Exhibit 10.33.4.1
LOAN AND SECURITY AGREEMENT
(Intermediate Mezzanine Loan)
     THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) is made as of the 11th
day of April, 2007, between ASHFORD SAPPHIRE JUNIOR MEZZ I LLC, a Delaware
limited liability company, having an address at 14185 Dallas Parkway,
Suite 1100, Dallas, Texas 75254-4308 and ASHFORD SAPPHIRE JUNIOR MEZZ II LLC, a
Delaware limited liability company, having an address at 14185 Dallas Parkway,
Suite 1100, Dallas, Texas 75254-4308 (collectively, “Borrower”) and WACHOVIA
BANK, NATIONAL ASSOCIATION, having an address at Wachovia Bank, National
Association, Commercial Real Estate Services, 8739 Research Drive URP 4, NC
1075, Charlotte, North Carolina 28262 (“Lender”).
W I T N E S S E T H:
     WHEREAS, the Persons identified on Exhibit D as Owner (collectively
“Owner”) are the owners of the fee estates and/or leasehold estates in the
premises described in Exhibit A attached hereto and all buildings, foundations,
structures, and improvements of any kind or nature now or hereafter located
thereon (collectively, the “Premises”);
     WHEREAS, pursuant to those certain limited liability company agreements
(collectively, the “Operating Agreement”) of Ashford Sapphire Senior Mezz I LLC,
a Delaware limited liability company and Ashford Sapphire Senior Mezz II LLC, a
Delaware limited liability company (collectively “Senior Mez Borrower”) Borrower
is the present owner and holder of one hundred percent (100%) of the limited
liability company interest in Senior Mez Borrower;
     WHEREAS, Senior Mez Borrower delivered a promissory note (the “Senior Mez
Note”) to Wachovia Bank, National Association (the “Senior Mez Lender”) which
evidences a loan (the “Senior Mez Loan”) in the original principal amount of
EIGHTY MILLION ONE HUNDRED TWENTY-TWO THOUSAND AND NO/100 DOLLARS
($80,122,000.00) which is secured by a pledge of one hundred percent (100%) of
the Senior Mez Borrower’s direct and indirect limited liability company
interests in Owner pursuant to that certain loan and security agreement by and
between Senior Mez Borrower and Senior Mez Lender (the “Senior Mez Loan
Agreement”, and, together with the Senior Mez Note and all other documents
executed and delivered in connection with the making of the Senior Mez Loan
and/or evidencing, securing or guaranteeing payment of the obligations evidenced
by the Senior Mez Note, collectively, the “Senior Mez Loan Documents”;
     WHEREAS, the Persons identified on Exhibit D as Operating Tenant
(collectively, “Operating Tenant”) are the operating tenants in the Premises;
     WHEREAS, Borrower is the present owner and holder directly or indirectly of
one hundred percent (100%) of the equity in Owner;
     WHEREAS, Owner delivered a promissory note (the “Mortgage Note”) to
Wachovia Bank, National Association (“Mortgage Lender”) which evidences a loan
(the “Mortgage Loan”) in the original principal amount of $315,000,000 which is
secured by certain mortgages, deeds of trust and deeds to secure debt
(collectively, the “Mortgage” and together with the Mortgage Note

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and all other documents now or hereafter executed and delivered in connection
with the making of the Mortgage Loan, collectively, the “Mortgage Loan
Documents”) encumbering the Premises;
     WHEREAS, Lender has agreed to make a loan (the “Loan”) to Borrower, which
Loan, together with interest thereon, shall be evidenced by and payable in
accordance with the provisions of the promissory note issued by Borrower, as
maker, to Lender, as holder (the “Note”, and together with this Agreement and
all other documents now or hereafter executed and delivered in connection with
the making of the Loan, collectively, the “Loan Documents”) in the original
principal amount of $80,000,000 (the “Loan Amount” and together with interest
and all other sums which may or shall become due under the Note or this
Agreement or the other Loan Documents being hereinafter collectively referred to
as the “Debt”); and
     WHEREAS, Lender is willing to make the Loan to Borrower only if Borrower
grants and assigns to Lender, as security for the payment of the Debt and the
observance and performance by Borrower of all of the terms, covenants and
provisions of the Note and the other Loan Documents on the part of Borrower to
be observed and performed, a security interest in the Collateral (hereinafter
defined) in the manner hereinafter set forth;
     NOW, THEREFORE, in consideration of the making of the Loan and other good
and valuable consideration, the receipt of which is hereby acknowledged,
Borrower hereby represents and warrants to and covenants and agrees with Lender
as follows:
ARTICLE I. DEFINITIONS
     Section 1.01. Defined Terms. Capitalized terms used herein that are not
otherwise defined shall have the respective meanings ascribed thereto in the
definitions list on Exhibit C attached hereto and if not defined therein shall
have the meaning set forth in the Mortgage. Any references to defined terms or
provisions of the Mortgage incorporated by reference in the Loan Documents shall
survive the repayment of the Mortgage Loan and termination of the Mortgage
unless expressly agreed to the contrary by the parties hereto. All citations to
the Mortgage in this Agreement shall refer to the Mortgage as it exists as of
the date of this Agreement; provided, however, that in the event the cited
provision is amended and such amendment is approved in writing by Lender, then
such citation shall be to the amended provision. All references to sections and
schedules are to sections and schedules in or to this Agreement unless otherwise
specified.
ARTICLE II. REPRESENTATIONS, COVENANTS AND
WARRANTIES OF BORROWER
     Section 2.01. Pledge of Collateral. (a) As security for the due and
punctual payment and performance of all of the Debt (whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise,
including, without limitation, the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. §362(a)), whether allowed or allowable as claims, and the
observance and performance by Borrower of all of the terms, covenants and
provisions of the Note and the other Loan Documents on the part of Borrower to
be observed or performed,

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Borrower hereby (i) pledges, transfers, grants, hypothecates and assigns to
Lender all of Borrower’s right, title and interest in, to and under the
Collateral, whether now or hereafter acquired, and (ii) grants to Lender a
continuing first priority lien on and security interest in and to all Collateral
in which Borrower now or hereafter has rights. Following the occurrence of an
Event of Default, Lender is hereby authorized: (i) to transfer to the account of
Lender or its designee any Pledged Interests whether in the possession of, or
registered in the name of, The Depository Trust Company (the “DTC”) or other
clearing corporation or held otherwise; (ii) to transfer to the account of
Lender or its designee with any Federal Reserve Bank any Pledged Interests held
in book entry form with any such Federal Reserve Bank; and (iii) to exchange
certificates representing or evidencing the Pledged Interests for certificates
of smaller or larger denominations. To the extent that the Pledged Interests
have not already been transferred to Lender or its designee in a manner
sufficient to perfect Lender’s security interest therein, Borrower shall
promptly deliver or cause to be delivered to Lender all certificates or
instruments evidencing the Pledged Interests, together with duly executed
transfer powers or other appropriate endorsements. With respect to any
Collateral in the possession of or registered in the name of a custodian bank or
nominee therefor, or any Collateral represented by entries on the books of any
financial intermediary, Borrower agrees to cause such custodian bank or nominee
either to enter into an agreement with Lender satisfactory to Lender in form and
content confirming that the Collateral is held for the account of Lender, or at
the discretion of Lender and subject to the written instructions of Lender,
deliver any such Collateral to Lender and/or cause any such Collateral to be put
in bearer form, registered in the name of Lender or its nominee, or transferred
to the account of Lender with any Federal Reserve Bank, DTC, or other clearing
corporation. With respect to any Collateral held in an account maintained by
Lender as financial intermediary, Borrower hereby gives notice to Lender of
Lender’s security interest in such Collateral. In addition, Borrower agrees that
in the event that any Collateral is held by Lender in a fiduciary capacity for
or on behalf of Borrower as the beneficial owner thereof, any agreements
executed by Borrower in connection therewith are hereby amended to authorize and
direct the pledge, hypothecation and/or transfer of such Collateral to Lender,
as lender, by Lender, as fiduciary, in accordance with the terms, covenants and
conditions of this Agreement. The rights granted to Lender pursuant to this
Agreement are in addition to the rights granted to Lender pursuant to any such
agreements. In case of conflict between the provisions of this Agreement and
those of any other such agreement, the provisions hereof shall prevail. In the
event that Borrower purchases or otherwise acquires or obtains any additional
Equity Interests in any Corporation, LLC or Partnership, or any rights, or
options, subscriptions or warrants to acquire such Equity Interests, all such
Equity Interests, rights, options, subscriptions or warrants shall automatically
be deemed to be a part of the Collateral pledged by Borrower. If any such Equity
Interests are to be evidenced by a certificate, such additional certificates
shall be promptly delivered to Lender, together with Powers related thereto, or
other instruments appropriate to a certificate representing an Equity Interest,
duly executed in blank. Borrower shall deliver to Lender all subscriptions,
warrants, options and all such other rights, and upon delivery to Lender, Lender
shall hold such subscriptions, warrants, options and other rights as additional
collateral pledged to secure the Debt; provided, however, that if Lender
determines, in its sole discretion, that the value of any such subscriptions,
warrants, options or other rights shall terminate, expire or be materially
reduced in value by holding the same as Collateral, Lender shall have the right
(but not the obligation), in its sole discretion, to sell or exercise the same,
and if exercised, then the monies disbursed by Lender in connection therewith
shall become part of the Debt and all

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of the stock, securities, evidences of indebtedness and other items so acquired
shall be titled in the name of Borrower and shall become part of the Collateral.
     Section 2.02. Representations of Borrower. Borrower represents and warrants
to Lender:
     (a) Existence. Borrower (i) is a limited liability company, general
partnership, limited partnership or corporation, as the case may be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (ii) has all requisite power and authority and
all necessary licenses and permits to enter into the transactions contemplated
by the Note and this Agreement and to carry on its business as now conducted and
as presently proposed to be conducted and (iii) is duly qualified, authorized to
do business and in good standing in each jurisdiction where the conduct of its
business or the nature of its activities makes such qualification necessary. If
Borrower is a limited liability company, limited partnership or general
partnership, each general partner or managing member, as applicable, of Borrower
which is a corporation is duly organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation.
     (b) Power. Borrower and, if applicable, each General Partner has full power
and authority to execute, deliver and perform, as applicable, the Loan Documents
to which it is a party, to make the borrowings thereunder, to execute and
deliver the Note and to grant to Lender a first priority, perfected and
continuing lien on and security interest in the Collateral.
     (c) Authorization of Borrower. The execution, delivery and performance of
the Loan Documents to which Borrower is a party, the making of the borrowings
thereunder, the execution and delivery of the Note, the grant of the lien and
security interest on and in the Collateral pursuant to the Loan Documents to
which Borrower is a party and the consummation of the Loan are within the powers
of Borrower and have been duly authorized by Borrower and, if applicable, the
General Partners, by all requisite action (and Borrower hereby represents that
no approval or action which has not already been obtained of any member, limited
partner or shareholder, as applicable, of Borrower is required to authorize any
of the Loan Documents to which Borrower is a party) and will constitute the
legal, valid and binding obligation of Borrower, enforceable against Borrower in
accordance with their terms, except as enforcement may be stayed or limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity (whether considered in
proceedings at law or in equity) and will not (i) violate any provision of its
Organizational Documents, or, to its knowledge, any law, judgment, order, rule
or regulation of any court, arbitration panel or other Governmental Authority,
domestic or foreign, or other Person affecting or binding upon Borrower or the
Collateral, or (ii) violate any provision of any indenture, agreement, mortgage,
deed of trust, contract or other instrument to which Borrower or, if applicable,
any General Partner is a party or by which any of their respective property,
assets or revenues are bound, or be in conflict with, result in an acceleration
of any obligation or a breach of or constitute (with notice or lapse of time or
both) a default or require any payment or prepayment under, any such indenture,
agreement, mortgage, deed of trust, contract or other instrument, or
(iii) result in the creation or imposition of any lien, except those in favor of
Lender as provided in the Loan Documents to which it is a party.
     (d) Consent. Neither Borrower nor, if applicable, any General Partner, is
required to

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obtain any consent, approval or authorization from, or to file any declaration
or statement with, any Governmental Authority or other agency in connection with
or as a condition to the execution, delivery or performance of this Agreement,
the Note or the other Loan Documents which has not been so obtained or filed.
     (e) Interest Rate. The rate of interest paid under the Note and the method
and manner of the calculation thereof do not violate any usury or other law or
applicable Legal Requirement.
     (f) Other Agreements. Borrower is not a party to or otherwise bound by any
agreements or instruments which, individually or in the aggregate, are
reasonably likely to have a Material Adverse Effect. Neither Borrower nor, if
applicable, any General Partner, is in violation of its organizational documents
or other restriction or any agreement or instrument by which it is bound, or any
judgment, decree, writ, injunction, order or award of any arbitrator, court or
Governmental Authority, or any Legal Requirement, in each case, applicable to
Borrower, except for such violations that would not have a Material Adverse
Effect.
     (g) Maintenance of Existence. (i) Borrower is familiar with the criteria of
the Rating Agency required to qualify as a special-purpose bankruptcy-remote
entity and Borrower and, if applicable, each General Partner at all times since
their formation have been duly formed and existing at all times and at all times
has preserved and shall preserve and has kept and shall keep in full force and
effect their existence as a Single Purpose Entity.
          (ii) Borrower and, if applicable, each General Partner, at all times
since their organization have complied, and will continue to comply in all
material respects, with the provisions of its certificate of limited partnership
and agreement of limited partnership or certificate of incorporation and by-laws
or articles of organization, certificate of formation and operating agreement,
as applicable, and the laws of its jurisdiction of organization relating to
partnerships, corporations or limited liability companies, as applicable.
          (iii) Borrower and, if applicable, each General Partner have done or
caused to be done and will do all things reasonably necessary to observe
organizational formalities and preserve their existence and Borrower and, if
applicable, each General Partner will not hereafter amend, modify or otherwise
change the certificate of limited partnership and agreement of limited
partnership or certificate of incorporation and by-laws or articles of
organization, certificate of formation and operating agreement, as applicable,
or other organizational documents of Borrower and, if applicable, each General
Partner, except for non-material amendments which do not modify the Single
Purpose Entity provisions.
          (iv) Borrower and, if applicable, each General Partner, have at all
times accurately maintained, and will continue to accurately maintain in all
material respects, their respective financial statements, accounting records and
other partnership, company or corporate documents separate from those of any
other Person and Borrower and/or, if applicable General Partner, have filed and
will file its own tax returns or, if Borrower and/or, if applicable, General
Partner is part of a consolidated group for purposes of filing tax returns,
Borrower and General Partner, as applicable, has been shown and will be

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shown as separate members of such group. Borrower and, if applicable, each
General Partner have not at any time since their formation commingled, and will
not commingle, their respective assets with those of any other Person and each
has maintained and will maintain their assets in such a manner such that it will
not be costly or difficult to segregate, ascertain or identify their individual
assets from those of any other Person. Borrower and, if applicable, each General
Partner has not permitted and will not permit any Affiliate independent access
to their bank accounts. Borrower and, if applicable, each General Partner have
at all times since their formation accurately maintained and utilized, and will
continue to accurately maintain and utilize, their own separate bank accounts,
payroll and separate books of account, stationery, invoices and checks.
          (v) Borrower and, if applicable, each General Partner, have at all
times paid, and will continue to pay, their own liabilities from their own
separate assets and each has allocated and charged and shall each allocate and
charge fairly and reasonably any overhead which Borrower and, if applicable, any
General Partner, shares with any other Person, including, without limitation,
for office space and services performed by any employee of another Person.
          (vi) Borrower and, if applicable, each General Partner, have at all
times identified themselves, and will continue to identify themselves, in all
dealings with the public, under their own names and as separate and distinct
entities and have corrected and shall correct any known misunderstanding
regarding their status as separate and distinct entities. Borrower and, if
applicable, each General Partner, have not at any time identified themselves,
and will not identify themselves, as being a division of any other Person.
          (vii) Borrower and, if applicable, each General Partner, have been at
all times, and will continue to be, adequately capitalized in light of the
nature of their respective businesses.
          (viii) Borrower and, if applicable, each General Partner, (A) have not
owned, do not own and will not own any assets or property other than the
Collateral, (B) have not engaged and will not engage in any business other than
the ownership, management and servicing of the Collateral, (C) have not incurred
and will not incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than, with respect to Borrower
the Loan, (D) have not pledged and will not pledge their assets for the benefit
of any other Person, and (E) have not made and will not make any loans or
advances to any Person (including any Affiliate).
          (ix) Neither Borrower nor, if applicable, any General Partner will
hereafter change its name or principal place of business.
          (x) Neither Borrower nor, if applicable, any General Partner has, and
neither of such Persons will have, any subsidiaries (other than Borrower and
Owner and Senior Mez Borrower).

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          (xi) Borrower has preserved and maintained and will preserve and
maintain its existence as a Delaware limited liability company and all material
rights, privileges, tradenames and franchises. General Partner, if applicable,
has preserved and maintained and will preserve and maintain its existence as a
Delaware limited liability company and all material rights, privileges,
tradenames and franchises.
          (xii) Neither Borrower nor, if applicable, any General Partner, has
merged or consolidated with, and none will merge or consolidate with, and none
has sold all or substantially all of its respective assets to any Person, and
none will sell all or substantially all of its respective assets to any Person,
and none has liquidated, wound up or dissolved itself (or suffered any
liquidation, winding up or dissolution) and none will liquidate, wind up or
dissolve itself (or suffer any liquidation, winding up or dissolution). Neither
Borrower nor, if applicable, any General Partner has acquired nor will acquire
any business or assets from, or capital stock or other ownership interest of, or
be a party to any acquisition of, any Person (other than, with respect to
General Partners, if applicable, its interest in Borrower).
          (xiii) Borrower and, if applicable, each General Partner, have not at
any time since their formation assumed, guaranteed or held themselves out to be
responsible for, and will not assume, guarantee or hold themselves out to be
responsible for the liabilities or the decisions or actions respecting the daily
business affairs of their partners, shareholders or members or any predecessor
company, corporation or partnership, each as applicable, any Affiliates, or any
other Persons other than the Loan and other loans which have been paid in full,
and liens granted thereunder fully discharged, prior to the date hereof. Neither
Borrower nor, if applicable, each General Partner, has at any time since their
formation acquired, nor will acquire, obligations or securities of its partners
or shareholders, members or any predecessor company, corporation or partnership,
each as applicable, or any Affiliates (other than, with respect to General
Partner, its interest in Borrower). Borrower and, if applicable, each General
Partner, have not at any time since their formation made, and will not make,
loans to its partners, members or shareholders or any predecessor company,
corporation or partnership, each as applicable, or any Affiliates of any of such
Persons. Borrower and, if applicable, each General Partner, have no known
material contingent liabilities nor do they have any material financial
liabilities under any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such Person is a party or by which it is
otherwise bound other than under the Loan Documents.
          (xiv) Neither Borrower nor, if applicable, General Partner, has at any
time since its formation entered into and was not a party to, and, will not
enter into or be a party to, any transaction with its Affiliates, members,
partners or shareholders, as applicable, or any Affiliates thereof except in the
ordinary course of business of such Person on terms which are no less favorable
to such Person than would be obtained in a comparable arm’s length transaction
with an unrelated third party.
          (xv) If Borrower is a limited partnership or a limited liability
company, the General Partner shall be a corporation or limited liability company
whose sole asset is its interest in Borrower and the General Partner will at all
times comply, and will cause

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Borrower to comply, with each of the representations, warranties, and covenants
contained in this Section 2.02(g) as if such representation, warranty or
covenant was made directly by such General Partner.
          (xvi) Borrower shall at all times cause there to be at least two duly
appointed members (each, an “Independent Director”) of the board of directors or
board of managers or other governing board or body, as applicable, of, if
Borrower is a corporation, Borrower or if Borrower is a limited partnership, of
the General Partner, and if Borrower is a limited liability company, of the
General Partner or of Borrower reasonably satisfactory to Lender who shall not
have been at the time of such individual’s appointment, and may not be or have
been at any time (A) a shareholder, officer, director, attorney, counsel,
partner, member or employee of Borrower or any of the foregoing Persons or
Affiliates thereof, (B) a customer or creditor of, or supplier or service
provider to, Borrower or any of its shareholders, partners, members or their
Affiliates, (C) a member of the immediate family of any Person referred to in
(A) or (B) above or (D) a Person Controlling, Controlled by or under common
Control with any Person referred to in (A) through (C) above. A natural person
who otherwise satisfies the foregoing definition except for being the
Independent Director of a Single Purpose Entity Affiliated with Borrower or
General Partner shall not be disqualified from serving as an Independent
Director if such individual is at the time of initial appointment, or at any
time while serving as the Independent Director, an Independent Director of a
Single Purpose Entity Affiliated with Borrower or General Partner if such
individual is an independent director provided by a nationally-recognized
company that provides professional independent directors.
          (xvii) Borrower and, if applicable, each General Partner, shall not
cause or permit the board of directors or board of managers or other governing
board or body, as applicable, of Borrower or, if applicable, each General
Partner, to take any action which, under the terms of any certificate of
incorporation, by-laws, limited liability company agreement, certificate of
formation, operating agreement or articles of organization, requires a vote of
the board of directors or board of managers or the governing board or body of
Borrower or, if applicable, the General Partner and also requires the vote of
the Independent Directors therewith, unless at the time of such action there
shall be at least two members who are Independent Directors.
          (xviii) Borrower and, if applicable, each General Partner has paid and
shall pay the salaries of their own employees and has maintained and shall
maintain a sufficient number of employees in light of their contemplated
business operations
          (xix) Borrower shall, and shall cause its Affiliates to, and Borrower
has and has caused its Affiliates to, conduct its business so that the
assumptions made with respect to Borrower and, if applicable, each General
Partner, in that certain opinion letter relating to substantive
non-consolidation dated the date hereof (the “Insolvency Opinion”) delivered in
connection with the Loan shall be true and correct in all respects.
Notwithstanding anything to the contrary contained in this Section 2.02(g),
provided Borrower is a Delaware single member limited liability company which
satisfies the single purpose

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bankruptcy remote entity requirements of each Rating Agency for a single member
limited liability company, the foregoing provisions of this Section 2.02(g)
shall not apply to the General Partner.
     (h) No Default. No Event of Default or, to Borrower’s knowledge, Default
has occurred and is continuing or would occur as a result of the consummation of
the transactions contemplated by the Loan Documents. Borrower is not in default
in the payment or performance of any of its Contractual Obligations in any
material respect.
     (i) Governmental Consents and Approvals. Borrower and, if applicable, each
General Partner, have obtained or made all necessary (i) consents, approvals and
authorizations, and registrations and filings of or with all Governmental
Authorities and (ii) consents, approvals, waivers and notifications of partners,
stockholders, members, creditors, lessors and other nongovernmental Persons, in
each case, which are required to be obtained or made by Borrower or, if
applicable, the General Partner, in connection with the execution and delivery
of, and the performance by Borrower of its obligations under, the Loan
Documents.
     (j) Investment Company Act Status, etc. Borrower is not (i) an “investment
company,” or a company “controlled” by an “investment company,” as such terms
are defined in the Investment Company Act of 1940, as amended, (ii) 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 (iii) subject to any
other federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.
     (k) Compliance with Law. To Borrower’s knowledge, Borrower is and shall
remain in compliance with all Legal Requirements to which it or the Collateral
are subject, including, without limitation, all Environmental Statutes (except
as previously disclosed in the Environmental Report), the Americans with
Disabilities Act (except as previously disclosed in the engineering report
relating to the Property delivered to Lender in connection with the origination
of the Loan), the Occupational Safety and Health Act of 1970 and ERISA.
     (l) Transaction Brokerage Fees. Borrower has not dealt with any financial
advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement. All brokerage
fees, commissions and other expenses payable in connection with the transactions
contemplated by the Loan Documents have been paid in full by Borrower
contemporaneously with the execution of the Loan Documents and the funding of
the Loan. Borrower hereby agrees to indemnify and hold Lender harmless for, from
and against any and all claims, liabilities, costs and expenses of any kind in
any way relating to or arising from (i) a claim by any Person that such Person
acted on behalf of Borrower in connection with the transactions contemplated
herein or (ii) any breach of the foregoing representation. The provisions of
this subsection (l) shall survive the repayment of the Loan.
     (m) Federal Reserve Regulations. No part of the proceeds of the Loan will
be used for the purpose of “purchasing” or “carrying” any “margin stock” within
the meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulations T, U or X or any other Regulations of such

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Board of Governors, or for any purposes prohibited by Legal Requirements or by
the terms and conditions of the Loan Documents.
     (n) Pending Litigation. There are no actions, suits or proceedings pending
or, to the best knowledge of Borrower, threatened against or affecting Borrower,
Guarantor or the Premises in any court or before any Governmental Authority
which if adversely determined either individually or collectively has or is
reasonably likely to have a Material Adverse Effect.
     (o) Solvency; No Bankruptcy. Each of Borrower and, if applicable, the
General Partner, (i) is and has at all times been Solvent and will remain
Solvent immediately upon the consummation of the transactions contemplated by
the Loan Documents and (ii) is free from bankruptcy, reorganization or
arrangement proceedings or a general assignment for the benefit of creditors and
is not contemplating the filing of a petition under any state or federal
bankruptcy or insolvency laws or the liquidation of all or a major portion of
such Person’s assets or property and Borrower has no knowledge of any Person
contemplating the filing of any such petition against it or, if applicable, the
General Partner. None of the transactions contemplated hereby will be or have
been made with an intent to hinder, delay or defraud any present or future
creditors of Borrower and Borrower has received reasonably equivalent value in
exchange for its obligations under the Loan Documents. Borrower’s assets do not,
and immediately upon consummation of the transaction contemplated in the Loan
Documents will not, constitute unreasonably small capital to carry out its
business as presently conducted or as proposed to be conducted. Borrower does
not intend to, nor believe that it will, incur debts and liabilities beyond its
ability to pay such debts as they may mature.
     (p) Use of Proceeds. The proceeds of the Loan shall be applied by Borrower
to, inter alia, (i) acquire an interest in the Collateral and (ii) pay certain
transaction costs incurred by Borrower in connection with the Loan. No portion
of the proceeds of the Loan will be used for family, personal, agricultural or
household use.
     (q) Tax Filings. Borrower and, if applicable, each General Partner, have
filed all federal, state and local tax returns required to be filed and have
paid or made adequate provision for the payment of all federal, state and local
taxes, charges and assessments payable by Borrower and, if applicable, the
General Partners. Borrower and, if applicable, the General Partners, believe
that their respective tax returns properly reflect the income and taxes of
Borrower and said General Partner, if any, for the periods covered thereby,
subject only to reasonable adjustments required by the Internal Revenue Service
or other applicable tax authority upon audit.
     (r) Not Foreign Person. Borrower is not a “foreign person” within the
meaning of §1445(f)(3) of the Code.
     (s) ERISA (i) Neither Borrower nor Guarantor is, or is acting on behalf of:
(a) an “employee benefit plan” within the meaning of Section 3(3) of ERISA, that
is subject to Part 4 of Title I of ERISA; (b) a “plan” within the meaning of
section 4975(e)(1) of the Code that is subject to section 4975 of the Code or
(c) any other entity that is deemed under applicable law to hold the assets of a
plan described in (a) or (b) and this representation shall be deemed to be
continuing in nature for all periods that this Agreement is in effect. Each Plan
is in compliance

