and such funds are not derived from any of the
Properties or any other collateral for the Mortgage Loan (it being understood
and agreed that the Mezzanine Borrower shall in any event be entitled to apply
to any such prepayment of the Mezzanine Loan funds sourced or derived from any
of the Properties or any other collateral for the Mortgage  Loan to the extent the same have previously
been distributed to the Mezzanine Borrower provided such distribution was not
in violation of the Mortgage Loan Documents) (provided that

 

27

 

the foregoing is
subject to Sections 544 and 548 of Title 11 of the United States Code) and (y)
no Default or Event of Default shall then exist under the Mortgage Loan
Documents or (2) Mortgage Lender shall agree in a writing addressed to Lender
to such prepayment in full of the Mezzanine Loan.

 

(ii)                                  Partial
Prepayment.  Provided no Event of
Default shall have occurred and is then continuing, commencing on the day after
the expiration of the Lockout Period, and upon giving Lender at least thirty
(30) days (but not more than ninety (90) days) prior written notice, which said
notice can be given prior to the expiration of the Lockout Period in connection
with the prepayment to occur following the Lockout Period, Borrower may
voluntarily prepay a portion of the Loan on a Payment Date provided such
prepayment is being made in connection with a partial prepayment of the
Mortgage Loan and the release of a Property pursuant to Section 2.4(c)(ii)
of the Mortgage Loan Agreement and the Mortgage Loan Borrower has complied with
all of the terms and conditions of Section 2.4(c)(ii) of the Mortgage Loan
Agreement, and provided Borrower satisfies the following release conditions:

 

(A)                              Borrower
shall provide Lender with prior written notice specifying (1) the Payment Date
on which Borrower intends to make the partial prepayment (“Release Date”) and (2) the
Property proposed to be released from the Lien of the related Mortgage (the “Release
Property”)

 

(B)                                Borrower
shall pay to Lender (i) the applicable Release Price, (ii) all amounts payable
under Section 2.4(c)(iii) below in connection with the accompanying
prepayment of the Loan, and (iii) any and all expenses incurred by Lender in
connection with any such release, including, but not limited to, reasonable
attorney’s fees and expenses, as required under clause (F) below;

 

(C)                                Borrower
shall pay in the event the prepayment occurs at any time during the period
after the Lockout Period through and including the Payment Date occurring in
December, 2005, a prepayment premium in the amount of 1.75% of the applicable
Release Price;

 

(D)                               Borrower
shall have delivered to Lender written confirmation that Rate Cap in the
aggregate notional amount of no less than the principal balance of the Loan as
prepaid shall remain in full force and effect after the proposed prepayment;

 

(E)                                 Borrower
shall deliver to Lender such other documents, instruments, opinions and
certificates as Lender may reasonably request;

 

(F)                                 Borrower
shall pay all out-of-pocket costs and expenses of Lender incurred in connection
with the proposed prepayment, including Lender’s reasonable attorneys’ fees and
expenses; and

 

(G)                                Without
limiting the generality of any of the provisions contained herein, Borrower
shall have paid any amounts required to be paid to Mortgage Lender in
connection with the release of the Release Property.

 

28

 

(iii)                               Prepayments
in General.  All payments and
prepayments of the Loan, whether voluntary, involuntary, at the Maturity Date
or otherwise (but exclusive of prepayments made pursuant to Section 2.4(d)
hereof) shall include in the event that any such repayment or prepayment is
made on a day other than a Payment Date, a sum equal to the amount of interest
which would have accrued under this Agreement through the end of the Interest
Period in which the next Payment Date occurs. 
For purposes of this Agreement, an involuntary prepayment shall be
deemed to include, but not be limited to, a prepayment of the Loan in
connection with or following the Lender’s acceleration of the outstanding
balance of the Loan.

 

(d)                                 Insurance
and Condemnation Proceeds; Excess Interest.  Notwithstanding any other provision herein to the contrary, and
provided no Default exists, Borrower shall not be required to pay any
prepayment premium in connection with any prepayment occurring solely as a result
of (i) the application of Insurance Proceeds or Condemnation Proceeds pursuant
to the terms of the Loan Documents, or (ii) the application of any interest in
excess of the maximum rate permitted by applicable law to the reduction of the
Loan.

 

(e)                                  Prepayments
Prior to the Lockout Period.  If,
during the Lockout Period, payment of all or any part of the Debt is tendered
by Borrower or otherwise recovered by Lender, such tender or recovery shall be
(a) made on the next occurring Payment Date together with the Debt Service then
due and (b) deemed a voluntary prepayment by Borrower in violation of the
prohibition against prepayment set forth in this Section 2.4 and Borrower
shall pay, in addition to the Debt being repaid and the accompanying Debt Service
payment, (x) an amount equal to the Lockout Yield Maintenance Premium and (y)
the accrued and unpaid interest calculated for the full Interest Period in
which such voluntary prepayment occurs.

 

(f)                                    Application
of Payments.  All voluntary and
involuntary prepayments on the Note shall be applied, to the extent thereof, to
accrued but unpaid interest on the amount prepaid, to the remaining principal
amount, and any other sums due and unpaid to Lender in connection with the
Loan, in such manner and order as Lender may elect in its sole and absolute
discretion, including, but not limited to, application to principal
installments in inverse order of maturity. 
Following the occurrence of an Event of Default, any payment made on the
Note shall be applied to accrued but unpaid interest, late charges, accrued
fees, the unpaid principal amount of the Note, and any other sums due and
unpaid to Lender in connection with the Loan, in such manner and order as
Lender may elect in its sole and absolute discretion.

 

(g)                                 Liquidation
Events.

 

(i)                                     In
the event of (A) any Casualty to any Property or any material portion thereof,
(B) any Condemnation of any Property or any material portion thereof,
(C) any transfer of any Property in connection with a realization thereon
following a Mortgage Event of Default, including, without limitation, a
foreclosure sale, or (D) any refinancing of any Property or the Mortgage
Loan (each, a “Liquidation Event”), Borrower shall cause the related
Net Liquidation Proceeds After Debt Service to be deposited directly into an
Eligible Account with Lender (the “Mezzanine Debt Service Account”).  On each date on which Lender actually
receives a distribution of Net Liquidation Proceeds After Debt Service,
Borrower shall prepay the outstanding principal balance of the Note in an

 

29

 

amount equal to
one hundred percent (100%) of such Net Liquidation Proceeds After Debt Service,
together with interest which actually accrued on such amount through the next
Payment Date, but without the payment of 
a prepayment fee or penalty.  Any
amounts of Net Liquidation Proceeds After Debt Service in excess of the Debt
shall be paid to Borrower.  Any
prepayment received by Lender pursuant to this Section 2.4(g)(i) on a date
other than a Payment Date shall be held by Lender as collateral security for
the Loan in an interest bearing account, with such interest accruing to the
benefit of Borrower, and shall be applied by Lender on the next Payment Date.

 

(ii)                                  Borrower
shall notify Lender of any Liquidation Event no later than one (1) Business Day
following the first date on which Borrower has knowledge of such event.  Borrower shall be deemed to have knowledge
of (i) a sale (other than a foreclosure sale) of any Property on the date
on which a contract of sale for such sale is entered into, and all other
contingencies, if any, contained therein have been satisfied and/or waived, and
a foreclosure sale, on the date notice of such foreclosure sale is given, and
(ii) a refinancing of any Property, on the date on which a commitment for
such refinancing has been entered into, and all other contingencies, if any,
contained therein have been satisfied and/or waived.  The provisions of this Section 2.4(g)(ii) shall not be
construed to contravene in any manner the restrictions and other provisions
regarding refinancing of the Mortgage Loan or the Sale or Pledge of any
Property set forth in this Agreement and the other Loan Documents.

 

(h)                                 Prepayment
of the Mortgage Loan.  Subject to
the provisions of Section 5.33 hereof, in the event that the Mortgage Loan
is paid in full at any time prior to the then Maturity Date of the Loan, the
Debt shall then be immediately due and payable regardless of the Maturity Date
of the Loan.

 

ARTICLE 3

CONDITIONS PRECEDENT

 

The obligation of
Lender to make the Loan hereunder is subject to the fulfillment by Borrower or
waiver by Lender of the following conditions precedent no later than the
Closing Date.

 

Section 3.1.                                   REPRESENTATIONS
AND WARRANTIES; COMPLIANCE WITH CONDITIONS

 

The
representations and warranties of Borrower and Affiliated Lessee contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the Closing Date with the same effect as if made
on and as of such date, and Lender shall have determined that no Default or an
Event of Default shall have occurred and be continuing nor will any Default or
Event of Default occur immediately following the Closing Date; and Borrower
shall be in compliance in all material respects with all terms and conditions
set forth in this Agreement and in each other Loan Document on its part to be
observed or performed.

 

30

 

Section 3.2.                                   DELIVERY
OF LOAN DOCUMENTS; REPORTS; LEASES

 

(a)                                  Pledge
Agreement, Loan Agreement and Note. 
Lender shall have received from Borrower a fully executed and
acknowledged counterparts of the Pledge Agreement and evidence that the Uniform
Commercial Code financing statements have been delivered to the title company
for recording and/or filing, in the reasonable judgment of Lender, so as to
effectively create upon such recording and/or filing valid and enforceable
Liens upon the Collateral, of first priority, in favor of Lender (or such other
trustee as may be required or desired under local law).  Lender shall have also received from
Borrower and Borrower Principal, the applicable Operating Lessee and Manager,
as applicable, fully executed counterparts of this Agreement, the Note, each
Subordination, Non-Disturbance and Attornment Agreement, each Subordination and
Attornment Agreement, and each Subordination of Management Agreement/Estoppel
and all other Loan Documents.

 

(b)                                 Intentionally
deleted.

 

(c)                                  Intentionally
deleted.

 

(d)                                 Insurance.  Lender shall have received copies of the
Policies required hereunder or other evidence of insurance, satisfactory to
Lender in its sole discretion, and evidence of the payment of all Insurance
Premiums payable for the existing policy period.

 

(e)                                  Environmental
Reports.  Lender shall have received
an Environmental Report in respect of each Property satisfactory to Lender (or
an acceptable update and reliance letter relating to the applicable
Environmental Report delivered to Bridge Lender in connection with the Bridge
Loan).

 

(f)                                    Intentionally
deleted.

 

(g)                                 Encumbrances.  Borrower shall have taken or caused to be
taken such actions in such a manner so that Lender has a valid and perfected
first Lien as of the Closing Date on the Collateral, and Lender shall have received
satisfactory evidence thereof.

 

(h)                                 Lien
Searches.  Borrower shall have
delivered to Lender certified search results pertaining to the Borrower,
Borrower Principal, Mortgage Borrower, Mortgage Borrower GP, Affiliated Lessee
and such other Persons or any SPE Component Entity as reasonably required by
Lender for state and federal tax liens, bankruptcy, judgment, litigation and
state and local UCC filings.

 

Section 3.3.                                   RELATED
DOCUMENTS

 

Each additional
document not specifically referenced herein, but relating to the transactions
contemplated herein, shall have been duly authorized, executed and delivered by
all parties thereto and at Lender’s written request, Lender shall have received
and approved certified copies thereof.

 

31

 

Section 3.4.                                   ORGANIZATIONAL
DOCUMENTS

 

On or before the
Closing Date, Borrower shall deliver or cause to be delivered to Lender (a)
copies certified by Borrower of all organizational documentation related to
Borrower, Borrower Principal, Mortgage Borrower, Mortgage Borrower GP and each
SPE Component Entity which must be acceptable to Lender in its sole discretion,
and (b) such other evidence of the formation, structure, existence, good
standing and/or qualification to do business of the Borrower, Borrower
Principal and each SPE Component Entity, as Lender may request in its sole
discretion, including, without limitation, good standing or existence
certificates, qualifications to do business in the appropriate jurisdictions,
resolutions authorizing the entering into of the Loan and incumbency
certificates as may be requested by Lender.

 

Section 3.5.                                   OPINIONS
OF BORROWER’S COUNSEL

 

Lender shall have
received opinions of Borrower’s counsel (a) with respect to non-consolidation
issues, (b) with respect to due execution, authority, enforceability of the
Loan Documents and such other matters as Lender may require, and (c) with
respect to the perfection of Lender’s security interest in the Collateral, all
such opinions in form, scope and substance satisfactory to Lender and Lender’s
counsel in their sole discretion.  In
addition, Borrower shall deliver to Lender on the Closing Date an opinion
letter from Borrower’s counsel relating to Lender’s security interest in the
Collateral being perfected by delivery of certificates evidencing the equity
interests or by the filing of the UCC-1 Financing Statement with the Secretary
of State of Delaware.

 

Section 3.6.                                   ANNUAL
BUDGET

 

Borrower shall
have delivered, and Lender shall have approved, the Annual Budget with respect
to the Properties for the current fiscal year, a copy of which is attached as
Exhibit A hereto.

 

Section 3.7.                                   TAXES
AND OTHER CHARGES

 

Mortgage Borrower
shall have paid all Taxes and Other Charges which are due and payable
(including any in arrears) relating to each Property, which amounts may be
funded with proceeds of the Mortgage Loan and the Loan.

 

Section 3.8.                                   COMPLETION
OF PROCEEDINGS

 

All corporate and
other proceedings taken or to be taken in connection with the transactions contemplated
by this Agreement and other Loan Documents and all documents incidental thereto
shall be satisfactory in form and substance to Lender, and Lender shall have
received all such counterpart originals or certified copies of such documents
as Lender may reasonably request.

 

32

 

Section 3.9.                                   PAYMENTS

 

All payments,
deposits or escrows required to be made or established by Borrower under this
Agreement, the Note and the other Loan Documents on or before the Closing Date
shall have been paid.

 

Section 3.10.                             TRANSACTION
COSTS

 

Except as
otherwise expressly provided herein, Borrower shall have paid or reimbursed
Lender for all out of pocket expenses in connection with the underwriting,
negotiation, and closing of the Loan, including title insurance premiums and
other title company charges; recording, registration, filing and similar fees,
taxes and charges; transfer, mortgage, deed, stamp or documentary taxes or
similar fees or charges; costs of third-party reports, including without
limitation, environmental studies, credit reports, seismic reports, engineer’s
reports, appraisals and surveys; underwriting and origination expenses;
Securitization expenses; and all actual, reasonable legal fees and expenses charged
by counsel to Lender.

 

Section 3.11.                             NO
MATERIAL ADVERSE CHANGE

 

There shall have
been no material adverse change in the financial condition or business
condition of any Property, Mortgage Borrower, Mortgage Borrower GP, Borrower,
Borrower Principal, Operating Lessee, any SPE Component Entity, any Manager or
any other person or party contributing to the operating income and operations
of any Property since the date of the most recent financial statements and/or
other information delivered to Lender. 
The income and expenses of each Property, the occupancy and leases
thereof, and all other features of the transaction shall be as represented to
Lender without material adverse change. 
Neither Mortgage Borrower, Mortgage Borrower GP, Borrower, Borrower
Principal, any Operating Lessee, any SPE Component Entity nor any Manager shall
be the subject of any bankruptcy, reorganization, or insolvency proceeding.

 

Section 3.12.                             OPERATING
LEASES

 

Lender shall have
received (i) a certified copy of each Operating Lease, (ii) copies of the fully
executed estoppels from the applicable Operating Lessee of each Property
delivered to Mortgage Lender pursuant to the Mortgage Loan Agreement, and (iii)
fully executed counterparts signed by Mortgage Borrower, Borrower and the applicable
Operating Lessee of a Subordination, Non-Disturbance and Attornment Agreement,
with respect to the Operating Leases of the Miami Lakes Property and the Miami
Airport West Property, and a Subordination and Attornment Agreement, with
respect to each of the remaining Operating Leases.

 

Section 3.13.                             LEASES;
RENT ROLLS

 

Lender shall have
received a Rent Roll or summary of all Leases affecting any Property (other
than Operating Leases, which are addressed in Section 3.12), which shall
be satisfactory in form and substance to Lender.

 

33

 

Section 3.14.                             TENANT
ESTOPPELS

 

Lender shall have
received copies of each executed tenant estoppel letter delivered to Mortgage
Lender pursuant to the Mortgage Loan Agreement.

 

Section 3.15.                             REA
ESTOPPELS

 

Borrower shall
have delivered to Lender copies of each executed REA estoppel letter delivered
to Mortgage Lender, from each party to any REA with respect to any Property, as
required by Mortgage Lender pursuant to the Mortgage Loan Agreement.

 

Section 3.16.                             SUBORDINATION
AND ATTORNMENT

 

Borrower shall
have delivered to Lender copies of any and all executed instruments delivered
to Mortgage Lender subordinating to the applicable Mortgage certain of the
Leases (other than the Operating Leases, which are addressed in
Section 3.12) affecting each Property, to the extent required by Mortgage
Lender pursuant to the Mortgage Loan Agreement.

 

Section 3.17.                             TAX
LOT

 

Lender shall have
received evidence that each Property constitutes one (1) or more separate tax
lots, which evidence shall be reasonably satisfactory in form and substance to
Lender.

 

Section 3.18.                             PHYSICAL
CONDITIONS REPORT; PIP REPORT

 

Lender shall have
received copies of (a) the Physical Conditions Report with respect to each
Property, delivered to Lender pursuant to the Mortgage Loan Documents, and (b)
any PIP Reports issued with respect to any Property, delivered to Mortgage
Lender pursuant to the Mortgage Loan Agreement.

 

Section 3.19.                             MANAGEMENT
AGREEMENT

 

Lender shall have
received a certified copy of each Management Agreement with respect to each
Property subject to a Management Agreement, each of which shall be satisfactory
in form and substance to Lender.

 

Section 3.20.                             APPRAISAL

 

Lender shall have
received an appraisal of each Property, which shall be satisfactory in form and
substance to Lender.  Lender hereby
acknowledges (a) receipt of appraisals with respect to each Property, as
delivered to Bank of America, N.A. in connection with the  Bridge Loan and (b) that each such appraisal
together with any reliance letter which Lender may require in its reasonable
discretion shall be deemed acceptable for all purpose under this
Section 3.20 absent any material adverse change to the applicable Property
from and after the date of such appraisal.

 

34

 

Section 3.21.          FINANCIAL STATEMENTS

 

Lender shall have
received financial statements and related information in form and substance
satisfactory to Lender and in compliance with any Legal Requirements
promulgated by the Securities and Exchange Commission, including, without
limitation, (a) operating statement as of September 30, 2003 with respect to
each Property, for the year-to-date 2003, and (b) audited financial statements
by an Acceptable Accountant with respect to RFS Partnership, L.P. (the prior
direct/indirect owner of each Property) for the years 2002, 2001, 2000 and
1999, in all instances the same shall be accompanied by an unqualified opinion
of such Acceptable Accountant that such statements have been prepared in
accordance with GAAP applied on a consistent basis.

 

Section 3.22.          NET OPERATING INCOME

 

The annual Net Operating
Income for all the Properties shall not be less than $20,000,000.00 as
determined by Lender in its sole discretion pursuant to its standard
underwriting procedures for loans which are consummated by Lender for the
purpose of any Securitization.

 

Section 3.23.          FRANCHISE AGREEMENTS

 

Lender shall have
received (i) a certified copy of each Franchise Agreement with respect to each
Property (other than those previously disclosed to Lender for which there is no
Franchise Agreement, only a Management Agreement), and (ii) a franchisor
estoppel/comfort letter executed by each Franchisor under each Franchise
Agreement, in form and substance reasonably satisfactory to Lender.

 

Section
3.24.          GROUND LEASE

 

Lender shall have received (a) a certified copy of
each Ground Lease and (b) copies of the fully executed ground lessor estoppel
from the ground lessor under the Wilmington Ground Lease and the fully executed
ground lessor estoppel from the Borrower with respect to the Louisville
Southwest Agreement.

 

Section 3.25.          FURTHER DOCUMENTS

 

Lender or its counsel
shall have received such other and further approvals, opinions, documents and
information as Lender or its counsel may have reasonably requested including
the Loan Documents in form and substance satisfactory to Lender and its
counsel.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES

 

Borrower and, where
specifically indicated, each Borrower Principal, represents and warrants to
Lender as of the Closing Date that:

 

35

 

Section 4.1.            ORGANIZATION

 

Each of Borrower,
Borrower Principal (when not an individual), Mortgage Borrower, Mortgage
Borrower GP and Affiliated Lessee (a) has been duly organized and is validly
existing and in good standing with requisite power and authority to own its
properties and to transact the businesses in which it is now engaged, (b) is
duly qualified to do business and is in good standing in each jurisdiction
where it is required to be so qualified in connection with its properties,
businesses and operations, (c) possesses all rights, licenses, permits and
authorizations, governmental or otherwise, necessary to entitle it to own its
properties and to transact the businesses in which it is now engaged, and the
sole business of Borrower is the ownership, and management of the Mortgage
Borrower, and (d) in the case of Borrower, has full power, authority and legal
right to grant, bargain, sell, pledge, assign, warrant, transfer and convey the
Collateral pursuant to the terms of the Loan Documents, and in the case of
Borrower, Mortgage Borrower, each Borrower Principal and Affiliated Lessee, has
full power, authority and legal right to keep and observe all of the terms of
the Loan Documents and/or Mortgage Loan Documents  to which it is a party. 
Borrower and  Borrower Principal
represent and warrant that the chart attached hereto as Exhibit B sets forth an
accurate ownership structure of Borrower.

 

Section 4.2.            STATUS
OF BORROWER; AFFILIATED LESSEE

 

Borrower’s exact legal
name is correctly set forth on the first page of this Agreement, on the Pledge
Agreement and on any UCC-1 Financing Statements filed in connection with the
Loan.  Borrower is an organization of
the type specified on the first page of this Agreement.  Borrower is incorporated in or organized
under the laws of the state of Delaware. 
Borrower’s principal place of business and chief executive office, and
the place where each of Borrower  keeps
its books and records, including recorded data of any kind or nature,
regardless of the medium of recording, including software, writings, plans,
specifications and schematics, has been for the preceding four months (or, if
less, the entire period of the existence of Borrower) the address of Borrower
set forth on the first page of this Agreement. 
The organizational identification number, if any, assigned by the state
of incorporation or organization of  Borrower
is 3721072.

 

Section 4.3.            VALIDITY
OF DOCUMENTS

 

Borrower, Mortgage
Borrower, Affiliated Lessee, and Borrower Principal have taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
the other Loan Documents and the Mortgage Loan Documents to which they are
parties.  This Agreement, the other Loan
Documents and the Mortgage Loan Documents have been duly executed and delivered
by or on behalf of Borrower, Mortgage Borrower, Affiliated Lessee and  Borrower Principal, as applicable, and
constitute the legal, valid and binding obligations of Borrower, Mortgage
Borrower, Affiliated Lessee and Borrower Principal, as applicable, enforceable
against each, as applicable, in accordance with their respective terms, subject
only to applicable bankruptcy, insolvency and similar laws affecting rights of
creditors generally, and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law).

 

36

 

Section 4.4.            NO CONFLICTS

 

The execution, delivery
and performance of this Agreement, the other Loan Documents and the Mortgage
Loan Documents to be executed by Borrower, Mortgage Borrower, Affiliated Lessee
and Borrower Principal, as applicable, 
will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance (other than pursuant to the Loan
Documents or Mortgage Loan Documents) upon any of the property or assets of
Borrower, Mortgage Borrower, Affiliated Lessee or Borrower Principal pursuant
to the terms of any agreement or instrument to which Borrower, Mortgage
Borrower, Affiliated Lessee or Borrower Principal s a party or by which any of
Borrower’s, Mortgage Borrower’s, Affiliated Lessee’s or Borrower Principal’s
property or assets is subject, nor will such action result in any violation of
the provisions of any statute or any order, rule or regulation of any
Governmental Authority having jurisdiction over Borrower, Mortgage Borrower,
Affiliated Lessee or Borrower Principal or any of Borrower’s, Mortgage
Borrower’s, Affiliated Lessee’s or Borrower Principal’s properties or assets,
and any consent, approval, authorization, order, registration or qualification of
or with any Governmental Authority required for the execution, delivery and
performance by Borrower, Mortgage Borrower, Affiliated Lessee or Borrower
Principal of this Agreement, any of the other Loan Documents or any of the
Mortgage Loan Documents has been obtained and is in full force and effect.

 

Section 4.5.            LITIGATION

 

There are no actions,
suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending or, to Borrower’s or Borrower Principal’s
knowledge, threatened against or affecting Borrower, Mortgage Borrower,
Borrower Principal, any Operating Lessee, any Manager, the Collateral or any
Property, which actions, suits or proceedings, if determined against Borrower,
Mortgage Borrower, Borrower Principal, any Operating Lessee, any Manager, the
Collateral or any Property, would materially adversely affect the condition
(financial or otherwise) or business of Borrower, Mortgage Borrower, Borrower
Principal or Affiliated Lessee or the condition or ownership of the Collateral
or any Property (as applicable).

 

Section 4.6.            AGREEMENTS

 

None of Borrower,
Mortgage Borrower, Borrower Principal nor any Affiliated Lessee is a party to
any agreement or instrument or subject to any restriction which would
materially and adversely affect Borrower, Mortgage Borrower, Borrower
Principal, Affiliated Lessee, the Collateral or any Property, or Borrower’s,
Mortgage Borrower’s, Borrower Principal’s or Affiliated Lessee’s business,
properties or assets, operations or condition, financial or otherwise.  None of Borrower, Mortgage Borrower,
Borrower Principal nor Affiliated Lessee is in default in any material respect
in the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement or instrument to which it is a party
or by which Borrower, Mortgage Borrower, Borrower Principal, Affiliated Lessee
or the Collateral is bound.  None of
Borrower, Mortgage Borrower, Borrower Principal or Affiliated Lessee has any
material financial obligation under any agreement or instrument to which
Borrower, Mortgage Borrower, Borrower Principal or Affiliated Lessee is a party
or by which Borrower, Mortgage

 

37

 

Borrower, Borrower Principal, Affiliated Lessee or the
Collateral is otherwise bound, other than (a) obligations incurred in the
ordinary course of the operation of the Collateral and (b) its applicable
obligations under the Loan Documents or the Mortgage Loan Documents.

 

Section 4.7.            SOLVENCY

 

Neither Borrower nor
Borrower Principal has (a) entered into the transaction or executed the Note
(if applicable), this Agreement or any other Loan Documents to which any such
Person is a party, with the actual intent to hinder, delay or defraud any creditor
and (b) received reasonably equivalent value in exchange for their respective
obligations under such Loan Documents. 
Giving effect to the Loan, the fair saleable value of the assets of each
of Borrower, and Borrower Principal exceeds and will, immediately following the
making of the Loan, exceed the total liabilities of each of Borrower and
Borrower Principal, including, without limitation, subordinated, unliquidated,
disputed and contingent liabilities.  No
petition in bankruptcy has been filed against Borrower, Mortgage Borrower,
Borrower Principal, Affiliated Lessee or any SPE Component Entity (if any) in
the last ten (10) years, and neither Borrower, Mortgage Borrower, Borrower
Principal, Affiliated Lessee nor any SPE Component Entity in the last ten (10)
years has made an assignment for the benefit of creditors or taken advantage of
any Creditors Rights Laws.  Neither
Borrower, Mortgage Borrower, Borrower Principal, Affiliated Lessee nor any SPE
Component Entity (if any) is contemplating either the filing of a petition by
it under any Creditors Rights Laws or the liquidation of all or a major portion
of Borrower’s, Mortgage Borrower’s, Borrower Principal’s, SPE Component
Entity’s or Affiliated Lessee’s assets or property, and  Borrower has no knowledge of any Person
contemplating the filing of any such petition against Borrower, Mortgage
Borrower, Borrower Principal, Affiliated Lessee or any SPE Component Entity (if
any).

 

Section 4.8.            FULL AND ACCURATE DISCLOSURE

 

No statement of fact made
by or on behalf of Borrower, Mortgage Borrower, any SPE Component Entity (as
defined herein and in the Mortgage Loan Agreement), Borrower Principal or
Affiliated Lessee in this Agreement or in any of the other Loan Documents or in
any other document or certificate delivered by or on behalf of Borrower,
Borrower Principal or Affiliated Lessee contains any untrue statement of a
material fact or omits to state any material fact necessary to make statements
contained herein or therein not misleading. 
There is no material fact presently known to Borrower, Mortgage
Borrower, any SPE Component Entity (as defined herein and in the Mortgage Loan
Agreement), Borrower Principal or Affiliated Lessee which has not been
disclosed to Lender which adversely affects, nor as far as Borrower, Borrower
Principal or Affiliated Lessee can reasonably foresee, might adversely affect,
the Collateral or the business, operations or condition (financial or
otherwise) of Borrower, Borrower Principal or Affiliated Lessee.

 

Section 4.9.            NO PLAN ASSETS

 

Neither Borrower nor
Borrower Principal is an “employee benefit plan,” as defined in
Section 3(3) of ERISA, subject to Title I of ERISA, and none of the assets
of Borrower or Borrower Principal constitutes or will constitute “plan assets”
of one or more such plans within the meaning of 29 C.F.R.
Section 2510.3-101.  Neither
Borrower nor Borrower Principal is a

 

38

 

“governmental plan” within the meaning of
Section 3(32) of ERISA, subject to state statutes regulating investment
of, and fiduciary obligations with respect to, governmental plans similar to
the provisions of Section 406 of ERISA or Section 4975 of the
Internal Revenue Code currently in effect, which prohibit or otherwise restrict
the transactions contemplated by this Agreement.

 

Section 4.10.          NOT A FOREIGN PERSON

 

Neither Borrower nor
Borrower Principal is a “foreign person” within the meaning of §1445(f)(3) of
the Internal Revenue Code.

 

Section 4.11.          ENFORCEABILITY

 

The Loan Documents are not
subject to any right of rescission, set-off, counterclaim or defense by
Borrower or Borrower Principal, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and neither Borrower
nor Borrower Principal has asserted any right of rescission, set-off,
counterclaim or defense with respect thereto. 
No Default or Event of Default exists under or with respect to any Loan
Document.

 

Section 4.12.          BUSINESS PURPOSES

 

The Loan is solely for
the business purpose of Borrower, and is not for personal, family, household,
or agricultural purposes.

 

Section 4.13.          COMPLIANCE

 

Borrower, Mortgage
Borrower, Affiliated Lessee and each Property, and the use and operation
thereof, comply in all material respects with all Legal Requirements,
including, without limitation, building and zoning ordinances and codes and the
Americans with Disabilities Act. 
Borrower has no knowledge that any of such entities is in default or
violation of any order, writ, injunction, decree or demand of any Governmental
Authority and Borrower has not received any written notice of any such default
or violation.  There has not been
committed by Borrower or, to Borrower’s knowledge, any other Person in
occupancy of or involved with the operation or use of any Property, any act or
omission affording any Governmental Authority the right of forfeiture as
against any Property or any part thereof or any monies paid in performance of Borrower’s
obligations under any of the Loan Documents.