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with, and has been administered in all material respects in compliance with, its
terms and the applicable provisions of ERISA, the Code and any other applicable
Legal Requirement, except to the extent the foregoing could not have a Material
Adverse Effect, and no event or condition has occurred and is continuing as to
which Borrower would be under an obligation to furnish a report to Lender under
clause (ii)(A) of this Section. With respect to each Plan maintained or
contributed to by Borrower, Guarantor or any ERISA Affiliate thereof (a) there
is no actual or contingent material liability of Borrower, Guarantor or any
ERISA Affiliate under Title IV of ERISA or Section 412 of the Code to any person
or entity, including the Pension Benefit Guaranty Corporation, IRS, any such
Plan or participants (or their beneficiaries) in any such Plan (other than the
obligation to pay routine benefit claims when due under the terms of such Plan),
(b) the assets of Borrower or Guarantor have not been subject to a lien under
ERISA or the Code and (c) there is no basis for such material liability or the
assertion of any such lien with respect to the assets of Borrower or Guarantor
as the result of or after the consummation of the transactions contemplated by
this Agreement. Except to the extent the following could not have a Material
Adverse Effect, no Welfare Plan provides or will provide benefits, including,
without limitation, death or medical benefits (whether or not insured) with
respect to any current or former employee of Borrower or Guarantor beyond his or
her retirement or other termination of service other than (A) coverage mandated
by applicable law, (B) death or disability benefits that have been fully
provided for by fully paid up insurance or (C) severance benefits.
          (ii) Borrower will furnish to Lender as soon as possible, and in any
event within ten (10) days after Borrower knows or has reason to believe that
any of the events or conditions specified below with respect to any Plan,
Welfare Plan or Multiemployer Plan has occurred or exists, an Officer’s
Certificate setting forth details respecting such event or condition and the
action, if any, that Borrower or its ERISA Affiliate proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC (or any other relevant Governmental Authority)) by Borrower or an
ERISA Affiliate with respect to such event or condition, if such report or
notice is required to be filed with the PBGC or any other relevant Governmental
Authority:
          (A) any reportable event, as defined in Section 4043 of ERISA and the
regulations issued thereunder, with respect to a Plan, as to which PBGC has not
by regulation waived the requirement of Section 4043(a) of ERISA that it be
notified within thirty (30) days of the occurrence of such event (provided that
a failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of the Code and
of Section 302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the Code), and any
request for a waiver under Section 412(d) of the Code for any Plan;
          (B) the distribution under Section 4041 of ERISA of a notice of intent
to terminate any Plan or any action taken by Borrower or an ERISA Affiliate to
terminate any Plan;
          (C) the institution by PBGC of proceedings under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any

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Plan, or the receipt by Borrower or any ERISA Affiliate of a notice from a
Multiemployer Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;
          (D) the complete or partial withdrawal from a Multiemployer Plan by
Borrower or any ERISA Affiliate that results in material liability under
Section 4201 or 4204 of ERISA (including the obligation to satisfy secondary
liability as a result of a purchaser default) or the receipt by Borrower or any
ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization
or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA;
          (E) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA, which proceeding is not dismissed within thirty (30) days;
          (F) the adoption of an amendment to any Plan that, pursuant to Section
401(a)(29) of the Code or Section 307 of ERISA, would result in the loss of
tax-exempt status of the trust of which such Plan is a part if Borrower or an
ERISA Affiliate fails to timely provide security to the Plan in accordance with
the provisions of said Sections;
          (G) the imposition of a lien or a security interest in connection with
a Plan; or
          (H) Borrower or Guarantor permits any Welfare Plan to provide
benefits, including without limitation, medical benefits (whether or not
insured), with respect to any current or former employee of Borrower or
Guarantor beyond his or her retirement or other termination of service other
than (1) coverage mandated by applicable law, (2) death or disability benefits
that have been fully provided for by paid up insurance or otherwise or
(3) severance benefits.
          (iii) Borrower shall not knowingly engage in or permit any transaction
in connection with which Borrower or Guarantor could be subject to either a
material civil penalty or tax assessed pursuant to Section 502(i) or 502(l) of
ERISA or Section 4975 of the Code, to the extent it could have a Material
Adverse Effect, permit any Welfare Plan to provide benefits, including without
limitation, medical benefits (whether or not insured), with respect to any
current or former employee of Borrower or Guarantor beyond his or her retirement
or other termination of service other than (A) coverage mandated by applicable
law, (B) death or disability benefits that have been fully provided for by paid
up insurance or otherwise or (C) severance benefits, permit the assets of
Borrower or Guarantor to become “plan assets”, as defined under ERISA
Section 3(42) and regulations promulgated thereunder or, to the extent it could
have a Material Adverse Effect, adopt, amend (except as may be required by
applicable law) or increase the amount of any benefit or amount payable under,
or permit any ERISA Affiliate to adopt, amend (except as may be required by
applicable law) or increase the amount of any benefit or amount payable under,
any employee benefit plan (including, without limitation, any employee welfare
benefit plan) or other plan, policy or arrangement, except for

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normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits expense to Borrower, Guarantor or any ERISA Affiliate.
     (t) Labor Matters. Borrower is not a party to any collective bargaining
agreements and has no employees.
     (u) Borrower’s Legal Status. Borrower’s exact legal name that is indicated
on the signature page hereto, organizational identification number and place of
business or, if more than one, its chief executive office, as well as Borrower’s
mailing address, if different, which were identified by Borrower to Lender and
contained in this Agreement, are true, accurate and complete. Borrower will not
change its name, its place of business or, if more than one place of business,
its chief executive office, or its mailing address or organizational
identification number if it has one without giving Lender at least thirty
(30) days prior written notice of such change, if Borrower does not have an
organizational identification number and later obtains one, Borrower shall
promptly notify Lender of such organizational identification number and Borrower
will not change its type of organization, jurisdiction of organization or other
legal structure.
     (v) Owner’s Legal Status. (A) (i) The fee owner or leasehold owner, as
applicable, of the Premises and the maker of the Mortgage Note is and shall be
Owner, (ii) there are no defaults existing under the Mortgage Loan Documents,
and, to the best of Borrower’s knowledge, there is no event which, but for the
passage of time or the giving of notice, or both, would constitute an event of
default under the Mortgage Loan Documents, (iii) the Mortgage Loan Documents and
the provisions thereof have not been amended, modified or altered in any manner
whatsoever, (iv) the Mortgage constitutes a valid and enforceable first lien
covering the Premises subject only to items set forth as exceptions to or
subordinate matters in the title insurance policy insuring the lien of the
Mortgage, none of which, individually or in the aggregate, materially interfere
with the benefits of the security intended to be provided by the Mortgage,
materially and adversely affect the value of the Premises, impair the use or
operation of the Premises for the use currently being made thereof or impair
Borrower’s ability to pay its obligations in a timely manner (such items being
the “Permitted Encumbrances”), (v) the Premises are improved and
income-producing and the improvements located thereon have not been damaged by
fire or other casualty, (vi) no condemnation or other eminent domain proceedings
have been commenced with respect to the Premises and Borrower has no knowledge
that any such proceedings are contemplated, (vii) Borrower knows of no fact or
circumstance which would affect the enforceability, validity or priority of the
Mortgage Loan Documents, or which would affect the ability or willingness of
Owner and any other Person liable under the Mortgage Loan Documents to continue
to perform and observe the terms, covenants and provisions of the Mortgage Loan
Documents, (viii) the unpaid principal balance of the Mortgage Note as of the
date of this Agreement is as set forth on Exhibit B attached hereto.
          (B) (i) there are no defaults existing under the Senior Mez Note, the
Senior Mez Loan Agreement or the other Senior Mez Loan Documents, and, to the
best of Borrower’s knowledge, there is no event which, but for the passage of
time or the giving of notice, or both, would constitute an event of default
under the Senior Mez Loan Documents, (ii) the Senior Mez Loan Documents and the
provisions thereof have not been amended, modified or altered in any manner
whatsoever, (iii) Borrower knows of no fact or circumstance which would affect
the

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enforceability, validity or priority of the Senior Mez Loan Documents, or which
would affect the ability or willingness of Senior Mez Borrower and any other
Person liable under the Senior Mez Loan Documents to continue to perform and
observe the terms, covenants and provisions of the Senior Mez Loan Documents,
(iv) the unpaid principal balance of the Senior Mez Note as of the date of this
Agreement is as set forth on Exhibit B attached hereto.
     (w) Title. Borrower (i) is the record and beneficial owner of, and has good
and marketable title to, (x) the Equity Interests set forth in Schedule 1
attached hereto and (y) all of the other Collateral owned by Borrower as of the
date hereof, and (ii) will have good and marketable title to the Equity
Interests and all other Collateral hereafter acquired, in any case, free and
clear of all claims, liens, options and encumbrances of any kind, and Borrower
has the right and authority to pledge and assign its portion of the Equity
Interests and grant a security interest therein as herein provided.
     (x) Securities Laws. The transactions contemplated by this Agreement do not
violate and do not require that any filing, registration or other act be taken
with respect to any and all laws pertaining to the registration or transfer of
securities, including without limitation the Securities Act of 1933, as amended,
and the Securities and Exchange Act of 1934, as amended, and any and all rules
and regulations promulgated thereunder (collectively, the “Securities Laws”), as
such laws are amended and in effect from time to time, and none of the Equity
Interests in the Partnerships or LLCs are represented by any “certificated
security” as that term is defined in Section 8-102 of the UCC. Borrower shall at
all times comply with the Securities Laws as the same pertain to all or any
portion of the Collateral or any of the transactions contemplated by this
Agreement. Lender agrees not to take any action with respect to the Collateral
that, without the consent of Borrower, requires Borrower to file a registration
statement with the SEC or apply to qualify a sale of a security under the
securities laws of any state.
     (y) Ownership Structure. The ownership chart attached hereto as Schedule 2
is true, correct and complete as of the Closing Date. Except as set forth on
Schedule 2, no other Person has any direct or indirect interest in Owner, Senior
Mez Borrower or Borrower.
     (z) Control of Owner. Borrower has the power and authority and the
requisite ownership interests to control the actions of Owner and at all times
during the term of the Loan shall maintain the power and authority to control
the actions of Owner.
     (aa) Representations and Warranties of Owner. (i) All of the
representations and warranties of Owner or any Affiliate of Owner under the
Mortgage Loan Documents are true, complete and correct in all material respects
and (ii) all of the representations and warranties of Senior Mez Borrower or any
Affiliate of Senior Mez Borrower under the Senior Mez Loan Documents are true,
complete and correct in all material respects.
     (bb) Management Agreement. The Management Agreement is in full force and
effect. There is no default, breach or violation existing under the Management
Agreement, and no event has occurred (other than payments due but not yet
delinquent) that, with the passage of time or the giving of notice, or both,
would constitute a default, breach or violation thereunder, by either party
thereto.

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     (cc) Operating Company Status. Borrower qualifies as an “operating
company,” as such term is defined in the regulation issued by the U.S.
Department of Labor known as the “plan assets regulation,” 29 C.F.R. §2510.3-101
and, as long as the Loan is outstanding, Borrower will remain at all times an
operating company, as so defined.
     (dd) Affiliation. Neither Borrower nor Operating Tenant, nor any Affiliate
of Borrower or Operating Tenant is an Affiliate of Lender.
     (ee) Insurance. Borrower has obtained and delivered, or has caused Owner to
obtain and deliver, to Lender certified copies of all insurance policies
reflecting the insurance coverages, amounts and other requirements set forth in
this Agreement. Borrower has not, and to the best of Borrower’s knowledge no
other Person has, done by act or omission anything which would impair the
coverage of any such policy.
     (ff) Absence of UCC Financing Statements, Etc. Except with respect to the
Mortgage Loan Documents and the Loan Documents, there is no financing statement,
security agreement, chattel mortgage, real estate mortgage or other document
filed or recorded with any filing records, registry, or other public office,
that purports to cover, affect or give notice of any present or possible future
lien on, or security interest or security title in the interest in the Premises
or any of the Collateral.
     (gg) Financial Information. All financial data that has been delivered by
Borrower to Lender (i) is true, complete and correct in all material respects,
(ii) accurately represents the financial condition and results of operations in
all material respects of the Persons covered thereby as of the date on which the
same shall have been furnished, and (iii) in the case of audited financial
statements, has been prepared in accordance with GAAP and the Uniform System of
Accounts (or such other accounting basis as is reasonably acceptable to Lender)
throughout the periods covered thereby. As of the date hereof, neither Borrower
nor, if applicable, any General Partner, has any material contingent liability,
material liability for taxes or other unusual or forward commitment not
reflected in such financial statements delivered to Lender. Since the date of
the last financial statements delivered by Borrower to Lender, except as
otherwise disclosed in such financial statements or notes thereto, there has
been no change in the assets, liabilities or financial position of Borrower,
Owner nor, if applicable, any General Partner, or in the results of operations
of Borrower or Owner which would have a Material Adverse Effect. None of
Borrower, Owner nor, if applicable, any General Partner, has incurred any
obligation or liability, contingent or otherwise not reflected in such financial
statements which would have a Material Adverse Effect.
     (hh) Collateral. Borrower (i) represents and warrants to Lender that the
Collateral constitutes a “general intangible” (as defined in
Section 9-102(a)(42) of the UCC); and (ii) Borrower covenants and agrees that
(A) the Collateral is not and will not be dealt in or traded on securities
exchanges or securities markets, (B) the terms of the Collateral do not and will
not provide that they are securities governed by the UCC, (C) the Collateral is
not and will not be investment company securities within the meaning of
Section 8-103 of the UCC and (D) Borrower shall not cause or permit any
interests in the Collateral to be certificated and delivered to any Person other
than Lender.

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     (ii) Lockbox Account.
          (i) Pursuant to the irrevocable direction letter delivered by Borrower
to Senior Mez Borrower on the Closing Date, Borrower shall direct Senior Mez
Borrower to cause all Remaining Rents after payments due under the Senior Mez
Loan Documents have been paid to be deposited into the Lockbox Account;
          (ii) there are no other accounts maintained by Owner, Borrower or any
other Person with respect to the collection of rents, revenues, proceeds or
other income from the Premises or for the collection of Rents, except for
accounts established by the Manager pursuant to the Management Agreement, the
Collection Account and the Central Account and the Lockbox Account and a lockbox
account established pursuant to the Senior Mez Loan Agreement; and
          (iii) so long as any of the Debt shall be outstanding, neither
Borrower, Owner nor any other Person shall open any other accounts with respect
to the collection of rents, revenues, proceeds or other income from the Premises
or for the collection of Rents (other than accounts permitted pursuant to the
terms of the Mortgage which are opened in the name of Manager).
     (jj) Compliance with Anti-Terrorism, Embargo and Anti-Money Laundering
Laws. (i) None of Borrower, General Partner, any Guarantor, or any Person who
owns any equity interest in or Controls Borrower, General Partner or any
Guarantor currently is identified on the OFAC List or otherwise qualifies as a
Prohibited Person, and Borrower has implemented procedures, approved by General
Partner, to ensure that no Person who now or hereafter owns an equity interest
in Borrower or General Partner is a Prohibited Person or Controlled by a
Prohibited Person, (ii) no proceeds of the Loan will be used to fund any
operations in, finance any investments or activities in or make any payments to,
Prohibited Persons, and (iii) none of Borrower, General Partner, or any
Guarantor are in violation of any Legal Requirements relating to anti-money
laundering or anti-terrorism, including, without limitation, Legal Requirements
related to transacting business with Prohibited Persons or the requirements of
the Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56, and the
related regulations issued thereunder, including temporary regulations, all as
amended from time to time. Notwithstanding the foregoing, with respect to the
holders of shares in publicly traded corporations which hold an equity interest
in Borrower, General Partner or Guarantor and which holders of shares in
publicly traded corporations do not Control Borrower, General Partner or
Guarantor, the representations contained in clauses (i) and (iii) of the
preceding sentence are made to the knowledge of Borrower. No tenant at the
Premises currently is identified on the OFAC List or otherwise qualifies as a
Prohibited Person, and, to the best of Borrower’s knowledge, no tenant at the
Premises is owned or Controlled by a Prohibited Person. Borrower has determined
that Manager has implemented procedures, approved by Borrower, to ensure that no
tenant at the Premises is a Prohibited Person or owned or Controlled by a
Prohibited Person.
     (kk) Perfected Security Interest. Upon the filing of the UCC-1 financing
statements with the Delaware Secretary of State, Lender will have a valid, and
duly perfected first priority, security interest in the Collateral enforceable
as such against all creditors of Borrower and any

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Persons purporting to purchase any Pledged Interests and Proceeds from Borrower.
     Section 2.03. Further Acts, Etc. Borrower will, at the cost of Borrower,
and without expense to Lender, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, assignments, 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 the property, security interest and rights hereby
given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed,
pledged, assigned and hypothecated, or which Borrower may be or may hereafter
become bound to convey or assign to Lender, or for carrying out or facilitating
the performance of the terms of this Agreement or for filing, registering or
recording this Agreement and, on demand, will execute and deliver and 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, chattel mortgages or comparable security instruments to evidence
more effectively the lien hereof upon the Collateral. Without limiting the
generality of the foregoing, Borrower will: (i) if any Collateral shall be
evidenced by a promissory note or other instrument or chattel paper, deliver and
pledge to Lender hereunder such note or instrument or chattel paper duly
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance reasonably satisfactory to Lender; (ii) execute or
authenticate and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or desirable
and as Lender may request, in order to perfect and preserve the security
interest granted or purported to be granted by Borrower hereunder; (iii) take
all action necessary to ensure that Lender has control of any Collateral
consisting of deposit accounts, electronic chattel paper, investment property
and letter-of-credit rights as provided in Sections 9-104, 9-105, 9-106 and
9-107 of the UCC; and (iv) deliver to Lender evidence that all other action that
Lender may reasonably deem necessary or desirable in order to perfect and
protect the security interest granted or purported to be granted by Borrower
under this Agreement has been taken. Borrower grants to Lender an irrevocable
power of attorney coupled with an interest for the purpose of protecting,
perfecting, preserving and realizing upon the interests granted pursuant to this
Agreement and to effect the intent hereof, all as fully and effectually as
Borrower might or could do; and Borrower hereby ratifies all that Lender shall
lawfully do or cause to be done by virtue hereof; provided, however, that Lender
shall not exercise such power of attorney unless and until Borrower fails to
take the required action within the five (5) Business Day time period stated
above unless the failure to so exercise, could, in Lender’s reasonable judgment,
result in a Material Adverse Effect. Upon (a) 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, (b) receipt of an
indemnity of Lender related to losses resulting solely from the issuance of a
replacement note or other applicable Loan Document and (c) in the case of any
such mutilation, upon surrender and cancellation of such Note or other
applicable Loan Document, Borrower will issue, in lieu thereof, a replacement
Note or other applicable 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 2.04. Recording of Agreement, etc. Borrower forthwith upon the
execution and delivery of this Agreement and thereafter, from time to time,
will, at the request of Lender, cause this Agreement, and any security
instrument creating a lien or security interest or evidencing the lien hereof
upon the Collateral and each instrument of further assurance to be filed,
registered or

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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 protect the lien or security
interest hereof upon, and the interest of Lender in, the Collateral. Borrower
will pay all filing, registration or recording fees, and all expenses incident
to the preparation, execution and acknowledgment of this Agreement, any
additional security instrument with respect to the Collateral and any instrument
of further assurance, 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 this Agreement, and any security agreement
supplemental hereto, or any instrument of further assurance, except where
prohibited by law to do so, in which event Lender may declare the Loan to be
immediately due and payable. Borrower shall hold harmless and indemnify Lender,
and its successors and assigns, against any liability incurred as a result of
the imposition of any tax on the making and recording of this Agreement.
     Section 2.05. Cost of Defending and Upholding Lien. If any action or
proceeding is commenced to which Lender is made a party relating to the Loan
Documents and/or the Collateral or Lender’s interest therein or in which it
becomes necessary to defend or uphold the lien of this Agreement or any other
Loan Document, Borrower shall, on demand, reimburse Lender for all expenses
(including, without limitation, reasonable attorneys’ fees and disbursements)
incurred by Lender in connection therewith, and such sum, together with interest
thereon at the Default Rate from and after such demand until fully paid, shall
constitute a part of the Loan.
     Section 2.06. Financial Reports. Borrower shall keep accurate and complete
books, records and accounts in accordance with generally accepted accounting
principles (“GAAP”) (or such other accounting basis reasonably acceptable to
Lender) consistently applied with respect to the financial affairs of Borrower,
including, but not limited to, the financial affairs of Borrower which relate to
the Collateral and all sums due or which may become due thereunder. Borrower
shall, within thirty (30) days after request and at its sole cost and expense,
deliver to Lender any of such books and records relating to the operation of the
Property and the financial affairs of Borrower as may be reasonably requested by
Lender. Lender shall have the right from time to time at all times during normal
business hours to examine such books, records and accounts at the office of
Borrower or other Person maintaining such books, records and accounts and to
make copies or extracts thereof as Lender shall desire. Borrower will furnish
Lender annually, within one hundred twenty (120) days following the end of each
Fiscal Year of Borrower, with a complete copy of Borrower’s financial statement
covering all of the financial affairs of Borrower for such Fiscal Year and
containing a statement of revenues and expenses, a statement of assets and
liabilities and a statement of Borrower’s equity. Together with Borrower’s
annual financial statements, Borrower shall furnish to Lender an Officer’s
Certificate certifying as of the date thereof (i) that the annual financial
statements accurately represent the results of operations and financial
condition of Borrower all in accordance with GAAP (or such other accounting
basis reasonably acceptable to Lender) consistently applied, (ii) whether there
exists an event or circumstance which constitutes, or which upon notice or lapse
of time or both would constitute, a Default under the Note or any other Loan
Document executed and delivered by Borrower, and if such event or circumstance
exists, the nature thereof, the period of time it has existed and the action
then being taken to remedy such event or circumstance and (iii) audited
financial statements of Ashford Hospitality Trust Inc., which are audited by a
nationally recognized Independent certified public accountant that is acceptable
to Lender in accordance with GAAP

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(or such other accounting basis reasonably acceptable to Lender) consistently
applied. Borrower shall at all times, whether or not the Mortgage Loan is
outstanding, deliver or shall cause Owner to deliver to Lender (x) a copy of all
financial statements, reports, books, records and accounts required to be
delivered to Mortgage Lender pursuant to the terms of the Mortgage Loan
Documents within the time frames set forth in the Mortgage Loan Documents for
the delivery of such financial statements, reports, books, records and accounts
and (y) at any during which (A) an O&M Operative Period exists or (B) the Rent
under Space Leases exceeds five percent (5%) of the annual Operating Income,
annually, within twenty (20) days following the end of each year and within
twenty (20) days following receipt of such request therefor, a true, complete
and correct rent roll for the Premises, including a list of which tenants are in
default under their respective Major Space Leases, dated as of the date of
Lender’s request, identifying each tenant that has filed a bankruptcy,
insolvency, or reorganization proceeding since delivery of the last such rent
roll, and the arrearages for such tenant, if any, and such rent roll shall be
accompanied by an Officer’s Certificate, dated as of the date of the delivery of
such rent roll, certifying that such rent roll is true, correct and complete in
all material respects as of its date. Borrower acknowledges that notwithstanding
anything to the contrary contained herein or in the Note, all extension fees
will be treated as additional interest.
     Section 2.07. Litigation. Borrower will give prompt written notice to
Lender of any litigation or governmental proceedings pending or threatened (in
writing) against Borrower, Owner or Guarantor which might have a Material
Adverse Effect and of any claim, option, lien or encumbrance upon or against all
or a portion of the Collateral.
     Section 2.08. Estoppel Certificates. Borrower (a) shall, or shall cause
Owner to, from time to time, request from Mortgage Lender such certificates of
estoppel with respect to compliance by Owner with the terms of the Mortgage Loan
Documents as may be requested by Lender and required to be given by Mortgage
Lender pursuant to the Mortgage Loan Documents; and (b) shall, or shall cause
Senior Mez Borrower to, from time to time, request from Senior Mez Lender such
certificates of estoppel with respect to compliance by Senior Mez Borrower with
the terms of the Senior Mez Loan Documents as may be reasonably requested by
Lender and required to be given by Senior Mez Lender pursuant to the Senior Mez
Loan Documents.
     Section 2.09. Budget. Borrower shall submit to Lender for Lender’s written
approval (provided that such approval shall only be required in the event that
Borrower or any Affiliate of Borrower has the right to approve any such budget
pursuant to the terms of the Management Agreement) not to be unreasonably
withheld, an annual budget (the “Annual Budget”) within ten (10) Business Days
after receipt thereof from Manager, in form satisfactory to Lender setting forth
in reasonable detail budgeted monthly operating income and monthly operating
capital and other expenses for the Premises. In the event Lender shall have the
right to approve such Annual Budget and Lender objects to the 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, within
three (3) days after receipt of notice of any such objections, revise such
Annual Budget and resubmit the same to Lender. Lender shall advise Borrower of
any 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 revise the same in accordance with the process
described herein until Lender approves an Annual Budget, provided, however, that
if

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Lender shall not advise Borrower of its objections to any proposed Annual Budget
within the applicable time period set forth in this Section, then such proposed
Annual Budget shall be deemed approved by Lender. If Lender has the right to
approve the Annual Budget pursuant to the terms of the Management Agreement,
until such time that Lender approves a proposed Annual Budget, the most recently
Approved Annual Budget shall, except as otherwise provided in the Management
Agreement, apply; provided that, such Approved Annual Budget shall be adjusted
to reflect actual increases in Basic Carrying Costs and utilities expenses. In
the event that Owner must incur an Extraordinary Expense, then Borrower shall
promptly deliver to Lender a reasonably detailed explanation of such proposed
Extraordinary Expense which, if Borrower has the right to approve such
expenditures pursuant to the terms of the Management Agreement, shall be subject
to Lender’s approval, which approval may be granted or denied in Lender’s
reasonable discretion.
     Section 2.10. Failure To Deliver Financial Reports. In the event that
Borrower fails to deliver any of the financial statements, reports or other
information required to be delivered to Lender pursuant to this Agreement on or
prior to their due dates, and any such failure shall continue for ten (10) days
following notice thereof from Lender, Borrower shall pay to Lender on each
Payment Date for each month or portion thereof that any such financial
statement, report or other information remains undelivered, an administrative
fee in the amount of Two Thousand Five Hundred Dollars ($2,500) in the aggregate
for all failures occurring in any applicable month. Borrower agrees that such
administrative fee (i) is a fair and reasonable fee necessary to compensate
Lender for its additional administrative costs and increased costs relating to
Borrower’s failure to deliver the aforementioned statements, reports or other
items as and when required hereunder and (ii) is not a penalty.
     Section 2.11. Transfers, Etc. (a) Borrower shall not, without the prior
consent of Lender, in any manner allow a Transfer (other than a Permitted
Transfer (provided no transfer pursuant to clause (c) of the definition thereof
shall result in the transfer of direct interests in Owner or Senior Mez
Borrower)) to occur or enter into any agreement which expressly restricts
Borrower from making amendments, modifications or waivers to the Loan Documents.
Without the express prior written consent of Lender, Borrower shall not, and
shall not cause or permit Owner or Senior Mez Borrower to, enter into any
consensual sale or other similar transaction with respect to the Property or
impair or otherwise adversely affect the interests of Lender in the Collateral
or any portion thereof or any interest therein other than in connection with a
Release pursuant to Section 15.02 of the Mortgage and Section 2.11(b) hereof.
     (b) Notwithstanding the provisions of Section 2.11(a), any Release made in
accordance with the terms of Section 15.02 of the Mortgage and the transfer of
interests by Senior Mez Borrower pursuant to Section 2.11 of the Senior Mez Loan
Agreement, shall be a permitted Transfer hereunder and shall not require the
consent of Lender provided that (i) no Event of Default shall have occurred and
be continuing, (ii) Borrower and each General Partner is and shall continue
after such Release to be in compliance with the requirements of Section 2.02(g)
hereof, (iii) Owner and Operating Tenant are and shall continue after such
Release to be in compliance with the requirements of Section 2.02(g) of the
Mortgage, (iv) Lender shall have received no less than thirty (30) days prior
written notice of such Release, (v) the Release shall have been consummated in
accordance with the terms of the Mortgage, and (vi) upon or prior to such
Release, Borrower shall repay a portion of the principal amount of the Loan in
an amount

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equal to 110% of the Mez Allocated Loan Amount with respect to the
Cross-collateralized Property to be released in connection with such Release
together with any sums, if any, required to be paid pursuant to
Section 6.01(b)(v) hereof.
     Section 2.12. Sums Held In Trust. To the extent Borrower receives any sums
it is not otherwise entitled to receive pursuant to the terms of this Agreement,
Borrower shall hold all such sums sufficient to discharge all sums due or to
become due on the Debt, in trust for use in payment of the Debt.
     Section 2.13. Notification of Defaults. Borrower shall promptly (and in all
events within one (1) Business Day of obtaining knowledge thereof) notify Lender
of the occurrence of any default under the Mortgage Loan or the Senior Mez Loan
or of the occurrence of any event, which but for the passage of time or the
giving of notice or both, would constitute a default under the Mortgage Loan or
the Senior Mez Loan .
     Section 2.14. Compliance With Mortgage Loan Documents. (a) Borrower shall
cause Owner to comply with all of the terms, covenants and conditions set forth
in the Mortgage Loan Documents, notwithstanding any waiver or future amendment
of such covenants by Mortgage Lender. Borrower acknowledges that the obligation
to comply with such covenants is separate from, and may be enforced
independently from, the obligations of Owner under the Mortgage Loan Documents,
and, to the extent such term, covenants and conditions require any consents,
approvals or waivers by Mortgage Lender, Lender shall have the same rights to
consent, approve or waive. The provisions of Sections 3.01, 4.01, 7.02(a)
through (c) and 8.01 of the Mortgage are hereby incorporated by reference as if
fully restated herein and shall constitute the direct obligation of Borrower to
either perform or to cause Owner to perform such covenants on behalf of Lender.
     (b) Borrower shall cause Senior Mez Borrower to comply with all of the
terms, covenants and conditions set forth in the Senior Mez Loan Documents,
notwithstanding any waiver or future amendment of such covenants by Senior Mez
Lender. Borrower acknowledges that the obligation to comply with such covenants
is separate from, and may be enforced independently from, the obligations of the
Senior Mez Borrower under the Senior Mez Loan Documents.
     Section 2.15. No Change of Accounts. Borrower shall not permit (a) Owner to
change the Collection Account or the Central Account, without the prior written
consent of Lender and Mortgage Lender or (b) Senior Mez Borrower to change the
lockbox account established pursuant to the Senior Mez Loan Agreement without
the prior written consent of Lender, not to be unreasonably withheld, and Junior
Mez Lender.
     Section 2.16. Confirmation of Loan Documents, Etc. (a) After request by
Lender, Borrower, within fifteen (15) days and at its expense, will furnish or
will cause Owner and Senior Mezz Borrower to furnish to Lender a statement, duly
acknowledged and certified, setting forth with respect to this Agreement, the
Note, the Senior Mez Note and the Mortgage Note, as applicable, (i) the amount
of the original principal amount, and the unpaid principal amount, (ii) the rate
of interest, (iii) the date payments of interest and/or principal were last
paid, (iv) any offsets or defenses to payment, and if any are alleged, the
nature thereof, (v) that no

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modifications have taken place, or if modified, giving particulars of such
modification and (vi) that there has occurred and is then continuing no Default
or if such Default exists, the nature thereof, the period of time it has
existed, and the action being taken to remedy such Default.
     (b) Within fifteen (15) days after written request by Borrower, Lender
shall furnish to Borrower a written statement confirming the Principal Amount of
the Loan, the maturity date of the Note and the date to which interest has been
paid.
     Section 2.17. Corporate Actions. Without the prior written consent of
Lender, Borrower will not and will not cause or allow the Corporations, LLCs or
Partnerships at any time, to (and, without limiting the foregoing, will not vote
to enable, or take any other action to permit, the Corporations, LLCs or
Partnerships to):
     (a) make any Distribution or payment during the continuance of an Event of
Default or otherwise in violation of this Agreement or any of the other Loan
Documents; or
     (b) purchase or redeem or obligate itself to purchase or redeem any Equity
Interests, cancel any Equity Interests or issue or authorize to be issued any
additional Equity Interests; or
     (c) merge into or merge or consolidate with any corporation, partnership or
limited liability company or entity or cause itself to dissolve or liquidate its
assets; or
     (d) enter into, or cause or permit any affiliate of any of the
Corporations, LLCs or Partnerships to enter into, (x) any transaction with a
Person or entity affiliated with or related to itself, except upon arms-length
terms and conditions, or (y) any transaction which is motivated by an intent to
evade this Agreement; or
     (e) breach any of the covenants or obligations of the Corporations, LLCs or
Partnerships pursuant to this Agreement.
     Section 2.18. Conduct of Operations. To the extent that such matters are
within the control of Borrower pursuant to the terms of the Organizational
Documents and applicable laws, Borrower shall cause the Corporations, LLCs and
Partnerships to conduct their operations and to manage, protect and preserve
their assets and to act in a commercially reasonable manner to preserve the
value of the Collateral.
     Section 2.19. Voting Rights; Etc. (a) So long as an Event of Default shall
not have occurred and be continuing, Borrower shall be permitted (i) to receive
any and all regular Distributions and dividends paid in cash and in the ordinary
course of business of the Partnerships, the LLCs and the Corporations with
respect to the Equity Interests and (ii) to exercise all voting and other rights
with respect to the Equity Interests as long as no vote shall be cast, or right
exercised or other action taken which would, directly or indirectly, materially
impair the value of any Collateral or which would be inconsistent with or result
in a default under this Agreement or any of the other Loan Documents. Upon the
receipt of a written request from Borrower, Lender shall execute and deliver (or
cause to be executed and delivered) to Borrower all such proxies and other
instruments as Borrower may reasonably request for the purpose of enabling
Borrower to exercise the voting and other rights which it is entitled to
exercise and to receive the dividends or interest payments which it is
authorized to receive and

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retain pursuant to this Agreement. Upon the occurrence and during the
continuance of an Event of Default, the aforesaid rights shall immediately and
automatically vest in Lender.
     (b) If Borrower shall receive, by virtue of Borrower’s being or having been
an owner of any Equity Interest, (i) any Distributions or dividends payable in
cash (except such Distributions and dividends permitted to be retained by
Borrower pursuant to sub-section (a) above) or in securities or other property,
or (ii) any Distributions or dividends in connection with a partial or total
liquidation or dissolution or a reclassification, increase or reduction of
capital, capital surplus or paid-in capital, Borrower shall receive the same in
trust for Lender, segregate the same from its other assets and promptly deliver
the same to Lender in the exact form received, with any necessary endorsement
and/or appropriate powers or other instruments of assignment or conveyance, to
be held by Lender as Collateral pursuant to this Agreement.
     Section 2.20. Admission of New Equity. Borrower will not agree to admit any
new or substitute shareholders, members or partners into the Corporations, LLCs
or Partnerships or transfer its interests in the Corporations, LLCs or
Partnerships unless such new shareholder, member or partner executes and
delivers, and agrees to be bound by, an agreement, in form and content
substantially identical to this Agreement, pursuant to which such new
shareholder, member or partner pledges its interests in the Corporations, LLCs
or Partnerships to Lender and such admission is otherwise in accordance with the
terms of the applicable Organizational Documents and the Loan Documents.
     Section 2.21. Proceeds of Collateral. Upon the occurrence and during the
continuance of an Event of Default, all Proceeds of the Collateral received by
Borrower shall be promptly delivered to Lender, in the same form as received,
with the addition only of such endorsements and assignments as may be necessary
to transfer title to Lender, and pending such delivery, such Proceeds shall be
held in trust for Lender; and such Proceeds shall be applied to the Debt in such
order and manner as Lender shall direct in its sole discretion.
     Section 2.22. Admission of Lender As Shareholder, Member, Partner. In the
event that Lender forecloses on the Collateral, notwithstanding anything to the
contrary in the Organizational Documents, the Person that acquires the
Collateral in connection with such foreclosure (whether Lender, a designee or
Affiliate of Lender or any other Person) shall automatically be admitted as a
shareholder, member or partner of the Corporations, LLCs or Partnerships,
respectively, and shall be entitled to receive all benefits and exercise all
rights in connection therewith pursuant to the Organizational Documents;
provided, however, that such Person (whether Lender, a designee or Affiliate of
Lender or any other Person) shall have no liability for matters in connection
with the Equity Interests arising or occurring, directly or indirectly, prior to
such Person becoming a shareholder, member or partner of the Corporations, LLCs
or Partnerships.
     Section 2.23. Purchase of Mortgage Loan, Etc. (a) Neither Borrower nor any
Affiliate thereof or any other Person acting upon their direction or request
shall, directly or indirectly, acquire or agree to acquire, obtain, purchase or
control the Mortgage Loan, or any portion thereof or any interest therein, or
any direct or indirect ownership interest in the holder of, or participant in,
the Mortgage Loan in any manner whatsoever. If, solely by operation of
applicable subrogation law, Borrower or any Affiliate thereof shall be in breach
of or fail to

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comply with the foregoing, then such breach or failure shall not be an Event of
Default provided that Borrower (a) shall immediately upon obtaining knowledge
thereof notify Lender of such failure or breach, and (b) shall cause Borrower
and Affiliates thereof acquiring any interest in the Mortgage Loan Documents
(i) not to enforce the Mortgage Loan Documents, and (ii) upon the request of
Lender, to the extent any Borrower or such Affiliate has the power or authority
to do so, to promptly (A) cancel, reconvey and release its interest in the
Mortgage Loan Documents, (B) discontinue and terminate any enforcement
proceeding(s) under the Mortgage Loan Documents and (C) assign and transfer its
interest in the Mortgage Loan Documents to Lender.
     (b) Neither Senior Mez Borrower nor any Affiliate thereof or any other
Person acting upon their direction or request shall, directly or indirectly,
acquire or agree to acquire, obtain, purchase or control the Senior Mez Loan, or
any portion thereof or any interest therein, or any direct or indirect ownership
interest in the holder of, or participant in, the Senior Mez Loan in any manner
whatsoever. If, solely by operation of applicable subrogation law, Senior Mez
Borrower or any Affiliate thereof shall be in breach of or fail to comply with
the foregoing, then such breach or failure shall not be an Event of Default
provided that Senior Mez Borrower (a) shall immediately upon obtaining knowledge
thereof notify Lender of such failure or breach, and (b) shall cause Senior Mez
Borrower and Affiliates thereof acquiring any interest in the Senior Mez Loan
Documents (i) not to enforce the Senior Mez Loan Documents, and (ii) upon the
request of Lender, to the extent any Senior Mez Borrower or such Affiliate has
the power or authority to do so, to promptly (A) cancel, reconvey and release
its interest in the Senior Mez Loan Documents, (B) discontinue and terminate any
enforcement proceeding(s) under the Senior Mez Loan Documents and (C) assign and
transfer its interest in the Senior Mez Loan Documents to Lender.
     Section 2.24. Deed-In-Lieu, etc. Without the prior written consent of
Lender, Borrower shall not, and shall not cause or permit Owner to, enter into
any deed-in-lieu or consensual foreclosure or transfer or assignment with or for
the benefit of Mortgage Lender or any of Mortgage Lender’s Affiliates or
designees. Without the express prior written consent of Lender, Borrower shall
not, and shall not cause or permit Owner to, enter into any consensual sale or
transfer or assignment or other similar transaction, impair or otherwise
adversely affect the interests of Lender in the Collateral or any portion
thereof or any interest therein.
     Section 2.25. Intercreditor Agreement. Borrower acknowledges and agrees
that Lender, Senior Mez Lender, Junior Mez Lender and Mortgage Lender have
entered into an intercreditor agreement regarding their respective rights under
the Mortgage Loan, Senior Mez Loan, Junior Mez Loan and Loan (the “Intercreditor
Agreement”). Borrower acknowledges and agrees that: (a) no Person other than
Lender, Senior Mez Lender, Junior Mez Lender and Mortgage Lender has any rights
whatsoever, direct or indirect, beneficial or otherwise, under the Intercreditor
Agreement and Borrower is not a third party beneficiary thereof; (b) Lender,
Senior Mez Lender, Junior Mez Lender and Mortgage Lender may amend, modify,
cancel, terminate, supplement or waive the Intercreditor Agreement at any time
without notice to, or the consent of Borrower, Owner or any other Person, and
(c) except as expressly set forth in this Agreement, any restriction or other
agreement between Lender, Senior Mez Lender, Junior Mez Lender and Mortgage
Lender set forth in the Intercreditor Agreement is personal between Lender,
Senior Mez Lender, Junior Mez Lender and Mortgage Lender and, as between Lender,
on the one hand,

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and Borrower, on the other hand, no such agreement or restriction will be deemed
to benefit or otherwise modify any of the rights of Lender under the Loan
Documents.
     Section 2.26. Payment of Impositions. Borrower shall pay and discharge all
taxes now or hereafter imposed on it, or its income or profits, on any of its
property or upon the liens provided for herein prior to the date on which
penalties attach thereto; provided that Borrower shall have the right to contest
the validity or amount of any such tax in good faith and by proper proceedings.
Borrower shall promptly pay any valid, final judgment enforcing any such tax and
cause the same to be satisfied of record.
     Section 2.27. Central Cash Management. (a) All amounts paid by the issuer
of the Rate Cap Agreement (the “Counterparty”) to Borrower or Lender, together
with all rents, issues, profits, insurance proceeds, condemnation proceeds,
refinancing proceeds and all other sums received with respect to the Premises or
distributed with respect to the Equity Interests after all sums which are then
due and payable have been paid to Mortgage Lender pursuant to the terms of the
Mortgage Loan Documents and to Senior Mez Lender pursuant to the terms of the
Senior Mez Loan Agreement (collectively, “Remaining Rents”), shall be paid by
federal wire transfer or automatic clearing house funds (“ACH”) to Lender and
shall be deposited immediately into an Eligible Account located at a bank
satisfactory to Lender (the “Lockbox Account”). Lender has established the
Lockbox Account in the name of Lender as secured party. The Lockbox Account
shall be under the sole dominion and control of Lender. The Lockbox Account
shall contain the Debt Service Payment Account (an “Account” and together with
the other accounts now or hereafter required to be established pursuant to this
Section 2.27, collectively, the “Accounts”) to which certain funds shall be
allocated and from which disbursements shall be made pursuant to the terms of
the Lockbox Agreement. Borrower hereby irrevocably directs and authorizes Lender
to withdraw funds from the Lockbox Account, all in accordance with the terms and
conditions of the Lockbox Agreement. Borrower shall have no right of withdrawal
in respect of the Lockbox Account. Each transfer of funds to be made hereunder
shall be made only to the extent that funds are on deposit in the Lockbox
Account, and Lender shall have no responsibility to make additional funds
available in the event that funds on deposit are insufficient. Subject to the
rights of Senior Mez Lender pursuant to the terms of the Senior Mez Loan
Agreement, Borrower shall enter into or shall cause Owner to enter into a
substitute cash management agreement and related lockbox agreement
(collectively, the “Substitute CMA Agreements”) with substantially the same
terms as the agreements entered into as of the date hereof in connection with
the Mortgage Loan as a condition to the satisfaction of the Mortgage Loan or if
Mortgage Lender is not requiring that sums be deposited into any Sub-Accounts or
Escrow Accounts. Such substitute agreements shall provide that all Remaining
Rents shall be deposited into the Lockbox Account for disbursement in accordance
with the terms of the Substitute CMA Agreements, the Lockbox Agreement (as
amended to conform with the Substitute CMA Agreements) and this Agreement.
Additionally, on or before the Closing Date, Borrower shall establish or cause
Owner to establish such escrow and reserve accounts and deposit such amounts
into such accounts as required pursuant to the terms of the Mortgage Loan
Documents. After the occurrence and during the continuance of an Event of
Default, the funds on deposit in the Lockbox Account, and all other funds
received by Lender in respect of the Loan, shall be disbursed and applied in
such order and such manner as Lender shall elect in its sole discretion. If
Borrower shall receive any Remaining Rents other than in accordance with this
Agreement, Borrower shall hold all such payments in trust for Lender, will not
co-mingle such payments

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with other funds of Borrower, and will immediately pay and deliver in kind, all
such payments directly to Lender for application by Lender in accordance with
this Agreement.
     (b) Borrower shall maintain the Rate Cap Agreement at all times during the
term of the Loan and pay all fees, charges and expenses incurred in connection
therewith. Borrower shall comply with all of its obligations under the terms of
the Rate Cap Agreement. All amounts paid by the Counterparty to Borrower or
Lender shall be deposited immediately into the Lockbox Account. Borrower shall
take all actions reasonably requested by Lender to enforce Lender’s rights under
the Rate Cap Agreement in the event of a default by the Counterparty. In the
event that (a) the long-term unsecured debt obligations of the Counterparty are
downgraded by the Rating Agency below “A+” or its equivalent or (b) the
Counterparty shall default in any of its obligations under the Rate Cap
Agreement, Borrower shall, at the request of Lender, promptly but in all events
within five (5) Business Days, replace the Rate Cap Agreement with an agreement
having identical payment terms and maturity as the Rate Cap Agreement and which
is otherwise in form and substance substantially similar to the Rate Cap
Agreement and otherwise acceptable to Lender with a cap provider, the long-term
unsecured debt of which is rated at least “AA-” (or its equivalent) by each
Rating Agency, or which will allow each Rating Agency to reaffirm their then
current ratings of all rated certificates issued in connection with the
Securitization. In the event that Borrower fails to maintain the Rate Cap
Agreement as provided in this Section, Lender may purchase the Rate Cap
Agreement and the cost incurred by Lender in connection therewith shall be paid
by Borrower to Lender with interest thereon at the Default Rate from the date
such cost is incurred until such cost is paid by Borrower to Lender.
     (c) Subject to the rights of Senior Mez Lender, (i) during the existence of
an Event of Default or (ii) if Owner would be required to deposit sums into the
Sub-Accounts or Escrow Accounts pursuant to the terms of the Mortgage (as it
exists as of the Closing Date), but such sums are not being deposited into the
Sub-Accounts or Escrow Accounts, Borrower shall establish and maintain one or
more sub-accounts of the Lockbox Account into which Remaining Rents shall be
deposited for the purposes of paying Basic Carrying Costs, Recurring Replacement
Expenditures and Operating Expenses. In connection therewith, Borrower and
Lender shall modify the Lockbox Agreement to provide that, if sums are required
to be deposited into the Lockbox Account pursuant to this Section 2.27(c), such
funds shall be allocated in the order of priority set forth in Section 5.05 of
the Mortgage and Borrower hereby irrevocably appoints Lender as its
attorney-in-fact, coupled with an interest, to execute any such amendment to the
Lockbox Agreement. The amounts to be deposited in such sub-accounts shall equal
the amounts required to be deposited in the Sub-Accounts and Escrow Accounts
pursuant to the terms of the Mortgage (as in effect on the Closing Date or as
amended with Lender’s approval) and sums deposited into such sub-accounts may be
released on the same terms and conditions as set forth in the Mortgage (as in
effect on the Closing Date or as amended with Lender’s approval).
     (d) Borrower hereby agrees for the benefit of itself, Senior Mez Borrower
and Owner that all payments actually received by Lender shall be deemed payments
to Borrower by Senior Mez Borrower and Owner. Lender shall apply any and all
such payments actually received by Lender for application in accordance with
this Agreement. After payment of all sums due and payable with respect to the
Loan, Lender shall return to Borrower that portion of any payments actually
received by Lender from Borrower, Senior Mez Borrower or Owner which is required
to

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be paid to Borrower pursuant to the Loan Documents together with, in the event
of a Release made in accordance with the provisions of Section 2.11(b) hereof,
any funds held by Lender pursuant to Section 2.27(c) hereof which are allocable
to the portion of the Property which is the subject of the Release.
     Section 2.28. Certain Additional Rights of Lender. Notwithstanding anything
to the contrary which may be contained in this Agreement, Lender shall have:
     (a) the right to routinely consult on a regular basis (no less frequently
than quarterly) with and advise Borrower’s management regarding the significant
business activities and business and financial developments of Borrower,
provided, however, that such consultations shall not include discussions of
environmental compliance programs or disposal of hazardous substances, and,
provided, further, that Lender shall have the right to call special meetings at
any reasonable times;
     (b) the right, without restricting any other rights of Lender under this
Agreement (including any similar right), to restrict financing to be obtained in
connection with future property transactions, refinancing of any acquisition
financings, and unsecured debt unless the Loan has been paid in full or such
transactions, financings or debt are incurred in connection with a portion of
the Property which was the subject a release pursuant to Section 2.11 hereof;
     (c) the right, without restricting any other right of Lender under this
Agreement (including any similar right), to restrict, upon the occurrence of an
Event of Default, Borrower’s payments of management, consulting, director or
similar fees to Affiliates of Borrower (or their personnel);
     (d) Intentionally Omitted;
     (e) the right, without restricting any other rights of Lender under this
Agreement (including any similar right), to approve any acquisition by Borrower
of any other significant property (other than personal property required for the
day to day operation of the Premises);
     (f) the right, without restricting any other rights of Lender under this
Agreement (including any similar right), in the event of an Event of Default, to
vote the owners’ interests in Borrower pursuant to irrevocable proxies granted,
at the request of Borrower in advance for this purpose; and
     (g) the right, without restricting any other rights of Lender under this
Agreement (including any similar right), to restrict the transfer of voting
interests in Borrower held by its members, and the right to restrict the
transfer of interests in such member, except for any transfer that is a
Permitted Transfer (provided no transfer pursuant to clause (c) of the
definition thereof shall result in the transfer of direct interests in Owner or
Senior Mez Borrower).
The rights contained in this Section 2.28 may be exercised by any Person which
owns or Controls, directly or indirectly, substantially all of the interests in
Lender or the Loan.
     Section 2.29. Refinancing, Liens, etc. Borrower shall not and shall not
permit Senior Mez Borrower or Owner to, without the prior written consent of
Lender, which consent may be