 

Section 4.14.          FINANCIAL INFORMATION

 

All financial data,
including, without limitation, the balance sheets, statements of cash flow,
statements of income and operating expense and rent rolls, that have been
delivered to Lender in respect of Borrower, Borrower Principal, Mortgage
Borrower, Mortgage Borrower GP, Affiliated Lessee and/or the Properties (a) are
true, complete and correct in all material respects, (b) accurately represent
the financial condition of Borrower, Borrower Principal, Mortgage Borrower,
Mortgage Borrower GP, Affiliated Lessee or the Properties, as applicable, as of
the date of such reports, and (c) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with GAAP throughout the periods covered, except as disclosed therein.  Neither Borrower, Mortgage Borrower,
Mortgage

 

39

 

 Borrower GP
nor Affiliated Lessee has any contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments that are known to Borrower and reasonably
likely to have a material adverse effect on any Property or the current and/or
intended operation thereof, except as referred to or reflected in said
financial statements.  Since the date of
such financial statements, there has been no materially adverse change in the
financial condition, operations or business of Borrower, Mortgage Borrower,
Mortgage Borrower GP, Borrower Principal or Affiliated Lessee from that set
forth in said financial statements.

 

Section 4.15.          ILLEGAL ACTIVITY

 

No portion of the
Collateral or any Property has been or will be purchased with proceeds of any
illegal activity, and no part of the proceeds of the Loan will be used in
connection with any illegal activity.

 

Section 4.16.          PERMITTED ENCUMBRANCES

 

None of the Permitted
Encumbrances, individually or in the aggregate, materially interferes with the
benefits of the security intended to be provided by the Mortgage Loan Documents
or Loan Documents, materially and adversely affects the value of any Property,
impairs the use or the operation of any Property or impairs Mortgage Borrower’s
or Borrower’s ability to pay its obligations in a timely manner.

 

Section 4.17.          FEDERAL RESERVE REGULATIONS

 

Borrower will use the
proceeds of the Loan for the purposes set forth in Section 2.1(d) hereof
and not for any illegal activity.  No
part of the proceeds of the Loan will be used for the purpose of purchasing or
acquiring any “margin stock” within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System or for any other purpose which would be
inconsistent with such Regulation U or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements or prohibited
by the terms and conditions of this Agreement or the other Loan Documents.

 

Section 4.18.          INVESTMENT COMPANY ACT

 

Borrower is not (a) an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended; (b) a
“holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of either a “holding company” or a “subsidiary company” within the
meaning of the Public Utility Holding Company Act of 1935, as amended; or (c)
subject to any other federal or state law or regulation which purports to
restrict or regulate its ability to borrow money.

 

Section 4.19.          NO CHANGE IN FACTS OR CIRCUMSTANCES;
DISCLOSURE

 

All information submitted
by Borrower, Mortgage Borrower or its agents to Lender and in all financial
statements, rent rolls, reports, certificates and other documents submitted in
connection with the Loan or in satisfaction of the terms thereof and all
statements of fact made by Borrower, Mortgage Borrower, Affiliated Lessee or
Borrower Principal  in this Agreement,
in

 

40

 

any other Loan Document or in any Mortgage Loan
Document, are accurate, complete and correct in all material respects.  There has been no material adverse change in
any condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading in any material respect or that
otherwise materially and adversely affects or might materially and adversely
affect the Collateral, any Property or the business operations or the financial
condition of Borrower, Mortgage Borrower, Affiliated Lessee or Borrower
Principal.  Borrower has disclosed to
Lender all material facts and has not failed to disclose any material fact that
could cause any representation or warranty made herein to be materially
misleading.

 

Section
4.20.          SPECIAL PURPOSE ENTITY

 

Borrower, Mortgage
Borrower, and SPE Component Entity (as defined herein and in the Mortgage Loan
Agreement) (if any) meet all of the requirements of Article 6 hereof as of the
Closing Date in all material respects.

 

Section 4.21.          INTELLECTUAL PROPERTY

 

All trademarks, trade
names and service marks necessary to the business of Borrower as presently
conducted or as Borrower contemplates conducting its business are in good
standing and, to the extent of Borrower’s actual knowledge are uncontested.  Borrower has not knowingly infringed, is not
knowingly infringing, and has not received notice of infringement with respect
to asserted trademarks, trade names and service marks of others.  To Borrower’s knowledge, there is no infringement
by others of trademarks, trade names and service marks of Borrower.

 

Section 4.22.          EMBARGOED PERSON

 

As of the date hereof and
at all times throughout the term of the Loan, including after giving effect to
any transfers of interests permitted pursuant to the Loan Documents, (a) none
of the funds or other assets of Borrower or Borrower Principal constitute
property of, or are beneficially owned, directly or indirectly, by any person,
entity or government subject to trade restrictions under U.S. law, including
but not limited to, the International Emergency Economic Powers Act, 50 U.S.C.
§§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and
any Executive Orders or regulations promulgated thereunder with the result that
the investment in Borrower or Borrower Principal, as applicable (whether
directly or indirectly), is prohibited by law or the Loan made by Lender is in
violation of law (“Embargoed Person”); (b) no Embargoed Person
has any interest of any nature whatsoever in Borrower or Borrower Principal, as
applicable, with the result that the investment in Borrower or Borrower
Principal, as applicable (whether directly or indirectly), is prohibited by law
or the Loan is in violation of law; and (c) none of the funds of Borrower or
Borrower Principal, as applicable, have been derived from any unlawful activity
with the result that the investment in Borrower or Borrower Principal, as
applicable (whether directly or indirectly), is prohibited by law or the Loan
is in violation of law.

 

Section 4.23.          PATRIOT ACT

 

All capitalized words and
phrases and all defined terms used in the USA Patriot Act of 2001, 107 Public
Law 56 (October 26, 2001) and in other statutes and all orders, rules and

 

41

 

regulations of the United States government and its
various executive departments, agencies and offices related to the subject
matter of the Patriot Act, including Executive Order 13224 effective September
24, 2001 (collectively referred to in this Section only as the “Patriot Act”)
and are incorporated into this Section. 
Each of Borrower and Borrower Principal hereby represents and warrants
that Borrower and Borrower Principal and each and every Person Affiliated with
Borrower and Borrower Principal or that to Borrower’s knowledge has an economic
interest in Borrower or Borrower Principal, or, to Borrower’s or Borrower
Principal’s knowledge, that has or will have an interest in the transaction
contemplated by this Agreement or in the Collateral or any Property or will
participate, in any manner whatsoever, in the Loan (excluding any holders of
publicly traded shares in CNL Hospitality Properties, Inc., a publicly traded
real estate investment trust), is:  (i)
not a “blocked” person listed in the Annex to Executive Order Nos. 12947, 13099
and 13224 and all modifications thereto or thereof (as used in this
Section only, the “Annex”); (ii) in full compliance with the
requirements of the Patriot Act and all other requirements contained in the
rules and regulations of the Office of Foreign Assets Control, Department of
the Treasury (as used in this Section only, “OFAC”); (iii) operated under
policies, procedures and practices, if any, that are in compliance with the
Patriot Act and available to Lender for Lender’s review and inspection during
normal business hours and upon reasonable prior notice; (iv) not in receipt of
any notice from the Secretary of State or the Attorney General of the United
States or any other department, agency or office of the United States claiming
a violation or possible violation of the Patriot Act; (v) not listed as a
Specially Designated Terrorist or as a “blocked” person on any lists maintained
by the OFAC pursuant to the Patriot Act or any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and regulations
of the OFAC issued pursuant to the Patriot Act or on any other list of
terrorists or terrorist organizations maintained pursuant to the Patriot Act;
(vi) not a person who has been determined by competent authority to be subject to
any of the prohibitions contained in the Patriot Act; and (vii) not owned or
controlled by or now acting and or will in the future act for or on behalf of
any person named in the Annex or any other list promulgated under the Patriot
Act or any other person who has been determined to be subject to the
prohibitions contained in the Patriot Act. 
Borrower covenants and agrees that in the event Borrower receives any
notice that Borrower Principal or Borrower (or any of their respective
beneficial owners or Affiliates or participants) become listed on the Annex or
any other list promulgated under the Patriot Act or is indicted, arraigned, or
custodially detained on charges involving money laundering or predicate crimes
to money laundering, Borrower shall immediately notify Lender.  It shall be an Event of Default hereunder if
Borrower, Borrower Principal, or any other party to any Loan Document becomes
listed on any list promulgated under the Patriot Act or is indicted, arraigned
or custodially detained on charges involving money laundering or predicate
crimes to money laundering.

 

Section 4.24.          MORTGAGE LOAN REPRESENTATIONS

 

All of the
representations and warranties contained in the Mortgage Loan Documents are
hereby incorporated into this Agreement and deemed made by Borrower hereunder
and are true and correct as of the Closing Date and shall remain incorporated
as they may have been waived, amended or otherwise modified by the Mortgage
Lender but without regard to whether the related Mortgage Loan Document has
been repaid, defeased or otherwise terminated, unless otherwise consented to in
writing by Lender.

 

42

 

Section
4.25.          NO CONTRACTUAL OBLIGATIONS

 

Other than the Loan
Documents, the Borrower Partnership Agreement and the Mortgage Borrower
Partnership Agreement, as of the date of this Agreement, Borrower is not
subject to any Contractual Obligations and has not entered into any agreement,
instrument or undertaking by which it or its assets are bound, or has incurred
any indebtedness (other than the Loan), and prior to the date of this
Agreement, neither Borrower nor any of its Subsidiaries has entered into any
Contractual Obligation, or any agreement, instrument or undertaking by which it
or its assets are bound or incurred any indebtedness (other than the Loan or
the Mortgage Loan (as applicable)) except for such liabilities, which are
immaterial in the aggregate, that are incident to Borrower’s activities as a
member of the Mortgage Borrower or that are being satisfied in connection with
the funding of the Loan.

 

Section
4.26.          PLEDGED SECURITIES

 

There are no Liens on the
Pledged Securities (other than the Liens created by the Loan Documents).

 

Section 4.27.          TAXES

 

Mortgage Borrower,
Borrower, Borrower Principal and Affiliated Lessee have filed all federal,
state, county, municipal, and city income, personal property and other tax
returns required to have been filed by them and paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them.  Neither
Borrower, Mortgage Borrower, Borrower Principal nor Affiliated Lessee knows of
any basis for any additional assessment in respect of any such taxes and related
liabilities for prior years.

 

Section 4.28.          SURVIVAL; MISCELLANEOUS

 

Borrower agrees that,
unless expressly provided otherwise, all of the representations and warranties
of Borrower and of Borrower Principal set forth in this Agreement and in the
other Loan Documents shall survive for so long as any portion of the Debt
remains owing to Lender.  All
representations, warranties, covenants and agreements made in this Agreement or
in the other Loan Documents by Borrower shall be deemed to have been relied upon
by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.

 

ARTICLE 5

BORROWER COVENANTS

 

From the date hereof and
until repayment of the Debt in full and performance in full of all obligations
of Borrower under the Loan Documents or the earlier release of the Lien of the
Pledge Agreement (and all related obligations) in accordance with the terms of
this Agreement and the other Loan Documents, Borrower Principal (as to
Sections 5.11 and 5.33 only) and Borrower each hereby covenants and agrees
with Lender that:

 

43

 

Section 5.1.            EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS

 

(a)           Borrower and Mortgage Borrower shall
do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its existence, rights, licenses, permits and franchises and
comply with all Legal Requirements applicable to it, and each Property.  Borrower hereby covenants and agrees not to
commit, permit or suffer to exist any act or omission affording any Governmental
Authority the right of forfeiture as against the Collateral, any Property or
any part thereof or any monies paid in performance of Borrower’s obligations
under any of the Loan Documents. 
Borrower shall at all times cause Mortgage Borrower to maintain,
preserve and protect all franchises and trade names used by it, Affiliated
Lessee and any Affiliated Manager in connection with the operation of each
Property.  To the extent anything this
Article 5 or any other section of this Agreement requires Borrower to cause
Mortgage Borrower to take any action, such requirement shall require Borrower
to act solely in its capacity as an equity owner of Mortgage Borrower and
Mortgage Borrower SPE.

 

(b)           After prior written notice to Lender,
Borrower, at its own expense, may cause Mortgage Borrower to contest by
appropriate legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the Legal Requirements affecting any Property, provided
that (i) no Default or Event of Default has occurred and is continuing; (ii)
such proceeding shall be permitted under and be conducted in accordance with
the provisions of any other instrument to which Borrower, Mortgage Borrower or
the applicable Property is subject and shall not constitute a default thereunder;
(iii) neither such Property, any part thereof or interest therein, any of the
tenants or occupants thereof, including, but not limited to the applicable
Operating Lessee and Manager, nor Mortgage Borrower, nor Borrower shall be
affected in any material adverse way as a result of such proceeding; (iv)
non-compliance with the Legal Requirements shall not impose civil or criminal
liability on Borrower, Mortgage Borrower or Lender; (v) Borrower shall have
furnished, or shall have caused Mortgage Borrower to furnish, the security as
may be required in the proceeding or by Lender to ensure compliance by Borrower
and Mortgage Borrower with the Legal Requirements; and (vi) Borrower shall have
furnished, or shall have caused Mortgage Borrower to furnish, to Lender all
other items reasonably requested by Lender.

 

Section 5.2.            MAINTENANCE AND USE OF PROPERTY

 

Borrower shall cause
Mortgage Borrower to maintain each Property in a good and safe condition and
repair. The Improvements and the Personal Property shall not be removed,
demolished or other than in accordance with the provisions of
Section 5.21, materially altered (except for normal replacement of the
Personal Property) without the prior written consent of Lender.  If under applicable zoning provisions the use
of all or any portion of any Property is or shall become a nonconforming use,
Borrower will not cause or permit the nonconforming use to be discontinued or
the nonconforming Improvement to be abandoned without the express written
consent of Lender, such consent not to be unreasonably withheld.

 

Section 5.3.            WASTE

 

Borrower shall not commit
or suffer, and shall not cause Mortgage Borrower to commit or suffer, any waste
of any Property or make any change in the use of any Property which will in

 

44

 

any way materially increase the risk of fire or other
hazard arising out of the operation of such Property, or take any action that
might invalidate or give cause for cancellation of any Policy, or do or permit
to be done thereon anything that may in any way impair the value of any
Property or the security for the Loan. 
Borrower will not, without the prior written consent of Lender, permit
any drilling or exploration for or extraction, removal, or production of any
minerals from the surface or the subsurface of any Property, regardless of the
depth thereof or the method of mining or extraction thereof.

 

Section 5.4.            TAXES AND OTHER CHARGES

 

(a)           Borrower shall cause Mortgage
Borrower to pay all Taxes and Other Charges now or hereafter levied or assessed
or imposed against any Property or any part thereof as the same become due and
payable; provided, however, Borrower’s obligation to cause Mortgage Borrower to
directly pay (or cause to be paid) Taxes shall be suspended for so long as
Mortgage Borrower complies with the terms and provisions of Section 9.6 of
the Mortgage Loan Agreement.  Borrower
shall cause Mortgage Borrower to furnish to Lender receipts for the payment of the
Taxes and the Other Charges prior to the date the same shall become delinquent
(provided, however, that Borrower is not required to cause Mortgage Borrower to
furnish such receipts for payment of Taxes in the event that such Taxes have
been paid by Mortgage Lender pursuant to Section 9.6 of the Mortgage Loan
Agreement).  Borrower shall cause
Mortgage Borrower to not suffer and shall promptly cause Mortgage Borrower to
pay or transfer to bond and in either instance discharge (or fully and
unconditionally release) any Lien or charge whatsoever which may be or become a
Lien or charge against any Property, and shall cause Mortgage Borrower to
promptly pay for (or cause to be paid for) all utility services provided to any
Property.

 

(b)           After prior written notice to Lender,
Borrower, at its own expense, may permit Mortgage Borrower to contest by
appropriate legal proceeding, promptly initiated and conducted in good faith
and with due diligence, the amount or validity or application in whole or in
part of any Taxes or Other Charges, or any involuntary Lien or other charge,
provided that (i) no Default or Event of Default has occurred and remains
uncured; (ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower or
Mortgage Borrower is subject and shall not constitute a default thereunder and
such proceeding shall be conducted in accordance with all applicable Legal
Requirements; (iii) neither the applicable Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall cause Mortgage Borrower to promptly upon
final determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
contested Taxes or Other Charges from the applicable Property; and (vi)
Mortgage Borrower shall have furnished Mortgage Lender with such security as
may be required in the proceeding, or shall have delivered to Mortgage Lender
such reserve deposits or indemnification in lieu thereof as may be reasonably
requested by Mortgage Lender, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon (unless Mortgage
Borrower has paid all of the Taxes or Other Charges under protest).

 

45

 

Section 5.5.            LITIGATION

 

Borrower shall give
prompt written notice to Lender of any litigation or governmental proceedings
pending or threatened in writing against Borrower, Borrower Principal, Mortgage
Borrower or Affiliated Lessee which might materially adversely affect
Borrower’s, Mortgage Borrower’s, Borrower Principal’s or Affiliated Lessee’s
condition (financial or otherwise) or business or any Property or the
Collateral.

 

Section 5.6.            ACCESS TO PROPERTY

 

Borrower shall cause
Mortgage Borrower to permit agents, representatives and employees of Lender to
inspect any Property or any part thereof at reasonable hours upon reasonable
advance notice.

 

Section 5.7.            NOTICE OF DEFAULT

 

Borrower shall promptly
advise Lender of any material adverse change in the condition (financial or
otherwise) of Borrower, Mortgage Borrower, Borrower Principal, Affiliated Lessee
or any Property or of the occurrence of any Default or Event of Default of
which Borrower has knowledge.

 

Section 5.8.            COOPERATE IN LEGAL PROCEEDINGS

 

Borrower shall at
Borrower’s expense cooperate fully with Lender with respect to any proceedings
before any court, board or other Governmental Authority which may in any way
affect the rights of Lender hereunder or any rights obtained by Lender under
any of the other Loan Documents and, in connection therewith, permit Lender, at
its election, to participate in any such proceedings.

 

Section 5.9.            PERFORMANCE BY BORROWER

 

Borrower shall in a
timely manner observe, perform and fulfill each and every covenant, term and
provision to be observed and performed by Borrower under this Agreement and the
other Loan Documents and any other agreement or instrument affecting or
pertaining to the Collateral and any amendments, modifications or changes
thereto.

 

Section 5.10.          AWARDS; INSURANCE PROCEEDS

 

Borrower shall, and shall
cause Mortgage Borrower and Affiliated Lessee to, cooperate with Lender in
obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully
or equitably payable in connection with any Property, and Lender shall be
reimbursed for any reasonable out-of-pocket expenses incurred in connection
therewith (including reasonable, actual attorneys’ fees and disbursements, and
the payment by Borrower of the expense of an appraisal on behalf of Lender in
case of a Casualty or Condemnation materially affecting any Property or any
material part thereof) out of such Awards or Insurance Proceeds.

 

46

 

Section 5.11.          FINANCIAL REPORTING

 

(a)           Borrower and Borrower Principal
shall, and shall cause Mortgage Borrower to, keep adequate books and records of
account in accordance with GAAP, or in accordance with other methods acceptable
to Lender in its sole discretion, consistently applied and shall furnish or
cause to be furnished to Lender:

 

(i)            quarterly and annual certified rent
rolls signed and dated by Borrower and Mortgage Borrower, detailing the names
of all Tenants under Major Leases, the portion of the Improvements (in terms of
square footage) occupied by each such Tenant, the base rent, additional rent
and any other charges payable under each such Major Lease (including annual
store sales required to be reported by Tenant under any Lease), and the term of
each such Major Lease, including the commencement and expiration dates and any
tenant extension, expansion or renewal options, the extent to which any Tenant
is in default under any such Major Lease, and any other information as is
reasonably required by Lender, within forty-five (45) days after the end of
each fiscal quarter or ninety (90) days after the close of each fiscal year of
Borrower, as applicable;

 

(ii)           quarterly and annual operating
statements of each Property, prepared by Borrower or, if applicable, by Manager
in form reasonably acceptable to Lender and certified by Borrower and Mortgage
Borrower in the form required by Lender, detailing the revenues received, the
expenses incurred and the net operating income before and after debt service
(principal and interest) and major capital improvements for the period of
calculation and containing appropriate year-to-date information, within
forty-five (45) days after the end of each fiscal quarter or ninety (90) days
after the close of each fiscal year of Borrower, as applicable;

 

(iii)          quarterly and annual balance sheets,
profit and loss statements, statements of cash flows, and statements of change
in financial position of Borrower and Borrower Principal in the form required
by Lender (with the annual financial statements prepared and audited by an
Acceptable Accountant), together with a certificate by an authorized officer of
the general partner of Borrower Principal certifying as to Borrower Principal’s
then Consolidated Tangible Net Worth (which certificate shall be accompanied by
a description of the computation of such Consolidated Tangible Net Worth
reasonably acceptable to Lender), all within forty-five (45) days after the end
of each fiscal quarter or ninety (90) days after the close of each fiscal year
of Borrower and Borrower Principal, as applicable, as the case may be; and

 

(iv)          an Annual Budget in form reasonably
acceptable to Lender with respect to the operations of each Property, not later
than the later of (i) (5) Business Days after Borrower’s or any
Affiliate’s receipt thereof and (ii) thirty (30) days or in the instance
of each Marriott Managed Property (as defined in the Mortgage Loan Agreement)
fifteen (15) days prior to the commencement of each fiscal year of Borrower,
but in no event later than February 15th of any calendar
year.  In the event that Lender
reasonably objects to a proposed Annual Budget submitted by Borrower, Lender shall
advise Borrower of such objections within fifteen (15) days after receipt
thereof (and deliver to Borrower a reasonably detailed description of such
objections) and Borrower shall promptly revise

 

47

 

such Annual Budget and
resubmit the same to Lender.  Lender
shall advise Borrower of any reasonable objections to such revised Annual
Budget within ten (10) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Borrower shall promptly
revise the same in accordance with the process described in this subsection
until Lender approves such Annual Budget. 
In the event Lender shall fail to respond in writing to any proposed
Annual Budget or revised Annual Budget within the above-stated time period,
Lender shall be deemed to have approved the same, provided that any proposed or
revised Annual Budget submitted to Lender pursuant to the terms hereof shall
state in bold face type, 16” font and all capital letters on the cover letter
accompanying each such (A) proposed Annual Budget “ATTACHED IS A PROPOSED
ANNUAL BUDGET FOR THE BELOW REFERENCED PROPERTY(IES), YOUR FAILURE TO RESPOND
IN WRITING TO THE UNDERSIGNED REGARDING THE SAME WITHIN FIFTEEN (15) DAYS OF
THE DATE OF YOUR RECEIPT OF SAID PROPOSED ANNUAL BUDGET, SHALL BE DEEMED TO
CONSTITUTE YOUR APPROVAL OF THE SAME” and (B) revised Annual Budget “ATTACHED
IS A REVISED ANNUAL BUDGET FOR THE BELOW REFERENCED PROPERTY(IES), YOUR FAILURE
TO RESPOND IN WRITING TO THE UNDERSIGNED REGARDING THE SAME WITHIN FIFTEEN (15)
DAYS OF THE DATE OF YOUR RECEIPT OF SAID REVISED ANNUAL BUDGET SHALL BE DEEMED
TO CONSTITUTE YOUR APPROVAL OF THE SAME”. 
Until such time that Lender approves a proposed or revised Annual
Budget, which approval shall not be unreasonably withheld, conditioned or
delayed, or is deemed to have approved the same, the most recent Annual Budget
with respect to such Property shall apply; provided that, such approved Annual
Budget shall be adjusted to reflect actual increases in Taxes, Insurance
Premiums, utilities expenses and other expenses under the applicable Management
Agreement, if any.

 

(b)           Upon request from Lender, Borrower
shall promptly furnish to Lender:

 

(i)            a property management report
regarding operating and financial performance for any Property, in reasonable
detail and certified by Borrower under penalty of perjury to be true and
complete, but no more frequently than quarterly;

 

(ii)           to the extent applicable, an
accounting of all security deposits held in connection with any Lease of any
part of any Property, including the name and identification number of the
accounts in which such security deposits are held, the name and address of the
financial institutions in which such security deposits are held and the name of
the Person to contact at such financial institution, along with any authority
or release necessary for Lender to obtain information regarding such accounts
directly from such financial institutions; and

 

(iii)          to the extent applicable, a report of
all letters of credit provided by any Tenant in connection with any Lease of
any part of any Property, including the account numbers of such letters of
credit, the names and addresses of the financial institutions that issued such
letters of credit and the names of the Persons to contact at such financial
institutions, along with any authority or release necessary for Lender to
obtain information regarding such letters of credit directly from such
financial institutions.

 

48

 

(c)           Intentionally Omitted.

 

(d)           Borrower and Borrower Principal shall
furnish Lender (or cause Mortgage Borrower to furnish Lender) with such other
additional financial or management information (including state and federal tax
returns) as may, from time to time, be reasonably required by Lender in form
and substance satisfactory to Lender (including, without limitation, any
financial reports required to be delivered by any Tenant or any guarantor of
any Lease pursuant to the terms of such Lease), and shall furnish to Lender and
its agents convenient facilities for the examination and audit of any such
books and records.

 

(e)           All items requiring the certification
of Borrower or Mortgage Borrower shall, except where Borrower is an individual,
require a certificate executed by the general partner, managing member or chief
executive officer of Borrower or Mortgage Borrower, as applicable (and the same
rules shall apply to any sole shareholder, general partner or managing member
which is not an individual).

 

Section 5.12.          ESTOPPEL STATEMENT

 

(a)           After request by Lender, Borrower
shall within ten (10) Business Days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the rate of interest on the Note, (iii) the
unpaid principal amount of the Note, (iv) the date installments of interest
and/or principal were last paid, (v) any offsets or defenses to the payment of
the Debt, if any, and (vi) that the Note, this Agreement, the Pledge Agreement
and the other Loan Documents are valid, legal and binding obligations and have
not been modified or if modified, giving particulars of such modification.

 

(b)           Borrower shall use its best efforts
to deliver to Lender, promptly upon request, duly executed estoppel
certificates from (i) the applicable lessor under either Ground Lease pursuant
to the applicable terms and conditions of the applicable ground lease estoppel
and agreement executed in connection herewith, and (ii) any one or more Tenants
as required by Lender attesting to such facts regarding the related Lease as
Lender may require, including, but not limited to attestations that each Lease
covered thereby is in full force and effect with no defaults thereunder on the
part of any party, that none of the Rents have been paid more than one month in
advance, except as security, and that the Tenant claims no defense or offset
against the full and timely performance of its obligations under the Lease.

 

Section 5.13.          OPERATING LEASE; LEASING MATTERS

 

(a)           Borrower shall (or shall cause
Mortgage Borrower to) (i) promptly perform and observe all of the covenants
required to be performed and observed by it under the Operating Leases and do
all things necessary to preserve and to keep unimpaired its material rights
thereunder; (ii) promptly notify Lender of any material default under any
Operating Lease of which it is aware; (iii) promptly deliver to Lender a copy
of any notice of default or other material notice under any Operating Lease
delivered to any Operating Lessee by Mortgage Borrower; (iv) promptly give
notice to Lender of any notice or information that Mortgage Borrower receives
which indicates that an Operating Lessee is terminating its Operating Lease or
that any Operating Lessee is otherwise discontinuing its operation of the
applicable  Property;

 

49

 

and (v) promptly
enforce the performance and observance of all of the material covenants
required to be performed and observed by the Operating Lessee under the
applicable Operating Lease.

 

(b)           If at any time after the occurrence
and during the continuance of an Event of Default Lender realizes on the
Collateral, Borrower shall (A) in the instance of an Operating Lease
between Mortgage Borrower and an Affiliated Lessee, cause Mortgage Borrower to
cooperate and not in any way hinder, delay 
or otherwise interfere with the termination of the applicable Operating
Lease in accordance with the terms of the applicable Subordination and
Attornment Agreement or (b) in the instance of an Operating Lease with a
Non-Affiliated Lessee, cause Mortgage Borrower to terminate such Operating
Lease to the extent permitted under the terms of such Operating Lease under and
in accordance with terms of the applicable Subordination, Non-Disturbance and
Attornment Agreement.

 

(c)           Borrower shall not, without the prior
written consent of Lender (which consent shall not be unreasonably withheld,
conditioned or delayed) permit or cause Mortgage Borrower to: (i) surrender,
terminate or cancel any Operating Lease or otherwise replace any Operating
Lessee or enter into any other operating lease with respect to any Property;
(ii) reduce or consent to the reduction of the term of any Operating Lease; or
(iii) enter into, renew, amend, modify, waive any provisions of , reduce Rents
under, or shorten the term of any Operating Lease.

 

(d)           Borrower shall (or shall cause
Mortgage Borrower to) ensure that any replacement Operating Lessee shall in all
events be a Qualified Lessee, and shall be a party to an Operating Lease
approved in writing by Lender, in its reasonable discretion and shall be
approved by Mortgage Lender in accordance with the Mortgage Loan Documents. In
addition, any new or replacement Operating Lessee (i) Affiliated with Borrower,
shall execute a form of Subordination and Attornment Agreement in form
substantially similar to the form delivered in connection with the closing of
the Loan and (ii) not Affiliated with Borrower, shall execute a of
Subordination and Attornment Agreement in form reasonably acceptable to Lender.

 

(e)           Other than any new or replacement
Operating Lease, Borrower may permit Mortgage Borrower to enter into a proposed
Lease (including the renewal or extension of an existing Lease (a “Renewal
Lease”)) (or cause or permit any Operating Lessee to enter into a
proposed Lease or Renewal Lease) without the prior written consent of Lender,
provided such proposed Lease or Renewal Lease (i) provides for rental rates and
terms comparable to existing local market rates and terms (taking into account
the type and quality of the tenant) as of the date such Lease is executed by
Mortgage Borrower or Operating Lessee, as the case may be (unless, in the case
of a Renewal Lease, the rent payable during such renewal, or a formula or other
method to compute such rent, is provided for or contemplated in the original
Lease), (ii) is an arm’s-length transaction with a bona fide, independent third
party tenant, (iii) does not have a materially adverse effect on the value
of the applicable Property taken as a whole, (iv) does not contain any
option, offer, right of first refusal, or other similar right to acquire all or
any portion of the applicable Property, (v) has a base term of less than fifteen
(15) years including options to renew, (vi) as to Major Leases, has no
rent, credits, free rents or concessions granted thereunder, and (vii) as
to Major Leases, is written on customary form of lease reasonably acceptable to
Lender.  All proposed Leases which do
not satisfy the requirements set forth in this subsection shall be subject to
the prior approval of Lender and its counsel, at Borrower’s expense.