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withheld, delayed or conditioned in the sole discretion of Lender, give its
consent or approval or agree to any of the following:
     (a) (i) any refinancing of the Mortgage Loan or the Senior Mez Loan in
whole unless the Loan is repaid in accordance with the terms hereof
simultaneously therewith, (ii) any prepayment in full of the Mortgage Loan or
the Senior Mez Loan except in connection with a Release made in accordance with
Section 2.11 hereof, (iii) any Transfer (for purposes of this Section 2.29(a)
only, as defined in the Mortgage (as in effect on the Closing Date or as amended
with Lender’s approval)) of the Premises (other than a Permitted Transfer
(provided no transfer pursuant to clause (c) of the definition thereof shall
result in the transfer of direct interests in Owner or Senior Mez Borrower))
unless a Release occurs simultaneously therewith in accordance with Section 2.11
hereof, or (iv) any action in connection with or in furtherance of the
foregoing;
     (b) placing or permitting to attach any additional liens or encumbrances on
the Premises (except for liens and encumbrances permitted under the Mortgage
Loan Documents or the Senior Mez Loan Documents (as in effect on the Closing
Date or as amended with Lender’s approval) not requiring the consent of Mortgage
Lender) or the Senior Mez Lender); or
     (c) any modification, amendment, consolidation, spread, restatement or
waiver of any provision of the Mortgage Loan Documents, Senior Mez Documents or
Junior Mez Documents.
     Section 2.30. Insurance. (a) The insurance described in Section 3.01 of the
Mortgage and Section 2.30(c) hereof (except policies for worker’s compensation)
shall be in the form (other than with respect to Sections 3.01(a)(vi) and
(vii) of the Mortgage when insurance in those two sub-sections is placed with a
governmental agency or instrumentality on such agency’s forms) and amount and
with deductibles as, from time to time, shall be reasonably acceptable to
Lender, under valid and enforceable policies issued by financially responsible
insurers authorized to do business in the State where the Premises is located,
with a general policyholder’s service rating of not less than A and a financial
rating of not less than XIII as rated in the most currently available Best’s
Insurance Reports (or the equivalent, if such rating system shall hereafter be
altered or replaced) and shall have a claims paying ability rating and/or
financial strength rating, as applicable, of not less than “AA” (or its
equivalent), or such lower claims paying ability rating and/or financial
strength rating, as applicable, as Lender shall, in its sole and absolute
discretion, consent to, from a Rating Agency (one of which after a
Securitization in which Standard & Poor’s rates any securities issued in
connection with such Securitization, shall be Standard & Poor’s). All such
policies (except policies for worker’s compensation) shall name Lender as an
additional named insured (subject to the rights of Mortgage Lender and Senior
Mez Lender), with respect to the insurance required pursuant to
Section 3.01(a)(iii) of the Mortgage, shall provide, subsequent to the
satisfaction of the Mortgage Loan, for loss payable to Lender (subject to the
rights of Senior Mez Lender) and shall contain (or have attached): (i) standard
“non-contributory mortgagee” endorsement or its equivalent relating, inter alia,
to recovery by Lender notwithstanding the negligent or willful acts or omissions
of Borrower; (ii) a waiver of subrogation endorsement as to Lender; (iii) an
endorsement indicating that neither Lender nor Borrower shall be or be deemed to
be a co-insurer with respect to any casualty risk insured by such policies and
shall provide for a deductible per loss of an amount not more than $25,000, and
(iv) a provision that such policies

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shall not be canceled, terminated, denied renewal or amended, including, without
limitation, any amendment reducing the scope or limits of coverage, without at
least thirty (30) days’ prior written notice to Lender in each instance. Not
less than thirty (30) days prior to the expiration dates of the insurance
policies obtained pursuant to this Agreement certificates evidencing such
renewals bearing notations evidencing the payment of premiums or accompanied by
other reasonable evidence of such payment (which premiums shall not be paid by
Borrower or Owner through or by any financing arrangement which would entitle an
insurer to terminate a policy) shall be delivered by Borrower to Lender.
Borrower shall not carry separate insurance, concurrent in kind or form or
contributing in the event of loss, with any insurance required under
Section 3.01 of the Mortgage or Section 2.30(c) hereof.
     (b) If Borrower fails to maintain and deliver to Lender the original
policies or certificates of insurance required by this Agreement, Lender may, at
its option, procure such insurance, and Borrower shall pay, or as the case may
be, reimburse Lender for, all premiums thereon promptly, upon demand by Lender,
with interest thereon at the Default Rate from the date paid by Lender to the
date of repayment and such sum shall constitute a part of the Debt.
     (c) Borrower shall deliver, or shall cause Owner to deliver, to Lender such
other insurance as may from time to time be required by Lender and which is then
customarily required by Institutional Lenders for similar properties similarly
situated, against other insurable hazards, including, but not limited to,
malicious mischief, vandalism, acts of terrorism, windstorm and/or earthquake,
due regard to be given to the size and type of the Premises, Improvements,
Fixtures and Equipment and their location, construction and use. Additionally,
Borrower shall carry such insurance coverage as Lender may from time to time
require if the failure to carry such insurance may result in a downgrade,
qualification or withdrawal of any class of securities issued in connection with
a Securitization.
     Section 2.31. Casualty. Borrower shall give Lender prompt notice of any
loss or damage to the Premises the cost to repair which could reasonably be
expected to be in excess of $250,000 in the aggregate and, subject to the rights
of the Mortgage Lender under the Mortgage Loan Documents and Senior Mez Lender
under the Senior Mez Loan Documents (which shall in all respects supercede the
rights of Lender under this Section 2.31):
     (a) After the Mortgage Loan and the Senior Mez Loan have been paid in full,
(i) in the event of any loss or damage covered by any insurance, Lender shall
apply any insurance proceeds in the same manner such proceeds would be required
to be applied by Mortgage Lender under the Mortgage and other Mortgage Loan
Documents and (ii) Borrower shall not adjust, compromise or settle any claim for
such proceeds without the prior written consent of Lender, which shall not be
unreasonably withheld or delayed and Lender shall have the right, at Borrower’s
sole cost and expense, to participate in any settlement or adjustment of
Insurance Proceeds; provided, however, that, except during the continuance of an
Event of Default, Lender’s consent shall not be required with respect to the
adjustment, compromising or settlement of any claim for proceeds in an amount
less than $1,000,000. The expenses incurred by Lender in the adjustment and
collection of such proceeds of insurance shall be additional Debt of Borrower,
and shall be reimbursed to Lender upon demand or, at Lender’s option, in the
event and to the extent sufficient proceeds are available, deducted by Lender
from such proceeds of insurance prior to any other application thereof. If the
Mortgage Loan and the Senior Mez

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Loan have been paid in full, each insurance company which has issued insurance
is hereby authorized and directed to make payment for all losses covered by such
insurance to Lender alone, and not to Lender and Borrower, Senior Mez Borrower
or Owner jointly. Borrower agrees to execute and cause Owner and Senior Mez
Borrower to execute all documents and make all deliveries required in order to
permit adjustment and payment of insurance proceeds as provided above.
     (b) Subject to the prior rights of Mortgage Lender and Senior Mez Lender
Borrower hereby assigns to Lender the proceeds of all insurance (other than
worker’s compensation and liability insurance) obtained pursuant to this
Agreement, all of which proceeds shall be payable to Lender as collateral and
further security for the payment of the Debt and the performance of Borrower’s
obligations hereunder and under the other Loan Documents, and Borrower hereby
authorizes and directs the issuer of any such insurance to, subject to the
rights of Mortgage Lender and Senior Mez Lender, make payment of such proceeds
directly to Lender. Lender may, in its sole discretion, apply the proceeds of
insurance received upon any casualty to any one or more of the following: (i)
the payment of the Debt, whether or not then due, in any proportion or priority
as Lender, in its discretion, may elect, (ii) the repair or restoration of the
Property, (iii) the cure of any Default or (iv) the reimbursement of the costs
and expenses of Lender incurred pursuant to the terms hereof. Nothing herein
contained shall be deemed to excuse Borrower from repairing or maintaining or
causing Owner to repair or maintain the Property as provided in this Agreement
or restoring or causing Owner to restore all damage or destruction to the
Property, regardless of the sufficiency of the proceeds, and the application or
release by Lender of any proceeds shall not cure or waive any Default or notice
thereof.
     Section 2.32. Management of Premises. (a) Borrower shall cause Owner to
operate and manage the Property or cause the Property to be operated and managed
in a manner which is consistent with the Approved Manager Standard. Borrower
covenants and agrees with Lender that (a) the Premises will be managed at all
times by an Approved Manager pursuant to the management agreement approved by
Lender (the “Management Agreement”), such approval not to be unreasonably
withheld or delayed, (b) after Borrower has knowledge of a fifty percent (50%)
or more change in control of the ownership of Manager, Borrower will promptly
give Lender notice thereof (a “Manager Control Notice”) and (c) the Management
Agreement may be terminated by Lender at any time (i) for cause to the extent
provided in the Management Agreement (including, but not limited to, Manager’s
gross negligence, misappropriation of funds, willful misconduct or fraud)
following the occurrence of an Event of Default of the type set forth in
Section 3.01(a) through (c), or (ii) to the extent provided in the Management
Agreement, following the receipt of a Manager Control Notice and Borrower shall
cause Owner to appoint a substitute Approved Manager. Notwithstanding the
foregoing, transfers of publicly traded stock of Manager on a national stock
exchange or on the NASDAQ Stock Market in the normal course or business and not
in connection with a tender offer or sale or Manager or substantially all of the
assets of Manager shall not require the giving of a Manager Control Notice.
Borrower may from time to time cause Owner to appoint a successor manager to
manage the Premises, provided that any such successor manager shall be an
Approved Manager. Borrower further covenants and agrees that Borrower shall
cause Owner to require the Manager (or any successor managers) to maintain at
all times during the term of the Loan worker’s compensation insurance as
required by Governmental Authorities.

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     (b) Borrower shall not allow Owner to enter into any new or replacement
Franchise Agreement without obtaining the prior written consent of Lender, such
consent not to be unreasonably withheld, conditioned or delayed (provided that
any Franchise Agreement which is on a form in all material respects (including,
without limitation, all fees due thereunder) the same as the form of any
Franchise Agreement which is contained in the uniform franchise offering
circular for any Approved Franchisor shall be deemed an acceptable form), and
shall cause Owner to (i) pay or shall cause to be paid all sums required to be
paid by Borrower under any Franchise Agreement and Operating Lease,
(ii) diligently perform and observe all of the material terms, covenants and
conditions of any Franchise Agreement on the part of Owner to be performed and
observed to the end that all things shall be done which are necessary to keep
unimpaired the rights of Owner under any Franchise Agreement and Operating
Lease, (iii) promptly notify Lender of the giving of any notice to Owner or
Borrower of any material default by Owner in the performance or observance of
any of the terms, covenants or conditions of and Franchise Agreement or
Operating Lease on the part of Owner 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 expenditures plan,
report and estimate received by it under the Franchise Agreement or the
Management Agreement or the Operating Lease. Borrower shall not, without the
prior consent of the Lender, such consent not to be unreasonably withheld,
conditioned or delayed, allow Owner to surrender any Franchise Agreement or
Operating Lease or terminate or cancel any Franchise Agreement or modify,
change, supplement, alter or amend any Franchise Agreement or Operating Lease,
in any material 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
Security Instrument, all the rights, privileges and prerogatives of Borrower to
surrender any Franchise Agreement or Operating Lease or to terminate, cancel,
modify, change, supplement, alter or amend any Franchise Agreement or Operating
Lease in any respect, and any such surrender of any Franchise Agreement or
termination, cancellation, modification, change, supplement, alteration or
amendment of any Franchise Agreement or Operating Lease without the prior
consent of Lender shall be void and of no force and effect, provided, however,
Borrower may allow Owner to terminate any Franchise Agreement if Owner enters
into a new Franchise Agreement with an Approved Franchisor pursuant to a
Franchise Agreement which is reasonably acceptable to Lender. If Owner shall
default in the performance or observance of any material term, covenant or
condition of any Franchise Agreement or Operating Lease on the part of Owner 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 any Franchise
Agreement or Operating Lease on the part of Borrower to be performed or observed
to be promptly performed or observed on behalf of Borrower, to the end that the
rights of Borrower in, to and under any Franchise Agreement and Operating Lease
shall be kept unimpaired and free from default. Lender and any Person designated
by Lender shall have, and are hereby granted, the right to enter upon the
Property at any time and from time to time for the purpose of taking any such
action. If the franchisor under any Franchise Agreement or lessee under an
Operating Lease shall deliver to Lender a copy of any notice sent to Borrower of
default under any Franchise Agreement or Operating Lease, as applicable, such
notice shall constitute full protection to Lender for any action to be taken by

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Lender in good faith, in reliance thereon. Borrower shall, from time to time,
use its best efforts to obtain from the franchisor or lessee under any Franchise
Agreement such certificates of estoppel with respect to compliance by Borrower
with the terms of any Franchise Agreement as may be requested by Lender.
Borrower shall exercise or cause Owner to exercise each individual option, if
any, to extend or renew the term of any Franchise Agreement within four
(4) months of the last day upon which any such option may be exercised, unless
Lender consents to the non-renewal of such Franchise Agreement in writing, 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 or Owner,
which power of attorney shall be irrevocable and shall be deemed to be coupled
with an interest, provided, however, that Lender shall not exercise such power
of attorney unless and until Borrower fails to take the actions required herein.
     Section 2.33. Power of Attorney. Borrower hereby irrevocably appoints and
instructs Lender as its attorney-in-fact, with full authority in the place and
stead of Borrower and in the name of Borrower, Lender or otherwise, from time to
time in Lender’s discretion to take any and all actions necessary and proper, to
carry out the intent of this Agreement and (a) to perfect and protect the lien,
pledge, assignment and security interest of Lender created hereunder, (b) from
and during the continuance of an Event of Default, (i) to ask, demand, collect,
sue for, recover, compromise, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of the Collateral,
(ii) to file any claims or take any action or institute any proceedings for the
collection of any of the Collateral or otherwise to enforce the rights of Lender
with respect to any of the Collateral, and (iii) in connection with the exercise
of any power, right, privilege or remedy pursuant to this Agreement, to make all
necessary assignments, transfers and deliveries of the Collateral and rights and
to execute all applications, certificates, instruments, assignments and other
documents and papers, (c) to collect and receive any insurance proceeds paid
with respect to any portion of the insurance policies required to be maintained
hereunder, and to endorse any checks, drafts or other instruments representing
any insurance proceeds whether payable by reason of loss thereunder or
otherwise, (d) to exercise any option to extend or renew the term of any Ground
Lease in the name of and on behalf of Borrower or Owner and (e) from and during
the continuance of an Event of Default, to file and prosecute, to the exclusion
of Borrower and Owner, any proofs of claim, complaints, motions, applications,
notices and other documents, in any case in respect of any Ground Lessor under
the Bankruptcy Code. Borrower hereby ratifies, approves and confirms all actions
taken by Lender and its attorneys-in-fact pursuant to this Section 2.33. Neither
Lender nor any said Lender or attorney-in-fact will be liable for any acts of
commission or omission nor for any error of judgment or mistake of fact or law
with respect to its dealings with the Collateral. This power of attorney, being
coupled with an interest, is irrevocable until the date upon which the Debt has
been indefeasibly satisfied in full. Without limiting the foregoing, if Borrower
fails to perform any agreement or obligation contained herein, Lender may itself
perform, or cause performance of, where necessary or advisable in the name or on
behalf of Borrower, and at the expense of Borrower, as applicable.
     Section 2.34. Leases. (a) Borrower covenants and agrees that, from the date
hereof and until payment in full of the Debt, Borrower shall, or shall cause
Owner to, comply with the terms and provisions of Section 7.02(a) through (c) of
the Mortgage as provided in Section 2.14 hereof, and, to the extent such term,
covenants and conditions require any consents, approvals or waivers by Mortgage
Lender, Lender shall have the same rights to consent, approve or waive.

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     (b) Subject to the rights of Mortgage Lender in respect of the Rents under
the Mortgage Loan Documents and the rights of Senior Mez Lender in respect of
the Rents under the Senior Mez Loan Documents, at any time that (i) payments are
not being made to the Central Account, or (ii) following repayment of the
Mortgage Loan, then Lender shall have the immediate right to notify the bank in
which the Collection Account is located to make payments directly to the Lockbox
Account. Subject to the rights of Mortgage Lender under the Mortgage Loan
Documents and Senior Mez Lender under the Senior Mez Loan Documents, security
and other refundable deposits of tenants, whether held in cash or any other
form, shall, after and during the continuance of an Event of Default, be turned
over to Lender (together with any undisbursed interest earned thereon) upon
Lender’s request therefor to be held by Lender subject to the terms of the
Leases. Any letter of credit or other instrument which Borrower or Owner holds
in lieu of cash security deposit shall be maintained in full force and effect in
the full amount of such deposits unless replaced by cash deposits as
herein-above described and shall in all respects comply with any applicable
Legal Requirements and otherwise be satisfactory to Lender. Borrower shall, upon
request, provide Lender with evidence satisfactory to Lender of Borrower’s,
Senior Mez Borrower’s and Owner’s compliance with the foregoing.
     (c) Borrower (i) shall cause Owner or Operating Tenant to observe and
perform all of its material obligations under the Leases pursuant to applicable
Legal Requirements and shall not do or permit to be done anything to impair the
value of the Major Space Leases; (ii) shall cause Owner to promptly send copies
to Lender of all notices of material default which Owner shall receive under the
Major Space Leases; (iii) shall, consistent with the Approved Manager Standard,
enforce all of the terms, covenants and conditions contained in the Leases to be
observed or performed; (iv) shall not permit Owner to collect any of the Rents
under the Major Space Leases more than one (1) month in advance (except that
Owner may collect in advance such security deposits as are permitted pursuant to
applicable Legal Requirements and are commercially reasonable in the prevailing
market); (v) shall not permit Owner to cancel or terminate any of the Leases or
accept a surrender thereof in any manner inconsistent with the Approved Manager
Standard; (vi) shall not permit Owner to alter, modify or change the terms of
any guaranty of any Major Space Lease or cancel or terminate any such guaranty
in a manner inconsistent with the Approved Manager Standard; (vii) shall cause
Owner, in accordance with the Approved Manager Standard, to make all reasonable
efforts to seek lessees for space as it becomes vacant and enter into Leases in
accordance with the terms hereof; and (viii) shall not permit Owner to
materially modify, alter or amend any Major Space Lease or Property Agreement
without Lender’s consent, which consent will not be unreasonably withheld or
delayed. Borrower shall, and shall cause Senior Mez Borrower and Owner to,
promptly send copies to Lender of all notices of material default which either
Senior Mez Borrower or Owner shall receive under the Leases.
     Section 2.35. Condemnation. In the event that all or any portion of the
Premises shall be damaged or taken through condemnation (which term shall
include any damage or taking by any governmental authority, quasi-governmental
authority, any party having the power of condemnation, or any transfer by
private sale in lieu thereof), or any such condemnation shall be threatened,
Borrower shall give prompt written notice to Lender. Lender acknowledges that
Owner’s rights to any condemnation award is subject to the terms of the Mortgage
and the Senior Mez Loan Documents. Notwithstanding the foregoing, Borrower may
not and shall not permit Owner or Senior Mez Borrower to settle or compromise
any claim, action or proceeding relating

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to such damage or condemnation without the prior written consent of Lender,
which shall not be unreasonably withheld, delayed or denied; provided, further,
that either Owner or Senior Mez Borrower may settle, adjust and compromise any
such claim, action or proceeding which is of an amount less than five percent
(5%) of the Allocated Loan Amount provided no Event of Default has occurred. Any
proceeds remaining after the application of any award to reconstruct or repair
the Premises or to the payment of the Mortgage Loan and the Senior Mez Loan
shall be paid to Lender and applied to the payment of the Debt whether or not
then due. In the event that Owner is permitted pursuant to the terms of the
Mortgage to reconstruct, restore or repair the Premises following a condemnation
of any portion of the Premises, Borrower shall cause Owner to promptly and
diligently repair and restore the Premises in the manner and within the time
periods required by the Mortgage, the Leases and any other agreements affecting
the Premises. In the event that Owner is permitted pursuant to the terms of the
Mortgage to elect not to reconstruct, restore or repair the Premises following a
condemnation of any portion of the Premises, Borrower shall not permit Owner to
elect not to reconstruct, restore or repair the Property without the prior
written consent of Lender.
     Section 2.36. Ground Lease.
     (a) Borrower will, and will cause Owner to, comply in all material respects
with the terms and conditions of any Ground Lease. Borrower will not, and will
not permit Owner to, do or permit anything to be done, the doing of which, or
refrain from doing anything, the omission of which, will impair or tend to
impair the security of the Premises under the Ground Leases or will be grounds
for declaring a forfeiture of any Ground Lease. Borrower shall, and shall cause
Owner to, promptly send copies of all notices of default which Owner may receive
under any Ground Lease to Lender.
     (b) Borrower shall, and shall cause Owner to, enforce the Ground Leases and
not terminate, modify, cancel, change, supplement, alter or amend any Ground
Lease, or waive, excuse, condone or in any way release or discharge any Ground
Lessor of or from any of the material covenants and conditions to be performed
or observed by such Ground Lessor.
     (c) Lender shall have the right, but not the obligation, to perform any
obligations of Borrower or Owner under the terms of any Ground Lease during the
continuance of an Event of Default. All costs and expenses (including, without
limitation, reasonable attorneys’ fees and expenses) so incurred, shall be
treated as an advance secured by this Agreement, shall bear interest thereon at
the Default Rate from the date of payment by Lender until paid in full and shall
be paid by Borrower to Lender during the continuance of an Event of Default on
demand. No performance by Lender of any obligations of Borrower or Owner shall
constitute a waiver of any Event of Default arising by reason of Borrower’s or
Owner’s failure to perform the same. If Lender shall make any payment or perform
any act or take action in accordance with this Section 2.36(c), Lender will
notify Borrower of the making of any such payment, the performance of any such
act, or the taking of any such action.
     (d) Borrower shall cause Owner to exercise each individual option, if any,
to extend or renew the term of any Ground Lease not less than thirty (30) days
prior to the last day upon which any such option may be exercised (and in all
events within five (5) days after demand by Lender made at any time within one
(1) year of the last day upon which any such option may be

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exercised), and Borrower hereby expressly authorizes and appoints Lender its
attorney-in-fact to exercise any such option on behalf of Owner to so exercise
such option if Borrower fails to cause Owner to exercise as herein required,
which power of attorney shall be irrevocable and shall be deemed to be coupled
with an interest. Borrower shall give Lender notice of Owner’s exercise of any
such option to extend or renew the term of any Ground Lease within five (5) days
of the exercise of any such option.
     (e) Subject to Mortgage Lender’s rights under the Mortgage Loan and Senior
Mez Lender’s rights under the Senior Mez Loan, Borrower shall cause Owner to
assign, transfer and set over to Lender all of Borrower’s claims and rights to
the payment of damages arising from any rejection by any Ground Lessor of any
Ground Lease under the Bankruptcy Code. Borrower shall notify Lender promptly
(and in any event within ten (10) days) of any claim, suit, action or proceeding
relating to the rejection of any Ground Lease. Subject to Mortgage Lender’s
rights under the Mortgage Loan and Senior Mez Lender’s rights under the Senior
Mez Loan, the Lender is hereby irrevocably appointed as Borrower’s
attorney-in-fact, coupled with an interest, with exclusive power to file and
prosecute, to the exclusion of Borrower, any proofs of claim, complaints,
motions, applications, notices and other documents, in any case in respect of
any Ground Lessor under the Bankruptcy Code during the continuance of an Event
of Default. Borrower may make any compromise or settlement in connection with
such proceedings (subject to Lender’s reasonable approval); provided, however,
that Lender, subject to Mortgage Lender’s rights under the Mortgage Loan and
Senior Mez Lender’s rights under the Senior Mez Loan, shall be authorized and
entitled to compromise or settle any such proceeding if such compromise or
settlement is made after the occurrence and during the continuance of an Event
of Default. Borrower shall promptly execute and deliver to Lender any and all
instruments reasonably required in connection with any such proceeding after
request therefor by Lender. Except as set forth above, Borrower shall not, nor
permit Owner to, adjust, compromise, settle or enter into any agreement with
respect to such proceedings without the prior written consent of Lender, which
consent shall not be unreasonably withheld or delayed.
     (f) Borrower shall not permit Owner to, without Lender’s prior written
consent, elect to treat any Ground Lease as terminated under Section 365(h)(1)
of the Bankruptcy Code. Any such election made without Lender’s prior written
consent shall be void.
     (g) If pursuant to Section 365(h)(2) of the Bankruptcy Code, Owner seeks to
offset against the rent reserved in any Ground Lease the amount of any damages
caused by the non-performance by any Ground Lessor of any of such Ground
Lessor’s obligations under the applicable Ground Lease after the rejection by
such Ground Lessor of the Ground Lease under the Bankruptcy Code, Borrower
shall, prior to Owner effecting such offset, notify Lender of its intention to
do so, setting forth the amounts proposed to be so offset and the basis
therefor. If Lender has failed to object as aforesaid within ten (10) days after
notice from Borrower in accordance with the first sentence of this
Section 2.35(g), Borrower may permit Owner to proceed to effect such offset in
the amounts set forth in Borrower’s notice. Neither Lender’s failure to object
as aforesaid nor any objection or other communication between Lender and
Borrower relating to such offset shall constitute an approval of any such offset
by Lender. Borrower shall indemnify and save Lender harmless from and against
any and all claims, demands, actions, suits, proceedings, damages, losses, costs
and expenses of every nature whatsoever (including, without limitation,
reasonable attorneys’ fees and disbursements) arising