 

50

 

Borrower shall
promptly deliver to Lender copies of all Major Leases and to the extent
requested by Lender other Leases which are entered into pursuant to this
subsection together with Borrower’s certification that such Leases satisfy all
of the conditions of this Section.

 

(f)            Without limiting any other provision
contained herein, Borrower (i) shall (or shall cause Mortgage Borrower or the
applicable Operating Lessee to) observe and perform all the obligations imposed
upon the landlord under the Leases and shall not do or permit to be done
anything to impair the value of any of the Leases as security for the Debt;
(ii) shall cause Mortgage Borrower to promptly send copies to Lender of all
notices of default which Mortgage Borrower shall send or receive under any
Major Lease (and any other Lease to pursuant to any request made by Lender);
(iii) shall enforce (or cause or permit Mortgage Borrower or the applicable
Operating Lessee to enforce) all of the material terms, covenants and
conditions contained in the Leases upon the part of the tenant thereunder to be
observed or performed; (iv) shall not collect (or cause or permit Mortgage
Borrower or any Operating Lessee to collect) any of the Rents more than one (1)
month in advance (except security deposits shall not be deemed Rents collected
in advance); (v) shall not execute (or cause or permit Mortgage Borrower or any
Operating Lessee to execute) any other assignment of the landlord’s interest in
any of the Leases or the Rents; and (vi) shall not consent (or cause or permit
Mortgage Borrower or any Operating Lessee to consent) to any assignment of or
subletting under any Leases not in accordance with their terms, without the
prior written consent of Lender.

 

(g)           Notwithstanding any other provision
contained herein, other than with respect to a Major Lease (including, but not
limited to, any Operating Lease) Borrower may, without the prior written
consent of Lender, permit Mortgage Borrower to amend, modify or waive the
provisions of any Lease or terminate, reduce Rents under, accept a surrender of
space under, or shorten the term of, any Lease (including any guaranty, letter
of credit or other credit support with respect thereto) (or cause or permit
Mortgage Borrower or any Operating Lessee to do any of the foregoing) provided
that such action (taking into account, in the case of a termination, reduction
in rent, surrender of space or shortening of term, the planned alternative use
of the affected space) does not have a materially adverse effect on the value
of the applicable Property taken as a whole, and provided that such Lease, as
amended, modified or waived, is otherwise in compliance with the requirements
of this Agreement and any subordination agreement binding upon Lender with
respect to such Lease.  A termination of
a Lease (other than an Operating Lease) with a tenant who is in default beyond
applicable notice and grace periods shall not be considered an action which has
a materially adverse effect on the value of the applicable Property taken as a
whole.  Any amendment, modification,
waiver, termination, rent reduction, space surrender or term shortening which
does not satisfy the requirements set forth in this subsection shall be subject
to the prior approval of Lender and its counsel (not to be unreasonably
withheld), at Borrower’s expense. 
Borrower shall promptly deliver to Lender copies of amendments,
modifications and waivers for Major Leases (and any other Lease pursuant to any
request made by Lender) which are entered into pursuant to this subsection
together with Borrower’s certification that all conditions of this subsection
have been satisfied.

 

(h)           Notwithstanding anything contained
herein to the contrary, Borrower shall not permit Mortgage Borrower, without
the prior written consent of Lender to enter into, renew, extend, amend,
modify, waive any provisions of, terminate, reduce Rents under, accept a
surrender of space under, or shorten the term of any Major Lease (or in the
instance of a Major

 

51

 

Lease other than
an Operating Lease, cause or permit the applicable Operating Lessee to do any
of the foregoing).

 

(i)            Notwithstanding anything contained
herein to the contrary, Borrower shall not, without the prior written consent
of Lender, cause Mortgage Borrower to enter into, renew, extend, amend, modify,
waive any provisions of, terminate, reduce Rents under, accept a surrender of
space under, or shorten the term of any Lease during a Excess Cash Flow Sweep
Period (as defined in the Mortgage Loan Agreement) (or cause or permit the
Mortgage Borrower to cause or permit the applicable Operating Lessee to do any
of the foregoing).

 

Section 5.14.          PROPERTY MANAGEMENT

 

(a)           Borrower shall cause Mortgage
Borrower or the applicable Operating Lessee to (i) promptly perform and observe
all of the covenants required to be performed and observed by it under the
Management Agreement and do all things necessary to preserve and to keep
unimpaired its material rights thereunder; (ii) promptly notify Lender of any
default under the Management Agreement of which it is aware; (iii) promptly
deliver to Lender a copy of any notice of default or other material notice
received by Mortgage Borrower under the Management Agreement; (iv) promptly
give notice to Lender of any notice or information that Mortgage Borrower
receives which indicates that Manager is terminating the Management Agreement
or that Manager is otherwise discontinuing its management of the applicable
Property; and (v) promptly enforce the performance and observance of all of the
covenants required to be performed and observed by Manager under the Management
Agreement.

 

(b)           Subject to the rights of the Mortgage
Lender and the applicable provisions of the Mortgage Loan Documents, if at any
time, an event shall occur (i) under any Management Agreement which constitutes
a material monetary default by Manager as determined by Lender or a material
non-monetary default by Manager as determined by Lender which default
materially and adversely affects the value, use or operation of the Property or
the Borrower’s obligation to pay the Debt and permits Mortgage Borrower or
Operating Lessee to terminate the applicable Manager or (ii) under any
Subordination of Management Agreement/Estoppel permits Lender, Mortgage
Borrower or Operating Lessee to terminate the applicable Manager, Borrower
shall, at the request of Lender, cause Mortgage Borrower to promptly terminate
(or cause Operating Lessee to terminate) the applicable Management Agreement in
accordance with the terms (including the minimum time periods for termination)
of such Management Agreement and/or Subordination of Management
Agreement/Estoppel, and replace Manager with a Qualified Manager approved by
Lender on terms and conditions satisfactory to Lender, it being understood and
agreed that the management fee for such replacement manager shall not exceed
then prevailing market rates.  Without
limiting the foregoing, in the event any Subordination of Management
Agreement/Estoppel shall permit Lender to terminate the Management Agreement
directly, upon Lender’s election to so terminate any such Management Agreement,
Borrower shall reasonably cooperate and not in any way interfere with any act
by Lender’s to so terminate such Management Agreement.

 

(c)           Borrower shall not cause or permit
Mortgage Borrower to, without the prior written consent of Lender (which
consent shall not be unreasonably withheld, conditioned or delayed): (i)
surrender, terminate or cancel the Management Agreement or otherwise replace
any

 

52

 

Manager or enter
into any other management agreement with respect to any Property (or cause or
permit the applicable Operating Lessee to do any of the foregoing); (ii) reduce
or consent to the reduction of the term of any Management Agreement (or cause
or permit the applicable Operating Lessee to do any of the foregoing); (iii)
increase or consent to the increase of the amount of any charges under any
Management Agreement (or cause or permit the applicable Operating Lessee to do
any of the foregoing); or (iv) otherwise modify, change, supplement, alter or
amend, or waive or release any of its rights and remedies under, any Management
Agreement in any material respect (or cause or permit the applicable Operating
Lessee to do any of the foregoing).

 

(d)           Borrower shall (or shall cause
Mortgage Borrower to) ensure that any replacement Manager shall in all events
be a Qualified Manager, and shall be a party to a Management Agreement approved
in writing by Lender, in its reasonable discretion.  Any new or replacement manager shall execute a form of
Subordination of Management Agreement/Estoppel as may be approved by Lender in
its reasonable discretion.

 

Section 5.15.          LIENS

 

Borrower shall not permit
Mortgage Borrower, without the prior written consent of Lender, to create,
incur, assume or suffer to exist any Lien on any portion of any Property or
permit any such action to be taken, except Permitted Encumbrances.  Borrower shall not incur, assume or suffer
to exist any Lien on any portion of the Collateral or permit any such action to
be taken.

 

Section 5.16.          DEBT CANCELLATION

 

Borrower shall not cancel
or otherwise forgive or release any claim or debt owed to Borrower by any
Person, except for adequate consideration and in the ordinary course of
Borrower’s business.  Borrower shall not
permit Mortgage Borrower to cancel or otherwise forgive or release any claim or
debt (other than termination of Leases in accordance hereunder) owed to
Mortgage Borrower by any person, except for adequate consideration and in the
ordinary course of Mortgage Borrower’s business.

 

Section 5.17.          ZONING

 

Borrower shall not permit
Mortgage Borrower to initiate or consent to any zoning reclassification of any
portion of any Property or seek any variance under any existing zoning
ordinance or use or permit the use of any portion of any Property in any manner
that could result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the
prior written consent of Lender.

 

Section 5.18.          ERISA

 

(a)           Borrower shall not engage in any
transaction which would cause any obligation, or action taken or to be taken,
hereunder (or the exercise by Lender of any of its rights under the Note, this
Agreement or the other Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under ERISA.

 

53

 

(b)           Borrower further covenants and agrees
to deliver to Lender such certifications or other evidence from time to time
throughout the term of the Loan, as requested by Lender in its sole discretion,
that (i) Borrower is not and does not maintain an “employee benefit plan” as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or
a “governmental plan” within the meaning of Section 3(3) of ERISA; (ii)
Borrower is not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more of the
following circumstances is true:

 

(A)          Equity interests in Borrower are
publicly offered securities, within the meaning of 29 C.F.R. §2510.3-101(b)(2);

 

(B)           Less than twenty-five percent (25%)
of each outstanding class of equity interests in Borrower are held by “benefit
plan investors” within the meaning of 29 C.F.R. §2510.3-101(f)(2); or

 

(C)           Borrower qualifies as an “operating
company” or a “real estate operating company” within the meaning of 29 C.F.R.
§2510.3-101(c) or (e).

 

Section 5.19.          NO JOINT ASSESSMENT

 

Borrower shall not permit
Mortgage Borrower to suffer, permit or initiate the joint assessment of any
Property with (a) any other real property constituting a tax lot separate from
such Property, or (b) any portion of such Property which may be deemed to
constitute personal property, or any other procedure whereby the Lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to such Property.

 

Section 5.20.          RECIPROCAL EASEMENT AGREEMENTS

 

Borrower shall not permit
Mortgage Borrower to enter into, terminate or modify any REA without Lender’s
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed.  Borrower shall
cause Mortgage Borrower to enforce, comply with, and cause each of the parties
to each REA to comply with all of the material economic terms and conditions
contained in each REA.

 

Section 5.21.          ALTERATIONS

 

Lender’s prior approval
(which shall not be unreasonably withheld) shall be required in connection with
any alterations to any Improvements, exclusive of alterations to tenant spaces
required under any Lease, (a) that may have a material adverse effect on any
Property, (b) that are structural in nature or (c) that, together with any
other alterations undertaken at the same time (including any related
alterations, improvements or replacements), are reasonably anticipated to have
a cost in excess of the Alteration Threshold. 
If the total unpaid amounts incurred and to be incurred with respect to
such alterations to the Improvements shall at any time exceed the Alteration
Threshold, Borrower shall promptly deliver to Lender as security for the
payment of such amounts and as additional security for Borrower’s obligations
under the Loan Documents any of the following: (i) cash, (ii) direct non-callable
obligations of the United States of America or other obligations which are
“government securities” within the meaning of Section 2(a)(16) of the
Investment Company Act of 1940, to the extent acceptable to the applicable
Rating Agencies,

 

54

 

(iii) other securities
acceptable to Lender and the Rating Agencies, (iv) Letter of Credit acceptable
to Lender and the Rating Agencies or (v) a completion bond, provided that such
completion bond is acceptable to the Lender and the Rating Agencies.  Such security shall be in an amount equal to
the excess of the total unpaid amounts incurred and to be incurred with respect
to such alterations to the Improvements over the Alteration Threshold.

 

 

Section 5.22.          FRANCHISE AGREEMENTS.

 

(a)           Borrower shall ensure that each
Property (other than any Property for which with Lender’s consent there is no
Franchise Agreement in place) shall be operated under the terms and conditions
of the applicable Franchise Agreement. 
Borrower shall cause Mortgage Borrower or the applicable Operating
Lessee to (i) pay all sums required to be paid by the franchisee under each
Franchise Agreement, (ii) diligently perform, observe and enforce all of the
terms, covenants and conditions of each Franchise Agreement on the part of the
franchisee thereunder to be performed, observed and enforced to the end that
all things shall be done which are necessary to keep unimpaired the rights of
said franchisee under each Franchise Agreement, (iii) promptly notify Lender of
the giving of any notice to Mortgage Borrower and/or Operating Lessee of any
default by the franchisee in the performance or observance of any of the terms,
covenants or conditions of any Franchise Agreement on the part of the
franchisee thereunder to be performed and observed and deliver to Lender a true
copy of each such notice, and (iv) promptly deliver to Lender a copy of each
financial statement, business plan, capital expenditure plan, notice of default
under the Franchise Agreement, report regarding operations of the related
Property, estimates of any monetary nature and any other items reasonably
requested by Lender, in each case received by Borrower, Mortgage Borrower or
Affiliated Lessee under any Franchise Agreement.

 

(b)           Subject to the rights of the Mortgage
Lender, Borrower shall not cause or permit Mortgage Borrower or any Operating
Lessee to, without the prior consent of the Lender, surrender any Franchise
Agreement or terminate or cancel any Franchise Agreement or modify, change, supplement,
alter or amend any Franchise Agreement, in any respect, either orally or in
writing.

 

(c)           If any franchisee shall default in
the performance or observance of any material term, covenant or condition of
any Franchise Agreement on the part of the franchisee thereunder to be
performed or observed, then, without limiting the generality of the other
provisions of this Agreement, and without waiving or releasing Borrower from
any of its obligations hereunder and subject to the rights of the Mortgage Lender,
Lender shall have the right, but shall be under no obligation, to pay any sums
and to perform any act or take any action as may be appropriate to cause all
the terms, covenants and conditions of such Franchise Agreement on the part of
the franchisee to be performed or observed to be promptly performed or observed
on behalf of Mortgage Borrower, to the end that the rights of said franchisee
(and/or Mortgage Borrower and/or Operating Lessee) in, to and under such
Franchise Agreement shall be kept unimpaired and free from default.  Any such amounts so advanced by Lender
together with interest thereon from the date expended by Lender at the Default
Rate shall be part of the Debt, and Borrower shall immediately repay such
amounts to Lender upon demand.  Pursuant
to the terms of the applicable Subordination Non-Disturbance Attornment
Agreement, Subordination and Attornment Agreement and/or Subordination of
Management Agreement/Estoppel, Lender and

 

55

 

any person
designated by Lender shall have, and are hereby granted, the right to enter
upon the applicable Property at any time and from time to time for the purpose
of taking any such action.  If any
Franchisor shall deliver to Lender a copy of any notice sent to Mortgage
Borrower, Borrower and/or Operating Lessee of any default under any Franchise
Agreement, such notice shall constitute full protection to Lender for any
action taken or omitted to be taken by Lender in good faith, in reliance
thereon.

 

(d)           Subject to the rights of the Mortgage
Lender, Borrower shall cause the Mortgage Borrower or the applicable Operating
Lessee to exercise each individual option, if any, to extend or renew the term
of each Franchise Agreement upon demand by Lender made at any time within
ninety (90) days prior to the last day upon which any such option may be
exercised, and Borrower hereby expressly authorizes and appoints Lender as its
attorney-in-fact to exercise (or cause the applicable Operating Lessee to
exercise) any such option in the name of and upon behalf of Mortgage Borrower
should Borrower fail to cause the Mortgage Borrower to do so, which power of
attorney shall be irrevocable and shall be deemed to be coupled with an
interest.

 

(e)           Any sums expended by Lender pursuant
to this Section shall bear interest at the Default Rate from the date such cost
is incurred to the date of payment to Lender, shall be deemed to constitute a
portion of the Debt , shall be secured by the lien of the Pledge Agreement and
the other Loan Documents and shall be immediately due and payable upon demand
by Lender therefor.

 

(f)            Borrower shall (or shall cause
Mortgage Borrower to), promptly upon request of Lender, use its diligent best
efforts to obtain and deliver (or cause to be delivered) an estoppel
certificate from each Franchisor stating that (i) each applicable Franchise
Agreement is in full force and effect and has not been modified, amended or
assigned, (ii) neither such Franchisor nor the franchisee named thereunder is
in default under any of the terms, covenants or provisions of each applicable
Franchise Agreement and such Franchisor knows of no event which, but for the
passage of time or the giving of notice or both, would constitute an event of
default under each applicable Franchise Agreement, (iii) neither such
Franchisor nor the franchisee thereunder has commenced any action or given or
received any notice for the purpose of terminating any applicable Franchise
Agreement and (iv) all sums due and payable to such Franchisor under each applicable
Franchise Agreement have been paid in full.

 

(g)           Upon the termination of any Franchise
Agreement, Borrower shall (or shall cause Mortgage Borrower or Operating Lessee
to) promptly enter into a new Franchise Agreement with a replacement
Franchisor, which shall deliver a comfort or similar letter to and in favor of
Lender, all upon terms and conditions acceptable to Lender in its discretion.

 

Section 5.23.          GROUND LEASE

 

(a)           With respect to each Ground Lease,
Borrower shall cause Mortgage Borrower to (i) subject to Section 9.10, pay
all rents, additional rents and other sums required to be paid by Mortgage
Borrower, as tenant under and pursuant to the provisions of the Ground Lease,
(ii) diligently perform and observe all of the terms, covenants and conditions
of the Ground Lease on the part of Mortgage Borrower, as tenant thereunder,
(iii) promptly notify Lender of the giving of any notice by the landlord under
the Ground Lease to Mortgage Borrower of any default by

 

56

 

Mortgage Borrower,
as tenant thereunder, and deliver to Lender a true copy of each such notice
within five (5) Business Days of receipt and (iv) promptly notify Lender of any
bankruptcy, reorganization or insolvency of the landlord under the Ground Lease
or of any notice thereof, and deliver to Lender a true copy of such notice
within five (5) Business Days of Mortgage Borrower’s receipt.  Mortgage Borrower shall not, without the
prior written consent of Lender, surrender the leasehold estate created by the
Ground Lease or terminate or cancel the Ground Lease or modify, change,
supplement, alter or amend the Ground Lease, either orally or in writing, and
if Mortgage Borrower shall default in the performance or observance of any
term, covenant or condition of the Ground Lease on the part of Mortgage
Borrower, as tenant thereunder, and shall fail to cure the same prior to the
expiration of any applicable cure period provided thereunder, Lender (subject
to the rights of Mortgage Lender) shall have the right, but shall be under no
obligation, to pay any sums and to perform any act or take any action as may be
appropriate to cause all of the terms, covenants and conditions of the Ground
Lease on the part of Mortgage Borrower to be performed or observed on behalf of
Mortgage Borrower, to the end that the rights of Mortgage Borrower in, to and
under the Ground Lease shall be kept unimpaired and free from default.  If the landlord under the Ground Lease shall
deliver to Lender a copy of any notice of default under the Ground Lease, such
notice shall constitute full protection to Lender for any action taken or
omitted to be taken by Lender, in good faith, in reliance thereon.  Mortgage Borrower shall exercise each
individual option, if any, to extend or renew the term of the Ground Lease upon
demand by Lender made at any time within ninety (90) days prior to the last day
upon which any such option may be exercised, and Mortgage Borrower hereby
expressly authorizes and appoints Lender its attorney-in-fact to exercise any
such option in the name of and upon behalf of Mortgage Borrower should Mortgage
Borrower fail to do so, which power of attorney shall be irrevocable and shall
be deemed to be coupled with an interest.

 

(b)           Other than as permitted by this Agreement,
notwithstanding anything contained in either Ground Lease to the contrary,
Borrower shall not cause or permit Mortgage Borrower to further sublet any
portion of applicable Property subject to such Ground Lease (other than as
permitted pursuant to the applicable terms and conditions hereof) without prior
written consent of Lender.  In addition,
(i) any such sublease shall not terminate or be terminable by the lessee
thereunder, including, but not limited to, in the event of any action for the
foreclosure of the Security Instrument (unless a judgment is obtained therein
against such sublessee); and (ii) in the event that the Ground Lease is
terminated as aforesaid, the sublessee under the sublease shall attorn to the
lessor under the Ground Lease or to the purchaser at the sale of the applicable
Property on such foreclosure, as the case may be.  In the event that any portion of the applicable Property shall be
sublet pursuant to the terms of this subsection, such sublease shall be deemed
to be included in the applicable Property.

 

Section 5.24.          INTEREST RATE CAP AGREEMENT

 

(a)           Prior to or contemporaneously with
the Closing Date, Borrower shall have obtained the Rate Cap, which shall
continue until the end of the Interest Period in which the Maturity Date of the
Loan shall occur and have a notional amount which shall not at any time be less
than the outstanding principal balance of the Loan.  The Rate Cap shall be maintained throughout the term of the Loan
with an Acceptable Counterparty.  If the
provider of the Rate Cap or any Replacement Rate Cap ceases to be an Acceptable
Counterparty, Borrower shall

 

57

 

obtain a
Replacement Rate Cap at Borrower’s sole cost and expense within ten (10) days
of receipt of notice from Lender or Borrower’s obtaining knowledge that the
provider is no longer an Acceptable Counterparty.

 

(b)           Borrower shall collaterally assign to
Lender pursuant to the Collateral Assignment of Interest Rate Cap Agreement all
of its right, title and interest to receive any and all payments under the Rate
Cap or any Replacement Rate Cap (and any related guarantee, if any) and shall
deliver to Lender counterparts of such Collateral Assignment of Interest Rate
Cap Agreement executed by the Borrower and by the Acceptable Counterparty and
notify the Acceptable Counterparty of such collateral assignment (either in
such Rate Cap or by separate instrument). 
At such time as the Loan is repaid in full, all of Lender’s right, title
and interest in the Rate Cap and any Replacement Rate Cap shall terminate and
Lender shall execute and deliver at Borrower’s sole cost and expense, such
documents as may be required to evidence Lender’s release of the Rate Cap and
any Replacement Rate Cap and to notify the Acceptable Counterparty of such
release.

 

(c)           Borrower shall comply with all of its
obligations under the terms and provisions of the Rate Cap and any Replacement
Rate Cap.  All amounts paid by the
Acceptable Counterparty under the Rate Cap to Borrower or Lender shall be
deposited immediately into an account designated by Lender.  Provided no Event of Default shall then
exist, to the extent any funds actually received in such account when combined
with funds actually received by and due Mezzanine Lender under this Agreement,
the other Loan Documents and the Intercreditor Agreement, exceed amounts then
due Lender under this Agreement and the other Loan Documents, such excess shall
be distributed to Borrower.  Borrower
shall take all actions reasonably requested by Lender to enforce Lender’s
rights under the Rate Cap and any Replacement Rate Cap in the event of a
default by the Acceptable Counterparty and shall not waive, amend or otherwise
modify any of its rights thereunder.

 

(d)           In the event that Borrower fails to purchase
and deliver to Lender the Rate Cap or any Replacement Rate Cap as and when
required hereunder, or fails to maintain such agreement in accordance with the
terms and provisions of this Agreement, Lender may purchase the Rate Cap or any
Replacement Rate Cap, as applicable, and the cost incurred by Lender in
purchasing the Rate Cap or any Replacement Rate Cap, as applicable, shall be
paid by Borrower to Lender with interest thereon at the Default Rate from the
date such cost was incurred by Lender until such cost is reimbursed by Borrower
to Lender.

 

(e)           In connection with the Rate Cap and
any Replacement Rate Cap, Borrower shall obtain and deliver to Lender an
opinion from counsel (which counsel may be in house counsel for the Acceptable
Counterparty) for the Acceptable Counterparty (upon which Lender and its
successors and assigns may rely) which shall provide, in relevant part, that:

 

(i)            the Acceptable Counterparty is duly
organized, validly existing, and in good standing under the laws of its jurisdiction
of incorporation and has the organizational power and authority to execute and
deliver, and to perform its obligations under, the Rate Cap or the Replacement
Rate Cap, as applicable;

 

58

 

(ii)           the execution and delivery of the
Rate Cap or the Replacement Rate Cap, as applicable, by the Acceptable
Counterparty, and any other agreement which the Acceptable Counterparty has
executed and delivered pursuant thereto, and the performance of its obligations
thereunder have been and remain duly authorized by all necessary action and do
not contravene any provision of its certificate of incorporation or by laws (or
equivalent organizational documents) or any law, regulation or contractual
restriction binding on or affecting it or its property;

 

(iii)          all consents, authorizations and
approvals required for the execution and delivery by the Acceptable
Counterparty of the Rate Cap or the Replacement Rate Cap, as applicable, and
any other agreement which the Acceptable Counterparty has executed and
delivered pursuant thereto, and the performance of its obligations thereunder
have been obtained and remain in full force and effect, all conditions thereof
have been duly complied with, and no other action by, and no notice to or
filing with any governmental authority or regulatory body is required for such
execution, delivery or performance; and

 

(iv)          the Rate Cap or the Replacement Cap,
as applicable, and any other agreement which the Acceptable Counterparty has
executed and delivered pursuant thereto, has been duly executed and delivered
by the Acceptable Counterparty and constitutes the legal, valid and binding
obligation of the Acceptable Counterparty, enforceable against the Acceptable
Counterparty in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally, and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

Section
5.25.          NOTICES

 

Borrower shall give
notice, or cause notice to be given, to Lender promptly upon the occurrence of:

 

(a)           any Event of Default, or a Default or
Event of Default under the Mortgage Loan Documents;

 

(b)           any material default or event of
default under any Contractual Obligation of Borrower, or, to the knowledge of
Borrower, Mortgage Borrower, or Borrower Principal that could reasonably be
expected to have a material adverse effect on Borrower, the ability of Borrower
to perform under the Loan Documents or the rights and remedies of Lender under
the Loan Documents;

 

(c)           any litigation or proceeding
affecting Borrower, or, to the knowledge of Borrower, affecting any of Mortgage
Borrower or Borrower Principal, in which the amount involved in each case is
$100,000.00 or more and not fully covered by insurance, or in which injunctive
or similar relief is sought; or

 

(d)           a change in the business, operations,
property or financial or other condition or prospects of Borrower, or, to the
knowledge of Borrower, Mortgage Borrower or Borrower Principal which could
reasonably be expected to have a material adverse effect on Borrower,

 

59

 

the ability of
Borrower to perform under the Loan Documents or the rights and remedies of
Lender under the Loan Documents.

 

Section 5.26.          CURING

 

Lender shall have the
right, but shall not have the obligation, to exercise Borrower’s rights under
the Mortgage Borrower Partnership Agreement (a) to cure a Default or Event of
Default under the Mortgage Loan, and (b) to satisfy any Liens, claims or
judgments against any Property (except for Liens permitted by the Mortgage Loan
Documents), in the case of either (a) or (b), unless Borrower or Mortgage
Borrower shall be diligently pursuing remedies to cure to Lender’s sole
satisfaction.  Borrower shall reimburse
Lender on demand for any and all costs incurred by Lender in connection with
curing any such Default or Event of Default under the Mortgage Loan or
satisfying any Liens, claims or judgments against any Property.

 

Section 5.27.          SPECIAL
DISTRIBUTIONS

 

On each date on which
amounts are required to be paid to Lender under any of the Loan Documents,
Borrower shall exercise its rights under the Mortgage Borrower Partnership Agreement
to cause Mortgage Borrower (to the extent of any and all available cash after
payment of all amounts due under or required to be paid pursuant to the
Mortgage Loan Documents) to make to Borrower a distribution in an aggregate
amount such that Lender shall receive the amount required to be paid to Lender
on such date, after consideration of all amounts  (a) to be paid to Lender under the Cash Management Agreement on
such date (and actually received by Lender on such date) and (b) any other
amounts actually received by Lender (and due Lender under the Intercreditor
Agreement) as of such date.  Nothing
contained herein shall in any way modify (or be deemed to modify) any other
obligation of Borrower hereunder, including, but not limited to any other payment
obligations of Borrower hereunder.

 

Section 5.28.          LIMITATION ON SECURITIES ISSUANCES

 

None of Borrower or any
of its subsidiaries shall issue any membership interests or other securities,
other than those that have been issued as of the Closing Date.

 

Section 5.29.          LIMITATIONS ON DISTRIBUTIONS

 

Following (a) the
occurrence and during the continuance of a monetary Event of Default, (b) the
occurrence and during the continuance of an Event of Default under Section
11.1(f) hereof or (c) the occurrence of any other Event of Default with respect
to which Lender has accelerated the Loan, Borrower shall not make any
distributions to its members.

 

Section 5.30.          OTHER LIMITATIONS

 

Prior to the payment in
full of the Debt, neither Borrower nor any of its Subsidiaries shall, nor
permit Mortgage Borrower to, without the prior written consent of Lender (which
may be furnished or withheld at its sole and absolute discretion, except as
otherwise provided herein), give its consent or approval to any of the
following actions or items:

 

(a)           except as expressly permitted
pursuant to and in accordance with the terms hereof (including, without
limitation, the provisions of Section 5.34 hereof, with respect to a refinance

 

60

 

of the Mortgage
Loan, and the provisions of Section 2.4(c)(ii) hereof, with respect to the
Release of a Property) (i) any refinance of the Mortgage Loan, (ii) any
prepayment in full of the Mortgage Loan, (iii) any Transfer or Release of a
Property or any portion thereof, or (iv) any action in connection with or in
furtherance of the foregoing;

 

(b)           except as expressly permitted
pursuant to and in accordance with the terms hereof, creating, incurring,
assuming or suffering to exist any additional Liens on any portion of the
Properties except for Permitted Encumbrances;

 

(c)           any modification, amendment,
consolidation, spread, restatement, waiver or termination of any of the
Mortgage Loan Documents;

 

(d)           approve the terms of any Annual
Budget (unless pursuant to and in accordance with the provisions of Section
5.11(a)(iv));

 

(e)           the distribution to the partners,
members or shareholders of Mortgage Borrower of property other than cash;

 

(f)            except as set forth in an approved
Annual Budget or as permitted under the Mortgage Loan Documents, any (i)
improvement, renovation or refurbishment of all or any part of a Property to a
materially higher standard or level than that of comparable properties in the
same market segment and in the same geographical area as such Property, (ii)
removal, demolition or material alteration of the improvements or equipment on
a Property or (iii) material increase in the square footage or gross leasable
area of the improvements on a Property if a material portion of any of the
expenses in connection therewith are paid or incurred by Mortgage Borrower;
provided that Mezzanine Lender will not unreasonably withhold, delay or
condition its consent to any such actions to the extent the same are to be
funded in full by an additional capital contribution to Borrower;

 

(g)           any material change in the method of
conduct of the business of Mortgage Borrower or Borrower or any of its
subsidiaries, such consent to be given in the reasonable discretion of the
Lender;

 

(h)           the settlement of any claim against Mortgage
Borrower or Borrower or any of its Subsidiaries, other than (i) any settlement
provided for in an Approved Annual Budget or (ii) a fully insured third party
claim, in any amount greater than $100,000 (in the case of Borrower or Mortgage
Borrower), such consent to be given in the sole discretion of the Lender; or

 

(i)            except as required by the Loan
Documents or the Mortgage Loan Documents, any determination to restore a
Property after a Casualty or Condemnation, except to the extent funded solely
from additional capital contributions to Borrower.

 

Section 5.31.          CONTRACTUAL
OBLIGATIONS

 

Other than the Loan
Documents, the Borrower Partnership Agreement (and the initial membership
interests in Borrower issued pursuant thereto), the Mortgage Loan Documents and
the Mortgage Borrower Partnership Agreement, neither Borrower nor any of its
assets shall be subject to any Contractual Obligations, and Borrower shall not
enter into any agreement,

 

61

 

instrument or undertaking by which it or its assets
are bound, except for such liabilities, not material in the aggregate, that are
incidental to its activities as a limited partner or regular member, as
applicable, of Mortgage Borrower.

 

Section 5.32.          MANAGER OF FLINT PROPERTY

 

The initial Manager of
the Flint Property as of the Closing Date is Flagstone.  Borrower anticipates entering into with
Interstate a new Management Agreement (“Flint Interstate Management Agreement”) in
the exact same form as the form in place on the Closing Date with Interstate on
the other Interstate Properties.  On or
before February 15, 2004, Borrower shall provide Lender with a copy of the
executed Flint Interstate Management Agreement as well as the Subordination of
Management Agreement/Estoppel in the form delivered on the Closing Date and
executed by Interstate for the other Interstate Managed Properties.

 

Section 5.33.          CONSOLIDATED
TANGIBLE NET WORTH

 

Borrower Principal shall
not permit the Consolidated Tangible Net Worth of Borrower Principal and its
Subsidiaries on a consolidated basis at any time to be less than the sum of
$150,000,000.00 plus the cost basis of the Properties subject to the Lien of
the Mortgage at such time as set forth on Schedule I hereto minus the aggregate
then outstanding principal balance of the Loan and Mortgage Loan.

 

Section 5.34.          REFINANCING

 

Borrower shall not consent to or permit a refinancing
of the Mortgage Loan unless it obtains the prior written consent of Lender,
which consent may be withheld in the event (a) Lender shall determine in its
sole and absolute discretion that the terms of such new mortgage loan are not
at least equivalent to the terms of the Mortgage Loan, (b) without limiting the
foregoing, (i) the principal balance of the new mortgage loan shall in no event
exceed the principal balance of the Mortgage Loan on the date of the
refinancing, (ii) the new mortgage loan shall have an interest rate that is no
higher than the then current interest rate for the Mortgage Loan, as determined
by Lender in its sole discretion (and shall provide for an interest rate cap
agreement substantially identical to the Rate Cap), (iii) the new mortgage loan
shall have an amortization schedule that provides for repayment in monthly
installments each of which is no greater than the monthly principal payments
due under the Mortgage Note , (iv) the new mortgage loan shall have a maturity
date that is no earlier than that provided for under the Mortgage Loan at the
time of the closing thereof, as such maturity date may be extended pursuant to
the Mortgage Loan Agreement, and (v) the terms of the new mortgage loan shall
permit the Loan, (c) the new mortgage lender shall refuse to enter into an
intercreditor agreement with Lender no less favorable to Lender (as determined
in Lender’s sole and absolute discretion) than the Intercreditor Agreement, (d)
Borrower shall fail to execute and deliver such amendments to this Agreement
and the other Loan Documents as Lender may determine necessary to preserve all
rights granted Lender under this Agreement and the other Loan Documents, (e)
Borrower shall fail to deliver to Lender such settlement statements, pay-off
letters, opinions and other documentation as Lender shall request in connection
with such refinancing, or (f) Borrower shall fail to pay all costs and expenses
incurred by Lender (including, but not limited to, attorneys’ fees) in
connection with such refinancing.

 

62

 

ARTICLE 6

ENTITY COVENANTS

 

Section 6.1.            SINGLE PURPOSE ENTITY/SEPARATENESS

 

Until the Debt has been
paid in full, Borrower represents, warrants and covenants as follows (provided,
however, any Borrower covenant that it will cause Mortgage Borrower to take any
action shall be deemed to mean that the Borrower shall act in Borrower’s
capacity as an equity owner of Mortgage Borrower and Mortgage Borrower GP):

 

(a)           Borrower has not and will not and
will not permit Mortgage Borrower or SPE Component Entity thereof to:

 

(i)            with respect to (x) Borrower, engage
in any business or activity other than the ownership of the Pledged Securities
and the Collateral and any activities incidental thereto and (y) Mortgage
Borrower, engage in any business or activity other than the ownership,
operation and maintenance of the Properties, and activities incidental thereto;

 

(ii)           with respect to (x) Borrower acquire
any assets other than (A) the Pledged Securities and the Collateral and (B)
such incidental Personal Property as may be necessary for the operation of the
Pledged Securities and the Collateral (y) Mortgage Borrower acquire or own any
assets other than (A) the Properties, and (B) such incidental Personal Property
as may be necessary for the operation of each Property;

 

(iii)          merge into or consolidate with any
Person, or dissolve, terminate, liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change its legal
structure, without the prior written consent of Lender and after a
Securitization written confirmation from each of the applicable Rating Agencies
that the same shall not result in the qualification, withdrawal or downgrade of
the initial, or if higher, then current ratings issued in connection with a
Securitization;

 

(iv)          fail to observe all organizational
formalities, or fail to preserve its existence as an entity duly organized,
validly existing and in good standing (if applicable) under the applicable
Legal Requirements of the jurisdiction of its organization or formation, or
amend, modify, terminate or fail to comply with the provisions of its
organizational documents;

 

(v)           own any subsidiary, or make any
investment in, any Person, without the prior written consent of Lender and
after a Securitization written confirmation from each of the applicable Rating
Agencies that said ownership or investment shall not result in the
qualification, withdrawal or downgrade of the initial, or if higher, then
current ratings issued in connection with a Securitization;

 

(vi)          commingle its assets with the assets
of any other Person;

 

(vii)         with respect to (x) Borrower , incur
any debt, secured or unsecured, direct or contingent (including guaranteeing
any obligation), other than (A) the Debt, (B) trade

 

63

 

and operational
indebtedness incurred in the ordinary course of business with trade creditors
(including obligations in respect of alterations, replacements and capital
improvements permitted under the Loan Documents), provided such indebtedness is
(1) unsecured, (2) not evidenced by a note, (3) on commercially reasonable
terms and conditions, and (4) due not more than sixty (60) days past the date
incurred and paid on or prior to such date, and/or (C) financing leases and
purchase money indebtedness incurred in the ordinary course of business
relating to Personal Property on commercially reasonable terms and conditions;
provided however, the aggregate amount of the indebtedness described in (B) and
(C) shall , when combined with any similar indebtedness then held by the
Affiliated Lessee, not exceed at any time five percent (5%) of the outstanding
principal amount of the Note; and (y) Mortgage Borrower or any SPE Component
Entity thereof, incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than as permitted under the
Mortgage Loan Documents;

 

(viii)        fail to maintain its records, books of
account, bank accounts, financial statements, accounting records and other
entity documents separate and apart from those of any other Person; except that
Borrower’s and Mortgage Borrower’s financial position, assets, liabilities, net
worth and operating results may be included in the consolidated financial
statements of an Affiliate, provided that such consolidated financial
statements clearly and conspicuously identify the Borrower as a separate legal
entity;

 

(ix)           enter into any contract or agreement
with any general partner, member, shareholder, principal, guarantor of the
obligations of Borrower or of Mortgage Borrower, or any Affiliate of the
foregoing, except upon terms and conditions that are intrinsically fair,
commercially reasonable and substantially similar to those that would be
available on an arm’s-length basis with unaffiliated third parties;

 

(x)            maintain its assets in such a manner
that it will be costly or difficult to segregate, ascertain or identify its
individual assets from those of any other Person;

 

(xi)           except as otherwise expressly
permitted by the Loan Documents, assume or guaranty the debts of any other
Person (other than any commercially reasonable guaranty of any Affiliated
Lessee’s obligations under any Franchise Agreement or Management Agreement
consented to by Lender), hold itself out to be responsible for the debts of any
other Person, or otherwise pledge its assets for the benefit of any other
Person or hold out its credit as being available to satisfy the obligations of
any other Person;

 

(xii)          make any loans or advances to any
Person, without the prior written consent of Lender and after a Securitization
written confirmation from each of the applicable Rating Agencies that the same
shall not result in the qualification, withdrawal or downgrade of the initial,
or if higher, then current ratings issued in connection with a Securitization;

 

(xiii)         fail to file its own tax returns or
fail to file a consolidated tax return on which Borrower (and as applicable,
Mortgage Borrower and any SPE Component Entity

 

64

 

thereof) is identified as
a separate entity from all other Persons, or which otherwise complies with or
if necessary is promptly amended to comply with all applicable Rating Agency
requirements;

 

(xiv)        fail either to hold itself out to the
public as a legal entity separate and distinct from any other Person or to
conduct its business solely in its own name or fail to correct any known
misunderstanding regarding its separate identity;

 

(xv)         fail to maintain adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;

 

(xvi)        if it is a partnership or limited
liability company, without the unanimous written consent of all of its partners
or members, as applicable, and the written consent of 100% of the directors or
managers as applicable, of each SPE Component Entity (if any), including,
without limitation, each Independent Director, (a) file or consent to the
filing of any petition, either voluntary or involuntary, to take advantage of
any Creditors Rights Laws, (b) seek or consent to the appointment of a
receiver, liquidator or any similar official, (c) take any action that might
cause such entity to become insolvent, or (d) make an assignment for the
benefit of creditors;

 

(xvii)       fail to allocate shared expenses
(including, without limitation, shared office space and services performed by
an employee of an Affiliate) among the Persons sharing such expenses and to use
separate stationery, invoices and checks;

 

(xviii)      (A) fail to remain solvent or (B) fail to
pay its own liabilities (including, without limitation, salaries of its own
employees) only from its own funds;

 

(xix)         acquire obligations or securities of
its partners, members, shareholders or other Affiliates, as applicable;

 

(xx)          violate or cause to be violated the
assumptions made with respect to Borrower and its principals in any opinion
letter pertaining to substantive consolidation delivered to Lender in
connection with the Loan;

 

(xxi)         fail to maintain a sufficient number of
employees in light of its contemplated business operations; or

 

(xxii)        form, acquire, or hold any subsidiary
(other than Mortgage Borrower and Mortgage Borrower GP).

 

(b)           If Borrower is a partnership or
limited liability company which is not a single member limited liability
company, each general partner in the case of a general partnership, each
general partner in the case of a limited partnership, or the managing member in
the case of a limited liability company (each an “SPE Component Entity”) of
Borrower, as applicable, shall be a corporation or a single member Delaware
limited liability company (which shall comply with all additional provisions
contained herein with respect to Delaware limited liability companies) whose
sole asset is its interest in Borrower. 
Each SPE Component Entity (i) will at all times

 

65

 

comply with each of the covenants, terms and
provisions contained in Section 6.1(a)(iii) - (vi) and (viii) - (xxi), as
if such representation, warranty or covenant was made directly by such SPE Component
Entity; (ii) will not engage in any business or activity other than owning an
interest in Borrower; (iii) will not acquire or own any assets other than its
partnership, membership, or other equity interest in Borrower; (iv) will not
incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation); and (v) will cause Borrower to comply with the
provisions of this Section 6.1 and Section 6.4.  Prior to the withdrawal or the
disassociation of any SPE Component Entity from Borrower, Borrower shall
immediately appoint a new general partner or managing member whose articles of
incorporation (or other applicable formation and entity documentation) are
substantially similar to those of such SPE Component Entity and, if an opinion
letter pertaining to substantive consolidation was required at closing, deliver
a new opinion letter acceptable to Lender and the Rating Agencies with respect
to the new SPE Component Entity and its equity owners.  Notwithstanding the foregoing, to the extent
Borrower is a single member Delaware limited liability company, so long as
Borrower maintains such formation status, no SPE Component Entity shall be
required.

 

(c)           In the event Borrower is a single
member Delaware limited liability company, the limited liability company
agreement of Borrower (the “LLC Agreement”) shall provide that (i) upon
the occurrence of any event that causes the sole member of Borrower (“Member”)
to cease to be the member of Borrower (other than (A) upon an assignment by Member
of all of its limited liability company interest in Borrower and the admission
of the transferee in accordance with the Loan Documents and the LLC Agreement,
or (B) the resignation of Member and the admission of an additional member of
Borrower in accordance with the terms of the Loan Documents and the LLC
Agreement), any person acting as Independent Director of Borrower shall,
without any action of any other Person and simultaneously with the Member
ceasing to be the member of Borrower, automatically be admitted to Borrower as
a member thereof (“Special Member”) and shall continue
Borrower without dissolution and (ii) Special Member may not resign from
Borrower or transfer its rights as Special Member unless (A) a successor
Special Member has been admitted to Borrower as Special Member in accordance
with requirements of Delaware law and (B) such successor Special Member has
also accepted its appointment as an Independent Director.  The LLC Agreement shall further provide that
(i) Special Member shall automatically cease to be a member of Borrower upon
the admission to Borrower of a substitute Member, (ii) Special Member
shall be a member of Borrower that has no interest in the profits, losses and
capital of Borrower and has no right to receive any distributions of Borrower
assets, (iii) pursuant to Section 18-301 of the Delaware Limited
Liability Company Act (the “Act”), Special Member shall not be required
to make any capital contributions to Borrower and shall not receive a limited
liability company interest in Borrower, (iv) Special Member, in its capacity as
Special Member, may not bind Borrower and (v) except as required by any
mandatory provision of the Act, Special Member, in its capacity as Special
Member, shall have no right to vote on, approve or otherwise consent to any
action by, or matter relating to, Borrower, including, without limitation, the
merger, consolidation or conversion of Borrower; provided, however, such
prohibition shall not limit the obligations of Special Member, in its capacity as
Independent Director, to vote on such matters required by the Loan Documents or
the LLC Agreement.  In order to
implement the admission to Borrower of Special Member, Special Member shall
execute a counterpart to the LLC Agreement. 
Prior to its admission to Borrower as Special Member, Special Member
shall not be a member of Borrower.

 

66

 

Upon the occurrence of
any event that causes the Member to cease to be a member of Borrower, to the
fullest extent permitted by law, the personal representative of Member shall,
within ninety (90) days after the occurrence of the event that terminated the
continued membership of Member in Borrower, agree in writing (i) to continue
Borrower and (ii) to the admission of the personal representative or its
nominee or designee, as the case may be, as a substitute member of Borrower,
effective as of the occurrence of the event that terminated the continued
membership of Member of Borrower in Borrower. 
Any action initiated by or brought against Member or Special Member
under any Creditors Rights Laws shall not cause Member or Special Member to
cease to be a member of Borrower and upon the occurrence of such an event, the
business of Borrower shall continue without dissolution.  The LLC Agreement shall provide that each of
Member and Special Member waives any right it might have to agree in writing to
dissolve Borrower upon the occurrence of any action initiated by or brought
against Member or Special Member under any Creditors Rights Laws, or the
occurrence of an event that causes Member or Special Member to cease to be a
member of Borrower.

 

Section 6.2.            CHANGE OF NAME, IDENTITY OR STRUCTURE

 

Borrower shall not change
or permit to be changed (a) Borrower’s name, (b) Borrower’s identity (including
its trade name or names), (c) Borrower’s principal place of business set forth
on the first page of this Agreement, (d) the corporate, partnership or other
organizational structure of Borrower, Borrower Principal, Mortgage Borrower or
SPE Component Entity (if any), (e) Borrower’s state of organization, or (f)
Borrower’s organizational identification number, without in each case notifying
Lender of such change in writing at least thirty (30) days prior to the
effective date of such change and, in the case of a change in Borrower’s
structure, without first obtaining the prior written consent of Lender.  In addition, Borrower shall not change or
permit to be changed any organizational documents of Borrower or any SPE
Component Entity (if any) if such change would adversely impact the covenants
set forth in Section 6.1 and Section 6.4 hereof.  Borrower authorizes Lender to file any
financing statement or financing statement amendment required by Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein.  At the request
of Lender, Borrower shall execute a certificate in form satisfactory to Lender
listing the trade names under which Borrower intends to operate each Property,
and representing and warranting that Borrower does business under no other
trade name with respect to such Property. 
If Borrower does not now have an organizational identification number
and later obtains one, or if the organizational identification number assigned
to Borrower subsequently changes, Borrower shall promptly notify Lender of such
organizational identification number or change.

 

Section 6.3.            BUSINESS AND OPERATIONS

 

(a)           Borrower will qualify to do business
and will remain in good standing under the laws of the applicable State as and
to the extent the same are required for the ownership, maintenance, management
and operation of the Pledged Securities and the Collateral.  Borrower shall not enter into any line of
business other than the ownership of the Pledged Securities and the Collateral,
or make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than
the continuance of its present business.

 

67

 

(b)           Borrower will cause Mortgage Borrower
to qualify to do business and to remain in good standing under the laws of each
State as and to the extent the same are required for the ownership,
maintenance, management and operation of the Property.  Borrower shall not permit Mortgage Borrower
to enter into any line of business other than the ownership of the Property, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than
the continuance of its present business.

 

Section 6.4.            INDEPENDENT DIRECTOR

 

(a)           The organizational documents of each
SPE Component Entity (if any) shall provide that at all times there shall be,
and Borrower shall cause there to be, at least two duly appointed members of
the board of directors, board of managers or equivalent governing board (each
an “Independent
Director”) of such SPE Component Entity reasonably satisfactory to
Lender each of whom are not at the time of such individual’s initial
appointment, and shall not have been at any time during the preceding five (5)
years, and shall not be at any time while serving as an Independent Director of
such SPE Component Entity, either (i) a shareholder (or other equity owner) of,
or an officer, director, partner, manager, member (other than as a Special
Member in the case of a single member Delaware limited liability company, or in
the instance in which such Independent Director is an employee, representative
or officer of a corporate service company which in the ordinary course of
business serves as Independent Director for an Affiliate of Borrower other than
any Affiliate which has a direct interest in Borrower, Affiliated Lessee or any
of Borrower’s constituent entities), employee, attorney or counsel of,
Borrower, such SPE Component Entity or any of 
their respective shareholders, partners, members, subsidiaries or
Affiliates; (ii) a customer or creditor of, or supplier to, Borrower or any of
its respective shareholders, partners, members, subsidiaries or Affiliates who
derives any of its purchases or revenue from its activities with Borrower or
such SPE Component Entity or any Affiliate of any of them; (iii) a Person who
Controls or is under common Control with any such shareholder, officer,
director, partner, manager, member, employee, supplier, creditor or customer;
or (iv) a member of the immediate family of any such shareholder, officer,
director, partner, manager, member, employee, supplier, creditor or customer.

 

(b)           The organizational documents of each
SPE Component Entity (if any) shall provide that the board of directors, board
of managers or equivalent governing board of such SPE Component Entity shall
not take any action which, under the terms of any certificate of incorporation,
certificate of formation, limited liability company agreement, by-laws, similar
entity governance document or any voting trust agreement with respect to any
common stock, requires an unanimous vote of the board of directors of such SPE
Component Entity of Borrower unless at the time of such action there shall be
at least two members of the board of directors who are Independent
Directors.  Such SPE Component Entity
will not, without the unanimous written consent of its board of directors, board
of managers or other equivalent governing board including each Independent
Director, on behalf of itself or Borrower, (i) file or consent to the filing of
any petition, either voluntary or involuntary, to take advantage of any
applicable Creditors Rights Laws; (ii) seek or consent to the appointment of a
receiver, liquidator or any similar official; (iii) take any action that might
cause such entity to become insolvent; or (iv) make an assignment for the
benefit of creditors.

 

68

 

ARTICLE 7

NO SALE OR ENCUMBRANCE

 

Section 7.1.            TRANSFER DEFINITIONS

 

For purposes of this
Article 7 an “Affiliated Manager” shall mean any managing agent in which
Borrower, Mortgage Borrower, Affiliated Lessee, Borrower Principal, any SPE
Component Entity (if any) or any Affiliate of such entities has, directly or
indirectly, any legal, beneficial or economic interest; “Control” shall mean the power
to direct the management and policies of a Restricted Party, directly or
indirectly, whether through the ownership of voting securities or other
beneficial interests, by contract or otherwise; “Restricted Party” shall mean
Borrower, Mortgage Borrower, Affiliated Lessee, Borrower Principal, any SPE
Component Entity (if any), any Affiliated Manager, or any shareholder, partner,
member or non-member manager, or any direct or indirect legal or beneficial
owner of Borrower, Mortgage Borrower, Affiliated Lessee, Borrower Principal,
any SPE Component Entity (if any), any Affiliated Manager or any non-member
manager; and a “Sale or Pledge” shall mean a voluntary or involuntary sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of
any options with respect to, or any other transfer or disposition of (directly
or indirectly, voluntarily or involuntarily, by operation of law or otherwise,
and whether or not for consideration or of record) of a legal or beneficial
interest.

 

Section 7.2.            NO SALE/ENCUMBRANCE

 

(a)           Borrower shall not cause or permit a
Sale or Pledge of the Collateral or any Property or any part thereof or any
legal or beneficial interest therein held by Borrower nor permit a Sale or
Pledge of an interest in any Restricted Party (in each case, a “Prohibited
Transfer”), other than pursuant to Leases of space in the
Improvements to Tenants in accordance with the provisions of Section 5.13,
without the prior written consent of Lender. 
Nothing set forth herein shall or shall be deemed to prohibit the sale
of publicly traded shares in CNL Hospitality Properties, Inc.

 

(b)           A Prohibited Transfer shall include,
but not be limited to, (i) an installment sales agreement wherein Mortgage
Borrower agrees to sell any Property or any part thereof for a price to be paid
in installments; (ii) other than an Operating Lease, an agreement by Mortgage
Borrower leasing all or a substantial part of any Property for other than
actual occupancy by a Tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, Mortgage Borrower’s right, title and
interest in and to any Leases or any Rents; (iii) if a Restricted Party is a
corporation, any merger, consolidation or Sale or Pledge of such corporation’s
stock or the creation or issuance of new stock in one or a series of
transactions; (iv) if a Restricted Party is a limited or general partnership or
joint venture, any merger or consolidation or the change, removal, resignation
or addition of a general partner or the Sale or Pledge of the partnership
interest of any general or limited partner or any profits or proceeds relating
to such partnership interests or the creation or issuance of new partnership
interests; (v) if a Restricted Party is a limited liability company, any merger
or consolidation or the change, removal, resignation or addition of a managing
member or non-member manager (or if no managing member, any member) or the Sale
or Pledge of the membership interest of any member or any profits or proceeds
relating to such membership interest; (vi) if a Restricted Party

 

69

 

is a trust or
nominee trust, any merger, consolidation or the Sale or Pledge of the legal or
beneficial interest in a Restricted Party or the creation or issuance of new
legal or beneficial interests; or (vii) the removal of Manager, the acceptance
by Borrower of the resignation of Manager when such Manager was not entitled
under the applicable Management Agreement to resign or the resignation of the
Manager in collusion with the Borrower, in each case other than in accordance with
Section 5.14.

 

Section 7.3.            PERMITTED TRANSFERS

 

Notwithstanding the
provisions of Section 7.2, the following transfers shall not be deemed to
be a Prohibited Transfer:  (a) a
transfer by devise or descent or by operation of law upon the death of a member,
partner or shareholder of a Restricted Party; (b) the transfer, in one or a
series of transactions, of not more than forty-nine percent (49%) of the stock,
limited partnership interests or non-managing membership interests (as the case
may be) in a Restricted Party (other than a transfer or issuance of any
interests in the Mortgage Borrower or the Mortgage Borrower GP which shall be a
Prohibited Transfer); provided, however, no such transfers shall result in a
change in Control in the Restricted Party or change in control of any Property,
and as a condition to each such transfer, Lender shall receive not less than
thirty (30) days prior written notice of such proposed transfer; (c) the
pledge by Borrower of its interest in Mortgage Borrower and Borrower its
interest in Mortgage Borrower GP pursuant to the Pledge Agreement; (d) a
transfer permitted under the Intercreditor Agreement; (e) a transfer in a
transaction (including, without limitation, a merger or consolidation) whereby
CNL Rose Acquisition Corp., CNL Rose GP Corp. or CNL Hospitality Properties,
Inc. transfer their interests in Borrower Principal provided that following
such transaction a majority of the interests in Borrower Principal continue to
be owned, directly or indirectly, by CNL Hospitality Properties, Inc. and CNL
Hospitality Properties, Inc. shall continue to Control Borrower Principal; or
(f) other than as to Borrower Principal or any of Borrower Principal’s
Subsidiaries any transaction, including, without limitation, a merger or consolidation
involving a Restricted Party, whereby, immediately following such transaction
(i) a majority of the ownership interests in such Restricted Party are owned,
directly or indirectly, by Persons who owned, directly or indirectly, a
majority of the ownership interests of such Restricted Party immediately prior
to such transaction, and (ii) as to any entity other than CNL Hospitality
Properties, Inc., there is no resulting change in Control. Notwithstanding the
foregoing, any transfer that results in any Person owning in excess of
forty-nine percent (49%) of the ownership interest in a Restricted Party other
than a transfer permitted under the Intercreditor Agreement or a transfer
permitted under items (e) or (f) above, shall comply with the requirements of
Section 7.4 hereof.

 

Section 7.4.            LENDER’S RIGHTS

 

All expenses incurred by
Lender shall be payable by Borrower whether or not Lender consents to the
Prohibited Transfer.  Lender shall not
be required to demonstrate any actual impairment of its security or any
increased risk of default hereunder in order to declare the Debt immediately
due and payable upon a Prohibited Transfer made without Lender’s consent. This
provision shall apply to each and every Prohibited Transfer, whether or not
Lender has consented to any previous Prohibited Transfer.  Notwithstanding anything to the contrary
contained in this Section 7.4, in the event a substantive
non-consolidation opinion was delivered to Lender and the Rating Agencies in
connection with the closing of the Loan, and if any Sale or Pledge permitted

 

70

 

under this Article 7 results in any Person and its
Affiliates owning in excess of forty-nine percent (49%) of the ownership
interests in a Restricted Party, Borrower shall, prior to such transfer, and in
addition to any other requirement for Lender consent contained herein, deliver
a revised substantive non-consolidation opinion to Lender reflecting such
Prohibited Transfer, which opinion shall be in form, scope and substance
acceptable in all respects to Lender and the Rating Agencies.

 

Section 7.5.            ASSUMPTION

 

Borrower and Lender
acknowledge and agree that no transfer of all of the Collateral or of all the
Properties to, and the related assumption of the Loan or Mortgage Loan,
respectively, by, any Person shall be permitted under this Agreement.