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from or relating to any such offset by Owner against the rent reserved in the
Ground Lease.
     (h) Borrower shall immediately, after obtaining knowledge thereof, notify
Lender of any filing by or against any Ground Lessor of a petition under the
Bankruptcy Code. Borrower shall thereafter forthwith give written notice of such
filing to Lender, setting forth any information available to Borrower or Owner
as to the date of such filing, the court in which such petition was filed, and
the relief sought therein. Borrower shall promptly deliver to Lender following
receipt any and all notices, summonses, pleadings, applications and other
documents received by Borrower or Owner in connection with any such petition and
any proceedings relating thereto.
     (i) Borrower shall, and shall cause Owner to, perform all other covenants
with respect to any Ground Lease as set forth in the Mortgage for so long as any
portion of the Debt remains outstanding (regardless of whether the Mortgage Loan
remains outstanding).
ARTICLE III. EVENTS OF DEFAULT/REMEDIES
     Section 3.01. Events of Default. The Loan shall become immediately due at
the option of Lender upon any one or more of the following events (“Event of
Default”):
     (a) if the final payment or prepayment premium, if any, due under the Note
shall not be paid on Maturity;
     (b) if any monthly payment of interest and/or principal due under the Note
(other than the sums described in (a) above) shall not be fully paid on the date
upon which the same is due and payable thereunder; provided, that the failure of
any such amount to be paid when due shall not be an Event of Default if adequate
funds were on deposit in the Lockbox Account (or would have been on deposit
therein if Lender had timely allocated such funds thereto from the Lockbox
Account in accordance with the provisions of Section 2.27 hereof);
     (c) if payment of any sum (other than the sums described in (a) above or
(b) above) required to be paid pursuant to the Note, this Agreement or any other
Loan Document shall not be paid within five (5) Business Days after Lender
delivers written notice to Borrower that same is due and payable thereunder or
hereunder;
     (d) if Borrower, Senior Mez Borrower, Owner, Operating Tenant, Guarantor
or, if Borrower, Senior Mez Borrower, Owner, Operating Tenant or Guarantor is a
partnership, any general partner of Borrower, Senior Mez Borrower, Owner,
Operating Tenant or Guarantor, or, if Borrower, Senior Mez Borrower, Owner,
Operating Tenant or Guarantor is a limited liability company, any member of
Borrower, Senior Mez Borrower, Owner, Operating Tenant or Guarantor, shall
institute or cause to be instituted any proceeding for the termination or
dissolution of Borrower, Senior Mez Borrower, Owner, Operating Tenant, Guarantor
or any such general partner or member;
     (e) if a default beyond applicable notice and grace periods shall occur
under any of the Mortgage Loan Documents or the Senior Mez Loan Documents, or
any other event or condition shall exist, if the Mortgage Lender or Senior Mez
Lender has accelerated the maturity of any portion of the Mortgage Loan or the
Senior Mez Loan for any reason;

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     (f) if Borrower, Senior Mez Borrower, Owner or Guarantor attempts to assign
its rights under this Agreement or any other Loan Document or any interest
herein or therein, or if any Transfer other than a Permitted Transfer (provided
no transfer pursuant to clause (c) of the definition thereof shall result in the
transfer of direct interests in Owner or Senior Mez Borrower) occurs other than
in accordance with the provisions hereof;
     (g) if any representation or warranty of Borrower, Senior Mez Borrower,
Owner or Guarantor made herein or in any other Loan Document or in any
certificate, report, financial statement or other instrument or agreement
furnished to Lender shall prove false or misleading in any material respect, as
of the date made; provided, however, that if such representation or warranty
which was false or misleading in any material respect is, by its nature, curable
and is not reasonably likely to have a Material Adverse Effect, and such
representation or warranty was not, to the best of Borrower’s knowledge, false
or misleading in any material respect when made, then the same shall not
constitute an Event of Default unless Borrower has not cured the same within
five (5) Business Days after receipt by Borrower of notice from Lender in
writing of such breach;
     (h) if Borrower, Senior Mez Borrower, Owner, Operating Tenant, Guarantor
or, if Borrower, Senior Mez Borrower, Owner, Operating Tenant or Guarantor is a
partnership, any general partner of Borrower, Senior Mez Borrower, Owner,
Operating Tenant or Guarantor, or, if Borrower, Senior Mez Borrower, Owner,
Operating Tenant or Guarantor is a limited liability company, any member of
Borrower, Senior Mez Borrower, Owner, Operating Tenant or Guarantor, shall make
an assignment for the benefit of creditors or shall admit in writing its
inability to pay its debts generally as they become due;
     (i) if a receiver, liquidator or trustee of Borrower, Senior Mez Borrower,
Owner, Operating Tenant or Guarantor or any general partner of Borrower, Senior
Mez Borrower, Owner, Operating Tenant or Guarantor shall be appointed or if
Borrower, Senior Mez Borrower, Owner, Operating Tenant or Guarantor or their
respective general partners shall be adjudicated a bankrupt or insolvent, or if
any petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower, Senior Mez Borrower,
Owner, Operating Tenant, Guarantor or their respective general partners or if
any proceeding for the dissolution or liquidation of Borrower, Senior Mez
Borrower, Owner, Operating Tenant, Guarantor or their respective general
partners shall be instituted; however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by Borrower, Senior
Mez Borrower, Owner, Operating Tenant, Guarantor or their respective general
partners, as applicable, upon the same not being discharged, stayed or dismissed
within ninety (90) days or if Borrower, Senior Mez Borrower, Owner, Operating
Tenant, Guarantor or their respective general partners shall generally not be
paying its debts as they become due;
     (j) if Borrower consummates a transaction which would cause this Agreement
or Lender’s rights under this Agreement, the Note or any other Loan Document to
constitute a non-exempt prohibited transaction under ERISA or result in a
violation of a state statute regulating government plans subjecting Lender to
liability for a violation of ERISA or a state statute;
     (k) if a default by Borrower or Owner beyond applicable notice and grace
periods, if

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any, occurs under the Franchise Agreement or Operating Lease, or if the
Franchise Agreement or Operating Lease is terminated, or if, without Lender’s
prior written consent, there is a material change to the Franchise Agreement or
Operating Lease unless, with respect to any default under or termination of the
Franchise Agreement, Borrower or Owner enters into a replacement Franchise
Agreement within thirty (30) days of the termination or receipt of notice of any
such default, as applicable, in accordance with the terms hereof;
     (l) if a default beyond applicable notice and grace periods shall occur
under any loan and security agreement executed by Borrower or any Affiliate of
Borrower which secures, in whole or in part, the Debt;
     (m) if any pledge or security interest made or granted or purported to be
made or granted pursuant to this Agreement or any of the other Loan Documents
shall cease to be in full force and effect or shall not be enforceable or shall
not be of the effect or have the priority stated herein or therein for such
pledge or security interest; or
     (n) if a default shall occur under any of the other terms, covenants or
conditions of the Note, this Agreement or any other Loan Document, other than as
set forth in (a) through (m) above, for 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 or an additional ninety (90) days if Borrower is diligently and
continuously effectuating a cure of a curable non-monetary default, other than
as set forth in (a) through (m) above.
     Section 3.02. Remedies. (a) Upon the occurrence and during the continuance
of any Event of Default, Lender may, in addition to any other rights or remedies
available to it hereunder or under any other Loan Document, at law or in equity,
take such action, without notice or demand, as it reasonably deems advisable to
protect and enforce its rights against Borrower and in and to the Collateral,
including, but not limited to, the following actions, each of which may be
pursued singly, concurrently or otherwise, at such time and in such order as
Lender may determine, in its sole discretion, without impairing or otherwise
affecting any other rights and remedies of Lender hereunder, at law or in
equity: (i) declare all or any portion of the unpaid Loan to be immediately due
and payable; provided, however, that upon the occurrence of any of the events
specified in Section 3.01(i), the entire Loan will be immediately due and
payable without notice or demand or any other declaration of the amounts due and
payable; or (ii) bring an action to foreclose this Agreement and thereupon
Lender may (A) exercise all rights and powers of Borrower with respect to the
Collateral or any part thereof, whether in the name of Borrower or otherwise and
(B) apply the receipts from the Collateral to the payment of the Debt, after
deducting therefrom all expenses (including, without limitation, reasonable
attorneys’ fees and disbursements and all applicable transfer taxes) reasonably
incurred in connection therewith, as well as just and reasonable compensation
for the services of Lender’s third-party agents; or (iii) sell the Collateral or
institute proceedings for the complete foreclosure of this Agreement, or take
such other action as may be allowed pursuant to Legal Requirements, at law or in
equity, for the enforcement of this Agreement; or (iv) pursue any or all such
other rights or remedies as Lender may have under applicable law or in equity
(including, without limitation, all rights and remedies to a secured party under
the UCC); provided, however, that the provisions of this Section shall not be
construed to extend or modify any of the notice requirements or grace

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periods provided for hereunder or under any of the other Loan Documents.
     (b) In addition to the remedies described in subsection (a) above, if any
Event of Default shall occur, so long as such Event of Default shall be
continuing, (i) Lender and/or its nominees or designees shall have the right to
receive any and all dividends, payments or Distributions paid with respect to
the Equity Interests and the other Collateral, as applicable, and make
application thereof in accordance with this Agreement (and any dividends and
other payments received in trust by Borrower for the benefit of Lender shall be
segregated from the other funds of Borrower) and (ii) at Lender’s election, all
Equity Interests shall be transferred to Lender and/or one (1) or more
nominee(s) or designee(s) thereof, and Lender and/or such nominee(s) or
designee(s) may in the name of Borrower or in Lender’s and/or such nominee’s(s’)
or designee’s(s’) own name, collect all payments and assets due Borrower
pursuant to the Equity Interests and/or the applicable Organizational Documents,
and Lender and/or such nominee(s) or designee(s) may thereafter exercise (A) all
voting and other rights pertaining to the Equity Interests and/or the other
Collateral under the Organizational Documents, and (B) any and all rights of
conversion, exchange, subscription and any other rights, privileges or options
pertaining to the Equity Interests as if they were the absolute owners thereof
(including the right to exchange at their discretion any and all of the Equity
Interests upon the merger, consolidation, reorganization, recapitalization or
other change in the structure of any Corporation, LLC or Partnership), or upon
the exercise by Borrower or Lender and/or such nominee(s) or designee(s) of any
right, privilege or option pertaining to such Equity Interests, and, in
connection therewith, the right to deposit and deliver evidences of the Equity
Interests with any committee, depository, transfer agent, registrar or other
designated agency (upon such terms and conditions as they may determine), all
without liability except to account for property actually received by them, but
neither Lender nor any such nominee or designee shall have any duty to exercise
any such right, privilege or option and shall not be responsible for any failure
to do so or delay in so doing. Further, unless and until Lender and/or such
nominee(s) or designee(s) succeeds to actual ownership thereof, pursuant to the
exercise of Lender’s remedies described in subsection (a) above, neither Lender
nor any such nominee or designee shall be obligated to perform or discharge any
obligation, duty or liability in connection with the Equity Interests or the
other Collateral. The rights of Lender hereunder shall not be conditioned or
contingent upon the pursuit by Lender of any other right or remedy against
Borrower or any guarantor of any of the Debt, or against any other Person which
may be or become liable in respect of all or any part of the Debt or against any
other collateral security therefor, guarantee thereof or right of offset with
respect thereto. Neither Lender nor any of its nominees or designees shall be
liable for any failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, nor shall they be under any obligation
to sell or otherwise dispose of any Collateral upon the request of Borrower or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
     (c) Following the occurrence and during the continuance of an Event of
Default, Lender may, at its election, and in addition to any other remedies
available hereunder, in its sole and absolute discretion, no such duty being
imposed hereby, pay, purchase, contest or compromise any encumbrance, charge or
lien which is prior or superior to its security interest in the Collateral and
pay all expenses incurred therewith (any payment or expense so incurred shall be
deemed a part of the Debt and shall be immediately due and payable and secured
hereby), all of which shall be deemed authorized by Borrower. All such expenses
not paid when due shall

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accrue interest at the Default Rate.
     (d) Without limiting the generality of the other provisions of this
Agreement, Lender is hereby authorized by Borrower, but not obligated, in the
event of any Event of Default hereunder giving rise to Lender’s rights to sell
or otherwise dispose of the Collateral, and after the giving of any notices
required herein, to sell all or any part of the Collateral at private sale,
subject to an investment letter or in any other manner which will not require
the Collateral, or any part thereof, to be registered in accordance with the
Securities Act of 1933, as amended (the “Securities Act”), or other applicable
rules and regulations promulgated thereunder, or any other law or regulation, at
the best price reasonably obtainable by Lender at any such private sale or other
disposition in the manner mentioned above, and Borrower specifically
acknowledges that any such disposition shall be commercially reasonable under
the UCC even though any such private sales may be at prices and on terms less
favorable than those obtainable through a public sale without such restrictions,
and agrees that Lender shall have no obligation to engage in public sales and no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale required
by registration under the Securities Act or under applicable state securities
laws, even if such issuer would, or should agree to, so register it. Lender is
also hereby authorized by Borrower, but not obligated, to take such actions,
give such notices, obtain such consents, and do such other things as Lender may
deem required or appropriate in the event of a sale or disposition of any of the
Collateral. If Lender determines to exercise its right to sell any or all of the
Collateral, upon written request, Borrower shall and shall cause each issuer of
any Pledged Interests or other Equity Interests owned by Borrower to be sold
hereunder from time to time to furnish to Lender all such information as Lender
may request in order to determine the number of shares and other instruments
included in the Collateral which may be sold by Lender in exempt transactions
under the Securities Act and the rules and regulations of the Securities and
Exchange Commission thereunder, as the same are from time to time in effect.
Borrower clearly understands that Lender may at its discretion approach a
restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Collateral, or any part or parts
thereof, than would otherwise be obtainable if same were registered and sold in
the open market. Borrower agrees: (i) in the event Lender shall, upon an Event
of Default hereunder, sell the Collateral, or any portion thereof, at such
private sale or sales, Lender shall have the right to rely upon the advice and
opinion of any member firm of the National Security Exchange as to the best
price reasonably obtainable upon such private sale thereof; and (ii) that such
reliance shall be conclusive evidence that Lender handled such matter in a
commercially reasonable manner under the UCC.
     (e) In order to permit Lender to exercise the voting and other consensual
rights which it may be entitled to exercise pursuant to this Agreement and to
receive all dividends and other Distributions which it may be entitled to
receive under this Agreement, (i) Borrower shall promptly execute and deliver
(or cause to be executed and delivered) to Lender all such proxies, dividend
payment orders and other instruments as Lender may from time to time reasonably
request and (ii) WITHOUT LIMITING THE EFFECT OF THE IMMEDIATELY PRECEDING CLAUSE
(i), BORROWER HEREBY GRANTS TO LENDER AN IRREVOCABLE PROXY TO VOTE THE PLEDGED
INTERESTS AND OTHER EQUITY INTERESTS PLEDGED BY BORROWER AND TO EXERCISE ALL
OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF THE

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PLEDGED INTERESTS OR OTHER EQUITY INTERESTS WOULD BE ENTITLED (INCLUDING WITHOUT
LIMITATION GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, MEMBERS OR
PARTNERS, AS APPLICABLE, CALLING SPECIAL MEETINGS OF SHAREHOLDERS, MEMBERS OR
PARTNERS, AS APPLICABLE, AND VOTING AT SUCH MEETINGS), WHICH PROXY IS COUPLED
WITH AN INTEREST AND SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY
OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED INTERESTS ON THE RECORD
BOOKS OF THE ISSUER THEREOF) BY ANY OTHER PERSON (INCLUDING THE ISSUER OF THE
PLEDGED INTERESTS OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT AND WHICH PROXY SHALL ONLY
TERMINATE UPON THE PAYMENT IN FULL OF THE DEBT OTHER THAN THE SURVIVING
OBLIGATIONS (WHICH, HOWEVER, SHALL REMAIN SUBJECT TO THE PREFERENTIAL PAYMENT
PROVISIONS).
     (f) Any time after an Event of Default Lender shall have the power to sell
the Collateral or any part thereof at public auction, in such manner, at such
time and place, upon such terms and conditions, and upon such public notice as
Lender may deem best for the interest of Lender, or as may be required or
permitted by applicable law, consisting of advertisement in a newspaper of
general circulation in the jurisdiction and for such period as applicable law
may require and at such other times and by such other methods, if any, as may be
required by law to convey the Collateral to and at the cost of the purchaser,
who shall not be liable to see to the application of the purchase money.
Notwithstanding anything contained in this Agreement or in any other Loan
Document, the proceeds or avails of any sale made under or by virtue of this
Section, together with any other sums which then may be held by Lender under
this Agreement, whether under the provisions of this Section or otherwise, shall
be applied as follows:
First: To the payment of the third-party costs and expenses reasonably incurred
in connection with any such sale (including, without limitation, any transfer
taxes) and to advances, fees and expenses, including, without limitation,
reasonable fees and expenses of Lender’s legal counsel as applicable, and of any
judicial proceedings wherein the same may be made, and of all expenses,
liabilities and advances reasonably made or incurred by Lender under this
Agreement, together with interest as provided herein on all such advances made
by Lender;
Second: To the payment of the whole amount then due, owing and unpaid under the
Note for principal and interest thereon, with interest on such unpaid principal
at the Default Rate from the date of the occurrence of the earliest Event of
Default that formed a basis for such sale until the same is paid;
Third: To the payment of any other portion of the Loan required to be paid by
Borrower pursuant to any provision of this Agreement, the Note, or any of the
other Loan Documents; and

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Fourth: The surplus, if any, to Junior Mez Lender if the Junior Mez Loan is then
outstanding and if the Junior Mez Loan is not outstanding, then to Borrower
unless otherwise required by Legal Requirements.
Lender and any receiver or custodian of the Collateral or any part thereof shall
be liable to account for only those rents, issues, proceeds and profits, as
applicable, actually received by it.
     (g) Lender may adjourn from time to time any sale by it to be made under or
by virtue of this Agreement by announcement at the time and place appointed for
such sale or for such adjourned sale or sales and, except as otherwise provided
by any applicable provision of Legal Requirements, Lender, without further
notice or publication, may make such sale at the time and place to which the
same shall be so adjourned.
     (h) Upon the completion of any sale or sales made by Lender under or by
virtue of this Section, Lender, or any officer of any court empowered to do so,
shall execute and deliver to the accepted purchaser or purchasers a good and
sufficient instrument, or good and sufficient instruments, granting, conveying,
assigning and transferring all estate, right, title and interest in and to the
Collateral. Lender is hereby irrevocably appointed the true and lawful
attorney-in-fact of Borrower (coupled with an interest), in its name and stead,
to make all necessary conveyances, assignments, transfers and deliveries and for
that purpose Lender may execute all necessary instruments of conveyance,
assignment, transfer and delivery, and may substitute one or more Persons with
like power, Borrower hereby ratifying and confirming all that its said
attorney-in-fact or such substitute or substitutes shall lawfully do by virtue
hereof. Nevertheless, Borrower, if so requested by Lender, shall ratify and
confirm any such sale or sales by executing and delivering to Lender, or to such
purchaser or purchasers all such instruments as may be advisable, in the sole
judgment of Lender, for such purpose, and as may be designated in such request.
Any such sale or sales made under or by virtue of this Section shall operate to
divest all the estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of Borrower in and to the Collateral, and shall, to
the fullest extent permitted under Legal Requirements, be a perpetual bar, both
at law and in equity against Borrower and against any and all Persons claiming
or who may claim the same, or any part thereof, from, through or under Borrower.
     (i) In the event of any sale made under or by virtue of this Section, the
entire Loan immediately thereupon shall, anything in the Loan Documents to the
contrary notwithstanding, become due and payable.
     (j) Upon any sale made under or by virtue of this Section (whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or a judgment or decree of foreclosure and sale), Lender may bid for
and acquire the Collateral or any part thereof and in lieu of paying cash
therefor may make settlement for the purchase price by crediting upon the Loan
the net sales price after deducting therefrom the expenses of the sale
(including, without limitation, transfer taxes) and the costs of the action.
     (k) No recovery of any judgment by Lender and no levy of an execution under
any judgment upon the Collateral or upon any other property of Borrower shall
release the lien of this Agreement upon the Collateral or any part thereof, or
any liens, rights, powers or remedies of

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Lender hereunder, but such liens, rights, powers and remedies of Lender shall
continue unimpaired until all amounts due under the Note, this Agreement and the
other Loan Documents are paid in full.
     (l) Upon the exercise by Lender of any power, right, privilege, or remedy
pursuant to this Agreement which requires any consent, approval, registration,
qualification, or authorization of any Governmental Authority, Borrower agrees
to execute and deliver, or will cause the execution and delivery of, all
applications, certificates, instruments, assignments and other documents and
papers that Lender or any purchaser of the Collateral may be required to obtain
for such governmental consent, approval, registration, qualification, or
authorization and Lender is hereby irrevocably appointed the true and lawful
attorney-in-fact of Borrower (coupled with an interest), in its name and stead,
to execute all such applications, certificates, instruments, assignments and
other documents and papers.
     (m) Lender may comply with any applicable Legal Requirements in connection
with the disposition of the Collateral, and Lender’s compliance therewith will
not be considered to adversely affect the commercial reasonableness of any sale
of the Collateral.
     (n) Lender may sell the Collateral without giving any warranties as to the
Collateral. Lender may specifically disclaim any warranties of title,
possession, quiet enjoyment or the like. This procedure will not be considered
to adversely affect the commercial reasonableness of any sale of the Collateral.
     (o) If Lender sells any of the Collateral upon credit, Borrower will be
credited only with payments actually made by the purchaser, received by Lender
and applied to the indebtedness of the purchaser. In the event the purchaser of
the Collateral fails to fully pay for the Collateral, Lender may resell the
Collateral and Borrower will be credited with the proceeds of such sale.
     Section 3.03. No Conditions Precedent to Exercise of Lender’s Remedies.
Borrower waives any and all legal requirements that Lender institute any action
or proceeding at law or in equity against Borrower or any other party or exhaust
its remedies against Borrower or any other party in respect of any other
security held by Lender for the Debt or any portion thereof as a condition
precedent to exercising its right and remedies pursuant to this Agreement.
     Section 3.04. Additional Security. Borrower authorizes Lender without
notice or demand and without affecting its liability under this Agreement or
under the Note (i) to take and hold security in addition to the security
interest in the Collateral granted by Borrower to Lender pursuant to this
Agreement, for the payment of the Debt or any part thereof, and to exchange,
waive or release any such other security and (ii) to release or substitute
Borrower.
     Section 3.05. Rights and Remedies Continue. Until the Debt shall have been
paid in full, all rights, powers and remedies granted to Lender under this
Agreement shall continue to exist and may be exercised by Lender at any time and
from time to time irrespective of the fact that the Debt or any part thereof may
have become barred by any statute of limitations or that the liability of
Borrower therefor may have ceased.
     Section 3.06. Right to Terminate Proceedings. Lender may terminate or
rescind any

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proceeding or other action brought in connection with its exercise of the
remedies provided in Section 3.02 at any time before the conclusion thereof, as
determined in Lender’s sole discretion and without prejudice to Lender.
     Section 3.07. No Waiver or Release. The failure of Lender to exercise any
right, remedy or option provided in the Loan Documents shall not be deemed a
waiver of such right, remedy or option or of any covenant or obligation
contained in the Loan Documents. No acceptance by Lender of any payment after
the occurrence of an Event of Default and no payment by Lender of any payment or
obligation for which Borrower is liable hereunder shall be deemed to waive or
cure any Event of Default. No sale of all or any portion of the Collateral, no
forbearance on the part of Lender, and no extension of time for the payment of
the whole or any portion of the Loan or any other indulgence given by Lender to
Borrower or any other Person, shall operate to release or in any manner affect
the interest of Lender in the Collateral or the liability of Borrower to pay the
Loan. No waiver by Lender shall be effective unless it is in writing and then
only to the extent specifically stated.
     Section 3.08. Payment of Debt After Default. If following the occurrence of
any Event of Default, Borrower shall tender payment of an amount sufficient to
satisfy the Debt in whole or in part at any time prior to a UCC sale of the
Collateral, and if at the time of such tender prepayment of the principal
balance of the Note is not permitted by the Note and this Agreement, Borrower
shall, in addition to the entire Debt, also pay to Lender a sum equal to
interest which would have accrued on the principal balance of the Note at an
interest rate equal to the LIBOR Margin for the Note plus the greater of (x) the
then current LIBOR Rate and (y) the then current average yield for “This Week”
as published by the Federal Reserve Board during the most recent full week
preceding the date on which Borrower tenders such payment in Federal Reserve
Statistical Release H.15 (519) for instruments having a ten (10) year maturity,
from the date of such tender to the earlier of (a) the Maturity Date or (b) the
first day of the period during which prepayment of the principal balance of the
Note would have been permitted together with a prepayment consideration equal to
the prepayment consideration which would have been payable as of the first day
of the period during which prepayment would have been permitted. If at the time
of such tender, prepayment of the principal balance of the Note is permitted,
such tender by Borrower shall be deemed to be a voluntary prepayment of the
principal balance of the Note and Borrower shall, in addition to the entire
Debt, also pay to Lender the applicable prepayment consideration specified in
the Note and this Agreement. Notwithstanding the foregoing, Lender acknowledges
that the Loan may be prepaid at any time in accordance with the terms of
Section 6.01 hereof.
     Section 3.09. No Impairment; No Releases. The interests and rights of
Lender under the Loan Documents shall not be impaired by any indulgence,
including (a) any renewal, extension or modification which Lender may grant with
respect to the Loan; (b) any surrender, compromise, release, renewal, extension,
exchange or substitution which Lender may grant with respect to the Loan
Documents or any portion thereof; or (c) any release or indulgence granted to
any maker, endorser, or surety of the Loan.
     Section 3.10. Interest After Default. If any amount due under the Note,
this Agreement or any of the other Loan Documents is not paid within any
applicable notice and grace period after same is due, whether such date is the
stated due date, any accelerated due date or any other