 

ARTICLE 8

INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

 

Section 8.1.            INSURANCE

 

(a)           Borrower shall cause Mortgage
Borrower to obtain and maintain, at all times insurance for Mortgage Borrower
and for each Property required by the Mortgage Lender, and if for any reason
not being provided, Borrower shall cause Mortgage Borrower to provide at least
the following coverages for each Property:

 

(i)            comprehensive “all risk” insurance
on the Improvements and the Personal Property, in each case (A) in an amount
equal to one hundred percent (100%) of the “Full Replacement Cost,” which for
purposes of this Agreement shall mean actual replacement value (exclusive of
costs of excavations, foundations, underground utilities and footings) with a
waiver of depreciation; (B) containing an agreed amount endorsement with
respect to the Improvements and Personal Property waiving all co-insurance
provisions; (C) providing for no deductible in excess of $50,000 for all such
insurance coverage; and (D)  if any of
the Improvements or the use of such Property shall at any time constitute legal
non-conforming structures or uses, providing coverage for contingent liability
from Operation of Building Laws, Demolition Costs and Increased Cost of
Construction Endorsements and containing an “Ordinance or Law Coverage” or
“Enforcement” endorsement.  In addition,
Borrower shall obtain: (y) if any portion of the Improvements is currently or
at any time in the future located in a 
“special flood hazard area” designated by the Federal Emergency
Management Agency, flood hazard insurance in an amount equal to the maximum
amount of such insurance available under the National Flood Insurance Act of
1968, the Flood Disaster Protection Act of 1973 or the National Flood Insurance
Reform Act of 1994, as each may be amended; and (z) earthquake insurance in
amounts and in form and substance reasonably satisfactory to Lender in the
event such Property is located in an area with a high degree of seismic risk,
provided that the insurance pursuant to clauses (y) and (z) hereof shall be on
terms consistent with the comprehensive all risk insurance policy required
under this subsection (i);

 

(ii)           Commercial General Liability insurance
against claims for personal injury, bodily injury, death or property damage
occurring upon, in or about such

 

71

 

Property, including “Dram
Shop” or other liquor liability coverage if alcoholic beverages are sold from
or may be consumed at such Property, with such insurance (A) to be on the
so-called “occurrence” form with a general aggregate limit of not less than
$2,000,000 and a per occurrence limit of not less than $1,000,000; (B) to
continue at not less than the aforesaid limit until required to be changed by
Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations; (3) independent
contractors; (4) blanket contractual liability; and (5) contractual liability
covering the indemnities contained in clauses (a) through (e) and (f) in
Section 14.01 hereof to the extent the same is available;

 

(iii)          loss of rents insurance or business
income insurance, as applicable, (A) with loss payable to Lender; (B) covering
all risks required to be covered by the insurance provided for in subsection
(i) above; and (C) which provides that after the physical loss to the Improvements
and Personal Property occurs, the loss of rents or income, as applicable, will
be insured until completion of Restoration or the expiration of eighteen (18)
months, whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; and (D) which contains an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it
was at prior to the loss, or the expiration of six (6) months from the date
that such Property is repaired or replaced and operations are resumed,
whichever first occurs, and notwithstanding that the policy may expire prior to
the end of such period.  The amount of
such loss of rents or business income insurance, as applicable, shall be
determined prior to the date hereof and at least once each year thereafter
based on Borrower’s reasonable estimate of the gross income from such Property
for the succeeding period of coverage required above.  Subject to the rights of the Mortgage Lender under the Mortgage
Loan Agreement, all proceeds payable to Lender pursuant to this subsection shall
be held by Lender and shall be applied to the obligations secured by the Loan
Documents from time to time due and payable hereunder and under the Note;
provided, however, that nothing herein contained shall be deemed to relieve
Borrower of its obligations to pay the obligations secured by the Loan
Documents on the respective dates of payment provided for in the Note, this
Agreement and the other Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such loss of rents or business income
insurance, as applicable;

 

(iv)          at all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements, and only if such Property coverage form does not otherwise apply,
(A) owner’s contingent or protective liability insurance covering claims not
covered by or under the terms or provisions of the above mentioned commercial
general liability insurance policy; and (B) the insurance provided for in
subsection (i) above written in a so-called Builder’s Risk Completed Value form
(1) on a non-reporting basis, (2) against “all risks” insured against pursuant
to subsection (i) above, (3) including permission to occupy such Property, and
(4) with an agreed amount endorsement waiving co-insurance provisions;

 

72

 

(v)           workers’ compensation, subject to the
statutory limits of the State, and employer’s liability insurance in respect of
any work or operations on or about such Property, or in connection with such
Property or its operation (if applicable);

 

(vi)          comprehensive boiler and machinery
insurance, if applicable, in amounts as shall be reasonably required by Lender
on terms consistent with the commercial property insurance policy required
under subsection (i) above;

 

(vii)         excess liability insurance in an amount
not less than $50,000,000 per occurrence on terms consistent with the
commercial general liability insurance required under subsection (ii) above or
as otherwise approved by Lender;

 

(viii)        sinkhole and mine subsidence insurance,
if required, and if such Property is located in an “earthquake prone zone” as
determined by the U.S. Geological Survey, earthquake insurance in an amount not
less than the probable maximum loss, all as determined by a recognized
engineering firm acceptable to and approved by Lender, less any applicable
deductibles, including business interruption coverage in an amount not less
than that set forth in clause (iii) above;

 

(ix)           a blanket fidelity bond and errors
and omissions insurance coverage insuring against losses resulting from
dishonest or fraudulent acts committed by (A) Borrower’s personnel; (B) any
employees of outside firms that provide appraisal, legal, data processing or
other services for Borrower or (C) temporary contract employees or student interns;

 

(x)            motor vehicle liability coverage for
all owned and non-owned vehicles, including rented and leased vehicles
containing minimum limits per occurrence, including umbrella coverage, of One
Million and No/100 Dollars ($1,000,000)

 

(xi)           environmental insurance for the
Louisville Property in form acceptable to Lender for an initial term of two
years past the initial Maturity Date and, if Borrower extends the Maturity Date
in accordance with Section 2.3(b) hereof, for each Extended Maturity Date,
for two years from each such Extended Maturity Date; and

 

(xii)          upon sixty (60) days’ written notice,
such other reasonable insurance and in such reasonable amounts as Lender from
time to time may reasonably request against such other insurable hazards which
at the time are commonly insured against for property similar to such Property
located in or around the region in which such Property is located.

 

With respect to the
Policies required to be maintained pursuant to clauses (i), (iii) and (iv)
above, Borrower shall maintain insurance coverage against Losses resulting from
acts of terrorism.

 

(b)           All insurance provided for in
Section 8.1(a) shall be obtained under valid and enforceable policies
(collectively, the “Policies” or in the singular, the “Policy”),
and shall be subject to the approval of Lender as to insurance companies,
amounts, deductibles, loss payees and insureds.  The Policies shall be issued by financially sound and responsible
insurance companies authorized to do business in the State and having a claims
paying ability rating of “A”

 

73

 

or better by
S&P (or such other ratings approved by Lender) and a general policy rating
of “A” or better and a financial class of VIII or better by A.M. Best Company, Inc.  To the extent such Policies are not
available as of the Closing Date, Borrower shall deliver to Lender certified
copies of all Policies or other evidence of insurance reasonably acceptable to
Lender not later than thirty (30) days after the Closing Date.  Not less than ten (10) days prior to the
expiration dates of the Policies theretofore furnished to Lender, renewal
Policies or other evidence of insurance reasonably acceptable to Lender
accompanied by evidence satisfactory to Lender of payment of the premiums due
thereunder (the “Insurance Premiums”) shall be delivered by Borrower to Lender.

 

(c)           Any blanket insurance Policy shall
specifically allocate to each Property the amount of coverage from time to time
required hereunder and shall otherwise provide the same protection as would a
separate Policy insuring only the applicable Property in compliance with the
provisions of Section 8.1(a).

 

(d)           All Policies provided for or
contemplated by Section 8.1(a), except for the Policy referenced in
Section 8.1(a)(v), shall name Mortgage Borrower as the insured, Lender as
a “Named Insured” and Mortgage Lender as an additional insured, as their
interests may appear, and in the case of property damage, boiler and machinery,
flood and earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Mortgage Lender and Lender
providing that the loss thereunder shall be payable to Mortgage Lender, as
mortgagee and loss payee.

 

(e)           All Policies provided for in
Section 8.1(a) shall contain clauses or endorsements to the effect that:

 

(i)            except as may otherwise prohibited
by applicable law, no act or negligence of Mortgage Borrower, or anyone acting
for Mortgage Borrower, or of any Tenant or other occupant, or failure to comply
with the provisions of any Policy, which might otherwise result in a forfeiture
of the insurance or any part thereof, shall in any way affect the validity or
enforceability of the insurance insofar as Lender is concerned;

 

(ii)           the Policies shall not be materially
changed (other than to increase the coverage provided thereby) or canceled
without at least thirty (30) days’ prior written notice to Lender and any other
party named therein as an additional insured;

 

(iii)          the issuers thereof shall give written
notice to Lender if the Policies have not been renewed thirty (30) days prior
to its expiration;

 

(iv)          Lender shall not be liable for any
Insurance Premiums thereon or subject to any assessments thereunder; and

 

(v)           the Policies described in
clauses (i), (iii) and (vi) above do not contain an exclusion for acts of
terror or similar acts of sabotage.

 

(f)            If at any time Lender is not in
receipt of written evidence that all insurance required hereunder is in full
force and effect, Lender shall have the right, without notice to Borrower, to
take such action as Lender deems necessary to protect its interest in the
applicable

 

74

 

Property,
including, without limitation, obtaining such insurance coverage as Lender in
its sole discretion deems appropriate. 
All premiums incurred by Lender in connection with such action or in
obtaining such insurance and keeping it in effect shall be paid by Borrower to
Lender upon demand and, until paid, shall be secured by the Mortgage and shall
bear interest at the Default Rate.

 

(g)           Subject to the prior right of the
Mortgage Lender under the Mortgage Loan Agreement to receive any payments paid
under the Policy described in Section 8.1(a)(xi), Borrower shall cause
such payments to be paid to Lender.

 

Section 8.2.            CASUALTY

 

If any Property shall be
damaged or destroyed, in whole or in part, by fire or other casualty (a “Casualty”),
Borrower shall give prompt notice of such damage to Lender to the extent
required hereunder and shall cause Mortgage Borrower to promptly commence and
diligently prosecute the Restoration of such Property in accordance with
Section 8.4 hereof and Section 8.4 of the Mortgage Loan Agreement,
whether or not Mortgage Lender or Lender makes any Net Proceeds available
pursuant to said Section 8.4. 
Borrower shall cause Mortgage Borrower to pay all costs of such
Restoration whether or not such costs are covered by insurance.

 

Section 8.3.            CONDEMNATION

 

Borrower shall promptly
give Lender notice of the actual or threatened commencement of any proceeding
for the Condemnation of any Property of which Borrower has knowledge and shall
cause Mortgage Borrower to deliver to Lender copies of any and all papers
served in connection with such proceedings. 
Subject to the rights of Mortgage Lender under the Mortgage Loan
Agreement, Lender may participate in any such proceedings, and Borrower shall
from time to time deliver to Lender all instruments requested by it to permit
such participation.  Borrower shall
cause Mortgage Borrower to, at its expense, diligently prosecute any such
proceedings, and shall consult with Lender, its attorneys and experts, and
cooperate with them in the carrying on or defense of any such proceedings.  Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. 
Lender shall not be limited to the interest paid on the Award by the
condemning authority but shall be entitled to receive out of the Award interest
at the rate or rates provided herein or in the Note.  If any Property or any portion thereof is taken by a condemning
authority, Borrower shall promptly commence and diligently prosecute the
Restoration of such Property and otherwise comply with the provisions of
Section 8.4 hereof and Section 8.4 of the Mortgage Loan Agreement,
whether or not Lender or Mortgage Lender makes any Net Proceeds available
pursuant to Section 8.4 hereof or Section 8.4 of the Mortgage Loan
Agreement (as applicable).  Subject to
the terms and provisions of the Mortgage Loan Documents, to the extent Lender
is entitled to receive any Award as Net Liquidation Proceeds after Debt Service
pursuant to the terms hereof, if the Collateral is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the

 

75

 

Note shall have been sought, recovered or denied, to
receive the Award, or a portion thereof sufficient to pay the Debt.

 

Section 8.4.            RESTORATION

 

Subject to the rights of
Mortgage Lender and the obligations of Mortgage Borrower and the Mortgage Loan
Documents and only to the extent the Mortgage Loan is not outstanding and has
been paid in full, the following provisions shall apply in connection with any
Restoration of a Property:

 

(a)           If the costs of completing the Restoration
shall be less than five percent (5%) of the Allocated Loan Amount with respect
to the affected Property, the Net Proceeds will be disbursed by Lender to
Borrower or Mortgage Borrower upon receipt, provided that all of the conditions
set forth in Section 8.4(b)(i) below are each met and Borrower delivers to
Lender a written undertaking to expeditiously commence and to satisfactorily
complete with due diligence the Restoration in accordance with the terms of the
Mortgage Loan Agreement.

 

(b)           If the costs of completing the
Restoration are equal to or greater than five percent (5%) of the Allocated
Loan Amount with respect to the affected Property, Lender shall make the Net
Proceeds available for the Restoration in accordance with the provisions of this
Section 8.4.  The term “Net Proceeds”
for purposes of this Section 8.4 shall mean: (1) the net amount of all
insurance proceeds received by Lender pursuant to Section 8.1(a)(i), (iv),
(vi) and (vii) as a result of a Casualty, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel fees), if
any, in collecting the same (“Insurance Proceeds”), or (2) the net amount
of the Award as a result of a Condemnation, after deduction of its reasonable
costs and expenses (including, but not limited to, reasonable counsel fees), if
any, in collecting the same (“Condemnation Proceeds”), whichever the case
may be.

 

(i)            The Net Proceeds shall be made
available to Borrower or Mortgage Borrower for Restoration provided that each
of the following conditions are met:

 

(A)          no Event of Default shall have
occurred and be continuing;

 

(B)           (1) in the event the Net Proceeds are
Insurance Proceeds, less than ten percent (10%) of the aggregate fair market
value of the Improvements at all the Properties (immediately prior to the
applicable Casualty) has been damaged, destroyed or rendered unusable as a
result of a Casualty or (2) in the event the Net Proceeds are Condemnation
Proceeds, less than ten percent (10%) of the land constituting the affected
Property is taken, such land is located along the perimeter or periphery of the
affected Property, and no portion of the Improvements is located on such land;

 

(C)           the Operating Leases of the affected
Property in effect as of the date of the occurrence of such Casualty or
Condemnation, whichever the case may be, and each other Major Lease, if any, in
effect as of such date shall remain in full force and effect during and after
the completion of the Restoration without abatement of rent beyond the time
required for Restoration;

 

76

 

(D)          Borrower shall commence or cause
Mortgage Borrower to commence the Restoration as soon as reasonably practicable
(but in no event later than ninety (90) days after such Casualty or
Condemnation, whichever the case may be, occurs) and shall diligently pursue
the same to satisfactory completion;

 

(E)           Lender shall be satisfied that any
operating deficits, including all scheduled payments of principal and interest
under the Note, which will be incurred with respect to the affected Property as
a result of the occurrence of any such Casualty or Condemnation, whichever the
case may be, will be covered out of the insurance coverage referred to in
Section 8.1(a)(iii) above;

 

(F)           Lender shall be satisfied that the
Restoration will be completed on or before the earliest to occur of (1) six (6)
months prior to the Maturity Date, (2) the earliest date required for such
completion under the terms of any Leases (including, without limitation, any
Ground Lease) or material agreements affecting the affected Property, (3) such
time as may be required under applicable zoning law, ordinance, rule or
regulation, or (4) the expiration of the insurance coverage referred to in
Section 8.1(a)(iii);

 

(G)           the affected Property and the use
thereof after the Restoration will be in compliance with and permitted under
all Legal Requirements;

 

(H)          the Restoration shall be done and
completed by Borrower or Mortgage Borrower in an expeditious and diligent
fashion and in compliance with all applicable Legal Requirements;

 

(I)            such Casualty or Condemnation, as
applicable, does not result in the loss of access to the affected Property or
the Improvements;

 

(J)            Borrower shall deliver, or cause to
be delivered, to Lender a signed detailed budget approved in writing by
Mortgage Borrower’s architect or engineer stating the entire cost of completing
the Restoration, which budget shall be acceptable to Lender; and

 

(K)          the Net Proceeds together with any
cash or cash equivalent deposited by Borrower or Mortgage Borrower with Lender
are sufficient in Lender’s reasonable judgment to cover the cost of the
Restoration.

 

(ii)           The Net Proceeds shall be held by
Lender until disbursements commence, and, until disbursed in accordance with
the provisions of this Section 8.4, shall constitute additional security
for the Debt and other obligations under the Loan Documents.  The Net Proceeds shall be disbursed by
Lender to, or as directed by, Borrower or Mortgage Borrower from time to time
during the course of the Restoration, upon receipt of evidence satisfactory to
Lender that (A) all the conditions precedent to such advance, including those
set forth in Section 8.4(b)(i), have been satisfied, (B) all materials
installed and work and labor performed (except to the extent that they are to
be paid for out of the requested disbursement) in connection with the related
Restoration item have been paid for in full, and (C) there exist no notices of
pendency, stop orders, mechanic’s

 

77

 

or materialman’s liens or
notices of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the affected Property which have not either been fully
bonded to the satisfaction of Lender and discharged of record or in the
alternative fully insured to the satisfaction of Lender by the title company
issuing the Title Insurance Policy. 
Notwithstanding the foregoing, Insurance Proceeds from the Policies
required to be maintained by Borrower or Mortgage Borrower pursuant to
Section 8.1(a)(iii) shall be controlled by Lender at all times, shall not
be subject to the provisions of this Section 8.4 and shall be used solely
for the payment of the obligations under the Loan Documents and Operating
Expenses.

 

(iii)          All plans and specifications required
in connection with the Restoration shall be subject to prior review and
acceptance in all respects by Lender and by an independent consulting engineer
selected by Lender (the “Restoration Consultant”).  Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in
connection with the Restoration.  The
identity of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts in excess of $100,000 under which they
have been engaged, shall be subject to prior review and acceptance by Lender
and the Restoration Consultant.  All
costs and expenses incurred by Lender in connection with making the Net Proceeds
available for the Restoration, including, without limitation, reasonable
counsel fees and disbursements and the Restoration Consultant’s fees, shall be
paid by Borrower or Mortgage Borrower.

 

(iv)          In no event shall Lender be obligated
to make disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of the
Restoration, as certified by the Restoration Consultant, minus the Restoration
Retainage.  The term “Restoration
Retainage” shall mean an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Restoration Consultant, until the Restoration has been completed.  The Restoration Retainage shall be reduced
to five percent (5%) of the costs incurred upon receipt by Lender of
satisfactory evidence that fifty percent (50%) of the Restoration has been
completed.  The Restoration Retainage
shall in no event, and notwithstanding anything to the contrary set forth above
in this Section 8.4(b), be less than the amount actually held back by
Borrower or Mortgage Borrower from contractors, subcontractors and materialmen
engaged in the Restoration.  The
Restoration Retainage shall not be released until the Restoration Consultant
certifies to Lender that the Restoration has been completed in accordance with
the provisions of this Section 8.4(b) and that all approvals necessary for
the re-occupancy and use of the affected Property have been obtained from all
appropriate Governmental Authorities, and Lender receives evidence satisfactory
to Lender that the costs of the Restoration have been paid in full or will be
paid in full out of the Restoration Retainage; provided, however, that Lender
will release the portion of the Restoration Retainage being held with respect
to any contractor, subcontractor or

 

78

 

materialman engaged in
the Restoration as of the date upon which the Restoration Consultant certifies
to Lender that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, the
contractor, subcontractor or materialman delivers the lien waivers and evidence
of payment in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender.  If required by Lender, the release of any such portion of the
Restoration Retainage shall be approved by the surety company, if any, which
has issued a payment or performance bond with respect to the contractor,
subcontractor or materialman.

 

(v)           Lender shall not be obligated to make
disbursements of the Net Proceeds more frequently than once every calendar
month.

 

(vi)          If at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the reasonable opinion of Lender in
consultation with the Restoration Consultant, be sufficient to pay in full the
balance of the costs which are estimated by the Restoration Consultant to be
incurred in connection with the completion of the Restoration, Borrower or
Mortgage Borrower shall deposit without duplication the deficiency (the “Net Proceeds
Deficiency”) with Lender, before any further disbursement of the Net
Proceeds shall be made.  The Net
Proceeds Deficiency, if any, deposited with Lender shall be held by Lender in
an interest bearing account (with interest credited to Borrower) and shall be
disbursed for costs actually incurred in connection with the Restoration on the
same conditions applicable to the disbursement of the Net Proceeds, and until
so disbursed pursuant to this Section 8.4(b) shall constitute additional
security for the Debt and other obligations under the Loan Documents.

 

(vii)         The excess, if any, of the Net Proceeds
and the remaining balance, if any, of the Net Proceeds Deficiency deposited
with Lender after the Restoration Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of this
Section 8.4(b), and the receipt by Lender of evidence satisfactory to
Lender that all costs incurred in connection with the Restoration have been
paid in full, shall be remitted by Lender to Borrower (or as directed by
Borrower), provided no Event of Default shall have occurred and shall be
continuing under the Note, this Agreement or any of the other Loan Documents.

 

(c)           All Net Proceeds not required (i) to
be made available for the Restoration or (ii) to be returned to Borrower as
excess Net Proceeds pursuant to Section 8.4(b)(vii) may (x) be retained
and applied by Lender toward the payment of the Debt whether or not then due as
an involuntary partial prepayment thereof, or, (y) at the sole discretion of
Lender, the same may be paid, either in whole or in part, to Borrower for such
purposes and upon such conditions as Lender shall designate.

 

(d)           Notwithstanding anything herein to
the contrary, in the event that the Property is being restored by Mortgage
Borrower pursuant to the Mortgage Loan Documents, Lender shall agree to the
release of the Net Proceeds for Restoration of the Property pursuant to the
terms and provisions of the Mortgage Loan Documents, subject to Lender’s rights
to receive and approve in its discretion all deliverables set forth in this
Section 8.4.

 

79

 

ARTICLE 9

RESERVE FUNDS

 

Borrower shall cause
Mortgage Borrower to comply with all of its obligations under Article 9 of the
Mortgage Loan Agreement. 
Notwithstanding anything to the contrary contained in this Agreement, if
at any time and for any reason (including, without limitation, the satisfaction
of the Mortgage Loan), Mortgage Borrower is no longer maintaining any of the
Reserve Accounts required to be maintained by Mortgage Borrower in accordance
with the terms of the Mortgage Loan Documents, (i) Borrower shall be required
to promptly establish and maintain with Lender and for the benefit of Lender
reserves in replacement and substitution thereof, which substitute reserves
shall be subject to all of the same terms and conditions applicable under the
Mortgage Loan Documents with respect to the Reserve Account being replaced
(including, but not limited to, Article 10 of the Mortgage Loan Agreement
relating to cash management and Borrower shall, and shall cause Mortgage
Borrower to, executed a cash management agreement in form substantially similar
to the Cash Management Agreement) and (ii) to the extent not prohibited by
Mortgage Lender under the Mortgage Loan Documents, Borrower shall or shall
cause Mortgage Lender to remit to Lender any funds from Reserve Accounts that
were remaining in such reserves at the time of the termination of such reserves
for the purpose of funding the equivalent substitute reserves.

 

ARTICLE 10

CASH MANAGEMENT

 

Borrower and Lender
acknowledge and agree that all Rents and other income from the Property payable
to Borrower or Mortgage Borrower will be deposited and disbursed in accordance
with the terms of the Cash Management Agreement.  Notwithstanding anything to the contrary contained in this
Agreement, if at any time and for any reason (including, without limitation,
the satisfaction of the Mortgage Loan), Mortgage Borrower is no longer
maintaining the accounts established pursuant to the Cash Management Agreement
or if the Cash Management Agreement is no longer in full force and effect,
Borrower shall promptly enter into a substitute cash management agreement with
such other depository institution as Lender shall direct, or an agent selected
by Borrower and reasonably acceptable to Lender and, if the Loan is
securitized, acceptable to the Rating Agencies, which such agent shall be an
Eligible Institution on substantially the same terms as the agreements entered
into as of the date hereof in connection with the related Mortgage Loan.

 

ARTICLE 11

EVENTS OF DEFAULT; REMEDIES

 

Section 11.1.          EVENT
OF DEFAULT

 

The occurrence of any one
or more of the following events shall constitute an “Event of Default”:

 

(a)           if any portion of the Debt is not
paid on or prior to the date the same is due or if the entire Debt is not paid
on or before the Maturity Date; provided, however, Borrower shall not be in
default so long as there is sufficient money in the Cash Management Account for
payment

 

80

 

of all amounts then due and payable (including any deposits into
Mortgage Reserve Accounts) and Lender’s access to such money has not been
constrained or constricted in any manner;

 

(b)           except as otherwise expressly
provided in the Loan Documents, if any of the Taxes or Other Charges (including
Ground Rents as defined in the Mortgage Loan Agreement) are not paid when the
same are due and payable, unless there is sufficient money in the Tax and
Insurance Reserve Account or (as defined in the Mortgage Loan Agreement) Ground
Rent Reserve Account (as defined in the Mortgage Loan Agreement), as applicable
for payment of amounts then due and payable and Lender’s access to such money
has not been constrained or restricted in any manner;

 

(c)           if the Policies are not kept in full
force and effect, or if certified copies of the Policies are not delivered to
Lender as provided in Section 8.1;

 

(d)           if Borrower breaches any covenant
with respect to Borrower, Mortgage Borrower, Mortgage Borrower GP or any SPE
Component Entity (if any) contained in (i) Article 6 and Borrower shall within
fifteen (15) days of the earlier of Borrower’s knowledge or notice of such
breach, fail to cure the same and deliver an updated non-consolidation opinion
acknowledging such breach in form and substance acceptable to Lender or (ii) any
covenant contained in Article 7 hereof;

 

(e)           if any representation or warranty of,
or with respect to, Borrower, Mortgage Borrower, Affiliated Lessee, Borrower
Principal, any SPE Component Entity, or any member, general partner, principal
or beneficial owner of any of the foregoing, made herein, in any other Loan
Document, or in any certificate, report, financial statement or other
instrument or document furnished to Lender at the time of the closing of the
Loan or during the term of the Loan shall have been false or misleading in any
material respect when made;

 

(f)            if (i) Borrower, any managing member
or general partner of Borrower, Mortgage Borrower, Operating Lessee, Borrower
Principal or any SPE Component Entity (if any) shall commence any case, proceeding
or other action (A) under any Creditors Rights Laws, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate it a bankrupt
or insolvent, or seeking reorganization, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or Borrower, Mortgage Borrower,
Operating Lessee, any managing member or general partner of Borrower, Mortgage
Borrower, Operating Lessee, Borrower Principal, or any SPE Component Entity (if
any) shall make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against Borrower, Mortgage Borrower, Operating Lessee,
any managing member or general partner of Borrower, Mortgage Borrower,
Operating Lessee, Borrower Principal, or any SPE Component Entity (if any) any
case, proceeding or other action of a nature referred to in clause (i) above
which (A) results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unbonded for a
period of ninety (90) days; or (iii) there shall be commenced against Borrower,
Mortgage Borrower, Operating Lessee, any managing member or general partner of
Borrower, Mortgage Borrower, Operating Lessee, Borrower Principal, or any SPE
Component Entity (if any) any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of any order
for any such relief which

 

81

 

shall not have been vacated, discharged, or stayed or bonded pending
appeal within ninety (90) days from the entry thereof; or (iv) Borrower,
Mortgage Borrower, Operating Lessee, any managing member or general partner of
Borrower, Mortgage Borrower, Operating Lessee, Borrower Principal, or any SPE
Component Entity (if any) shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Borrower, Mortgage Borrower,
Operating Lessee, any managing member or general partner of Borrower, Mortgage
Borrower, Operating Lessee, Borrower Principal, or any SPE Component Entity (if
any) shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due;

 

(g)           if Borrower shall be in default
beyond applicable notice and grace periods under any other pledge or other
security agreement covering any part of the Collateral, whether it be superior
or junior in lien to the Pledge Agreement;

 

(h)           if Mortgage Borrower shall be in
default beyond applicable notice and grace periods under any mortgage, deed of
trust, deed to secure debt of other security agreement covering any party of
any Property;

 

(i)            if any Property becomes subject to
any mechanic’s, materialman’s or other Lien other than a Lien for any Taxes or
Other Charges not then due and payable and such Lien shall remain undischarged
of record (by payment, bonding or otherwise) for a period of sixty (60) days,
or if any portion of the Collateral becomes subject to any Lien and such Lien
shall remain undischarged of record (by payment, bonding or otherwise) for a
period of fifteen (15) days;

 

(j)            if any federal tax lien is filed
against Borrower, any member or general partner of Borrower, Mortgage Borrower,
Affiliated Lessee, Borrower Principal, or any SPE Component Entity (if any) or
any Property and same is not discharged of record within (a) fifteen (15) days
after the same is filed in the instance of a lien filed against Mortgage
Borrower or Mortgage Borrower’s general partner or (b) thirty (30) days after
same is filed in the instance of a lien filed against any of the other above
stated entities;

 

(k)           if a judgment is filed against the
Borrower in excess of $100,000 which judgment is not covered by insurance
proceeds and is not vacated or discharged within 30 days;

 

(l)            if any default occurs under any
guaranty or indemnity executed in connection herewith and such default
continues after the expiration of applicable grace periods, if any;

 

(m)          if Borrower shall cause Mortgage
Borrower to permit any event within Mortgage Borrower’s control to occur that
would cause any REA to terminate without notice or action by any party thereto
or would entitle any party to terminate any REA and the term thereof by giving
notice to Mortgage Borrower; or any REA shall be surrendered, terminated or
canceled for any reason or under any circumstance whatsoever except as provided
for in such REA; or any term of any REA shall be modified or supplemented
without Lender’s prior written consent; or Borrower shall fail to cause
Mortgage Borrower, within ten (10) Business Days after demand by Lender, to
exercise Mortgage Borrower’s option to renew or extend the term of any REA or
shall fail or neglect to pursue diligently all actions necessary to exercise
such renewal rights pursuant to such REA except as provided for in such REA and
the same shall have (or shall be reasonably

 

82

 

expected to have) a material and adverse affect on the value, use,
operation or enjoyment of the applicable Property as a hotel of a similar type
as the hotel situated on such Property as of the Closing Date or on the ability
of Borrower to perform its obligations (including its payment obligations under
this Agreement, the Note and the other Loan Documents);

 

(n)           if Borrower breaches any of its
covenants contained in Section 5.24;

 

(o)           if a default has occurred and is
continuing beyond any applicable cure period under any Franchise Agreement or
Management Agreement, which entitles such Franchisor or Manager, as the case
may be, to terminate or cancel such Franchise Agreement or Management
Agreement;

 

(p)           if Borrower shall breach any of the
material terms of:

 

(i)            Section 2.4(g) (Payments upon a
Liquidation Event);

 

(ii)           Intentionally Omitted;

 

(iii)          Section 5.25 (Notices), to the extent
such default shall continue for a period of five (5) days after Lender’s notice
thereof to Borrower;

 

(iv)          Section 5.27 (Special
Distributions);

 

(v)           Section 5.28 (Limitations on
Securities Issuances);

 

(vi)          Section 5.29 (Limitations on
Distributions);

 

(vii)         Section 5.30 (Other Limitations);

 

(viii)        Section 5.31 (Contractual
Obligations); or

 

(ix)           Section 5.34 (Refinancing);

 

(q)           if Borrower shall cause Mortgage
Borrower, without Lender’s consent, to modify, amend, terminate or cancel (or
to permit or direct Operating Lessee to modify, amend, terminate or cancel) any
Franchise Agreement or to operate any Property under the name of any hotel
chain or system other than the name such Property is operated under as of the
date hereof

 

(r)            if Borrower shall cause Mortgage
Borrower, without Lender’s consent, to modify, amend, terminate or cancel (or
to permit or direct any Affiliated Lessee to modify, amend, terminate or
cancel) any Management Agreement;

 

(s)           if any Affiliated Lessee is in
default beyond any applicable notice or cure period under the applicable
Operating Lease;

 

(t)            if any Affiliated Lessee shall
default in the performance or observance of the obligations under the
applicable Subordination and Attornment Agreement beyond any applicable notice
or cure period set forth therein or (b) an “Event of Default” shall occur under

 

83

 

any Subordination, Attornment and Security Agreement (as defined in the
Mortgage Loan Agreement);

 

(u)           if there shall occur any default by
Mortgage Borrower, as tenant under either Ground Lease, in the observance or
performance of any term, covenant or condition of the applicable Ground Lease
on the part of Mortgage Borrower to be observed or performed and said default
is not cured following the expiration of any applicable grace and notice
periods therein provided, or if the leasehold estate created by the applicable
Ground Lease shall be surrendered or if the applicable Ground Lease shall cease
to be in full force and effect or the applicable Ground Lease shall be
terminated or canceled for any reason or under any circumstances whatsoever, or
if any of the terms, covenants or conditions of the applicable Ground Lease
shall in any manner be modified, changed, supplemented, altered, or amended
without the consent of Lender;

 

(v)           if Borrower Principal breaches its
covenant set forth in Section 5.33 unless within five (5) days of written
notice from Lender, CNL Hospitality Properties, Inc. executes this Agreement
assuming all obligations of Borrower Principal hereunder and in connection
therewith provides Lender with a corporate and enforceability opinion with
respect to such execution and the obligations so assumed, all acceptable to
Lender in its reasonable discretion;

 

(w)          if Borrower shall continue to be in
default under any other term, covenant or condition of this Agreement or any of
the Loan Documents for more than ten (10) days after notice from Lender to
Borrower in the case of any default which can be cured by the payment of a sum
of money or for thirty (30) days after notice from Lender to Borrower in the
case of any other default, provided that if such default cannot reasonably be
cured within such thirty (30) day period and Borrower shall have commenced to
cure such default within such thirty (30) day period and thereafter diligently
and expeditiously proceeds to cure the same, such thirty (30) day period shall
be extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall be
for a period in excess of sixty (60) days; or

 

(x)            if a Mortgage Loan Event of Default
occurs.

 

Section 11.2.          REMEDIES

 

(a)           Upon the occurrence of an Event of
Default (other than an Event of Default described in Section 11.1(f)
above) and at any time thereafter during the continuance of such Event of
Default Lender may, in addition to any other rights or remedies available to it
pursuant to this Agreement and the other Loan Documents or at law or in equity,
take such action, without notice or demand, that Lender deems advisable to
protect and enforce its rights against Borrower and in the Collateral,
including, without limitation, declaring the Debt to be immediately due and
payable, and Lender may enforce or avail itself of any or all rights or remedies
provided in the Loan Documents and may exercise all the rights and remedies of
a secured party under the UCC, as adopted and enacted by the State of New York,
against Borrower and the Collateral (or any portion thereof), including,
without limitation, all rights or remedies available at law or in equity; and
upon any Event of Default described in Section 11.1(f) above, the Debt and
all other obligations of Borrower hereunder and under the other Loan Documents
shall immediately and

 

84

 

automatically become due and payable, without notice or demand, and
Borrower hereby expressly waives any such notice or demand, anything contained
herein or in any other Loan Document to the contrary notwithstanding.

 

(b)           Upon the occurrence and during the
continuance of an Event of Default, all or any one or more of the rights,
powers, privileges and other remedies available to Lender against Borrower
under this Agreement or any of the other Loan Documents executed and delivered
by, or applicable to, Borrower or at law or in equity may be exercised by
Lender at any time and from time to time, whether or not all or any of the Debt
shall be declared due and payable, and whether or not Lender shall have
commenced any foreclosure proceeding or other action for the enforcement of its
rights and remedies under any of the Loan Documents with respect to the
Collateral.  Any such actions taken by
Lender shall be cumulative and concurrent and may be pursued independently,
singularly, successively, together or otherwise, at such time and in such order
as Lender may determine in its sole discretion, to the fullest extent permitted
by law, without impairing or otherwise affecting the other rights and remedies
of Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents.

 

ARTICLE 12

ENVIRONMENTAL PROVISIONS

 

Section 12.1.          ENVIRONMENTAL
REPRESENTATIONS AND WARRANTIES

 

Borrower represents and
warrants, based upon an Environmental Report of each Property and information
that Borrower knows or should reasonably have known, and subject to all matters
disclosed in the Environmental Reports delivered pursuant to the provisions of
(or referenced in) Section 3.2(e) hereof that:  (a) there are no Hazardous Materials or underground storage tanks
in, on, or under any Property, except those that are both (i) in compliance
with Environmental Laws and with permits issued pursuant thereto (if such
permits are required), if any, and (ii) either (A) in the case of Hazardous
Materials, in amounts not in excess of that necessary to operate such Property
for the purposes set forth herein or (B) fully disclosed to and approved by
Lender in writing pursuant to an Environmental Report; (b) there are no past,
present or threatened Releases of Hazardous Materials in violation of any
Environmental Law or which would require remediation by a Governmental
Authority in, on, under or from any Property except as described in the
Environmental Report; (c) there is no threat of any Release of Hazardous
Materials migrating to any Property except as described in the Environmental
Report; (d) there is no past or present non-compliance with Environmental Laws,
or with permits issued pursuant thereto, in connection with any Property except
as described in the Environmental Report; (e) Borrower does not know of, and
has not received, any written or oral notice or other communication from any
Person relating to Hazardous Materials in, on, under or from any Property; and
(f) Borrower has truthfully and fully provided to Lender, in writing, any and
all information relating to environmental conditions in, on, under or from such
Property known to Borrower or contained in Borrower’s files and records,
including but not limited to any reports relating to Hazardous Materials in,
on, under or migrating to or from such Property and/or to the environmental
condition of such Property.

 

85

 

Section 12.2.          ENVIRONMENTAL
COVENANTS

 

Borrower covenants and
agrees that so long as Mortgage Borrower owns, manages, is in possession of, or
otherwise controls the operation of the Properties (but not any time after the
date on which Lender (or any purchaser at a foreclosure sale) actually acquires
title to the equity interest of Borrower in Mortgage Borrower and Mortgage
Borrower’s general partner):  (a)
all uses and operations on or of each Property, whether by Mortgage Borrower or
any other Person, shall be in compliance in all material respects with all
Environmental Laws and permits issued pursuant thereto; (b) there shall be no
Releases of Hazardous Materials in, on, under or from any Property; (c) there
shall be no Hazardous Materials in, on, or under any Property, except those
that are both (i) in compliance with all Environmental Laws and with permits
issued pursuant thereto, if and to the extent required, and (ii) (A) in amounts
not in excess of that necessary to operate any Property for the purposes set
forth herein or (B) fully disclosed to and approved by Lender in writing; (d)
cause Mortgage Borrower to keep each Property free and clear of all
Environmental Liens; (e) cause Mortgage Borrower to, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to
Section 12.4 below, including but not limited to providing all relevant
information and making knowledgeable persons available for interviews; (f)
Borrower shall cause Mortgage Borrower to, at its sole cost and expense,
perform any environmental site assessment or other investigation of
environmental conditions in connection with each Property, pursuant to any
reasonable written request of Lender, upon Lender’s reasonable belief that such
Property is not in full compliance with all Environmental Laws, and share with
Lender the reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof;
(g) Borrower shall cause Mortgage Borrower to, at its sole cost and expense,
comply with all reasonable written requests of Lender to (i) reasonably
effectuate remediation of any Hazardous Materials in, on, under or from such
Property; and (ii) comply with any Environmental Law; (h) Borrower shall cause
Mortgage Borrower not to allow any tenant or other user of any Property to
violate any Environmental Law; and (i) Borrower shall cause Mortgage Borrower
to immediately notify Lender in writing after it has become aware of (A) any
presence or Release or threatened Release of Hazardous Materials in, on, under,
from or migrating towards any Property; (B) any non-compliance with any
Environmental Laws related in any way to any Property; (C) any actual or
potential Environmental Lien against any Property; (D) any required or proposed
remediation of environmental conditions relating to any Property; and (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but not limited to a Governmental
Authority) relating in any way to Hazardous Materials.  Any failure of Borrower to cause Mortgage
Borrower to perform such obligations pursuant to this Section 12.2 shall
constitute bad faith waste with respect to the Properties.

 

Section 12.3.          LENDER’S
RIGHTS

 

Lender and any other
Person designated by Lender, including but not limited to any representative of
a Governmental Authority, and any environmental consultant, and any receiver
appointed by any court of competent jurisdiction, shall have the right, but not
the obligation, to enter upon any Property at all reasonable times to assess
any and all aspects of the environmental condition of each Property and its
use, including but not limited to conducting any environmental assessment or
audit (the scope of which shall be determined in Lender’s reasonable
discretion) and taking samples of soil, groundwater or other water, air, or
building materials, and conducting

 

86

 

other invasive testing. 
Borrower shall cooperate with and provide access to Lender and any such
person or entity designated by Lender.

 

Section 12.4.          OPERATIONS
AND MAINTENANCE PROGRAMS

 

If recommended by the
Environmental Report or any other environmental assessment or audit of any
Property,  Borrower shall cause Mortgage
Borrower to establish and comply with an operations and maintenance program
with respect to any such Property, in form and substance reasonably acceptable
to Lender, prepared by an environmental consultant reasonably acceptable to
Lender, which program shall address any asbestos-containing material or lead
based paint that may now or in the future be detected at or on any such
Property.  Without limiting the
generality of the preceding sentence, Lender may require (a) periodic notices
or reports to Lender in form, substance and at such intervals as Lender may
specify, (b) an amendment to such operations and maintenance program to address
changing circumstances, laws or other matters, (c) at Borrower’s sole expense,
supplemental examination of any such Property by consultants specified by
Lender, (d) access to each Property by Lender, its agents or servicer, to
review and assess the environmental condition of each Property and Borrower’s
compliance with any operations and maintenance program, and (e) variation of
the operations and maintenance program in response to the reports provided by
any such consultants.

 

Section 12.5.          ENVIRONMENTAL
DEFINITIONS

 

“Environmental Law” means any
present and future federal, state and local laws, statutes, ordinances, rules,
regulations, standards, policies and other government directives or
requirements, as well as common law, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act and the
Resource Conservation and Recovery Act, that apply to Borrower or any Property
and relate to Hazardous Materials or protection of human health or the
environment.  “Environmental Liens” means
all Liens and other encumbrances imposed pursuant to any Environmental Law,
whether due to any act or omission of Borrower or any other Person.  “Environmental Report” means the written
reports resulting from the environmental site assessments of any Property
delivered to Lender in connection with the Loan.  “Hazardous Materials” shall mean petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and
oil; explosives, flammable materials; radioactive materials; polychlorinated
biphenyls and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on any Property is prohibited by
any federal, state or local authority; any substance that requires special
handling; and any other material or substance now or in the future defined as a
“hazardous substance,” “hazardous material”, “hazardous waste”, “toxic
substance”, “toxic pollutant”, “contaminant”, or “pollutant” within the meaning
of any Environmental Law.  “Release”
of any Hazardous Materials includes but is not limited to any release, deposit,
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Materials.

 

87

 

Section 12.6.          INDEMNIFICATION

 

(a)           Borrower and Borrower Principal
covenant and agree at their sole cost and expense, to protect, defend,
indemnify, release and hold Indemnified Parties harmless from and against any
and all Losses imposed upon or incurred by or asserted against any Indemnified
Parties and directly or indirectly arising out of or in any way relating to any
one or more of the following:  (i) any
presence of any Hazardous Materials in, on, above, or under any Property; (ii)
any past, present or threatened Release of Hazardous Materials in, on, above,
under or from any Property; (iii) any activity by Borrower or Mortgage
Borrower, any Person Affiliated with Borrower or Mortgage Borrower, and any Tenant
or other user of any Property in connection with any actual, proposed or
threatened use, treatment, storage, holding, existence, disposition or other
Release, generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
any Property of any Hazardous Materials at any time located in, under, on or
above any Property or any actual or proposed remediation of any Hazardous
Materials at any time located in, under, on or above any Property, whether or
not such remediation is voluntary or pursuant to court or administrative order,
including but not limited to any removal, remedial or corrective action; (iv)
any past, present or threatened non-compliance or violations of any Environmental
Laws (or permits issued pursuant to any Environmental Law) in connection with
any Property or operations thereon, including but not limited to any failure by
Borrower or Mortgage Borrower, any person or entity Affiliated with Borrower or
Mortgage Borrower, and any tenant or other user of any Property to comply with
any order of any Governmental Authority in connection with any Environmental
Laws; (v) the imposition, recording or filing or the threatened imposition,
recording or filing of any Environmental Lien encumbering any Property; (vi)
any acts of Borrower or Mortgage Borrower, any person or entity Affiliated with
Borrower or Mortgage Borrower, and any tenant or other user of any Property in
(A) arranging for disposal or treatment, or arranging with a transporter for
transport for disposal or treatment, of Hazardous Materials at any facility or
incineration vessel containing such or similar Hazardous Materials or (B)
accepting any Hazardous Materials for transport to disposal or treatment facilities,
incineration vessels or sites from which there is a Release, or a threatened
Release of any Hazardous Substance which causes the incurrence of costs for
remediation; and (vii) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to this Agreement relating to
environmental matters.

 

(b)           Upon written request by any
Indemnified Party, Borrower and Borrower Principal shall defend same (if
requested by any Indemnified Party, in the name of the Indemnified Party) by
attorneys and other professionals reasonably approved by the Indemnified
Parties.  Notwithstanding the foregoing,
any Indemnified Parties may, in their sole discretion, engage their own attorneys
and other professionals to defend or assist them, and, at the option of
Indemnified Parties, their attorneys shall control the resolution of any claim
or proceeding.  Upon demand, Borrower
and Borrower Principal shall pay or, in the sole discretion of the Indemnified
Parties, reimburse, the Indemnified Parties for the payment of reasonable fees
and disbursements of attorneys, engineers, environmental consultants,
laboratories and other professionals in connection therewith.

 

(c)           Notwithstanding the foregoing,
Borrower shall have no liability for any Losses imposed upon or incurred by or
asserted against any Indemnified Parties and described in

 

88

 

subsection (a) above to the extent that Borrower can conclusively prove
both that such Losses were caused solely by actions, conditions or events that
first occurred after the date that Lender (or any purchaser at a foreclosure
sale) actually acquired title to the equity interest of Borrower in Mortgage
Borrower and Mortgage Borrower’s general partner and that such Losses
were not caused by the direct or indirect actions of Borrower, Borrower
Principal, or any partner, member, principal, officer, director, trustee or
manager of Borrower or Borrower Principal or any employee, agent, contractor or
Affiliate of Borrower or Borrower Principal (other than Mortgage Borrower to
the extent arising after the Foreclosure Date (as defined in Section
15.1(e))).  The obligations and liabilities
of Borrower and Borrower Principal under this Section 12.6 shall fully
survive indefinitely notwithstanding any termination, satisfaction or
assignment of the Pledge Agreement.

 

ARTICLE 13

SECONDARY MARKET

 

Section 13.1.          TRANSFER
OF LOAN

 

Lender may, at any time,
sell, transfer or assign the Loan Documents, or grant participations therein (“Participations”)
or syndicate the Loan (“Syndication”) or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest
in a rated or unrated public offering or private placement (“Securities”)
(a Syndication or the issuance of Participations and/or Securities, a “Securitization”).

 

Section 13.2.          DELEGATION
OF SERVICING

 

At the option of Lender,
the Loan may be serviced by a servicer/trustee selected by Lender and Lender may
delegate all or any portion of its responsibilities under this Agreement and
the other Loan Documents to such servicer/trustee pursuant to a servicing
agreement between Lender and such servicer/trustee.

 

Section 13.3.          DISSEMINATION
OF INFORMATION

 

Lender may forward to
each purchaser, transferee, assignee, or servicer of, and each participant, or
investor in, the Loan, or any Participations and/or Securities or any of their
respective successors (collectively, the “Investor”) or any Rating Agency rating the
Loan, or any Participations and/or Securities, each prospective Investor, and
any organization maintaining databases on the underwriting and performance of
commercial mortgage loans, all documents and information which Lender now has
or may hereafter acquire relating to the Debt and to Borrower, any managing
member or general partner thereof, Mortgage Borrower, Borrower Principal, any
SPE Component Entity (as defined herein and in the Mortgage Loan Agreement) (if
any) and any Property, including financial statements, whether furnished by
Borrower or otherwise, as Lender determines necessary or desirable.  Borrower irrevocably waives any and all
rights it may have under applicable Legal Requirements to prohibit such
disclosure, including but not limited to any right of privacy.

 

89

 

Section 13.4.          COOPERATION

 

Borrower and Borrower
Principal agree to cooperate with Lender in connection with any sale or
transfer of the Loan, Syndication or any Participation and/or Securities
created pursuant to this Article 13.  At
the request of the holder of the Note and, to the extent not already required
to be provided by Borrower under this Agreement, Borrower and Borrower
Principal shall take such reasonable actions for the benefit of, and use
reasonable efforts to provide information not in the possession of the holder
of the Note in order to satisfy the market standards (which may include such
holder’s delivery of information with respect to Borrower, Mortgage Borrower, Borrower
Principal, the Collateral and the Property to any Investor or prospective
Investor) to which the holder of the Note customarily adheres or which may be
reasonably required in the marketplace or by the Rating Agencies in connection
with such sales or transfers, including, without limitation, to:

 

(a)           provide or cause the Mortgage
Borrower to provide, (i) updated financial, budget and other information
(including, but not limited to, updated Rent Rolls meeting the requirements set
forth in Section 5.11(a)(i) hereof and operating statements for each Property
meeting the requirements set forth in Section 5.11(a)(ii) hereof) with respect
to each Property, Borrower, Mortgage Borrower, Borrower Principal and Manager
and (ii) modifications and/or updates to the appraisals, market studies,
environmental reviews and reports and engineering reports of any Property
obtained in connection with the making of the Loan (all of the foregoing being
referred to as the “Provided Information”), together, if
customary, with appropriate verification and/or consents of the Provided
Information through letters of auditors or opinions of counsel of independent
attorneys acceptable to Lender and the Rating Agencies;

 

(b)           make reasonable changes to the
organizational documents of Borrower, Mortgage Borrower or any SPE Component
Entity and their respective principals, including, but not limited to, changes
to the ownership structure of Borrower as may be necessary to create a second
Borrower acceptable to Lender in its reasonable discretion;

 

(c)           Intentionally Omitted;

 

(d)           permit site inspections, appraisals,
market studies and other due diligence investigations of any Property, as may
be reasonably requested by the holder of the Note or the Rating Agencies or as
may be necessary or appropriate in connection with the Securitization;

 

(e)           make the representations and
warranties with respect to any or all Properties, the Collateral, the Borrower,
Mortgage Borrower, Borrower Principal and the Loan Documents as are made in the
Loan Documents and such other representations and warranties as may be
reasonably requested by the holder of the Note or the Rating Agencies;

 

(f)            execute such amendments to the Loan
Documents as may be requested by the holder of the Note or the Rating Agencies
or otherwise to effect the Securitization including, without limitation,
bifurcation of the Loan into two or more components and/or separate notes
and/or creating a senior/subordinate note structure and/or additional mezzanine
note components and/or adjusting the relative loan amounts of the Loan and the
Mortgage Loan; provided, however, that Borrower shall not be required to modify
or amend any Loan Document if such

 

90

 

modification or amendment would (i) change the interest rate or the
stated maturity, except in connection with a bifurcation of the Loan which may
result in varying LIBOR Rates for each component thereof, but which shall have
the same weighted average coupon of the LIBOR Rate that existed immediately
prior to such modification, or (ii) in the reasonable judgment of Borrower,
modify or amend any other material economic term of the Loan, or (iii) in the
reasonable judgment of Borrower, materially increase Borrower’s obligations and
liabilities under the Loan Documents;

 

(g)           deliver to Lender and/or any Rating
Agency, (i) one or more certificates executed by an officer of the Borrower
certifying as to the accuracy, as of the closing date of the Securitization, of
all representations made by Borrower in the Loan Documents as of the Closing
Date in all relevant jurisdictions or, if such representations are no longer
accurate, certifying as to what modifications to the representations would be
required to make such representations accurate as of the closing date of the
Securitization, and (ii) certificates of the relevant Governmental Authorities
in all relevant jurisdictions indicating the good standing and qualification of
Borrower as of the date of the closing date of the Securitization;

 

(h)           have reasonably appropriate personnel
participate in a bank meeting and/or presentation for the Rating Agencies or
Investors; and

 

(i)            cooperate with and assist Lender in
obtaining ratings of the Securities from two (2) or more of the Rating
Agencies.

 

Upon Lender’s
modification the Selected Day pursuant to the terms of Section 2.2(d)
above, Borrower and Borrower Principal shall promptly deliver to Lender such
modifications to the Rate Cap and the Collateral Assignment of Interest Rate
Cap reasonably required by Lender as result of such designation.

 

Borrower shall not be
responsible for any costs and expenses incurred by Borrower or Lender in
connection with Borrower’s complying with the requests and requirements made
under this Section 13.4 (including, without limitation, the fees and
expenses of the Rating Agencies).

 

In the event that
Borrower requests any consent or approval hereunder and the provisions of this
Agreement or any Loan Documents require the receipt of written confirmation
from each Rating Agency with respect to the rating on the Securities, or, in
accordance with the terms of the transaction documents relating to a
Securitization, such a rating confirmation is required in order for the consent
of Lender to be given, Borrower shall pay all of the costs and expenses of
Lender, Lender’s servicer and each Rating Agency in connection therewith, and,
if applicable, shall pay any fees imposed by any Rating Agency as a condition
to the delivery of such confirmation.

 

Section 13.5.          SECURITIZATION
INDEMNIFICATION

 

(a)           Borrower and Borrower Principal
understand that certain of the Provided Information may be included in
disclosure documents in connection with the Securitization, including, without
limitation, a prospectus, prospectus supplement, offering memorandum or private
placement memorandum (each, a “Disclosure Document”) and may also be included
in filings with the Securities and Exchange Commission pursuant to the
Securities Act or the

 

91

 

Exchange Act, or provided or made available to investors or prospective
investors in the Securities, the Rating Agencies, and service providers
relating to the Securitization.  In the
event that the Disclosure Document is required to be revised prior to the sale
of all Securities, Borrower and Borrower Principal will cooperate with the
holder of the Note in updating the Disclosure Document by providing all current
information necessary to keep the Disclosure Document accurate and complete in
all material respects.

 

(b)           Borrower and Borrower Principal agree
in connection with each of (i) a preliminary and a final offering memorandum or
private placement memorandum or similar document (including any Investor or
Rating Agency “term sheets” or presentations relating to any Property, the
Collateral and/or the Loan) or (ii) a preliminary and final prospectus or
prospectus supplement, as applicable, (A) that Borrower and Borrower
Principal will provide a certificate certifying that Borrower and Borrower
Principal have carefully examined such memorandum or prospectus or other
document (including any Investor or Rating Agency “term sheets” or
presentations relating to any Property, the Collateral and/or the Loan), as
applicable, including without limitation, the sections entitled “Special
Considerations,” and/or “Risk Factors,” and “Certain Legal Aspects of the
Mortgage Loan,” or similar sections, and all sections relating to Borrower,
Borrower Principal, Manager, their Affiliates, the Loan, the Loan Documents,
the Collateral, and any Property, and any risks or special considerations
relating thereto, and that, to the best of Borrower’s knowledge, such sections
(and any other sections reasonably requested) do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements made, in the light of the circumstances under
which they were made, not misleading, and (B) that Borrower will provide
an indemnification certificate (1) indemnifying Lender (and for purposes
of this Section 13.5, Lender hereunder shall include its officers and
directors) and the Affiliate of Lender that (i) has filed the registration
statement, if any, relating to the Securitization and/or (ii) which is acting
as issuer, depositor, sponsor and/or a similar capacity with respect to the
Securitization (any Person described in (i) or (ii), an “Issuer Person”), and
each director and officer of any Issuer Person, and each Person or entity who
controls any Issuer Person within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively, the “Issuer Group”),
and each Person which is acting as an underwriter, manager, placement agent,
initial purchaser or similar capacity with respect to the Securitization, each
of its directors and officers and each Person who controls any such Person
within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act (collectively, the “Underwriter Group”) for any Losses to
which Lender, the Issuer Group or the Underwriter Group may become subject
insofar as the Losses arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact which is in fact untrue contained
in such sections (including any Investor or Rating Agency “term sheets” or presentations
relating to any Property and/or the Loan) or arise out of or are based upon the
omission or alleged omission which is in fact an omission to state therein a
material fact required to be stated in such sections (including any Investor or
Rating Agency “term sheets” or presentations relating to any Property, the
Collateral and/or the Loan) or necessary in order to make the statements in
such sections (including any Investor or Rating Agency “term sheets” or
presentations relating to any Property and/or the Loan) or in light of the
circumstances under which they were made, not misleading (collectively the
“Securities Liabilities”) and (2) agreeing to reimburse Lender, the Issuer
Group and the Underwriter Group for any legal or other expenses reasonably
incurred by Lender and Issuer Group in connection with investigating or
defending the Securities Liabilities; provided, however, that Borrower will be
liable in any such case under

 

92

 

clauses (1) or (2) above only to the extent that any such Securities
Liabilities arise out of or is based upon any such untrue statement or omission
made therein in reliance upon and in conformity with information furnished to
Lender or any member of the Issuer Group or Underwriter Group by or on behalf
of Borrower or Borrower Principal with respect to the Borrower, Mortgage
Borrower, Borrower Principal, Affiliated Lessee, the Property and/or the Loan
in connection with the preparation of the memorandum or prospectus or other
document (including any Investor or Rating Agency “term sheets” or
presentations relating to any Property and/or the Loan) or in connection with
the underwriting of the Loan, including, without limitation, financial
statements of Borrower or Borrower Principal, operating statements, rent rolls,
environmental site assessment reports and Property condition reports with
respect to any Property.  This indemnity
agreement will be in addition to any liability which Borrower may otherwise
have.  Moreover, the indemnification
provided for in Clauses (1) and (2) above shall be effective whether or not
certificate described in (A) above is provided and shall be applicable based on
information previously provided by Borrower and Borrower Principal or their
Affiliates if Borrower or Borrower Principal do not provide the indemnification
certificate.

 

(c)           In connection with filings under the
Exchange Act or any information provided to holders of Securities on an ongoing
basis, Borrower agrees to indemnify (i) Lender, the Issuer Group and the
Underwriter Group for Losses to which Lender, the Issuer Group or the
Underwriter Group may become subject insofar as the Securities Liabilities
arise out of or are based upon the omission or alleged omission which is in
fact an omission to state in the Provided Information a material fact required
to be stated in the Provided Information in order to make the statements in the
Provided Information, in light of the circumstances under which they were made
not misleading and (ii) reimburse Lender, the Issuer Group or the Underwriter
Group for any legal or other expenses reasonably incurred by Lender, the Issuer
Group or the Underwriter Group in connection with defending or investigating
the Securities Liabilities.

 

(d)           Promptly after receipt by an
indemnified party under this Section 13.5 of notice of the commencement of
any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 13.5, notify the
indemnifying party in writing of the commencement thereof, but the omission to
so notify the indemnifying party will not relieve the indemnifying party from
any liability which the indemnifying party may have to any indemnified party
hereunder except to the extent that failure to notify causes prejudice to the
indemnifying party.  In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein
and, to the extent that it (or they) may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. 
After notice from the indemnifying party to such indemnified party under
this Section 13.5 the indemnifying party shall be responsible for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there are any legal defenses available to it
and/or other indemnified parties that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on

 

93

 

behalf of such indemnified party or parties.  The indemnifying party shall not be liable for the expenses of
more than one such separate counsel unless an indemnified party shall have
reasonably concluded that there may be legal defenses available to it that are
different from or additional to those available to another indemnified party.

 

(e)           In order to provide for just and
equitable contribution in circumstances in which the indemnity agreements
provided for in  Section 13.5(c) or
Section 13.5(d) is or are for any reason held to be unenforceable by an
indemnified party in respect of any losses, claims, damages or liabilities (or
action in respect thereof) referred to therein which would otherwise be
indemnifiable under Section 13.5(c) or Section 13.5(d), the
indemnifying party shall contribute to the amount paid or payable by the indemnified
party as a result of such losses, claims, damages or liabilities (or action in
respect thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.  In
determining the amount of contribution to which the respective parties are
entitled, the following factors shall be considered:  (i) the indemnified party’s, Borrower’s and Borrower Principal’s
relative knowledge and access to information concerning the matter with respect
to which claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances.  Lender and
Borrower hereby agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation.

 

(f)            The liabilities and obligations of
Borrower, Borrower Principal and Lender under this Section 13.5 shall
survive the satisfaction of this Agreement and the satisfaction and discharge
of the Debt.

 

Section 13.6.          INTENTIONALLY
OMITTED.

 

ARTICLE 14

INDEMNIFICATIONS

 

Section 14.1.          GENERAL
INDEMNIFICATION

 

Borrower shall indemnify,
defend and hold harmless the Indemnified Parties from and against any and all
Losses imposed upon or incurred by or asserted against any Indemnified Parties
and directly or indirectly arising out of or in any way relating to any one or
more of the following: (a) any accident, injury to or death of persons or loss
of or damage to property occurring in, on or about any Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (b) any use, nonuse or condition in, on or
about any Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (c) performance
of any labor or services or the furnishing of any materials or other property
in respect of any Property or any part thereof; (d) any failure of any Property
or the Collateral to be in compliance with any Applicable Legal Requirements;
(e) any and all claims and demands whatsoever which may be asserted against
Lender by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants, or agreements contained in
any Lease; (f) the holding or investing of the Mortgage Reserve Accounts or the
performance of the Required Work, Additional Required

 

94

 

Repairs or Additional Replacements (all as defined in the Mortgage Loan
Agreement), or (g) the payment of any commission, charge or brokerage fee to
anyone which may be payable in connection with the funding of the Loan
(collectively, the “Indemnified Liabilities”); provided,
however, that Borrower shall not have any obligation to Lender hereunder to the
extent that such Indemnified Liabilities arise from the gross negligence,
illegal acts, fraud or willful misconduct of Lender.  To the extent that the undertaking to indemnify, defend and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion that
it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Lender.

 

Section 14.2.          INTANGIBLE
TAX INDEMNIFICATION

 

Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses imposed upon or
incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to any tax on the making of
the Pledge Agreement, the Note or any of the other Loan Documents, but
excluding any income, franchise or other similar taxes.

 

Section 14.3.          ERISA
INDEMNIFICATION

 

Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless
the Indemnified Parties from and against any and all Losses (including, without
limitation, reasonable attorneys’ fees and costs incurred in the investigation,
defense, and settlement of Losses incurred in correcting any prohibited transaction
or in the sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender’s sole
discretion) that Lender may incur, directly or indirectly, as a result of a
default under Section 4.8 or Section 5.18 of this Agreement.

 

Section 14.4.          SURVIVAL

 

The obligations and
liabilities of Borrower under this Article 14 shall fully survive indefinitely
notwithstanding any termination, satisfaction or assignment of the Pledge
Agreement.