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date or at any other time specified under any of the terms hereof or thereof,
then, in such event, Borrower shall pay interest on the amount not so paid from
and after the date on which such amount first becomes due at the Default Rate;
and such interest shall be due and payable at such rate until the earlier of the
cure of all Events of Default or the payment of the entire amount due to Lender,
whether or not any action shall have been taken or proceeding commenced to
recover the same or to foreclose this Agreement. All unpaid and accrued interest
shall be secured by this Agreement as part of the Debt. Nothing in this Section
or in any other provision of this Agreement shall constitute an extension of the
time for payment of the Debt.
     Section 3.11. Late Payment Charge. If any portion of the Debt (other than
the principal portion of the Debt due on Maturity) is not paid in full on or
before the date on which it is due and payable hereunder, Borrower shall pay to
Lender an amount equal to five percent (5%) of such unpaid portion of the Debt
(“Late Charge”) to defray the expense incurred by Lender in handling and
processing such delinquent payment, and such amount shall constitute a part of
the Debt.
     Section 3.12. Recovery of Sums Required To Be Paid. Lender shall have the
right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due and payable hereunder
(after the expiration of any grace period or the giving of any notice herein
provided, if any), without regard to whether or not the balance of the Debt
shall be due, and without prejudice to the right of Lender thereafter to bring
an action of foreclosure, or any other action, for a default or defaults by
Borrower existing at the time such earlier action was commenced.
     Section 3.13. Control By Lender After Default. Notwithstanding the
appointment of any custodian, receiver, liquidator or trustee of Borrower, or of
any of its property, or of the Collateral or any part thereof, to the extent
permitted by Legal Requirements, Lender shall be entitled to obtain possession
and control of all Collateral.
ARTICLE IV. INDEMNIFICATION
     Section 4.01. Indemnification Covering Property. In addition, and without
limitation, to any other provision of this Agreement or any other Loan Document,
Borrower shall protect, indemnify and save harmless Lender and its successors
and assigns, and each of their agents, employees, officers, directors,
stockholders, partners and members (collectively, “Indemnified Parties”) for,
from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, known or
unknown, contingent or otherwise, whether incurred or imposed within or outside
the judicial process, including, without limitation, reasonable attorneys’ fees
and disbursements imposed upon or incurred by or asserted against any of the
Indemnified Parties by reason of (a) ownership of this Agreement or the
Collateral; (b) any accident, injury to or death of any person or loss of or
damage to property occurring in, on or about the Premises or the Collateral or
any part thereof or on the adjoining sidewalks, curbs, parking areas, streets or
ways; (c) any use, nonuse or condition in, on or about, or possession,
alteration, repair, operation, maintenance or management of, the Premises or any
part thereof or on the adjoining sidewalks, curbs, parking areas, streets or
ways; (d) any failure on the part of Borrower to perform or comply with any of
the terms of this Agreement; (e) performance of any labor or services or the
furnishing of any materials or other property in

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respect of the Premises or any part thereof; (f) any claim by brokers, finders
or similar Persons claiming to be entitled to a commission in connection with
any Lease or other transaction involving the Premises or any part thereof;
(g) any Imposition including, without limitation, any Imposition attributable to
the execution, delivery, filing, or recording of any Loan Document, Lease or
memorandum thereof; (h) any lien or claim arising on or against the Premises or
any part thereof under any Legal Requirement or any liability asserted against
any of the Indemnified Parties with respect thereto; (i) any claim arising out
of or in any way relating to any tax or other imposition on the making and/or
recording of this Agreement, the Note or any of the other Loan Documents; (j) a
Default under Sections 2.02(f), 2.02(g), 2.02(k) or 2.02(s) hereof, (k) the
failure of any Person to file timely with the Internal Revenue Service an
accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate,
Broker and Barter Exchange Transactions, which may be required in connection
with the Loan, or to supply a copy thereof in a timely fashion to the recipient
of the proceeds of the Loan; (l) the claims of any lessee or any Person acting
through or under any lessee or otherwise arising under or as a consequence of
any Lease; or (m) the actual or alleged presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release or threat of release of any
Hazardous Materials in, on, over, under, from or affecting the Premises.
Notwithstanding the foregoing provisions of this Section to the contrary,
Borrower shall have no obligation to indemnify the Indemnified Parties pursuant
to this Section for liabilities, obligations, claims, damages, penalties, causes
of action, costs and expenses relative to the foregoing which result from
Lender’s, and its successors’ or assigns’, willful misconduct or gross
negligence or with respect to matters which first occur after Lender has taken
title to the Property through a foreclosure or delivery of a deed in lieu
thereof. Any amounts payable to Lender by reason of the application of this
Section shall constitute a part of the Loan secured by this Agreement and the
other Loan Documents and shall become immediately due and payable and shall bear
interest at the Default Rate from the date the liability, obligation, claim,
cost or expense is sustained by Lender, as applicable, until paid. The
provisions of this Section shall survive the termination of this Agreement
whether by repayment of the Loan, foreclosure of this Agreement, assignment or
otherwise. In case any action, suit or proceeding is brought against any of the
Indemnified Parties by reason of any occurrence of the type set forth in
(a) through (m) above, Borrower shall, at Borrower’s expense, resist and defend
such action, suit or proceeding or will cause the same to be resisted and
defended by counsel at Borrower’s expense for the insurer of the liability or by
counsel designated by Borrower (unless reasonably disapproved by Lender promptly
after Lender has been notified of such counsel); provided, however, that nothing
herein shall compromise the right of Lender (or any other Indemnified Party) to
appoint its own counsel at Borrower’s expense for its defense with respect to
any action which, in the reasonable opinion of Lender or such other Indemnified
Party, as applicable, presents a conflict or potential conflict between Lender
or such other Indemnified Party that would make such separate representation
advisable. Any Indemnified Party will give Borrower prompt notice after such
Indemnified Party obtains actual knowledge of any potential claim by such
Indemnified Party for indemnification hereunder. The Indemnified Parties shall
not settle or compromise any action, proceeding or claim as to which it is
indemnified hereunder without notice to Borrower. Notwithstanding the foregoing,
so long as no Default has occurred and is continuing and Borrower is resisting
and defending such action, suit or proceeding as provided above in a prudent and
commercially reasonable manner, in order to obtain the benefit of this
Section 4.01 with respect to such action, suit or proceeding, Lender and the
Indemnified Parties agree that they shall not settle such action, suit or
proceeding without obtaining

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Borrower’s consent which Borrower agrees not to unreasonably withhold, condition
or delay; provided, however, (x) if Borrower is not diligently defending such
action, suit or proceeding in a prudent and commercially reasonable manner as
provided above and Lender has provided Borrower with thirty (30) days’ prior
written notice, or shorter period if mandated by the requirements of the
applicable law, and Borrower has failed to correct such failure, or (y) failure
to settle could, in Lender’s reasonable judgment, expose Lender to criminal
liability, Lender may settle such action, suit or proceeding without the consent
of Borrower and be entitled to the benefits of this Section 4.01 with respect to
the settlement of such action, suit or proceeding
ARTICLE V. SECURITY AGREEMENT
     Section 5.01. Security Agreement. (a) This Agreement is a “security
agreement” within the meaning of the UCC. If an Event of Default shall occur,
Lender, in addition to any other rights and remedies which it may have, shall
have and may exercise immediately and without demand, any and all rights and
remedies granted to a secured party upon default under the UCC, including,
without limiting the generality of the foregoing, the right to take possession
of the Collateral or any part thereof, and to take such other measures as Lender
may deem necessary for the care, protection and preservation of the Collateral.
Upon request or demand of Lender following an Event of Default, Borrower shall,
at its expense, assemble the Collateral and make it available to Lender at a
convenient place acceptable to Lender. Borrower shall pay to Lender on demand
any and all expenses, including reasonable legal expenses and attorneys’ fees
and all transfer taxes, incurred or paid by Lender in protecting its interest in
the Collateral and in enforcing its rights hereunder with respect to the
Collateral. Any notice of sale, disposition or other intended action by Lender
with respect to the Collateral given to Borrower in accordance with the
provisions hereof at least ten (10) days prior to such action shall constitute
reasonable notice to Borrower.
     (b) Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
coupled with an interest, to file with the appropriate public office on its
behalf any financing or other statements signed only by Lender, as secured
party, or, to the extent permitted under the UCC, unsigned, in connection with
the Collateral covered by this Agreement. Such financing statements may, at the
option of Lender, describe the Collateral as “all assets” or “all personal
property” of Borrower.
     (c) Borrower will furnish to Lender from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Lender may reasonably request, all
in reasonable detail.
     (d) The powers conferred on Lender hereunder are solely to protect Lender’s
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, Lender shall have
no duty (and neither Lender nor any of its partners, members, officers,
directors, employees or agents shall be responsible to Borrower for any act or
failure to act) as to any Collateral, as to ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relating to any Collateral, whether or not Lender has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any

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Collateral. Lender shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which it accords its own
property.
ARTICLE VI. PREPAYMENT
     Section 6.01. Prepayment. (a) Except as set forth in Section 6.01(b)
hereof, no prepayment of the Debt may be made in whole or in part.
     (b) At any time, Borrower may prepay the Loan, in whole or in part, as of
the last day of an Interest Accrual Period, it being acknowledged that Borrower
may prepay the Loan on a day other than the last day of an Interest Accrual
Period, provided that Borrower pays all interest which would otherwise be due to
Lender through the end of such Interest Accrual Period, in accordance with the
following provisions:
          (i) Lender shall have received from Borrower, not less than thirty
(30) days’, nor more than ninety (90) days’, prior written notice specifying the
date proposed for such prepayment and the amount which is to be prepaid (which
notice shall be revocable by Borrower up to two (2) times during the term of the
Loan by giving Lender not less than one (1) Business Day prior written notice of
such revocation, provided that Borrower shall remain obligated to pay Lender’s
costs and expenses including, without limitation, breakage costs incurred by
Lender in connection with such revocation).
          (ii) Borrower shall also pay to Lender all interest due through and
including the last day of the Interest Accrual Period in which such prepayment
is being made, together with any and all other amounts due and owing pursuant to
the terms of the Note, this Agreement or the other Loan Documents.
          (iii) Any partial prepayment shall be in a minimum amount not less
than $25,000 and shall be in whole multiples of $1,000 in excess thereof.
          (iv) Any partial prepayment of the Principal Amount, including,
without limitation, Unscheduled Payments, shall be applied to the installments
of principal last due hereunder and shall not release or relieve Borrower from
the obligation to pay the regularly scheduled installments of principal and
interest becoming due under the Note.
          (v) Borrower shall pay to Lender, together with such prepayment and
all other amounts due in connection therewith, a non-refundable amount which
shall be deemed earned by Lender upon the funding of the Loan and shall not
count to or be credited to payment of the Principal Amount, any interest thereon
or any other amounts payable under the Note, this Agreement or any of the other
Loan Document, equal to .70% of the Principal Amount being repaid if such
prepayment occurs prior to the Payment Date occurring in November, 2007 and .50%
of the Principal Amount being prepaid if the prepayment occurs on or after the
Payment Date occurring in November, 2007 but prior to the Payment occurring in
April, 2008. The Loan may be prepaid after the Payment Date occurring in April,
2008 without such additional fee or charge, provided, however, that a portion of
the Principal Amount not to exceed $14,438,820 in the aggregate may be prepaid
at any time without payment of any sum otherwise due under this clause
6.01(b)(v) and a portion of the Principal Amount up to $43,233,000 in the
aggregate may

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be prepaid on or prior to the Payment Date occurring in May, 2007 without
payment of any sums otherwise due under this clause 6.01(b)(v) if the Loan is
prepaid with the proceeds of a fixed rate mortgage loan secured by one or more
Cross-collateralized Properties made by Wachovia Bank, National Association.
ARTICLE VII. MISCELLANEOUS
     Section 7.01. Notices. Any notice, demand, statement, request or consent
made hereunder shall be in writing and delivered personally or sent to the party
to whom the notice, demand or request is being made by Federal Express or other
nationally recognized overnight delivery service, as follows and shall be deemed
given (a) when delivered personally, (b) on the date of sending by telefax if
sent during normal business hours on a Business Day (otherwise on the next
Business Day) provided that any notice given by telefax is also given by at
least one other method provided herein, or (c) one (1) Business Day after being
deposited with Federal Express or such other nationally recognized delivery
service:

         
 
  If to Lender:   Wachovia Bank, National Association
 
      Commercial Real Estate Services
 
      8739 Research Drive URP-4
 
      NC 1075
 
      Charlotte, NC 28262
 
      Loan Number: 502859548
 
      Attention: Portfolio Management
 
      Fax No.: (704) 715-0036
 
       
 
  with a copy to:   Proskauer Rose llp
 
      1585 Broadway
 
      New York, New York 10036
 
      Attn: David J. Weinberger, Esq.
 
      Fax No.: (212) 969-2900
 
       
 
  If to Borrower:   c/o Ashford Hospitality Trust, Inc.
 
      14185 Dallas Parkway, Suite 1100
 
      Dallas, Texas 75254-4308
 
      Attn: David Brooks
 
      Facsimile: (972) 778-9270
 
      E-mail: dbrooks@ahreit.com
 
       
 
  with a copy to:   Akin Gump Strauss Hauer & Feld LLP
 
      590 Madison Avenue
 
      New York, New York 10022-2524
 
      Attn: Peter Miller, Esq.
 
      Facsimile: (212) 872-1002
 
      E-mail: pamiller@akingump.com,

or such other address as Borrower or Lender shall hereafter specify by not less
than ten (10) days prior written notice as provided herein; provided, however,
that notwithstanding any provision of

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this Section to the contrary, such notice of change of address shall be deemed
given only upon actual receipt thereof. Rejection or other refusal to accept or
the inability to deliver because of changed addresses of which no notice was
given as herein required shall be deemed to be receipt of the notice, demand,
statement, request or consent.
     Section 7.02. Exhibits Incorporated. The information set forth on the cover
hereof, and the Exhibits 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 7.03. Severable Provisions. If any term, covenant or condition of
the Loan Documents including, without limitation, the Note or this Agreement, is
held to be invalid, illegal or unenforceable in any respect, such Loan Document
shall be construed without such provision.
     Section 7.04. Cumulative Rights. The rights, powers and remedies of Lender
under this Agreement shall be separate, distinct and cumulative and none shall
be given effect to the exclusion of the others. No act of Lender shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Lender shall not be limited exclusively to the
rights and remedies herein stated but shall be entitled, subject to the terms of
this Agreement, to every right and remedy now or hereafter afforded by law.
     Section 7.05. Duplicate Originals. This Agreement may be executed in any
number of duplicate originals and each such duplicate original shall be deemed
to constitute but one and the same instrument.
     Section 7.06. 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 specifically and expressly provides 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.
     Section 7.07. Joint and Several Liability. If Borrower consists of more
than one Person, the obligations and liabilities of each such Person hereunder
shall be joint and several.
     Section 7.08. No Oral Change. The terms of this Agreement, together with
the terms of the Note and the other Loan Documents constitute the entire
understanding and agreement of the parties hereto and supersede all prior
agreements, understandings and negotiations between Borrower and Lender with
respect to the Loan. This Agreement, and any provisions hereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally or
by any act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
     Section 7.09. WAIVER OF COUNTERCLAIMS, ETC. 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, AND WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY EITHER PARTY HERETO AGAINST
THE

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OTHER OR IN ANY COUNTERCLAIM BORROWER MAY BE PERMITTED TO ASSERT HEREUNDER OR
WHICH MAY BE ASSERTED BY LENDER OR ITS AGENTS, AGAINST BORROWER, OR IN ANY
MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR
THE DEBT.
     Section 7.10. Headings; Construction of Documents, etc. The headings and
captions of various paragraphs of this Agreement are for convenience of
reference only and are not to be construed as defining or limiting, in any way,
the scope or intent of the provisions hereof. Borrower acknowledges that it was
represented by competent counsel in connection with the negotiation and drafting
of this Agreement and the other Loan Documents and that neither this Agreement
nor the other Loan Documents shall be subject to the principle of construing the
meaning against the Person who drafted same.
     Section 7.11. Sole Discretion of Lender. Whenever 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 that arrangements or terms are satisfactory or not satisfactory shall be
in the sole discretion of Lender and shall be final and conclusive, except as
may be otherwise specifically provided herein.
     Section 7.12. APPLICABLE LAW. THIS AGREEMENT WAS NEGOTIATED IN NEW YORK,
AND MADE BY BORROWER AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE WERE DISBURSED FROM NEW YORK, WHICH STATE THE PARTIES AGREE
HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED
STATES OF AMERICA.
     Section 7.13. Actions and Proceedings. Lender has the right to appear in
and defend any action or proceeding brought with respect to the Collateral in
its own name or, if required by Legal Requirements or, if in Lender’s reasonable
judgment, it is necessary, in the name and on behalf of Borrower, which Lender
believes will adversely affect the Collateral or this Agreement and to bring any
action or proceedings, in its name or in the name and on behalf of Borrower,
which Lender, in its discretion, decides should be brought to protect its
interest in the Note, this Agreement and the other Loan Documents.
     Section 7.14. Usury Laws. This Agreement and the Note are subject to the
express condition, and it is the expressed intent of the parties, that at no
time shall Borrower be obligated or required to pay interest on the principal
balance due under the Note at a rate which could subject the holder of the Note
to either civil or criminal liability as a result of being in excess of the
maximum interest rate which Borrower is permitted by law to contract or agree to
pay. If by the terms of this Agreement or the Note, Borrower is at any time
required or obligated to pay interest on the principal balance due under the
Note at a rate in excess of such maximum rate,

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such rate of interest shall be deemed to be immediately reduced to such maximum
rate and the interest payable shall be computed at such maximum rate and all
prior interest payments in excess of such maximum rate shall be applied and
shall be deemed to have been payments in reduction of the principal balance of
the Note. No application to the principal balance of the Note pursuant to this
Section shall give rise to any requirement to pay any prepayment fee or charge
of any kind due hereunder, if any.
     Section 7.15. Remedies of Borrower. In the event that a claim or
adjudication is made that Lender has acted unreasonably or unreasonably delayed
acting in any case where by law or under the Note, this Agreement or the Loan
Documents, it has an obligation to act reasonably or promptly, Lender shall not
be liable for any monetary damages, and Borrower’s remedies shall be limited to
injunctive relief or declaratory judgment.
     Section 7.16. Offsets, Counterclaims and Defenses. Any assignee of this
Agreement and the Note shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to the Note or this Agreement
which Borrower may otherwise have against any assignor of this Agreement and the
Note 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 this Agreement or the Note 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 7.17. Restoration of Rights. In case Lender shall have proceeded to
enforce any right under this Agreement and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely, then, in every such case, Borrower and Lender shall be restored to
their former positions and rights hereunder with respect to the Collateral
subject to the lien hereof.
     Section 7.18. Waiver of Statute of Limitations. The pleadings of any
statute of limitations as a defense to any and all obligations secured by this
Agreement are hereby waived to the full extent permitted by Legal Requirements.
     Section 7.19. Advances. This Agreement shall cover any and all advances
made pursuant to the Loan Documents, rearrangements and renewals of the Loan and
all extensions in the time of payment thereof, even though such advances,
extensions or renewals be evidenced by new promissory notes or other instruments
hereafter executed and irrespective of whether filed or recorded. Likewise, the
execution of this Agreement shall not impair or affect any other security which
may be given to secure the payment of the Loan, and all such additional security
shall be considered as cumulative. The taking of additional security, execution
of partial releases of the security, or any extension of time of payment of the
Loan shall not diminish the force, effect or lien of this Agreement and shall
not affect or impair the liability of Borrower and shall not affect or impair
the liability of any maker, surety, or endorser for the payment of the Loan.
     Section 7.20. Application of Default Rate Not a Waiver. Application of the
Default Rate shall not be deemed to constitute a waiver of any Default or Event
of Default or any rights or remedies of Lender under this Agreement, any other
Loan Document or applicable Legal Requirements, or a consent to any extension of
time for the payment or performance of any

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obligation with respect to which the Default Rate may be invoked.
     Section 7.21. Intervening Lien. To the fullest extent permitted by law, any
agreement hereafter made pursuant to this Agreement shall be superior to the
rights of the holder of any intervening lien.
     Section 7.22. No Joint Venture or Partnership. Borrower and Lender intend
that the relationship created hereunder be solely that of pledgor and pledgee or
borrower and lender, as the case may be. Nothing herein is intended to create a
joint venture or partnership relationship between Borrower and Lender nor to
grant Lender any interest in the Collateral other than that of pledgee or
lender.
     Section 7.23. Time of the Essence. Time shall be of the essence in the
performance of all obligations of Borrower hereunder.
     Section 7.24. Borrower’s Obligations Absolute. Borrower acknowledges that
Lender and/or certain Affiliates of Lender are engaged in the business of
financing, owning, operating, leasing, managing, and brokering real estate and
in other business ventures which may be viewed as adverse to or competitive with
the business, prospect, profits, operations or condition (financial or
otherwise) of Borrower. Except as set forth to the contrary in the Loan
Documents, all sums payable by Borrower hereunder shall be paid without notice
or demand, counterclaim, set-off, deduction or defense and without abatement,
suspension, deferment, diminution or reduction, and the obligations and
liabilities of Borrower hereunder shall in no way be released, discharged, or
otherwise affected (except as expressly provided herein) by reason of: (a) any
bankruptcy proceeding relating to Owner, Senior Mez Borrower, Borrower,
Operating Tenant, any General Partner, or any guarantor or indemnitor, or any
action taken with respect to this Agreement or any other Loan Document by any
trustee or receiver of Owner, Senior Mez Borrower, Operating Tenant, Borrower or
any such General Partner, guarantor or indemnitor, or by any court, in any such
proceeding; (b) any claim which Borrower has or might have against Lender;
(c) any default or failure on the part of Lender to perform or comply with any
of the terms hereof or of any other agreement with Borrower; or (d) any other
occurrence whatsoever, whether similar or dissimilar to the foregoing, whether
or not Borrower shall have notice or knowledge of any of the foregoing.
     Section 7.25. Publicity. All promotional news releases, publicity or
advertising by Borrower or its Affiliates through any media intended to reach
the general public shall not refer to the Loan Documents or the financing
evidenced by the Loan Documents, or to Lender or to any of its Affiliates
without the prior written approval of Lender or such Affiliate, as applicable,
in each instance, such approval not to be unreasonably withheld or delayed.
Notwithstanding anything herein to the contrary, Borrower shall be authorized to
provide information relating to the Loan Documents or the financing evidenced by
the Loan Documents, or to Lender or to any of its Affiliates, to rating
agencies, underwriters, potential securities investors, auditors, regulatory
authorities and to any Persons which may be entitled to such information by
operation of law and without limiting the foregoing to issue press releases and
make Form 8-K and other securities filings containing the above-described
information as it or its counsel reasonably deems required by law. Lender shall
be authorized to provide information relating to the Collateral, the Loan and
matters relating thereto to rating agencies, underwriters, potential

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securities investors, auditors, regulatory authorities and to any Persons which
may be entitled to such information by operation of law and may use basic
transaction information (including, without limitation, the name of Borrower,
the name and address of the Property and the Loan Amount) in press releases or
other marketing materials.
     Section 7.26. Intentionally Omitted.
     Section 7.27. Sale of Loan, Participations, Securitization. (a) Nothing
contained in this Agreement shall be construed as preventing Lender, at any time
after the date hereof, from selling, pledging, assigning or transferring the
Note and in connection with any such sale, pledge, assignment or transfer from
assigning this Agreement and transferring possession of the Collateral, if any,
in Lender’s possession, to the purchaser of the Note. Upon any sale, pledge,
assignment or transfer of the Note and upon assignment of this Agreement and a
transfer in connection therewith of possession of the Collateral, if any, in
Lender’s possession to the purchaser of the Note, Lender shall be released and
discharged from any liability or responsibility with respect to the Loan
Documents and references to “Lender” in this Agreement shall, with respect to
any matters thereafter occurring, be deemed to be references to the purchaser of
the Note.
     (b) Borrower acknowledges that Lender may on or after the Closing Date sell
and assign participation interests in and to the Loan, or pledge, hypothecate or
encumber, or sell and assign all or any portion of the Loan, to or with such
domestic or foreign banks, insurance companies, pension funds, trusts or other
institutional lenders or other Persons, parties or investors (including, without
limitation, grantor trusts, owner trusts, special purpose corporations, real
estate investment trusts or other similar or comparable investment vehicles) as
may be selected by Lender in its sole and absolute discretion and on terms and
conditions satisfactory to Lender in its sole and absolute discretion. Borrower
and all Affiliates of Borrower shall cooperate in all respects with Lender in
connection with the sale of participation interests in, or the pledge,
hypothecation or encumbrance or sale of all or any portion of, the Loan, and
shall, in connection therewith, execute and deliver such estoppels,
certificates, instruments and documents as may be reasonably requested by
Lender. Borrower grants to Lender the right to distribute financial and other
information concerning Borrower, Owner, the Premises, the Collateral, and all
other pertinent information with respect to the Loan to any Person who has
purchased a participation interest in the Loan, or who has purchased the Loan,
or who has made a loan to Lender secured by the Loan or who has expressed an
interest in purchasing a participation interest in the Loan, or expressed an
interest in purchasing the Loan or the making of a loan to Lender secured by the
Loan. If requested by Lender, Borrower shall execute and deliver, and shall
cause each Affiliate of Borrower to execute and deliver, at no cost or expense
to Borrower, such documents and instruments as may be necessary to split the
Loan into two or more loans evidenced by separate sets of notes and secured by
separate sets of other related Loan Documents to the full extent required by
Lender to facilitate the sale of participation interests in the Loan or the sale
of the Loan or the making of a loan to Lender secured by the Loan, it being
agreed that (a) the Loan Documents securing the Loan as so split will have such
priority of lien as may be specified by Lender and (b) the retained interest of
Lender in the Loan as so split shall be allocated to or among one or more of
such separate loans in a manner specified by Lender in its sole and absolute
discretion, (c) the aggregate principal amount of such separate loans shall
equal the outstanding principal balance of the Loan immediately prior to the
creation of such

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separate loans, (d) the weighted average interest rate of all such separate
notes shall on the date created equal the interest rate which was applicable to
the Loan immediately prior to the creation of such separate notes (it being
acknowledged by Borrower that if an Event of Default occurs during the term of
the Loan, whether or not it is subsequently cured, the weighted average interest
rates of the separate notes may increase (i.e. the Loan may have “rate creep”)),
(e) the debt service payments on all such separate notes shall on the date
created equal the debt service payment which was and would be due under the Loan
immediately prior to the creation of such separate notes (it being acknowledged
that if an Event of Default occurs during the term of the Loan, whether or not
it is subsequently cured, the weighted average interest rates of the separate
notes may increase (i.e. the Loan may have “rate creep”)) and (f) the other
terms and provisions of each of the separate notes shall be identical in
substance and substantially similar in form to the Loan Documents. From and
after the effective date of any assignment of all or any portion of the Loan to
any Person (an “Assignee”) (a) such Assignee shall be a party hereto and to each
of the other Loan Documents to the extent of the applicable percentage or
percentages assigned to such Assignee and, except as otherwise specified herein,
shall succeed to the rights and obligations of Lender hereunder in respect of
such applicable percentage or percentages and (b) Lender shall relinquish its
rights and be released from its obligations hereunder and under the Loan
Documents to the extent of such applicable percentage or percentages. The
liabilities of Lender and each of the other Assignees shall be separate and not
joint and several. Neither Lender nor any Assignee shall be responsible for the
obligations of any other Assignee. Borrower acknowledges that the information
provided by Borrower to Lender may be incorporated into the offering documents
for a Securitization and to the fullest extent permitted, Borrower irrevocably
waives all rights, if any, to prohibit such disclosures including, without
limitation, any right of privacy. Lender and each Rating Agency shall be
entitled to rely on the information supplied by, or on behalf of, Borrower and
Borrower indemnifies Lender as to any liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses, (including, without limitation,
reasonable attorney’s fees and expenses, whether incurred within or outside the
judicial process) that arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such information or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated in such information or necessary in order
to make the statements in such information, or in light of the circumstances
under which they were made, not misleading.
     (c) Lender, at its option, may elect to effect a Securitization by means of
the issuance of certificates of interest therein or notes secured thereby (the
“Securities”) rated by one or more Rating Agencies. In such event and upon
request by Lender to seek to effect such a Securitization, Borrower shall
promptly thereafter cooperate in all reasonable respects with Lender in the
Securitization including, without limitation, providing such information as may
be requested in connection with the preparation of a private placement
memorandum or registration statement required to privately place or publicly
distribute the Securities in a manner which does not conflict with federal or
state securities laws.
     Section 7.28. Expenses. Borrower shall reimburse Lender upon receipt of
notice for all reasonable costs and expenses (including reasonable attorneys’
fees and disbursements) incurred by Lender in connection with (i) the
preparation, negotiation, execution and delivery of the Loan Documents and the
consummation of the transactions contemplated thereby; (ii) Borrower’s, its
Affiliates’ and Lender’s ongoing performance under and compliance with the Loan
Documents,

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including confirming compliance with environmental and insurance requirements;
(iii) the negotiation, preparation, execution, delivery and administration of
any consents, amendments, waivers or other modifications of or under any Loan
Document and any other documents or matters requested by Lender; (iv) filing and
recording of any Loan Documents; (v) surveys, inspections and appraisals;
(vi) 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, Senior Mez Borrower, Owner, the
Loan Documents, the Collateral, the Premises, or any other security given for
the Loan; and (vii) enforcing any obligations of or collecting any payments due
from Borrower, Senior Mez Borrower, or Owner under any Loan Document or with
respect to the Collateral, the Premises or in connection with any refinancing or
restructuring of the Loan in the nature of a “work-out”, or any insolvency or
bankruptcy proceedings. Any costs and expenses due and payable to Lender
hereunder which are not paid by Borrower within ten (10) days after demand may
be paid from any amounts in the Lockbox Account. The obligations and liabilities
of Borrower under this Section shall survive the Maturity Date and the exercise
by Lender of any of its rights or remedies under the Loan Documents.
     Section 7.29. Mortgage Loan Defaults.
     (a) Without limiting the generality of the other provisions of this
Agreement, and without waiving or releasing Borrower from any of its obligations
hereunder, if there shall occur any Event of Default under the Mortgage Loan
Documents (without regard to any other defenses or offset rights Owner may have
against Mortgage Lender) or under the Senior Mez Documents (without regard to
any defenses or offset rights Senior Mez Borrower may have against Senior Mez
Lender), Borrower hereby expressly agrees that Lender shall have the immediate
right, without notice to or demand on Borrower or Owner or Senior Mez Borrower,
but shall be under no obligation: (i) to pay all or any part of the Mortgage
Loan and/or Senior Mez Loan, and any other sums, that are then due and payable
and to perform any act or take any action on behalf of Owner and/or Senior Mez
Borrower, as applicable, as may be appropriate, to cause all of the terms,
covenants and conditions of the Mortgage Loan Documents and/or Senior Mez Loan
Documents on the part of Owner and/or Senior Mez Borrower, as applicable, to be
performed or observed thereunder to be promptly performed or observed; and
(ii) to pay any other amounts and take any other action as Lender, in its sole
and absolute discretion, shall deem advisable to protect or preserve the rights
and interests of Lender in the Loan and/or the Collateral. Lender shall have no
obligation to complete any cure or attempted cure undertaken or commenced by
Lender. All sums so paid and the third party costs and expenses actually
incurred by Lender in exercising rights under this Section (including, without
limitation, reasonable attorneys’ and other professional fees), with interest at
the Default Rate, for the period from the date of demand by Lender to Borrower
for such payments to the date of payment to Lender, shall constitute a portion
of the Debt, shall be secured by this Agreement and shall be due and payable to
Lender within two (2) Business Days following demand therefor. In the event that
Lender makes any payment in respect of the Mortgage Loan and/or Senior Mez Loan,
Lender shall be subrogated to all of the rights of Mortgage Lender or Senior Mez
Borrower under the Mortgage Loan Documents against the Property and Owner and/or
Senior Mez Borrower, as applicable, in addition to all other rights Lender may
have under the Loan Documents or applicable law.
     (b) Subject to the rights of tenants under Leases, Borrower hereby grants,
and shall

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cause Owner to grant, Lender and any Person designated by Lender the right to
enter upon the Property at any time for the purpose of carrying out the rights
granted to Lender under this Section 7.29. Borrower shall not, and shall not
cause or permit Owner or any other Person to impede, interfere with, hinder or
delay, any effort or action on the part of Lender to cure any Event of Default
under the Mortgage Loan and/or the Senior Mez Loan as permitted by this Section
7.29, or to otherwise protect or preserve Lender’s interests in the Loan and the
Collateral, including the Property in accordance with the provisions of this
Agreement and the other Loan Documents.
     (c) Borrower hereby indemnifies Lender from and against all liabilities,
obligations, losses, damages, penalties, assessments, actions, or causes of
action, judgments, suits, claims, demands, costs, expenses (including, without
limitation, reasonable attorneys’ and other professional fees, whether or not
suit is brought, and settlement costs), and disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against Lender as a
result of the foregoing actions described in Section 7.29(a) or (b) except to
the extent they are caused by the gross negligence or willful misconduct of
Lender. Lender shall have no obligation to Borrower, Owner or any other Person
to make any such payment or performance.
     (d) If Lender shall receive a copy of any notice of default under the
Mortgage Loan Documents sent by Mortgage Lender to Owner or under the Senior Mez
Loan Documents sent by Senior Mez Lender to Senior Mez Borrower, 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. As a material inducement to
Lender’s making the Loan, Borrower hereby absolutely and unconditionally
releases and waives all claims against Lender arising out of Lender’s exercise
of its rights and remedies provided in this Section other than claims arising
out of the fraud, illegal acts, gross negligence or willful misconduct of
Lender.
     Section 7.30. Discussions With Mortgage Lender; Etc. In connection with the
exercise of its rights set forth in the Loan Documents, Lender shall have the
right at any time to discuss the Premises, the Mortgage Loan, the Loan, the
Senior Mez Loan, the Junior Mez Loan or any other matter directly with Mortgage
Lender, Senior Mez Lender, Junior Mez Lender or Mortgage Lender’s consultants,
agents or representatives without notice to or permission from Borrower, nor
shall Lender have any obligation to disclose such discussions or the contents
thereof with Borrower.
     Section 7.31. Independent Approval Rights. If any action, proposed action
or other decision is consented to or approved by Mortgage Lender or Senior Mez
Lender, such consent or approval shall not be binding or controlling on Lender
if Lender has such consent and/or approval rights under this Agreement. Borrower
hereby acknowledges and agrees that (a) the risks of Mortgage Lender in making
the Mortgage Loan and the risks of Senior Mez Lender in making the Senior Mez
Loan are different from the risks of Lender in making the Loan, (b) in
determining whether to grant, deny, withhold or condition any requested consent
or approval Mortgage Lender, Senior Mez Lender and Lender may reasonably reach
different conclusions, and (c) Lender has an absolute independent right to
grant, deny, withhold or condition any requested consent or approval based on
its own point of view in accordance with the terms hereof. Further, the denial
by Lender of a requested consent or approval in accordance with the Loan
Documents shall not create any liability or other obligation of Lender if the
denial of such

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consent or approval results directly or indirectly in a default under the
Mortgage Loan and/or the Senior Mez Loan, and Borrower hereby waives any claim
of liability against Lender arising from any such denial.
     Section 7.32. Reinstatement. This Agreement and each other Loan Document
shall continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Debt or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by Borrower, whether as a “voidable preference”, “fraudulent
conveyance”, or otherwise, all as though such payment or performance had not
been made. In the event that any payment, or any part thereof, is rescinded,
reduced, restored or returned, the Debt shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.
ARTICLE VIII. EXCULPATION
     Section 8.01. Exculpation. Notwithstanding anything in this Agreement or in
any other Loan Document to the contrary, except as otherwise set forth in this
Section 8.01 to the contrary, Lender shall not enforce the liability and
obligation of Borrower or any Person holding a direct or indirect interest in
Borrower (a) if Borrower or any of its direct or indirect owners is a
partnership, its or their direct or indirect constituent partners or any of
their respective partners, (b) if Borrower or any of its direct or indirect
owners is a trust, its or their beneficiaries or any of their respective
Partners (as hereinafter defined), (c) if Borrower or any of its direct or
indirect owners is a corporation, any of its or their direct or indirect
shareholders, directors, principals, officers or employees, or (d) if Borrower
or any of its direct or indirect owners is a limited liability company, any of
its or their direct or indirect members (the Persons described in the foregoing
clauses (a) — (d), as the case may be, are hereinafter referred to as the
“Partners”) to perform and observe the obligations contained in this Agreement
or any of the other Loan Documents by any action or proceeding, including,
without limitation, any action or proceeding wherein a money judgment shall be
sought against Borrower or the Partners, except that Lender may bring a UCC
sale, action for specific performance, or other appropriate action or proceeding
(including, without limitation, an action to obtain a deficiency judgment)
against Borrower solely for the purpose of enabling Lender to realize upon
(i) Borrower’s interest in the Collateral, (ii) subject to the rights of
Mortgage Lender and Senior Mez Lender, the Rent to the extent received by
Borrower during the existence of an Event of Default (all Rent covered by this
clause (ii) being hereinafter referred to as the “Recourse Distributions”) and
not applied towards Debt Service or the operation and maintenance of the
Property and (iii) any other collateral then subject to the Loan Documents (the
collateral described in the foregoing clauses (i) — (iii) is hereinafter
referred to as the “Default Collateral”); provided, however, that any judgment
in any such action or proceeding shall be enforceable against Borrower and the
Partners only to the extent of any such Default Collateral. The provisions of
this Section shall not, however, (a) impair the validity of the Debt evidenced
by the Note or in any way affect or impair the lien of this Agreement or any of
the other Loan Documents or the right of Lender to enforce this Agreement during
the existence of an Event of Default the cure of which has not been accepted by
Lender; (b) impair the right of Lender to name Borrower as a party defendant in
any action or suit for judicial foreclosure and sale under this Agreement;
(c) affect the validity or enforceability of the Note, this Agreement, or any of
the other Loan Documents, or impair the right of Lender to seek a personal
judgment against the Guarantor to the extent and for the

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obligations guaranteed in the Guaranty; (d) impair the right of Lender to obtain
the appointment of a receiver; (e) impair the right of Lender to bring suit for
a monetary judgment against Borrower with respect to fraud or material
misrepresentation by Borrower, or any Affiliate of Borrower in connection with
this Agreement, the Note or the other Loan Documents, and the foregoing
provisions shall not modify, diminish or discharge the liability of Borrower or
Guarantor to the extent of Guarantor’s liability under the Guaranty delivered by
Guarantor with respect to same; (f) impair the right of Lender to bring suit for
a monetary judgment to obtain the Recourse Distributions received by Borrower or
any of its Affiliates including, without limitation, the right to bring suit for
a monetary judgement to proceed against any Guarantor, to the extent of
Guarantor’s liability under any guaranty delivered by Guarantor, and the
foregoing provisions shall not modify, diminish or discharge the liability of
Borrower or Guarantor with respect to same; (g) impair the right of Lender to
bring suit for a monetary judgment against Borrower with respect to Borrower’s
or Owner’s misappropriation of tenant security deposits or Rent collected more
than one (1) month in advance, and the foregoing provisions shall not modify,
diminish or discharge the liability of Borrower or Guarantor to the extent of
Guarantor’s liability under any guaranty delivered by Guarantor with respect to
same; (h) impair the right of Lender to obtain insurance proceeds due to Lender
pursuant to this Agreement; (i) impair the right of Lender to enforce the
provisions of Sections 2.02(g) and 4.01, inclusive of this Agreement, even after
repayment in full by Borrower of the Debt or to bring suit for a monetary
judgment against Borrower with respect to any obligation set forth in said
Sections; (j) prevent or in any way hinder Lender from exercising, or constitute
a defense, or counterclaim, or other basis for relief in respect of the exercise
of, any other remedy against any or all of the collateral securing the Note as
provided in the Loan Documents; (k) impair the right of Lender to bring suit for
a monetary judgment against Borrower with respect to any misapplication or
conversion of Loss Proceeds, and the foregoing provisions shall not modify,
diminish or discharge the liability of Borrower or Guarantor to the extent of
Guarantor’s liability under any guaranty delivered by Guarantor with respect to
same; (l) impair the right of Lender to sue for, seek or demand a deficiency
judgment against Borrower solely for the purpose of foreclosing the Premises or
any part thereof, or realizing upon the Default Collateral; provided, however,
that any such deficiency judgment referred to in this clause (l) shall be
enforceable against Borrower and Guarantor only to the extent of any of the
Default Collateral; (m) impair the ability of Lender to bring suit for monetary
judgment against Borrower with respect to arson or physical waste to or of the
Collateral or damage to the collateral resulting from the gross negligence or
willful misconduct of Borrower or, to the extent that there is sufficient cash
flow, failure to pay any Imposition, or in lieu thereof, deposit a sum equal to
any Impositions into the Basic Carrying Costs Sub-Account ; (n) impair the right
of Lender to bring a suit for a monetary judgment against Borrower in the event
of the exercise of any right or remedy under any federal, state or local
forfeiture laws resulting in the loss of the lien of this Agreement, or the
priority thereof, against the Collateral; (o) be deemed a waiver of any right
which Lender may have under Sections 506(a), 506(b), 1111(b) or any other
provision of the Bankruptcy Code to file a claim for the full amount of the Debt
or to require that all collateral shall continue to secure all of the Debt;
(p) impair the right of Lender to bring suit for monetary judgment against
Borrower with respect to any losses resulting from any claims, actions or
proceedings initiated by Borrower (or any Affiliate of Borrower) alleging that
the relationship of Borrower and Lender is that of joint venturers, partners,
tenants in common, joint tenants or any relationship other than that of debtor
and creditor; (q) impair the right of Lender to bring suit for a monetary
judgment against

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Borrower in the event of a Transfer in violation of the provisions of this
Agreement; (r) impair the right of Lender to bring suit for a monetary judgment
in the event that Borrower moves its principal place of business or its books
and records relating to the Collateral which are governed by the UCC, or changes
its name, its jurisdiction of organization, type of organization or other legal
structure or, if it has one, organizational identification number, without first
giving Lender thirty (30) days prior written notice; or (s) impair the right of
Lender to bring suit for a monetary judgment in the event that Borrower changes
its name or otherwise does anything which would make the information set forth
in any UCC Financing Statements relating to the Collateral materially misleading
without giving Lender thirty (30) days prior written notice thereof. The
provisions of this Section shall be inapplicable to Borrower if (a) any
proceeding, action, petition or filing under the Bankruptcy Code, or any similar
state or federal law now or hereafter in effect relating to bankruptcy,
reorganization or insolvency, or the arrangement or adjustment of debts, shall
be (A) filed by Borrower, Owner or Guarantor or (B) filed against Borrower,
Owner or Guarantor and consented to or acquiesced in by Borrower or Owner or any
Affiliate of Borrower, Owner or Guarantor, or if Borrower, Owner or Guarantor or
any Affiliate of Borrower, Owner or Guarantor shall institute any proceeding for
Borrower’s or Owner’s dissolution or liquidation, or Borrower, Owner or
Guarantor shall make an assignment for the benefit of creditors or (b) Borrower
or any Affiliate contests in bad faith or in any material way interferes with in
bad faith, directly or indirectly (collectively, a “Contest”) any UCC sale or
other material remedy exercised by Lender upon the occurrence of an Event of
Default under the Loan Documents whether by making any motion, bringing any
counterclaim (other than a compulsory counterclaim), claiming any defense,
seeking any injunction or other restraint, commencing any action, or otherwise
in bad faith (provided that if any such Person obtains a non-appealable order
successfully asserting a Contest, Borrower shall have no liability under this
clause (b)) or (c) Borrower (i) fails to cause Owner to deliver notice of
default under any Ground Lease to Lender or any other Person designated in
writing by Lender or (ii) fails to prevent Owner from amending or modifying any
Ground Lease without the prior written consent of Lender, in which event Lender
shall have recourse against all of the assets of Borrower including, without
limitation, any right, title and interest of Borrower in and to the Collateral.
* * * * *

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     IN WITNESS WHEREOF, Borrower has duly executed this Agreement the day and
year first above written.

              Borrower’s Organizational Identification
Number: 4305175   ASHFORD SAPPHIRE JUNIOR MEZZ I LLC, a
Delaware limited liability company, Borrower    
 
           
 
  By:   /s/ David A Brooks    
 
           
 
      Name: David A. Brooks    
 
      Title: Vice President    

              Borrower’s Organizational Identification
Number: 4305180   ASHFORD SAPPHIRE JUNIOR MEZZ II LLC, a
Delaware limited liability company, Borrower    
 
           
 
  By:   /s/ David A Brooks    
 
           
 
      Name: David A. Brooks    
 
      Title: Vice President    

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EXHIBIT A
Description of the Premises

A-1

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EXHIBIT B
Unpaid Principal Balance of Mortgage Loan: $315,000,000
Unpaid Principal Balance of Senior Mez Loan: $80,122,000

B-1

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EXHIBIT C
CERTAIN DEFINED TERMS
     “Accounts” shall have the meaning set forth in Section 2.27.
     “ACH” shall have the meaning set forth in Section 2.27.
     “Affiliate” of any specified Person shall mean any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such specified Person.
     “Agreement” shall have the meaning set forth in the recitals hereto.
     “Bankruptcy Code” shall mean 11 U.S.C. §101 et seq., as amended from time
to time.
     “Borrower” shall mean Borrower named herein and its successors and assigns.
     “Business Day” shall mean any day other than (a) a Saturday or Sunday, or
(b) a day on which banking and savings and loan institutions in the State of New
York or the State of North Carolina are authorized or obligated by law or
executive order to be closed, or at any time during which the Loan is an asset
of a Securitization, the cities, states and/or commonwealths used in the
comparable definition of “Business Day” in the Securitization documents.
     “Closing Date” shall mean the date of the Note.
     “Code” shall mean the Internal Revenue Code of 1986, as amended and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto.
     “Collateral” shall mean (a) the Equity Interests, (b) all additional Equity
Interests acquired by Borrower, (c) all rights of Borrower, if any, as creditor
of the Pledged Entities, (d) any and all Remaining Rents from time to time
available in the Lockbox Account and Borrower’s rights to receive from Owner all
Remaining Rents required, by the terms of the Mortgage as now in effect or
amended with the consent of Lender, to be deposited by the Mortgage Lender into
the Lockbox Account; (e) the Accounts and all cash, checks, drafts, securities
entitlements, securities, securities accounts, funds or other accounts
maintained or deposited with Lender and other investment property, certificates,
instruments and other property, including, without limitation, all deposits
and/or wire transfers from time to time deposited or held in, credited to or
made to Accounts; (f) all interest, dividends, cash, instruments, securities,
securities entitlements and other investment property, and other property from
time to time received, receivable or otherwise payable in respect of, or in
exchange for, any or all of the foregoing or purchased with funds from the
Accounts; (g) all of Borrower’s interests in the Rate Cap Agreement; (h) all
rights of Borrower in, to and under Owner’s Senior Mez Borrower’s certificate of
formation, limited liability company agreement and all other organizational
documents of Owner Senior Mez Borrower (collectively, the “Owner Organizational
Documents”), or any other agreement or instrument relating to the Pledged
Interests, including, without limitation, (i) all rights of Borrower to receive
moneys due and to

C-1

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become due under or pursuant to Owner Organizational Documents, (ii) all rights
of Borrower to receive proceeds of any insurance, indemnity, warranty or
guaranty with respect to Owner Organizational Documents, (iii) all claims of
Borrower for damages arising out of or for breach of or default under Owner
Organizational Documents, and (iv) any right of Borrower to perform thereunder
and to compel performance and otherwise exercise all rights and remedies
thereunder; and (i) all Proceeds. The inclusion of Proceeds in the Agreement
does not authorize Borrower to sell, dispose of or otherwise use the Collateral
in any manner not specifically authorized hereby.
     “Condemnation Proceeds” shall mean all of the proceeds in respect of any
Taking or purchase in lieu thereof.
     “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 the property owned by it
is bound.
     “Control” means, when used with respect to any specific Person, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person whether through
ownership of voting securities, beneficial interests, by contract or otherwise.
The definition is to be construed to apply equally to variations of the word
“Control” including “Controlled,” “Controlling” or “Controlled by.”
     “Corporations” shall mean the corporations identified on Schedule 1 hereto.
     “Counterparty” shall have the meaning set forth in Section 2.27.
     “Debt” shall have the meaning set forth in the recitals hereto.
     “Default” shall mean any Event of Default or event which would constitute
an Event of Default if all requirements in connection therewith for the giving
of notice, the lapse of time, and the happening of any further condition, event
or act, had been satisfied.
     “Default Rate” shall mean the lesser of (a) the highest rate allowable at
law and (b) five percent (5%) above the interest rate set forth in the Note.
     “Default Rate Interest” shall mean, to the extent the Default Rate becomes
applicable, interest in excess of the interest which would have accrued on
(a) the principal amount of the Loan which is outstanding from time to time and
(b) any accrued but unpaid interest, if the Default Rate was not applicable.
     “Distributions” shall mean all dividends, distributions, liquidation
proceeds, cash, profits, instruments and other property and economic benefits to
which Borrower is entitled with respect to any one or more Equity Interests,
whether or not received by or otherwise distributed to Borrower, in each case
whether cash or non-cash and whether such dividends, distributions, liquidation
proceeds, cash, profits, instruments and other property and economic benefits
are paid or distributed by the Pledged Entities in respect of operating profits,
sales, exchanges, refinancings, condemnations or insured losses of the relevant
Pledged Entity’s assets, the liquidation of such Pledge Entity’s assets and
affairs, management fees, guaranteed payments,

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repayment of loans, or reimbursement of expenses or otherwise in respect of or
in exchange for any or all of the Equity Interests.
     “DTC” shall have the meaning set forth in Section 2.01.
     “Eligible Account” shall mean a segregated account which is either (a) an
account or accounts maintained with a federal or state chartered depository
institution or trust company the long term unsecured debt obligations of which
are rated by each of the Rating Agencies (or, if not rated by Fitch, Inc.
(“Fitch”), otherwise acceptable to Fitch, as confirmed in writing that such
account would not, in and of itself, result in a downgrade, qualification or
withdrawal of the then current ratings assigned to any certificates issued in
connection with a Securitization) in its second highest rating category at all
times (or, in the case of the Basic Carrying Costs Escrow Account, the long term
unsecured debt obligations of which are rated at least “AA” (or its equivalent))
by each of the Rating Agencies (or, if not rated by Fitch, otherwise acceptable
to Fitch, as confirmed in writing that such account would not, in and of itself,
result in a downgrade, qualification or withdrawal of the then current ratings
assigned to any certificates issued in connection with a Securitization) or, if
the funds in such account are to be held in such account for less than thirty
(30) days, the short term obligations of which are rated by each of the Rating
Agencies (or, if not rated by Fitch, otherwise acceptable to Fitch, as confirmed
in writing that such account would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any
certificates issued in connection with a Securitization) in its second highest
rating category at all times 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 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 $100,000,000 and subject to supervision or examination by federal and
state authority, or otherwise acceptable (as evidenced by a written confirmation
from each Rating Agency that such account would not, in and of itself, cause a
downgrade, qualification or withdrawal of the then current ratings assigned to
any certificates issued in connection with a Securitization) to each Rating
Agency, which may be an account maintained by Lender or its agents. Eligible
Accounts may bear interest. The title of each Eligible Account shall indicate
that the funds held therein are held in trust for the uses and purposes set
forth herein.
     “Equity Interests” shall mean the LLC Interests, the Partnership Interests
and the Pledged Interests.
     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder. Section
references to ERISA are to ERISA, as in effect at the date of this Agreement
and, as of the relevant date, any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
     “ERISA Affiliate” shall mean any corporation or trade or business that is a
member of any group of organizations (a) described in Section 414(b) or (c) of
the Code of which Borrower is a member and (b) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which Borrower is a
member.