 

ARTICLE 15

EXCULPATION

 

Section 15.1.          EXCULPATION

 

(a)           Subject to the qualifications below,
Lender shall not enforce the liability and obligation of Borrower or Borrower
Principal, as applicable, to perform and observe the obligations contained
herein or in the other Loan Documents by any action or proceeding wherein a
money judgment shall be sought against Borrower, except that Lender may bring
action under the UCC, an action for specific performance or any other
appropriate action or proceeding to enable Lender to enforce and realize upon
this Agreement, the Note, the Pledge Agreement and the other Loan Documents,
and the interest in the Collateral and any other collateral given to Lender
created by this Agreement, the Note, the Pledge Agreement and the other Loan Documents;
provided, however, that, except as specifically provided herein, any

 

95

 

judgment in any such action or proceeding shall be enforceable against
Borrower or Borrower Principal, as applicable, only to the extent of Borrower’s
or Borrower Principal’s interest in the Collateral and in any other collateral
given to Lender.  Lender, by accepting
this Agreement, the Note, the Pledge Agreement and the other Loan Documents,
agrees that it shall not, except as otherwise provided in this
Section 15.1, sue for, seek or demand any deficiency judgment against any
Borrower, its members, partners, shareholders, officers or directors or
Borrower Principal or its members, partners, shareholders, officers or directors
in any such action or proceeding, under or by reason of or under or in
connection with this Agreement, the Note, the Pledge Agreement or the other
Loan Documents.  The provisions of this
Section 15.1 shall not, however, (i) constitute a waiver, release or
impairment of any obligation evidenced or secured by this Agreement, the Note,
the Pledge Agreement or the other Loan Documents; (ii) impair the right of
Lender to name Borrower or Borrower Principal as a party defendant in any
action or suit for judicial foreclosure and sale under this Agreement and the
Pledge Agreement; (iii) affect the validity or enforceability of any indemnity
(including, without limitation, those contained in the Article 12 and in
Section 13.5 and Article 14 of this Agreement), guaranty, master lease or
similar instrument made in connection with this Agreement, the Note, the Pledge
Agreement and the other Loan Documents; (iv) impair the right of Lender to
obtain the appointment of a receiver; (v) impair the enforcement of the assignment
of leases provisions contained in the Pledge Agreement; (vi) impair the right
of Lender to obtain a deficiency judgment or other judgment on the Note against
Borrower or Borrower Principal if necessary to obtain any Insurance Proceeds or
Awards to which Lender would otherwise be entitled under this Agreement; or
(vii) impair the right of Lender to enforce its rights under the
Indemnity; provided however, Lender shall only enforce such judgment to the
extent of the Insurance Proceeds and/or Awards.

 

(b)           Notwithstanding the provisions of
this Section 15.1 to the contrary, Borrower and Borrower Principal shall
be personally liable to Lender on a joint and several basis for Losses due to:

 

(i)            fraud or intentional
misrepresentation by Borrower, Mortgage Borrower, Borrower Principal or any
other Affiliate of Borrower, Mortgage Borrower or Borrower Principal in
connection with the execution and the delivery of this Agreement, the Note, the
Pledge Agreement, the Mortgage Note, the Mortgage Loan Agreement, the Security
Instrument and any of the other Loan Documents or the Mortgage Loan Documents,
or any certificate, report, financial statement or other instrument or document
furnished to Lender at the time of the closing of the Loan or during the term
of the Loan;

 

(ii)           Mortgage Borrower’s or Borrower’s
misapplication or misappropriation of Rents received by Mortgage Borrower or
Borrower, after the occurrence of an Event of Default;

 

(iii)          Mortgage Borrower’s or Borrower’s
misapplication or misappropriation of tenant security deposits or Rents
collected in advance;

 

(iv)          the misapplication or misappropriation
of Insurance Proceeds or Awards;

 

96

 

(v)           Borrower’s or Mortgage Borrower’s
failure to pay Taxes or Other Charges (except to the extent that sums
sufficient to pay such amounts have been deposited in escrow with Mortgage
Lender pursuant to the terms of the Mortgage Loan Agreement and there exists no
impediment to Mortgage Lender’s utilization thereof), charges for labor or
materials or other charges that can create liens on any property beyond any
applicable notice and each cure period specified herein and in the Mortgage
Loan Agreement;

 

(vi)          Borrower’s or Mortgage Borrower’s
failure to return or to reimburse Lender for all Personal Property taken from
the Property by or on behalf of Mortgage Borrower or Borrower and not replaced
with Personal Property of the same utility and of the same or greater value;

 

(vii)         any act of actual waste or arson by
Borrower or Mortgage Borrower or any principal, Affiliate, member of general
partner of either such party or by Borrower Principal, any principal,
affiliate, member of general partner thereof;

 

(viii)        the misappropriation by Mortgage
Borrower or Borrower of any Net Liquidation Proceeds or other amounts due to
Lender;

 

(ix)           any breach of any representation,
warranty or covenant contained in Sections 4(f), (g) and/or (h) of the Pledge
Agreement;

 

(x)            any violation of the environmental
covenants contained in Article 12 of this Agreement;

 

(xi)           Borrower’s or Mortgage Borrower’s
gross negligence or willful misconduct;

 

(xii)          the failure by Borrower to pay
directly to Lender any distributions from Mortgage Borrower as required by the
Loan Documents, following and during the continuance of an Event of Default; or

 

(xiii)         Mortgage Borrower or any Affiliated
Lessee shall take any action of any kind or nature whatsoever, either directly
or indirectly to oppose, impede, obstruct, challenge, hinder, frustrate, enjoin
or otherwise interfere with (A) any termination of any Operating Lease
with any Affiliated Lessee, (B) the Mortgage Borrower (in full substitution of
the applicable Affiliated Lessee) being deemed the “Owner” under the Management
Agreements, (C) the execution, delivery or effectiveness of a replacement
Management Agreement directly between the Mortgage Borrower and the applicable
Manager or (D)  any payment or other transfer by Manager of funds which
would otherwise be paid to any Affiliated Lessee under any Operating Lease directly
to Mortgage Borrower, in each case after or as a result of the automatic
termination of the applicable Operating Lease pursuant to the applicable
Subordination and Attornment Agreement, or shall, either directly or
indirectly, cause or permit any other person to take any action which, if taken
by such Affiliated Lessee would constitute an event described in this
Section 15.1(b)(xiii).

 

97

 

(c)           Notwithstanding the foregoing, the
agreement of Lender not to pursue recourse liability as set forth in subsection
(a) above SHALL BECOME NULL AND VOID and shall be of no further force and
effect and the Debt shall become fully recourse to Borrower and Borrower
Principal; jointly and severally, in the event (i) of a breach by Borrower or
SPE Component Entity of any of the covenants set forth in Article 6 of this
Agreement (other than the covenants set forth in Sections 6.1(xv) and 6.1
(xviii) hereof) or a breach by Affiliated Lessee of any of the covenants set forth
in Section 6 of the Subordination and Attornment Agreement (other than the
covenants set forth in Sections 6(o) and 6(q) of the Subordination and
Attornment Agreement), in all events except to the extent that any such breach
was inadvertent, immaterial and is promptly cured, (ii) of a breach of any of
the covenants set forth in Article 7 hereof, or (iii) the Property, the
Collateral or any part thereof shall become an asset in (A) a voluntary
bankruptcy or insolvency proceeding of Mortgage Borrower, Borrower, Affiliated
Lessee or Borrower Principal, or (B) an involuntary bankruptcy or insolvency
proceeding of Mortgage Borrower, Borrower, Affiliated Lessee or Borrower
Principal in connection with which Mortgage Borrower, Borrower, Affiliated
Lessee, Borrower Principal, SPE Component Entity or any Affiliate of any of the
foregoing has or have colluded in any way with the creditors commencing or
filing such proceeding and such proceeding is not dismissed in ninety (90)
days.

 

(d)           Nothing herein shall be deemed to be
a waiver of any right which Lender may have under Section 506(a), 506(b),
1111(b) or any other provision of the U.S. Bankruptcy Code to file a claim for
the full amount of the indebtedness secured by the Pledge Agreement or to
require that all collateral shall continue to secure all of the indebtedness
owing to Lender in accordance with this Agreement, the Note, the Pledge
Agreement or the other Loan Documents.

 

(e)           Notwithstanding the foregoing,
Borrower and Borrower Principal shall have no liability for any Losses under
Section 15.1(b) (other than 15.1(b)(i)), or recourse liability as a result of
any action, of Mortgage Borrower or Mortgage Borrower’s general partner
described in Section 15.1(c)(iii) (any such event, a “Recourse Event”), to the extent
that a court finally determines, after the exhaustion of all applicable appeal
periods, both that (i) such Losses were caused solely by, or such Recourse
Event relates solely to, actions of Mortgage Borrower or Mortgage Borrower’s
general partners taken or conditions or events conclusively proven to have
first occurred after the date that Lender (or any purchaser at a foreclosure
sale) actually acquired title to the equity interest of Borrower in Mortgage
Borrower and Mortgage Borrower’s general partner (such date, the “Foreclosure
Date”), and (ii) such Losses were not, or Recourse Event was not,
caused by (A) the direct or indirect actions or failures to act of Borrower,
Borrower Principal or any Affiliate of Borrower or Borrower Principal, or any
partner, member, principal, officer, director, trustee or manager of Borrower
or Borrower Principal or any Affiliate of Borrower or Borrower Principal or any
employee, agent or contractor of Borrower, Borrower Principal or any Affiliate
of Borrower or Borrower Principal (other than Mortgage Borrower or Mortgage
Borrower’s general partner to the extent conclusively proven to have first
arisen after the Foreclosure Date), or (B) by any other actions, conditions,
occurrence or circumstance giving rise to liability under Section 15.1(b)
occurring or existing prior to the Foreclosure Date.  Without limiting any other provision contained herein, Borrower
and Borrower Principal hereby agree that the foregoing shall not excuse Borrower
or Borrower Principal from any liability for any Losses or recourse liability
relating to the actions or failure to act of Borrower, Borrower Principal or
any employee, agent, contractor or Affiliate of Borrower or Borrower Principal
(other than Mortgage Borrower or Mortgage Borrower’s general partner to the
extent

 

98

 

conclusively proven to have first arisen after the Foreclosure Date)
which relate to any act or failure to act arising after the Foreclosure
Date.  Nothing contained in this Section
15.1(c) shall in any way limit, alter or otherwise modify (a) Borrower or
Borrower Principal’s liability for Losses due to the events described in
Section 15.1(b)(xii) hereof or (b) the terms and conditions of, and the
obligations of Borrower Principal under the Indemnity.

 

ARTICLE 16

NOTICES

 

Section 16.1.          NOTICES

 

All notices, consents,
approvals and requests required or permitted hereunder or under any other Loan
Document shall be given in writing and shall be effective for all purposes if
hand delivered or sent by (a) certified or registered United States mail,
postage prepaid, return receipt requested, (b) expedited prepaid overnight
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, or by (c) telecopier (with answer back acknowledged
provided an additional notice is given pursuant to subsection (b) above),
addressed as follows (or at such other address and Person as shall be
designated from time to time by any party hereto, as the case may be, in a
written notice to the other parties hereto in the manner provided for in this
Section):

 

	
  If to Lender:

  	
   

  	
  Fleet National Bank

  
	
   

  	
   

  	
  Structured Real Estate

  
	
   

  	
   

  	
  100 Federal Street

  
	
   

  	
   

  	
  MA DE 10009A

  
	
   

  	
   

  	
  Boston, Massachusetts 02110

  
	
   

  	
   

  	
  Attention: 
  James B. McLaughlin

  
	
   

  	
   

  	
  Facsimile No.: (617) 434-7108

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  McKenna Long & Aldridge LLP

  
	
   

  	
   

  	
  303 Peachtree Street, Suite 5300

  
	
   

  	
   

  	
  Atlanta, Georgia 30308

  
	
   

  	
   

  	
  Attention: 
  William Timmons, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (404) 527-4198

  
	
   

  	
   

  	
   

  
	
  If to Borrower:

  	
   

  	
  c/o CNL Hospitality Properties

  
	
   

  	
   

  	
  450 South Orange Avenue, 12th Floor

  
	
   

  	
   

  	
  Orlando, Florida 32801-3336

  
	
   

  	
   

  	
  Attention: 
  Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile No.: (407) 650-1085

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

  
	
   

  	
   

  	
  215 North Eola Drive

  
	
   

  	
   

  	
  Orlando, Florida 32801-3336

  
	
   

  	
   

  	
  Attention: 
  Richard J. Fildes, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (407) 843-4444

  

 

99

 

	
  If to Borrower

  	
   

  	
   

  
	
  Principal:

  	
   

  	
  CNL Hospitality Properties

  
	
   

  	
   

  	
  450 South Orange Avenue, 12th Floor

  
	
   

  	
   

  	
  Orlando, Florida 32810-3336

  
	
   

  	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
   

  	
  Facsimile No.: (407) 650-1085

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Lowndes, Drosdick, Doster, Kantor & Reed, P.A.

  
	
   

  	
   

  	
  215 North Eola Drive

  
	
   

  	
   

  	
  Orlando, Florida 32801-3336

  
	
   

  	
   

  	
  Attention: 
  Richard J. Fildes, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (407) 843-4444

  

 

A notice shall be deemed to have been given:  in the case of hand delivery, at the time of delivery; in the
case of registered or certified mail, when delivered or the first attempted
delivery on a Business Day; or in the case of expedited prepaid delivery and
telecopy, upon the first attempted delivery on a Business Day.

 

ARTICLE 17

FURTHER ASSURANCES

 

Section 17.1.          REPLACEMENT
DOCUMENTS

 

Upon receipt of an
affidavit of an officer of Lender as to the loss, theft, destruction or
mutilation of the Note or any other Loan Document which is not of public
record, and, in the case of any such mutilation, upon surrender and
cancellation of such Note or other Loan Document, Borrower will issue, in lieu
thereof, a replacement Note or other Loan Document, dated the date of such
lost, stolen, destroyed or mutilated Note or other Loan Document in the same
principal amount thereof and otherwise of like tenor.

 

Section 17.2.          INTENTIONALLY
OMITTED

 

Section 17.3.          FURTHER ACTS, ETC.

 

Borrower will, at the
cost of Borrower, and without expense to Lender, do, execute, acknowledge and
deliver all and every further acts, deeds, conveyances, deeds of trust,
mortgages, assignments, security agreements, control agreements, notices of
assignments, transfers and assurances as Lender shall, from time to time,
reasonably require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender any Property and rights hereby
mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged,
assigned, warranted and transferred or intended now or hereafter so to be, or
which Borrower may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intention or facilitating the performance of
the terms of this Agreement or for filing or registering the Pledge Agreement,
or for complying with all Legal Requirements. 
Borrower, on demand, will execute and deliver, and in the event it shall
fail to so execute and deliver, hereby authorizes Lender to execute in the name
of Borrower or without the signature of Borrower to the extent Lender may
lawfully do so, one or more financing statements and financing statement
amendments to

 

100

 

evidence more effectively, perfect and maintain the priority of the
security interest of Lender in any Property. 
Borrower grants to Lender an irrevocable power of attorney coupled with
an interest for the purpose of exercising and perfecting any and all rights and
remedies available to Lender at law and in equity, including without
limitation, such rights and remedies available to Lender pursuant to this
Section 17.3.

 

Section 17.4.          CHANGES
IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP LAWS

 

(a)           If any law is enacted or adopted or
amended after the date of this Agreement which deducts the Debt from the value
of the Property or the Collateral for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or Lender’s interest in any
Property or the Collateral (other than taxes imposed on Lender’s receipt of
amounts payable hereunder), Borrower will pay the tax, with interest and
penalties thereon, if any.  If Lender is
advised by counsel chosen by it that the payment of tax by Borrower would be
unlawful or taxable to Lender or unenforceable or provide the basis for a
defense of usury then Lender shall have the option by written notice of not
less than one hundred twenty (120) days to declare the Debt immediately due and
payable.

 

(b)           Borrower will not claim or demand or
be entitled to any credit or credits on account of the Debt for any part of the
Taxes or Other Charges assessed against any Property or the Collateral, or any
part thereof, and no deduction shall otherwise be made or claimed from the
assessed value of any Property or the Collateral, or any part thereof, for real
estate tax purposes by reason of the Mortgage, the Pledge Agreement or the
Debt.  If such claim, credit or
deduction shall be required by law, Lender shall have the option, by written
notice of not less than one hundred twenty (120) days, to declare the Debt
immediately due and payable.

 

If at any time the United
States of America, any State thereof or any subdivision of any such State shall
require revenue or other stamps to be affixed to the Note, the Pledge
Agreement, or any of the other Loan Documents or impose any other tax or charge
on the same, Borrower will pay for the same, with interest and penalties
thereon, if any.

 

Section 17.5.          EXPENSES

 

Borrower covenants and
agrees to pay or, if Borrower fails to pay, to reimburse, Lender within ten
(10) days of receipt of written notice from Lender for all reasonable costs and
expenses (including reasonable, actual attorneys’ fees and disbursements and
the allocated costs of internal legal services and all actual disbursements of
internal counsel) reasonably incurred by Lender in accordance with this
Agreement in connection with (a) the preparation, negotiation, execution and
delivery of this Agreement, the Pledge Agreement and the other Loan Documents
and the consummation of the transactions contemplated hereby and thereby and
all the costs of furnishing all opinions by counsel for Borrower (including
without limitation any opinions requested by Lender as to any legal matters
arising under this Agreement or the other Loan Documents with respect to any
Property or the Collateral); (b) any default by Borrower in Borrower’s ongoing
performance of and compliance with Borrower’s respective agreements and
covenants contained in this Agreement, the Pledge Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including, without limitation, confirming compliance with environmental and
insurance requirements; (c) following a request

 

101

 

by Borrower, Lender’s ongoing performance and compliance with all
agreements and conditions contained in this Agreement, the Pledge Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date; (d) the negotiation, preparation, execution, delivery and
administration of any consents, amendments, waivers or other modifications to
this Agreement and the other Loan Documents and any other documents or matters
requested by Lender; (e) securing Borrower’s compliance with any requests made
pursuant to the provisions of this Agreement; (f) the filing and recording fees
and expenses, title insurance and reasonable fees and expenses of counsel for
providing to Lender all required legal opinions, and other similar expenses
incurred in creating and perfecting the Lien in favor of Lender pursuant to
this Agreement, the Pledge Agreement and the other Loan Documents; (g)
enforcing or preserving any rights, in response to third party claims or the
prosecuting or defending of any action or proceeding or other litigation, in
each case against, under or affecting Borrower, this Agreement, the other Loan
Documents, the Collateral, or any other security given for the Loan; and (h)
enforcing any obligations of or collecting any payments due from Borrower under
this Agreement, the other Loan Documents or with respect to any Property or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a “work-out” or of any
insolvency or bankruptcy proceedings; provided, however, that Borrower shall
not be liable for the payment of any such costs and expenses to the extent the
same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender.

 

ARTICLE 18

WAIVERS

 

Section 18.1.          REMEDIES
CUMULATIVE; WAIVERS

 

The rights, powers and
remedies of Lender under this Agreement shall be cumulative and not exclusive
of any other right, power or remedy which Lender may have against Borrower or
Borrower Principal pursuant to this Agreement or the other Loan Documents, or
existing at law or in equity or otherwise. 
Lender’s rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s sole discretion. 
No delay or omission to exercise any remedy, right or power accruing
upon an Event of Default shall impair any such remedy, right or power or shall
be construed as a waiver thereof, but any such remedy, right or power may be
exercised from time to time and as often as may be deemed expedient.  A waiver of one Default or Event of Default
with respect to Borrower shall not be construed to be a waiver of any subsequent
Default or Event of Default by Borrower or to impair any remedy, right or power
consequent thereon.

 

Section 18.2.          MODIFICATION,
WAIVER IN WRITING

 

No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of the Note, or of any other Loan Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the
same shall be in a writing signed by the party against whom enforcement is
sought, and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given.  Except as otherwise expressly provided herein, no notice to, or
demand on Borrower, shall

 

102

 

entitle Borrower to any other or future notice or demand in the same,
similar or other circumstances.

 

Section 18.3.          DELAY
NOT A WAIVER

 

Neither any failure nor
any delay on the part of Lender in insisting upon strict performance of any
term, condition, covenant or agreement, or exercising any right, power, remedy
or privilege hereunder, or under the Note or under any other Loan Document, or
any other instrument given as security therefor, shall operate as or constitute
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege.  In particular, and not by
way of limitation, by accepting payment after the due date of any amount
payable under this Agreement, the Note or any other Loan Document, Lender shall
not be deemed to have waived any right either to require prompt payment when
due of all other amounts due under this Agreement, the Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.

 

Section 18.4.          TRIAL
BY JURY

 

BORROWER, BORROWER PRINCIPAL AND LENDER EACH HEREBY AGREES
NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES
ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM
OR OTHER ACTION ARISING IN CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER, BORROWER PRINCIPAL AND LENDER, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE.  EACH OF
LENDER, BORROWER PRINCIPAL AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF
THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
BORROWER, BORROWER PRINCIPAL AND LENDER.

 

Section 18.5.          WAIVER
OF NOTICE

 

Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or the other Loan Documents
specifically and expressly provide for the giving of notice by Lender to
Borrower and except with respect to matters for which Borrower is not, pursuant
to applicable Legal Requirements, permitted to waive the giving of notice.  Borrower hereby expressly waives the right
to receive any notice from Lender with respect to any matter for which this
Agreement or the other Loan Documents do not specifically and expressly provide
for the giving of notice by Lender to Borrower.

 

103

 

Section 18.6.          REMEDIES
OF BORROWER

 

In the event that a claim
or adjudication is made that Lender or its agents have acted unreasonably or
unreasonably delayed acting in any case where by law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower’s sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment.  The parties
hereto agree that any action or proceeding to determine whether Lender has
acted reasonably shall be determined by an action seeking declaratory
judgment.  Lender agrees that, in such
event, it shall cooperate in expediting any action seeking injunctive relief or
declaratory judgment.

 

Section 18.7.          WAIVER
OF MARSHALLING OF ASSETS

 

To the fullest extent
permitted by law, Borrower, for itself and its successors and assigns, waives
all rights to a marshalling of the assets of Borrower, Mortgage Borrower,
Borrower’s partners and others with interests in Borrower or Mortgage Borrower,
the Collateral and of any Property, and agrees not to assert any right under
any laws pertaining to the marshalling of assets, the sale in inverse order of
alienation, homestead exemption, the administration of estates of decedents, or
any other matters whatsoever to defeat, reduce or affect the right of Lender
under the Loan Documents to a sale of the Collateral for the collection of the
Debt without any prior or different resort for collection or of the right of
Lender to the payment of the Debt out of the net proceeds of the Collateral in
preference to every other claimant whatsoever.

 

Section 18.8.          WAIVER
OF STATUTE OF LIMITATIONS

 

Borrower hereby expressly
waives and releases, to the fullest extent permitted by law, the pleading of
any statute of limitations as a defense to payment of the Debt or performance
of its Other Obligations.

 

Section 18.9.          WAIVER
OF COUNTERCLAIM

 

Borrower hereby waives
the right to assert a counterclaim, other than a compulsory counterclaim, in
any action or proceeding brought against it by Lender or its agents.

 

ARTICLE 19

GOVERNING LAW

 

Section 19.1.          CHOICE
OF LAW

 

This Agreement shall be
deemed to be a contract entered into pursuant to the laws of the State of New
York and shall in all respects be governed, construed, applied and enforced in
accordance with the laws of the State of New York.

 

Section 19.2.          SEVERABILITY

 

Wherever possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be

 

104

 

prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

 

Section 19.3.          PREFERENCES

 

Lender shall have the
continuing and exclusive right to apply or reverse and reapply any and all
payments by Borrower to any portion of the obligations of Borrower
hereunder.  To the extent Borrower makes
a payment or payments to Lender, which payment or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party under
any Creditors Rights Laws, state or federal law, common law or equitable cause,
then, to the extent of such payment or proceeds received, the obligations
hereunder or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been
received by Lender.

 

ARTICLE 20

MISCELLANEOUS

 

Section 20.1.          SURVIVAL

 

This Agreement and all
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by Lender of
the Loan and the execution and delivery to Lender of the Note, and shall
continue in full force and effect so long as all or any of the Debt is
outstanding and unpaid unless a longer period is expressly set forth herein or
in the other Loan Documents.  Whenever
in this Agreement any of the parties hereto is referred to, such reference
shall be deemed to include the legal representatives, successors and assigns of
such party.  All covenants, promises and
agreements in this Agreement,  by or on
behalf of Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.

 

Section 20.2.          LENDER’S
DISCRETION

 

Whenever pursuant to this
Agreement, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide whether arrangements or terms are
satisfactory or not satisfactory shall (except as is otherwise specifically
herein provided) be in the sole discretion of Lender and shall be final and
conclusive.

 

Section 20.3.          HEADINGS

 

The Article and/or
Section headings and the Table of Contents in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.

 

105

 

Section 20.4.          COST
OF ENFORCEMENT

 

In the event (a) that the
Pledge Agreement is foreclosed in whole or in part, (b) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Mortgage
Borrower or Borrower or any of its constituent Persons or an assignment by
Mortgage Borrower or Borrower or any of its constituent Persons for the benefit
of its creditors, or (c) Lender exercises any of its other remedies under this
Agreement or any of the other Loan Documents pursuant to its rights under any
Loan Document, Borrower shall be chargeable with and agrees to pay all costs of
collection and defense, including attorneys’ fees and costs, incurred by Lender
or Borrower in connection therewith and in connection with any appellate
proceeding or post-judgment action involved therein, together with all required
service or use taxes.

 

Section 20.5.          SCHEDULES
INCORPORATED

 

The Schedules annexed
hereto are hereby incorporated herein as a part of this Agreement with the same
effect as if set forth in the body hereof.

 

Section 20.6.          OFFSETS,
COUNTERCLAIMS AND DEFENSES

 

Any assignee of Lender’s
interest in and to this Agreement, the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which
are unrelated to such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.

 

Section 20.7.          NO
JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES

 

(a)           Borrower and Lender intend that the
relationships created hereunder and under the other Loan Documents be solely
that of borrower and lender.  Nothing
herein or therein is intended to create a joint venture, partnership, tenancy-in-common,
or joint tenancy relationship between Borrower and Lender nor to grant Lender
any interest in the Collateral other than that of secured party, pledge or
lender.

 

(b)           This Agreement and the other Loan
Documents are solely for the benefit of Lender and Borrower and nothing
contained in this Agreement or the other Loan Documents shall be deemed to
confer upon anyone other than Lender and Borrower any right to insist upon or
to enforce the performance or observance of any of the obligations contained
herein or therein.  All conditions to
the obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing
to require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person shall under any
circumstances be deemed to be a beneficiary of such conditions, any or all of which
may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.

 

106

 

(c)           The general partners, members,
principals and (if Borrower is a trust) beneficial owners of Borrower are
experienced in the ownership and operation of properties similar to any
Property and the Collateral, and Borrower and Lender are relying solely upon
such expertise and business plan in connection with the ownership and operation
of any Property and the Collateral. 
Borrower is not relying on Lender’s expertise, business acumen or advice
in connection with any Property or the Collateral.

 

(d)           Notwithstanding anything to the
contrary contained herein, Lender is not undertaking the performance of (i) any
obligations under the Leases; or (ii) any obligations with respect to such
agreements, contracts, certificates, instruments, franchises, permits,
trademarks, licenses and other documents.

 

(e)           By accepting or approving anything
required to be observed, performed or fulfilled or to be given to Lender
pursuant to this Agreement, the Pledge Agreement, the Note or the other Loan
Documents, including, without limitation, any officer’s certificate, balance
sheet, statement of profit and loss or other financial statement, survey,
appraisal, or insurance policy, Lender shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, the legality or effectiveness of
same, and such acceptance or approval thereof shall not constitute any warranty
or affirmation with respect thereto by Lender.

 

(f)            Borrower recognizes and acknowledges
that in accepting this Agreement, the Note, the Pledge Agreement and the other
Loan Documents, Lender is expressly and primarily relying on the truth and
accuracy of the representations and warranties set forth in Article 4 of this
Agreement without any obligation to investigate any Property or the Collateral
and notwithstanding any investigation of any Property or the Collateral by Lender;
that such reliance existed on the part of Lender prior to the date hereof, that
the warranties and representations are a material inducement to Lender in
making the Loan; and that Lender would not be willing to make the Loan and
accept this Agreement, the Note, the Pledge Agreement and the other Loan
Documents in the absence of the warranties and representations as set forth in
Article 4 of this Agreement.

 

Section 20.8.          PUBLICITY

 

All news releases,
publicity or advertising by Borrower or its Affiliates through any media
intended to reach the general public which refers to the Loan, Lender, or any
of its Affiliates shall be subject to the prior written approval of Lender, not
to be unreasonably withheld.  Lender
shall be permitted to make any news, releases, publicity or advertising by
Lender or its Affiliates through any media intended to reach the general public
which refers to the Loan, the Collateral, any Property, Mortgage Borrower,
Affiliated Lessee, Borrower, Borrower Principal and their respective Affiliates
without the approval of Borrower or any such Persons.  Borrower also agrees that Lender may share any information
pertaining to the Loan with its Affiliates, in connection with the sale or
transfer of the Loan or any Participations and/or Securities created.

 

107

 

Section 20.9.          CONFLICT;
CONSTRUCTION OF DOCUMENTS; RELIANCE

 

In the event of any
conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control.  The parties hereto acknowledge that they
were represented by competent counsel in connection with the negotiation,
drafting and execution of the Loan Documents and that such Loan Documents shall
not be subject to the principle of construing their meaning against the party
which drafted same.  Borrower
acknowledges that, with respect to the Loan, Borrower shall rely solely on its
own judgment and advisors in entering into the Loan without relying in any
manner on any statements, representations or recommendations of Lender or any
parent, subsidiary or Affiliate of Lender. 
Lender shall not be subject to any limitation whatsoever in the exercise
of any rights or remedies available to it under any of the Loan Documents or
any other agreements or instruments which govern the Loan by virtue of the
ownership by it or any parent, subsidiary or Affiliate of Lender of any equity
interest any of them may acquire in Borrower, and Borrower hereby irrevocably
waives the right to raise any defense or take any action on the basis of the
foregoing with respect to Lender’s exercise of any such rights or
remedies.  Borrower acknowledges that
Lender engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.

 

Section 20.10.        ENTIRE
AGREEMENT

 

This Agreement and the
other Loan Documents contain the entire agreement of the parties hereto and
thereto in respect of the transactions contemplated hereby and thereby, and all
prior agreements among or between such parties, whether oral or written between
Borrower and Lender are superseded by the terms of this Agreement and the other
Loan Documents.

 

Section 20.11.        TAX
DISCLOSURE

 

Notwithstanding anything
herein to the contrary, except as reasonably necessary to comply with
applicable securities laws, each party (and each employee, representative or
other agent of each party) hereto may disclose to any and all persons, without
limitation of any kind, any information with respect to the United States
federal income “tax treatment” and “tax structure” (in each case, within the
meaning of Treasury Regulation Section 1.6011-4) of the transactions
contemplated hereby and all materials of any kind (including opinions or other
tax analyses) that are provided to such parties (or their representatives)
relating to such tax treatment and tax structure; provided that with
respect to any document or similar item that in either case contains
information concerning the tax treatment or tax structure of the transaction as
well as other information, this sentence shall only apply to such portions of
the document or similar item that relate to the United States federal income
tax treatment or tax structure of the transactions contemplated hereby.

 

108

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their duly
authorized representatives, all as of the day and year first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  ROSE MEZZANINE SPE, LP, a Delaware limited
  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Rose Mezzanine SPE 1 GP, LLC, a Delaware limited
  liability company, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Paul H. Williams

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BORROWER PRINCIPAL:

  
	
   

  	
   

  
	
   

  	
  Acknowledged and agreed to with respect to its
  obligations set forth in Article 4, Section 5.11, Section 5.33,
  Section 12.6, Article 13, Article 15 and Article 18 hereof:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RFS PARTNERSHIP, L.P., a Tennessee limited
  partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CNL Rose GP CORP., a Delaware corporation, its
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Paul H. Williams

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  
					

 

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  FLEET NATIONAL BANK, a national banking association

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

[Signature Page 2 of 2 to
the Mezzanine Loan Agreement]

 

 

EXHIBIT A

 

Annual Budget

 

 

EXHIBIT B

 

Borrower Equity Ownership
Structure

 

Exhibit B to Loan Agreement

ROSE SPE Structure for
CMBS (26 Pool)

 

~~
 ~~

 

HI Phoenix Chandler, AZ; HOM Phoenix Chandler, AZ; HI Sedona, AZ; RI
Sacramento/Cal Expo, CA; DT San Diego Del Mar, CA; HI Denver SW Lakewood, CO;
RI Wilmington/Newark, DE;  HI Ft.
Lauderdale/Cypress, FL;  TPS Miami Airport
West, FL;  TPS Miami Lakes, FL;  RI Orlando International Drive, FL; HOL Crystal
Lake, IL;  HOL Louisville Southwest, KY;
RI Ann Arbor, MI;  CY Flint, MI;  HI Minneapolis Minnetonka, MN;  HI Hattiesburg, MS;  HI Lincoln Airport I-80, NE;  RI Fishkill, NY;  HI Oklahoma City Airport, OK; 
HI Tulsa, OK;  RI Warwick, RI; RI
Ft. Worth River Plaza, TX; TPS Fort Worth Southwest, TX;  HI Laredo, TX;  and  RI Tyler, TX

 

	
  

  

 

v.3.03  11-5-2003

 

CONFIDENTIALITY
NOTICE:  The information contained
herein is confidential and intended only for the use of CNL Hospitality
Properties, Inc. or it’s affiliates and legal counsel.  If the reader is not the intended recipient,
you are hereby notified that any dissemination, distribution or copying of this
information is strictly prohibited.

 

 

SCHEDULE A

 

Properties and Initial Allocated Loan Amounts and Percentages

 

	
  Property

  	
   

  	
  Initial
  Allocated

  Loan Amount

  	
   

  	
  Initial
  Allocated

  Loan Percentage

  	
   

  
	
  Hampton Inn Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  $

  	
  620,000

  	
   

  	
  1.8

  	
  %

  
	
  Homewood Suites Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  $

  	
  700,000

  	
   

  	
  2.0

  	
  %

  
	
  Hampton Inn Sedona Sedona, Arizona

  	
   

  	
  $

  	
  630,000

  	
   

  	
  1.8

  	
  %

  
	
  Residence Inn

  Sacramento/Cal Expo Sacramento, California

  	
   

  	
  $

  	
  2,650,000

  	
   

  	
  7.6

  	
  %

  
	
  Doubletree Hotel San Diego Del Mar

  San Diego, California

  	
   

  	
  $

  	
  1,960,000

  	
   

  	
  5.6

  	
  %

  
	
  Hampton Inn

  Denver SW Lakewood Lakewood, Colorado

  	
   

  	
  $

  	
  400,000

  	
   

  	
  1.1

  	
  %

  
	
  Residence Inn

  Wilmington/Newark (the “Wilmington

  Newark Property”)

  Wilmington, Delaware

  	
   

  	
  $

  	
  2,000,000

  	
   

  	
  5.7

  	
  %

  
	
  Hampton Inn Ft. Lauderdale-Cypress Creek

  Ft. Lauderdale, Florida

  	
   

  	
  $

  	
  750,000

  	
   

  	
  2.1

  	
  %

  
	
  Towne Place Suites

  Miami Airport West (the “Miami Airport

  West Property”) Miami, Florida

  	
   

  	
  $

  	
  800,000

  	
   

  	
  2.3

  	
  %

  
	
  Towne Place Suites Miami Lakes

  (The “Miami Lakes Property”)

  Miami, Florida

  	
   

  	
  $

  	
  800,000

  	
   

  	
  2.3

  	
  %

  
	
  Residence Inn by Marriott International Drive

  Orlando, Florida

  	
   

  	
  $

  	
  2,020,000

  	
   

  	
  5.8

  	
  %

  
	
  Holiday Inn Crystal Lake Crystal Lake,

  Illinois

  	
   

  	
  $

  	
  2,270,000

  	
   

  	
  6.5

  	
  %

  
	
  Holiday Inn Southwest Louisville (the

  “Louisville Southwest Property”) Louisville,

  Kentucky

  	
   

  	
  $

  	
  1,300,000

  	
   

  	
  3.7

  	
  %

  
	
  Residence Inn Ann Arbor Ann
  Arbor,

  Michigan

  	
   

  	
  $

  	
  1,175,000

  	
   

  	
  3.4

  	
  %

  
	
  Courtyard Flint

  Flint, Michigan (the “Flint Property”)

  	
   

  	
  $

  	
  1,076,000

  	
   

  	
  3.1

  	
  %

  
	
  Hampton Inn

  Minneapolis Minnetonka

  Minnetonka, Minnesota

  	
   

  	
  $

  	
  370,000

  	
   

  	
  1.1

  	
  %

  
	
  Hampton Inn Hattiesburg

  Hattiesburg, Mississippi

  	
   

  	
  $

  	
  1,240,000

  	
   

  	
  3.5

  	
  %

  

 

 

	
  Property

  	
   

  	
  Initial
  Allocated

  Loan Amount

  	
   

  	
  Initial
  Allocated

  Loan Percentage

  	
   

  
	
  Hampton Inn Lincoln

  Airport I-80

  Lincoln, Nebraska

  	
   

  	
  $

  	
  883,000

  	
   

  	
  2.5

  	
  %

  
	
  Residence Inn Fishkill

  Fishkill, New York

  	
   

  	
  $

  	
  3,906,000

  	
   

  	
  11.2

  	
  %

  
	
  Hampton Inn Oklahoma City-Airport I-40

  Oklahoma City, Oklahoma

  	
   

  	
  $

  	
  1,139,000

  	
   

  	
  3.3

  	
  %

  
	
  Hampton Inn Tulsa

  Tulsa, Oklahoma

  	
   

  	
  $

  	
  800,000

  	
   

  	
  2.3

  	
  %

  
	
  Residence Inn Warwick

  Warwick, Rhode Island

  	
   

  	
  $

  	
  1,700,000

  	
   

  	
  4.9

  	
  %

  
	
  Ft. Worth Towne Place Suites-Southwest

  Ft. Worth, Texas

  	
   

  	
  $

  	
  938,000

  	
   

  	
  2.7

  	
  %

  
	
  Residence Inn - Ft. Worth River Plaza

  Ft. Worth, Texas

  	
   

  	
  $

  	
  1,950,000

  	
   

  	
  5.6

  	
  %

  
	
  Hampton Inn - Laredo

  Laredo, Texas

  	
   

  	
  $

  	
  1,820,000

  	
   

  	
  5.2

  	
  %

  
	
  Residence Inns Tyler

  Tyler, Texas

  	
   

  	
  $

  	
  1,103,000

  	
   

  	
  3.2

  	
  %

  

 

 

SCHEDULE
B

 

Initial Property Manager and Franchisor

 

	
  Property

  	
   

  	
  Initial
  Property Manager

  	
   

  	
  Initial
  Franchisor

  	
   

  
	
  Hampton Inn Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  Promus Hotel, Inc.

  (“Promus”)

  	
   

  	
  Promus

  	
   

  
	
  Homewood Suites Phoenix Chandler

  Chandler, Arizona

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Hampton Inn Sedona

  Sedona, Arizona

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inn Sacramento/Cal Expo

  Sacramento, California

  	
   

  	
  Residence Inn by
  Marriott,

  Inc. (“Residence Inn”)

  	
   

  	
  N/A

  	
   

  
	
  Doubletree Hotel San Diego Del Mar

  San Diego, California

  	
   

  	
  DT Management, Inc.

  	
   

  	
  Double Tree Hotel

  Systems, Inc.

  	
   

  
	
  Hampton Inn

  Denver SW Lakewood

  Lakewood, Colorado

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inn

  Wilmington/Newark

  Wilmington, Delaware

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Hampton Inn Ft. Lauderdale-Cypress

  Creek

  Ft. Lauderdale, Florida

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Towne Place Suites

  Miami Airport West (the “Miami Airport

  West Property”)

  Miami, Florida(1)

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  Towne Place Suites

  Miami Lakes

  (the “Miami Lakes Property”)

  Miami, Florida(1)

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
	
  Residence Inn by Marriott International

  Drive

  Orlando, Florida

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Holiday Inn Crystal Lake

  Crystal Lake, Illinois

  	
   

  	
  Interstate Management

  Company, LLC (“Interstate”)

  	
   

  	
  Holiday Hospitality

  Franchising, Inc.

  (“Holiday”)

  	
   

  

 

(1) With respect to the Miami Airport West Property and the Miami Lakes
Property, such Properties are leased to the Non-Affiliated Lessee which may or
may not have entered into management agreements and/or franchise agreements for
such Properties.

 

 

	
  Property

  	
   

  	
  Initial
  Property Manager

  	
   

  	
  Initial
  Franchisor

  	
   

  
	
  Holiday Inn Southwest Louisville

  Louisville, Kentucky (“Louisville

  Property”)

  	
   

  	
  Interstate

  	
   

  	
  Holiday

  	
   

  
	
  Residence Inn Ann Arbor

  Ann Arbor, Michigan

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Courtyard Flint

  Flint, Michigan (the “Flint Property”)

  	
   

  	
  Flagstone/Interstate(2)

  	
   

  	
  Marriott

  International, Inc.

  	
   

  
	
  Hampton Inn Minneapolis
  Minnetonka

  Minnetonka, Minnesota

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Hampton Inn Hattiesburg

  Hattiesburg, Mississippi

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Hampton Inn Lincoln Airport I-80

  Lincoln, Nebraska

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inn Fishkill

  Fishkill, New York

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Hampton Inn Oklahoma City-Airport I-40

  Oklahoma City, Oklahoma

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Hampton Inn Tulsa

  Tulsa, Oklahoma

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inn Warwick

  Warwick, Rhode Island

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Ft. Worth Towne Place Suites-Southwest

  Ft. Worth, Texas

  	
   

  	
  Towne Place Management

  Corporation (“Towne Place”)

  	
   

  	
  N/A

  	
   

  
	
  Residence Inn - Ft. Worth River Plaza

  Ft. Worth, Texas

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  
	
  Hampton Inn - Laredo

  Laredo, Texas

  	
   

  	
  Promus

  	
   

  	
  Promus

  	
   

  
	
  Residence Inns Tyler

  Tyler, Texas

  	
   

  	
  Residence Inn

  	
   

  	
  N/A

  	
   

  

 

(2) On the Closing Date the Initial Manager is Flagstone Hospitality
Management LLC, a Tennessee limited liability company (“Flagstone”).  Borrower anticipates entering into a new
Management Agreement in the exact same form as the ones with Interstate for the
other Interstate Properties in effect on the Closing Date with Interstate on or
before February 15, 2004.

 

 

SCHEDULE I

 

COST BASIS OF PROPERTIES

 

	
   

  	
   

  	
  Property Name

  	
   

  	
  Brand

  	
   

  	
  Total

  Assigned

  Value (from

  Purch.

  Accounting)

  	
   

  	
  Land

  	
   

  	
  FF&E

  	
   

  	
  Automobiles

  	
   

  	
  Renovations

  (Building)

  	
   

  	
  Building

  	
   

  	
  Total

  Purchase

  Acctg NBV

  at 7/10/03

  	
   

  
	
  CMBS

  	
   

  	
  Flint

  	
   

  	
  Courtyard

  	
   

  	
  9,769,249

  	
   

  	
  963,479

  	
   

  	
  155,919

  	
   

  	
  4,397

  	
   

  	
  —

  	
   

  	
  8,645,454

  	
   

  	
  9,769,249

  	
   

  
	
  CMBS

  	
   

  	
  San Diego Del Mar

  	
   

  	
  Doubletree

  	
   

  	
  23,284,953

  	
   

  	
  1,896,074

  	
   

  	
  1,628,247

  	
   

  	
  —

  	
   

  	
  8,268

  	
   

  	
  19,752,364

  	
   

  	
  23,284,953

  	
   

  
	
  CMBS

  	
   

  	
  Phoenix Chandler

  	
   

  	
  Hampton Inn

  	
   

  	
  7,773,222

  	
   

  	
  737,860

  	
   

  	
  213,707

  	
   

  	
  —

  	
   

  	
  3,107

  	
   

  	
  6,818,548

  	
   

  	
  7,773,222

  	
   

  
	
  CMBS

  	
   

  	
  Sedona

  	
   

  	
  Hampton Inn

  	
   

  	
  6,028,695

  	
   

  	
  1,469,150

  	
   

  	
  152,093

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  4,407,451

  	
   

  	
  6,028,695

  	
   

  
	
  CMBS

  	
   

  	
  Denver SW Lakewood

  	
   

  	
  Hampton Inn

  	
   

  	
  11,273,212

  	
   

  	
  745,794

  	
   

  	
  471,465

  	
   

  	
  —

  	
   

  	
  600,356

  	
   

  	
  9,455,597

  	
   

  	
  11,273,212

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Lauderdale/Cypress

  	
   

  	
  Hampton Inn

  	
   

  	
  10,045,221

  	
   

  	
  931,111

  	
   

  	
  712,839

  	
   

  	
  12,627

  	
   

  	
  8,642

  	
   

  	
  8,380,002

  	
   

  	
  10,045,221

  	
   

  
	
  CMBS

  	
   

  	
  Minneapolis Minnetonka

  	
   

  	
  Hampton Inn

  	
   

  	
  9,872,521

  	
   

  	
  959,038

  	
   

  	
  274,303

  	
   

  	
  —

  	
   

  	
  698,277

  	
   

  	
  7,940,904

  	
   

  	
  9,872,521

  	
   

  
	
  CMBS

  	
   

  	
  Hattiesburg

  	
   

  	
  Hampton Inn

  	
   

  	
  11,259,326

  	
   

  	
  467,529

  	
   

  	
  559,715

  	
   

  	
  —

  	
   

  	
  8,152

  	
   

  	
  10,223,930

  	
   

  	
  11,259,326

  	
   

  
	
  CMBS

  	
   

  	
  Lincoln Airport I-80

  	
   

  	
  Hampton Inn

  	
   

  	
  8,407,611

  	
   

  	
  609,820

  	
   

  	
  190,586

  	
   

  	
  13,636

  	
   

  	
  698,320

  	
   

  	
  6,895,250

  	
   

  	
  8,407,611

  	
   

  
	
  CMBS

  	
   

  	
  Oklahoma City Airport

  	
   

  	
  Hampton Inn

  	
   

  	
  10,230,938

  	
   

  	
  847,150

  	
   

  	
  736,519

  	
   

  	
  13,845

  	
   

  	
  13,337

  	
   

  	
  8,620,088

  	
   

  	
  10,230,938

  	
   

  
	
  CMBS

  	
   

  	
  Tulsa

  	
   

  	
  Hampton Inn

  	
   

  	
  11,001,578

  	
   

  	
  589,738

  	
   

  	
  370,253

  	
   

  	
  —

  	
   

  	
  1,047,440

  	
   

  	
  8,994,147

  	
   

  	
  11,001,578

  	
   

  
	
  CMBS

  	
   

  	
  Laredo

  	
   

  	
  Hampton Inn

  	
   

  	
  9,300,920

  	
   

  	
  532,909

  	
   

  	
  354,727

  	
   

  	
  —

  	
   

  	
  7,439

  	
   

  	
  8,405,845

  	
   

  	
  9,300,920

  	
   

  
	
  CMBS

  	
   

  	
  Crystal Lake

  	
   

  	
  Holiday Inn

  	
   

  	
  19,784,530

  	
   

  	
  2,852,273

  	
   

  	
  1,727,477

  	
   

  	
  —

  	
   

  	
  (3,027

  	
  )

  	
  15,207,807

  	
   

  	
  19,784,530

  	
   

  
	
  CMBS

  	
   

  	
  Louisville Southwest

  	
   

  	
  Holiday Inn

  	
   

  	
  12,741,593

  	
   

  	
  881,392

  	
   

  	
  1,172,623

  	
   

  	
  11,866

  	
   

  	
  25,338

  	
   

  	
  10,650,374

  	
   

  	
  12,741,593

  	
   

  
	
  CMBS

  	
   

  	
  Phoenix Chandler

  	
   

  	
  Homewood Suites

  	
   

  	
  8,205,405

  	
   

  	
  905,563

  	
   

  	
  536,048

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  6,763,794

  	
   

  	
  8,205,405

  	
   

  
	
  CMBS

  	
   

  	
  Sacramento/Cal Expo

  	
   

  	
  Residence Inn

  	
   

  	
  18,481,558

  	
   

  	
  1,919,923

  	
   

  	
  1,617,702

  	
   

  	
  —

  	
   

  	
  1,201,158

  	
   

  	
  13,742,775

  	
   

  	
  18,481,558

  	
   

  
	
  CMBS

  	
   

  	
  Wilmington/Newark

  	
   

  	
  Residence Inn

  	
   

  	
  12,293,398

  	
   

  	
  —

  	
   

  	
  392,365

  	
   

  	
  13,481

  	
   

  	
  9,477

  	
   

  	
  11,878,075

  	
   

  	
  12,293,398

  	
   

  
	
  CMBS

  	
   

  	
  Orlando International Drive

  	
   

  	
  Residence Inn

  	
   

  	
  15,968,213

  	
   

  	
  1,434,506

  	
   

  	
  1,617,897

  	
   

  	
  —

  	
   

  	
  5,255

  	
   

  	
  12,910,555

  	
   

  	
  15,968,213

  	
   

  
	
  CMBS

  	
   

  	
  Ann Arbor

  	
   

  	
  Residence Inn

  	
   

  	
  10,974,675

  	
   

  	
  921,516

  	
   

  	
  868,776

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  9,184,383

  	
   

  	
  10,974,675

  	
   

  
	
  CMBS

  	
   

  	
  Fishkill

  	
   

  	
  Residence Inn

  	
   

  	
  15,215,711

  	
   

  	
  2,093,959

  	
   

  	
  477,646

  	
   

  	
  —

  	
   

  	
  1,670,850

  	
   

  	
  10,973,257

  	
   

  	
  15,215,711

  	
   

  
	
  CMBS

  	
   

  	
  Warwick

  	
   

  	
  Residence Inn

  	
   

  	
  10,147,626

  	
   

  	
  1,745,317

  	
   

  	
  543,968

  	
   

  	
  11,021

  	
   

  	
  3,032

  	
   

  	
  7,844,288

  	
   

  	
  10,147,626

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Worth River Plaza

  	
   

  	
  Residence Inn

  	
   

  	
  13,075,233

  	
   

  	
  1,928,207

  	
   

  	
  720,221

  	
   

  	
  —

  	
   

  	
  6,398

  	
   

  	
  10,420,407

  	
   

  	
  13,075,233

  	
   

  
	
  CMBS

  	
   

  	
  Tyler

  	
   

  	
  Residence Inn

  	
   

  	
  12,071,622

  	
   

  	
  788,783

  	
   

  	
  657,806

  	
   

  	
  —

  	
   

  	
  103,007

  	
   

  	
  10,522,027

  	
   

  	
  12,071,622

  	
   

  
	
  CMBS

  	
   

  	
  Miami Airport West

  	
   

  	
  TownePlace Suites

  	
   

  	
  8,518,695

  	
   

  	
  831,129

  	
   

  	
  380,010

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  7,307,556

  	
   

  	
  8,518,695

  	
   

  
	
  CMBS

  	
   

  	
  Miami Lakes

  	
   

  	
  TownePlace Suites

  	
   

  	
  8,470,964

  	
   

  	
  780,479

  	
   

  	
  374,080

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  7,316,405

  	
   

  	
  8,470,964

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Worth Southwest

  	
   

  	
  TownePlace Suites

  	
   

  	
  8,532,580

  	
   

  	
  835,181

  	
   

  	
  447,378

  	
   

  	
  —

  	
   

  	
  37,091

  	
   

  	
  7,212,930

  	
   

  	
  8,532,580

  	
   

  
	
   

  	
   

  	
  Total CMBS Properties

  	
   

  	
   

  	
   

  	
  302,729,251

  	
   

  	
  28,667,879

  	
   

  	
  17,354,370

  	
   

  	
  80,873

  	
   

  	
  6,151,917

  	
   

  	
  250,474,213

  	
   

  	
  302,729,251

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  	
  Depreciation
  7/10/03 through 9/30/03

  	
   

  	
  Net Book
  Value as of 9/30/03

  	
   

  
	
   

  	
   

  	
  Property Name

  	
   

  	
  Land

  	
   

  	
  FF&E

  (Including

  Autos)

  	
   

  	
  Buildings

  (Including

  Renovations)

  	
   

  	
  Land

  	
   

  	
  FF&E
  (Including

  Autos)

  	
   

  	
  Buildings

  (Including

  Renovations)

  	
   

  	
  Total

  	
   

  
	
  CMBS

  	
   

  	
  Flint

  	
   

  	
  —

  	
   

  	
  (5,208

  	
  )

  	
  (49,149

  	
  )

  	
  963,479

  	
   

  	
  155,108

  	
   

  	
  8,596,305

  	
   

  	
  9,714,892

  	
   

  
	
  CMBS

  	
   

  	
  San Diego Del Mar

  	
   

  	
  —

  	
   

  	
  (52,894

  	
  )

  	
  (112,338

  	
  )

  	
  1,896,074

  	
   

  	
  1,575,353

  	
   

  	
  19,648,294

  	
   

  	
  23,119,721

  	
   

  
	
  CMBS

  	
   

  	
  Phoenix Chandler

  	
   

  	
  —

  	
   

  	
  (6,942

  	
  )

  	
  (38,781

  	
  )

  	
  737,860

  	
   

  	
  206,765

  	
   

  	
  6,782,875

  	
   

  	
  7,727,499

  	
   

  
	
  CMBS

  	
   

  	
  Sedona

  	
   

  	
  —

  	
   

  	
  (4,941

  	
  )

  	
  (25,056

  	
  )

  	
  1,469,150

  	
   

  	
  147,152

  	
   

  	
  4,382,395

  	
   

  	
  5,998,698

  	
   

  
	
  CMBS

  	
   

  	
  Denver SW Lakewood

  	
   

  	
  —

  	
   

  	
  (15,316

  	
  )

  	
  (57,167

  	
  )

  	
  745,794

  	
   

  	
  456,149

  	
   

  	
  9,998,786

  	
   

  	
  11,200,728

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Lauderdale/Cypress

  	
   

  	
  —

  	
   

  	
  (23,567

  	
  )

  	
  (47,689

  	
  )

  	
  931,111

  	
   

  	
  701,899

  	
   

  	
  8,340,955

  	
   

  	
  9,973,965

  	
   

  
	
  CMBS

  	
   

  	
  Minneapolis Minnetonka

  	
   

  	
  —

  	
   

  	
  (8,911

  	
  )

  	
  (49,113

  	
  )

  	
  959,038

  	
   

  	
  265,392

  	
   

  	
  8,590,068

  	
   

  	
  9,814,498

  	
   

  
	
  CMBS

  	
   

  	
  Hattiesburg

  	
   

  	
  —

  	
   

  	
  (18,183

  	
  )

  	
  (58,169

  	
  )

  	
  467,529

  	
   

  	
  541,532

  	
   

  	
  10,173,913

  	
   

  	
  11,182,975

  	
   

  
	
  CMBS

  	
   

  	
  Lincoln Airport I-80

  	
   

  	
  —

  	
   

  	
  (6,634

  	
  )

  	
  (43,169

  	
  )

  	
  609,820

  	
   

  	
  197,588

  	
   

  	
  7,550,401

  	
   

  	
  8,357,808

  	
   

  
	
  CMBS

  	
   

  	
  Oklahoma City Airport

  	
   

  	
  —

  	
   

  	
  (24,376

  	
  )

  	
  (49,080

  	
  )

  	
  847,150

  	
   

  	
  725,988

  	
   

  	
  8,584,344

  	
   

  	
  10,157,482

  	
   

  
	
  CMBS

  	
   

  	
  Tulsa

  	
   

  	
  —

  	
   

  	
  (12,028

  	
  )

  	
  (57,086

  	
  )

  	
  589,738

  	
   

  	
  358,225

  	
   

  	
  9,984,502

  	
   

  	
  10,932,465

  	
   

  
	
  CMBS

  	
   

  	
  Laredo

  	
   

  	
  —

  	
   

  	
  (11,523

  	
  )

  	
  (47,829

  	
  )

  	
  532,909

  	
   

  	
  343,204

  	
   

  	
  8,365,455

  	
   

  	
  9,241,568

  	
   

  
	
  CMBS

  	
   

  	
  Crystal Lake

  	
   

  	
  —

  	
   

  	
  (56,118

  	
  )

  	
  (86,438

  	
  )

  	
  2,852,273

  	
   

  	
  1,671,359

  	
   

  	
  15,118,342

  	
   

  	
  19,641,974

  	
   

  
	
  CMBS

  	
   

  	
  Louisville Southwest

  	
   

  	
  —

  	
   

  	
  (38,479

  	
  )

  	
  (60,691

  	
  )

  	
  881,392

  	
   

  	
  1,146,010

  	
   

  	
  10,615,021

  	
   

  	
  12,642,424

  	
   

  
	
  CMBS

  	
   

  	
  Phoenix Chandler

  	
   

  	
  —

  	
   

  	
  (17,414

  	
  )

  	
  (38,452

  	
  )

  	
  905,563

  	
   

  	
  518,634

  	
   

  	
  6,725,343

  	
   

  	
  8,149,540

  	
   

  
	
  CMBS

  	
   

  	
  Sacramento/Cal Expo

  	
   

  	
  —

  	
   

  	
  (52,552

  	
  )

  	
  (84,955

  	
  )

  	
  1,919,923

  	
   

  	
  1,565,150

  	
   

  	
  14,858,978

  	
   

  	
  18,344,051

  	
   

  
	
  CMBS

  	
   

  	
  Wilmington/Newark

  	
   

  	
  —

  	
   

  	
  (13,184

  	
  )

  	
  (67,580

  	
  )

  	
  —

  	
   

  	
  392,662

  	
   

  	
  11,819,972

  	
   

  	
  12,212,634

  	
   

  
	
  CMBS

  	
   

  	
  Orlando International Drive

  	
   

  	
  —

  	
   

  	
  (52,558

  	
  )

  	
  (73,425

  	
  )

  	
  1,434,506

  	
   

  	
  1,565,339

  	
   

  	
  12,842,385

  	
   

  	
  15,842,230

  	
   

  
	
  CMBS

  	
   

  	
  Ann Arbor

  	
   

  	
  —

  	
   

  	
  (28,222

  	
  )

  	
  (52,213

  	
  )

  	
  921,516

  	
   

  	
  840,554

  	
   

  	
  9,132,171

  	
   

  	
  10,894,240

  	
   

  
	
  CMBS

  	
   

  	
  Fishkill

  	
   

  	
  —

  	
   

  	
  (15,516

  	
  )

  	
  (71,881

  	
  )

  	
  2,093,959

  	
   

  	
  462,130

  	
   

  	
  12,572,226

  	
   

  	
  15,128,314

  	
   

  
	
  CMBS

  	
   

  	
  Warwick

  	
   

  	
  —

  	
   

  	
  (18,029

  	
  )

  	
  (44,611

  	
  )

  	
  1,745,317

  	
   

  	
  536,960

  	
   

  	
  7,802,708

  	
   

  	
  10,084,986

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Worth River Plaza

  	
   

  	
  —

  	
   

  	
  (23,397

  	
  )

  	
  (59,276

  	
  )

  	
  1,928,207

  	
   

  	
  696,824

  	
   

  	
  10,367,530

  	
   

  	
  12,992,561

  	
   

  
	
  CMBS

  	
   

  	
  Tyler

  	
   

  	
  —

  	
   

  	
  (21,369

  	
  )

  	
  (60,403

  	
  )

  	
  788,783

  	
   

  	
  636,437

  	
   

  	
  10,564,631

  	
   

  	
  11,989,851

  	
   

  
	
  CMBS

  	
   

  	
  Miami Airport West

  	
   

  	
  —

  	
   

  	
  (12,345

  	
  )

  	
  (41,543

  	
  )

  	
  831,129

  	
   

  	
  367,665

  	
   

  	
  7,266,013

  	
   

  	
  8,464,807

  	
   

  
	
  CMBS

  	
   

  	
  Miami Lakes

  	
   

  	
  —

  	
   

  	
  (12,152

  	
  )

  	
  (41,593

  	
  )

  	
  780,479

  	
   

  	
  361,928

  	
   

  	
  7,274,811

  	
   

  	
  8,417,218

  	
   

  
	
  CMBS

  	
   

  	
  Ft. Worth Southwest

  	
   

  	
  —

  	
   

  	
  (14,533

  	
  )

  	
  (41,216

  	
  )

  	
  835,181

  	
   

  	
  432,845

  	
   

  	
  7,208,805

  	
   

  	
  8,476,831

  	
   

  
	
   

  	
   

  	
  Total CMBS Properties

  	
   

  	
  —

  	
   

  	
  (566,389

  	
  )

  	
  (1,458,902

  	
  )

  	
  28,667,879

  	
   

  	
  16,868,854

  	
   

  	
  255,167,228

  	
   

  	
  300,703,960

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}]]