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     “Event of Default” shall have the meaning set forth in Section 3.01.
     “Fiscal Year” shall mean the twelve (12) month period commencing on January
1 and ending on December 31 during each year of the term of this Agreement, or
such other fiscal year of Borrower as Borrower may select from time to time with
the prior written consent of Lender.
     “General Partner” shall mean, if Borrower is a partnership, each general
partner of Borrower and, if Borrower is a limited liability company, each
managing member of Borrower and in each case, if applicable, each general
partner or managing member of such general partner or managing member. In the
event that Borrower or any General Partner is a single member limited liability
company, the term “General Partner” shall include such single member.
     “Governmental Authority” shall mean, with respect to any Person, any
federal or State government or other political subdivision thereof and any
entity, including any regulatory or administrative authority or court,
exercising executive, legislative, judicial, regulatory or administrative or
quasi-administrative functions of or pertaining to government, and any
arbitration board or tribunal, in each case having jurisdiction over such
applicable Person or such Person’s property and any stock exchange on which
shares of capital stock of such Person are listed or admitted for trading.
     “Guarantor” shall mean any Person guaranteeing, in whole or in part, the
obligations of Borrower under the Loan Documents.
     “Independent” shall mean, when used with respect to any Person, a Person
who (a) is in fact independent, (b) does not have any direct financial interest
or any material indirect financial interest in Borrower, or in any Affiliate of
Borrower or any constituent partner, shareholder, member or beneficiary of
Borrower, (c) is not connected with Borrower or any Affiliate of Borrower or any
constituent partner, shareholder, member or beneficiary of Borrower as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions and (d) is not a member of the immediate family of
a Person defined in (b) or (c) above. Whenever it is herein provided that any
Independent Person’s opinion or certificate shall be provided, such opinion or
certificate shall state that the Person executing the same has read this
definition and is Independent within the meaning hereof.
     “Insurance Proceeds” shall mean all of the proceeds received under the
insurance policies required to be maintained by Owner pursuant to Article III of
the Mortgage.
     “Interest Shortfall” shall mean any shortfall in the amount of interest
required to be paid with respect to the Loan on any Payment Date.
     “Junior Mez Lender” shall mean the holder of the Junior Mez Loan.
     “Junior Mez Loan” shall mean that certain mezzanine loan secured by 100% of
the direct or indirect equity interests in Borrower.
     “Late Charge” shall have the meaning set forth in Section 3.11 hereof.

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     “Legal Requirement” shall mean as to any Person, the certificate of
incorporation, by-laws, certificate of limited partnership, agreement of limited
partnership or other organizational or governing documents of such Person, and
any law, statute, order, ordinance, judgment, decree, injunction, treaty, rule
or regulation or determination of an arbitrator or a court or other Governmental
Authority and all covenants, agreements, restrictions and encumbrances contained
in any instruments, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is subject.
     “Lender” shall mean Lender named herein and its successors and assigns.
     “LIBOR Rate” shall have the meaning set forth in the Note.
     “LLC Interests” shall mean, with respect to Borrower, all membership,
equity or ownership and/or other interests now or hereafter owned by Borrower in
the LLCs, and including all of Borrower’s right, title and interest in and to:
(a) any and all now existing and hereafter acquired membership, equity or
ownership interest of Borrower in the LLCs, whether in capital, profits or
otherwise; (b) any and all now existing and hereafter arising rights of Borrower
to receive Distributions or payments from the LLCs, whether in cash or in kind
and whether such Distributions or payments are on account of Borrower’s interest
as owner of a membership, equity or ownership interest of the LLCs or as a
creditor of the LLCs or otherwise, and all other economic rights and interests
of any nature of Borrower in the LLCs; (c) any and all now existing and
hereafter acquired management and voting rights of Borrower of, in, or with
respect to the LLCs, whether as an owner of a membership, equity or ownership
interest in the LLCs or otherwise, and whether provided for under the Operating
Agreements and/or applicable law, and all other rights of and benefits to
Borrower of any nature arising or accruing under the Operating Agreements;
(d) any and all now existing and hereafter acquired rights of Borrower to any
specific property owned by the LLCs; (e) if the LLC Interests are evidenced in
certificate form, the LLC Interests shall include all such certificates,
delivered to Lender accompanied by Powers duly executed in blank; and (f) all
Proceeds of the foregoing Collateral.
     “LLCs” shall mean the limited liability companies identified on Schedule 1
hereto.
     “Loan” shall have the meaning set forth in the recitals hereto.
     “Loan Documents” shall have the meaning set forth in the recitals hereto.
     “Loan Year” shall mean each 365 day period (or 366 day period if the month
of February in a leap year is included) commencing on the first day of the month
following the Closing Date (provided, however, that the first Loan Year shall
also include the period from the Closing Date to the end of the month in which
the Closing Date occurs).
     “Lockbox Account” shall have the meaning set forth in Section 2.27.
     “Lockbox Agreement” shall mean that certain mezzanine lockbox agreement
dated as of the date hereof between Borrower and Lender.
     “Material Adverse Effect” shall mean any event or condition that has a
material adverse effect on (a) the Collateral or the Property, (b) the business,
prospects, profits, management,

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operations or condition (financial or otherwise) of Borrower, Senior Mez
Borrower or Owner, (c) the enforceability, validity, perfection or priority of
the lien of any Loan Document or (d) the ability of Borrower to perform any
obligations under any Loan Document.
     “Maturity” shall mean the Maturity Date set forth in the Note or such other
date pursuant to the Loan Documents on which the final payment of principal, and
premium, if any, on the Note becomes due and payable as therein or herein
provided, whether at stated maturity or by declaration of acceleration, or
otherwise.
     “Maturity Date” shall have the meaning set forth in the Note.
     “Mez Allocated Loan Amount” shall mean the portion of the Loan Amount
allocated to each Cross-collateralized Property as set forth on Exhibit E
annexed hereto and made a part hereof.
     “Mortgage” shall have the meaning set forth in the recitals hereto.
     “Mortgage Lender” shall have the meaning set forth in the recitals hereto.
     “Mortgage Loan” shall have the meaning set forth in the recitals hereto.
     “Mortgage Note” shall have the meaning set forth in the recitals hereto.
     “Mortgage Securitization” shall mean a public or private offering of
securities by Mortgage Lender or any of its Affiliates or their respective
successors and assigns which are collateralized, in whole or in part, by the
Mortgage Loan.
     “Multiemployer Plan” shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been, or were required to
have been, made by Borrower, Guarantor or any ERISA Affiliate and which is
covered by Title IV of ERISA.
     “Note” shall have the meaning set forth in the recitals hereto.
     “OFAC List” shall mean the list of specially designated nationals and
blocked persons subject to financial sanctions that is maintained by the U.S.
Treasury Department, Office of Foreign Assets Control and accessible through the
internet website www.treas.gov/ofac/t11sdn.pdf.
     “Officer’s Certificate” shall mean a certificate delivered to Lender by
Borrower which is signed on behalf of Borrower by an authorized representative
of Borrower which states that the items set forth in such certificate are true,
accurate and complete in all respects.
     “Operating Agreements” shall mean the operating agreements and articles of
organization, certificates of formation or other formation documents and all
other agreements, certificates and other documents provided to and approved by
Lender and which govern the existence, operation and ownership of the LLCs, as
the same are in effect as of the date hereof and as the same hereafter may be
modified from time to time in accordance with this Agreement.

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     “Organizational Documents” shall mean (i) the articles or certificate of
incorporation (including any amendments thereto or restatements thereof), bylaws
and any certificate or statement of designation of the Corporations, (ii) the
Operating Agreements and (iii) the Partnership Agreements.
     “Owner” shall have the meaning set for in the recitals hereto.
     “Partnership Agreements” shall mean the partnership agreements together
with all agreements, certificates and other documents provided to and approved
by Lender and which govern the existence, operation and ownership of the
Partnerships.
     “Partnership Interests” shall mean all partnership, equity or ownership
and/or other interests now or hereafter owned by Borrower in the Partnerships,
and including all of Borrower’s right, title and interest in and to: (a) any and
all now existing and hereafter acquired membership, equity or ownership interest
of Borrower in the Partnerships whether in capital, profits or otherwise;
(b) any and all now existing and hereafter arising rights of Borrower to receive
Distributions or payments from the Partnerships, whether in cash or in kind and
whether such Distributions or payments are on account of Borrower’s interest as
an owner of a partnership, equity or ownership interest in the Partnerships or
as a creditor of the Partnerships or otherwise, and all other economic rights
and interests of any nature of Borrower in the Partnerships; (c) any and all now
existing and hereafter acquired management and voting rights of Borrower of, in,
or with respect to the Partnerships, whether as an owner of a partnership,
equity or ownership interest in the Partnerships or otherwise, and whether
provided for under the Partnership Agreements and/or applicable law, and all
other rights of and benefits to Borrower of any nature arising or accruing under
the Partnership Agreements; (d) any and all now existing and hereafter acquired
rights of Borrower to any specific property owned by the Partnerships; (e) if
the Partnership Interests are evidenced in certificate form, the Partnership
Interests shall include all such certificates, delivered to Lender accompanied
by Powers duly executed in blank; and (f) all Proceeds of the foregoing
Collateral.
     “Partnerships” shall mean the partnerships identified on Schedule 1
attached hereto.
     “PBGC” shall mean the Pension Benefit Guaranty Corporation established
under ERISA, or any successor thereto.
     “Person” shall mean any individual, corporation, limited liability company,
partnership, joint venture, 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.
     “Plan” shall mean an employee benefit or other plan established or
maintained by Borrower or any ERISA Affiliate during the five-year period ended
prior to the date of this Agreement or to which Borrower or any ERISA Affiliate
makes, is obligated to make or has, within the five year period ended prior to
the date of this Agreement, been required to make contributions (whether or not
covered by Title IV of ERISA or Section 302 of ERISA or Section 401(a) or 412 of
the Code), other than a Multiemployer Plan.
     “Pledged Entities” shall mean the Corporations, the LLCs and the
Partnerships.

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     “Pledged Interests” shall mean with respect to Borrower, (a) all shares of
capital stock of the Corporations, now owned or hereafter acquired by Borrower,
and the certificates representing the shares of such capital stock and any
interest of Borrower in the entries on the books of any financial intermediary
pertaining to such shares (such now-owned shares being identified on Schedule 1
attached hereto), and all options and warrants for the purchase of shares of the
stock of the Corporations now or hereafter held in the name of Borrower, (b) all
certificated LLC Interests or Partnership Interests, now owned or hereafter
acquired by Borrower, and the certificates representing such interests and any
interest of Borrower in the entries on the books of any financial intermediary
pertaining to such certificated interests (such now-owned certificated interests
being identified on Schedule 1 attached hereto), and all options and warrants
for the purchase of certificated interests in such LLCs or Partnership now or
hereafter held in the name of Borrower, (c) all additional shares of stock or
certificated interests of the Corporations, LLCs, or Partnerships from time to
time acquired by Borrower in any manner, and the certificates representing such
additional shares and any interest of Borrower in the entries on the books of
any financial intermediary pertaining to such shares and interests, and all
securities convertible into and options, warrants, dividends, cash, instruments
and other rights and options from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares,
(including all rights to request or cause the issuer thereof to register any or
all of the Collateral under federal and state securities laws to the maximum
extent possible under any agreement for such registration rights, and all put
rights, tag-along rights or other rights pertaining to the sale or other
transfer of such Collateral, together in each case with all rights under any
agreements, articles or certificates of incorporation or otherwise pertaining to
such rights; and (d) all voting rights and rights to cash and non-cash
dividends, securities, securities entitlements and other investment property,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, or in exchange for, any or all of the
foregoing Collateral, and (e) all Proceeds of the foregoing Collateral.
     “Powers” shall mean transfer powers in the form of Schedule 3 attached
hereto.
     “Premises” shall have the meaning set forth in the recitals hereto.
     “Principal Amount” shall mean the Loan Amount as such amount may be reduced
from time to time pursuant to the terms of this Agreement, the Note or the other
Loan Documents.
     “Proceeds” shall (a) mean all “proceeds” (as such term is defined in the
UCC) and “products” (as such term is defined in the UCC) with respect to the
Collateral and (b) include, without limitation: whatever is receivable or
received when Collateral is sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary; all rights to payment,
including return premiums, with respect to any insurance relating thereto; all
interest, dividends and other property receivable or received on account of the
Collateral or proceeds thereof, (including all Distributions or other income
from the Equity Interests, all collections thereon or all Distributions with
respect thereto); and proceeds of any indemnity or guaranty payable to Borrower
or Lender from time to time with respect to any Collateral.

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     “Prohibited Person” shall mean any Person identified on the OFAC List or
any other Person with whom a U.S. Person may not conduct business or
transactions by prohibition of Federal law or Executive Order of the President
of the United States of America.
     “Rate Cap Agreement” shall mean that certain interest rate protection
agreement (together with the confirmation and schedules relating thereto) with a
notional amount which shall not at any time be less than the Principal Amount
and a LIBOR Rate strike price equal to six percent (6%) entered into by Borrower
in accordance with the terms hereof or of the other Loan Documents and any
similar interest rate cap or collar agreements subsequently entered into in
replacement or substitution therefor by Borrower with respect to the Loan.
     “Rating Agency” shall mean each of Standard & Poor’s Ratings Services,
Inc., a division of The McGraw-Hill Company, Inc. (“Standard & Poor’s”), Fitch,
Inc. and Moody’s Investors Service, Inc. (“Moody’s”) and any successor to any of
them; provided, however, that at any time after a Securitization, “Rating
Agency” shall mean those of the foregoing rating agencies that from time to time
rate the securities issued in connection with such Securitization.
     “Remaining Rents” shall have the meaning set forth in Section 2.27.
     “Securities Act” shall have the meaning set forth in Section 3.02(d).
     “Securitization” shall mean a public or private offering of securities by
Lender or any of its Affiliates or their respective successors and assigns which
are collateralized, in whole or in part, by this Agreement.
     “Single Purpose Entity” shall mean a corporation, partnership, joint
venture, limited liability company, trust or unincorporated association, which
is formed or organized solely for the purpose of holding, directly, an ownership
interest in the Collateral, does not engage in any business unrelated to the
Collateral, does not have any assets other than those related to its interest in
the Collateral or any indebtedness other than as permitted by this Agreement or
the other Loan Documents, has its own separate books and records and has its own
accounts, in each case which are separate and apart from the books and records
and accounts of any other Person, holds itself out as being a Person separate
and apart from any other Person and which otherwise satisfies the criteria of
the Rating Agency for a special-purpose bankruptcy-remote entity.
     “Solvent” shall mean, as to any Person, that (a) the sum of the assets of
such Person, at a fair valuation, exceeds its liabilities, including contingent
liabilities, (b) such Person has sufficient capital with which to conduct its
business as presently conducted and as proposed to be conducted and (c) such
Person has not incurred debts, and does not intend to incur debts, beyond its
ability to pay such debts as they mature. For purposes of this definition,
“debt” means any liability on a claim, and “claim” means (a) a right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured, or (b) a right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured. With respect to any such
contingent liabilities, such liabilities shall be computed in accordance with
GAAP at the amount which, in light of all the facts and

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circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability.
     “Substitute CMA Agreement” shall have the meaning set forth in
Section 2.27.
     “Transfer” shall mean any conveying, assigning, selling, mortgaging,
encumbering, pledging, hypothecating, granting of a security interest in,
granting of options with respect to or other disposition (directly or
indirectly, voluntarily or involuntarily, by operation of law or otherwise and
whether or not for consideration or of record) of all or any portion of any
legal or beneficial interest in the Collateral, Borrower, Senior Mez Borrower,
Owner, the Premises or any other portion of the Property.
     “UCC” shall mean the Uniform Commercial Code as in effect in the State of
New York; provided that, if perfection or the effect of perfection or
non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “UCC” means the Uniform Commercial Code as in effect
from time to time in such other jurisdiction for purposes of the provisions
hereof relating to such perfection, effect of perfection or non-perfection or
priority.
     “Unscheduled Payments” shall mean insurance proceeds that have been applied
to the repayment of the Debt, any funds representing a voluntary or involuntary
principal prepayment and proceeds of any foreclosure action or UCC sale.
     “Welfare Plan” shall mean an employee welfare benefit plan as defined in
Section 3(1) of ERISA established or maintained by Borrower, Guarantor or any
ERISA Affiliate or that covers any current or former employee of Borrower,
Guarantor or any ERISA Affiliate.

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EXHIBIT D
Owners

          Property   Owner   Operating Tenant
Hilton Birmingham Perimeter Park
  Ashford Birmingham LP   None
8 Perimeter Drive S.
       
Birmingham, AL 35243-2326
       
 
       
BWI Airport Marriott
  Ashford BWI Hotel, LP   None
1742 W. Nursery Road
       
Linthicum Heights, MD 21090-2906
       
 
       
Hyatt Regency Coral Gables
  Ashford Coral Gables LP   Ashford TRS Sapphire LLC
50 Alhambra Piz
       
Coral Gables, FL 33134-5228
       
 
       
Residence Inn Kansas City
  Ashford Kansas City LP   None
2975 Main Street
       
Kansas City, MO 64108-3321
       
 
       
Residence Inn Torrance
  Ashford Torrance LP   None
3701 Torrance Blvd.
       
Los Angeles, CA 90503-4805
       
 
       
Residence Inn Las Vegas Hughes Center
  Ashford LV Hughes Center LP   Ashford TRS Sapphire LLC
370 Hughes Center Drive
       
Las Vegas, NV 89109-4814
       
 
       
Residence Inn Atlanta Perimeter West
  Ashford Atlanta Perimeter LP   None
6096 Barfield Road,
       
Perimeter West Atlanta, GA 30328-4408
       
 
       
Hampton Inn Lawrenceville
  Ashford Lawrenceville LP   Ashford TRS Sapphire LLC
1135 Lakes Parkway
       
Lawrenceville, GA 30043
       
 
       
Doubletree Guest Suites
  Ashford Columbus LP   Ashford TRS Sapphire LLC
50 S. Front Street
       
Columbus, OH 43215
       
 
       
Hilton Santa Fe
  Ashford Santa Fe LP   Ashford TRS Sapphire LLC
100 Sandoval Street
       
Santa Fe, NM 87501
       

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          Property   Owner   Operating Tenant
Homewood Suites Mobile
  Ashford Mobile LP   Ashford TRS Sapphire LLC
530 Providence Park Drive
       
Mobile, AL 36695
       
 
       
Hyatt Anaheim
  Ashford Anaheim LP   Ashford TRS Sapphire LLC
11999 Harbor Blvd.
       
Garden Grove, CA 92840
       
 
       
Sea Turtle Inn
  Ashford Atlantic Beach LP   Ashford TRS Sapphire LLC
One Ocean Blvd.
       
Atlantic Beach, FL 32233
       
 
       
JW Marriott San Francisco
  Ashford San Francisco LP   Ashford TRS Sapphire LLC
500 Post Street
       
San Francisco, CA 94102
       
 
       
Fairfield Inn Kennesaw
  Ashford Kennesaw I LP   Ashford TRS Sapphire LLC
3425 Busbee Drive
       
Kennesaw, GA
         
Springhill Suites BWI
  Ashford BWI Airport LP   Ashford TRS Sapphire LLC
899 Elkridge Landing Rd.
       
BWI Airport, Maryland 21090
       
 
       
Springhill Suites Kennesaw
  Ashford Kennesaw II LP   Ashford TRS Sapphire LLC
3399 Town Point Drive
       
Kennesaw, GA 30144
       
 
       
Radisson Holtsville
  Ashford Holtsville LP   Ashford TRS Sapphire LLC
1730 North Ocean Ave.
       
Holtsville, NY 11742
         
Sheraton Milford
  Ashford Milford Limited Partnership   Ashford TRS Sapphire LLC
11 Beaver Street
       
Milford, MA 01757
         
Radisson Rockland
  Rockland Massachusetts Hotel   Ashford TRS Sapphire LLC
929 Hingham Street
  Limited Partnership    
Rockland, MA 02370
       

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EXHIBIT E
Mez Allocated Loan Amounts

                  Asset   Property   Amount     1    
Hilton Birmingham Perimeter Park
  $ 3,240,369     4    
BWI Airport Marriot
  $ 8,632,337     10    
Hyatt Regency Coral Gables
  $ 6,507,398     22    
Residence Inn Kansas City
  $ 1,052,742     23    
Residence Inn Torrance
  $ 6,802,108     25    
Residence Inn Las Vegas Hughes Center
  $ 8,891,739     29    
Residence Inn Atlanta Perimeter West
  $ 1,693,321     34    
Hampton Inn Lawrenceville
  $ 977,083     35    
Doubletree Guest Suites Columbus
  $ 1,517,504     37    
Hilton Santa Fe
  $ 3,201,458     38    
Homewood Suites Mobile
  $ 1,627,750     39    
Hyatt Anaheim
  $ 15,457,503     40    
Sea Turtle Inn
  $ 3,721,704     41    
JW Marriott San Francisco
  $ 8,135,869     42    
Fairfield Inn Kennesaw
  $ 1,353,937     44    
Springhill Suites BWI
  $ 2,954,306     45    
Springhill Suites Kennesaw
  $ 1,381,318     46    
Radisson Holtsville
  $ 1,030,404     47    
Sheraton Milford
  $ 946,098     48    
Radisson Rockland
  $ 875,051  

D-3

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Schedule 1
Corporations, Limited Liability Companies and Partnerships
100% of all membership, equity and ownership interests in Ashford Sapphire
Senior Mezz I LLC, a Delaware limited liability company and Ashford Sapphire
Senior Mezz II LLC, a Delaware limited liability company.

 

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Schedule 2
Ownership Chart

 

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Schedule 3
Stock Power
A transfer power in form and substance acceptable to Lender.

 

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CONSENT AND WAIVER
     As a material inducement for Lender to enter into the Loan and Security
Agreement (“Loan Agreement”) dated as of the 11th day of April, 2007 between
ASHFORD SAPPHIRE JUNIOR MEZZ I LLC, a Delaware limited liability company, having
an address at 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254-4308 and
ASHFORD SAPPHIRE JUNIOR MEZZ II LLC, a Delaware limited liability company,
having an address at 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254-4308
(collectively, “Borrower”) and WACHOVIA BANK, NATIONAL ASSOCIATION, having an
address at Wachovia Bank, National Association, Commercial Real Estate Services,
8739 Research Drive URP 4, NC 1075, Charlotte, North Carolina 28262 (“Lender”),
and for valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned, as of the 11th day of April, 2007, hereby
consents to the pledge of the Collateral contained in the Loan Agreement and
ratifies all encumbrances and terms contained therein.
     The undersigned agrees that, by acceptance of the Loan Agreement, Lender
assumes no obligations with respect to the Pledged Entities or to the
constituent members, partners, or shareholders in the Pledged Entities and,
without the prior written consent of Lender, the undersigned shall not:
(a) terminate or materially amend or modify the Organizational Documents of the
Pledged Entities or consent thereto; or (b) take any action that would operate
to dilute the interest of Borrower in the Pledged Entities.
     The undersigned agrees that, upon written notice from Lender stating that
an Event of Default has occurred under the Loan Agreement, all Distributions,
dividends, or other sums payable to Borrower in connection with the Pledged
Entities shall be made payable to and delivered to Lender. The undersigned
further agrees that, upon written notice from Lender that it has foreclosed upon
the Collateral described in the Loan Agreement following an Event of Default,
Borrower shall be removed as a manager, managing member or general partner in
the Pledged Entity, as applicable, and replaced with the assignee designated in
such notice, which assignee shall be Lender or its nominee. In connection
therewith, the undersigned agrees to request (and use reasonable efforts to
ensure) that Lender is provided with a written statement of Borrower’s defaults
under the Organizational Documents and agrees that Lender be entitled to rely on
such statement in determining whether to become a substitute member, shareholder
or partner in the applicable Pledged Entity. If Lender so requests, the
undersigned covenants and agrees to consent to the execution of an amendment to
the Organizational Documents to reflect any such assignee’s substitution in
place of Borrower, as applicable.
     The undersigned further consents and agrees to (a) Borrower’s assignment to
Lender for security purposes, of Borrower’s Equity Interests, (b) any
foreclosure and/or subsequent sale by Lender or its nominee of its rights with
respect to such Equity Interests and the substitution of Lender or nominee of
its rights with respect to such Equity Interests, (c) the exercise of any remedy
by Lender or its nominee under the Loan Agreement and (d) notwithstanding
anything to the contrary contained in the Organizational Documents of the
Pledged Entities, Lender, its nominee or any third-party purchaser at a
foreclosure sale becoming a member, partner or shareholder, or a substitute
manager, managing member or general partner, as applicable, in a Pledged Entity,
with all of the rights enjoyed by Borrower prior to such foreclosure. Any such
foreclosure will not require any further consent of the undersigned or any other
member,

 

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shareholder, or partner in the applicable Pledged Entity and will not cause the
dissolution of any LLC or Partnership.
     The undersigned agrees that neither the execution and delivery of the Loan
Agreement, the enforcement by Lender of any of its rights thereunder, nor the
transfer (or agreement to transfer) by Lender of any of its rights in the
Pledged Entities or under the Loan Agreement shall constitute a default under
the Organizational Documents, and the undersigned expressly waives any rights it
may have under the Organizational Documents as a result of the foregoing. The
undersigned hereby waives any and all rights under the Organizational Documents
which, whether exercised by the undersigned or not, would prevent, inhibit or
interfere with the granting of a security interest in the Collateral to Lender,
the foreclosure of such security interest in the Collateral by Lender or the
full realization by Lender of any of its other rights under the Loan Agreement.
     The undersigned acknowledges that Lender is materially relying on the
undersigned’s execution of this Consent and Waiver in entering into the Loan
Agreement and the other Loan Documents.
     All capitalized terms not otherwise defined herein shall have the meaning
set forth in the Loan Agreement.
********************

 

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     IN WITNESS WHEREOF, the undersigned has duly executed this consent and
waiver as of this 11th day of April, 2007.

            ASHFORD SAPPHIRE SENIOR MEZZ I LLC, a Delaware limited liability
company
      By:   /s/ David A Brooks         Name:   David A. Brooks        Title:  
Vice President     

            ASHFORD SAPPHIRE SENIOR MEZZ II LLC, a
Delaware limited liability company
      By:   /s/ David A Brooks         Name:   David A. Brooks        Title:  
Vice President