Exhibit 10.7

 

LOAN NO. 18-52423

 

JUNIOR MEZZANINE LOAN AGREEMENT

 

Dated as of June 13, 2018

 

Between

 

ASHFORD JUNIOR C LLC,

as Borrower

 

and

 

BANK OF AMERICA, N.A.,

 

BARCLAYS BANK PLC, and

 

MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC,
collectively, as Lender

 

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TABLE OF CONTENTS

 

 

 

Page

Article 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1

Definitions

1

Section 1.2

Principles of Construction

35

 

 

 

Article 2 GENERAL TERMS

 

Section 2.1

The Loan

36

Section 2.2

Disbursement to Borrower

36

Section 2.3

The Note, Pledge Agreements and Loan Documents

36

Section 2.4

Interest Rate

36

Section 2.5

Loan Payments

39

Section 2.6

Loan Prepayments

44

Section 2.7

Taxes

46

Section 2.8

Intentionally Omitted

49

Section 2.9

Property Releases

49

 

 

 

Article 3 CONDITIONS PRECEDENT

 

Section 3.1

Conditions Precedent

51

 

 

 

Article 4 REPRESENTATIONS AND WARRANTIES

 

Section 4.1

Organization

51

Section 4.2

Status of Borrower

52

Section 4.3

Validity of Documents

52

Section 4.4

No Conflicts

53

Section 4.5

Litigation

53

Section 4.6

Agreements

53

Section 4.7

Solvency

54

Section 4.8

Full and Accurate Disclosure

54

Section 4.9

No Plan Assets

54

Section 4.10

Not a Foreign Person

55

Section 4.11

Enforceability

55

Section 4.12

Business Purposes

55

Section 4.13

Compliance

55

Section 4.14

Financial Information

55

Section 4.15

Condemnation

56

Section 4.16

Utilities and Public Access; Parking

56

Section 4.17

Separate Lots

56

Section 4.18

Assessments

56

Section 4.19

Insurance

57

Section 4.20

Use of Property

57

Section 4.21

Certificate of Occupancy; Licenses

57

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

Section 4.22

Flood Zone

57

Section 4.23

Physical Condition

57

Section 4.24

Boundaries

58

Section 4.25

Leases

58

Section 4.26

Filing and Recording Taxes

58

Section 4.27

Management Agreement

58

Section 4.28

Illegal Activity

58

Section 4.29

Construction Expenses

59

Section 4.30

Personal Property

59

Section 4.31

Taxes

59

Section 4.32

Title

59

Section 4.33

Federal Reserve Regulations

60

Section 4.34

Investment Company Act

60

Section 4.35

Reciprocal Easement Agreements

60

Section 4.36

No Change in Facts or Circumstances; Disclosure

60

Section 4.37

Intellectual Property

61

Section 4.38

Compliance with Prescribed Laws

61

Section 4.39

Brokers and Financial Advisors

61

Section 4.40

Franchise Agreements

61

Section 4.41

PIPS

62

Section 4.42

[Intentionally Omitted]

62

Section 4.43

Labor Matters

62

Section 4.44

Condominium Representations

62

Section 4.45

Ground Lease Representations

62

Section 4.46

Operating Lease Representations.

63

Section 4.47

Survival

64

Section 4.48

Affiliates

64

Section 4.49

Mortgage Borrower and Senior Mezzanine Borrower Representations

64

Section 4.50

List of Mortgage Loan Documents

64

Section 4.51

List of Senior Mezzanine Loan Documents

64

Section 4.52

Mortgage Loan Event of Default and Senior Mezzanine Loan Event of Default

65

 

 

 

Article 5 BORROWER COVENANTS

 

Section 5.1

Existence; Compliance with Requirements

65

Section 5.2

Maintenance and Use of Property

66

Section 5.3

Waste

66

Section 5.4

Taxes and Other Charges

67

Section 5.5

Litigation

68

Section 5.6

Access to Properties

68

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

Section 5.7

Notice of Default

68

Section 5.8

Cooperate in Legal Proceedings

68

Section 5.9

Performance by Borrower

69

Section 5.10

Awards; Insurance Proceeds

69

Section 5.11

Financial Reporting

69

Section 5.12

Estoppel Statement

71

Section 5.13

Leasing Matters

72

Section 5.14

Property Management

74

Section 5.15

Liens

75

Section 5.16

Debt Cancellation

76

Section 5.17

Zoning

76

Section 5.18

ERISA

76

Section 5.19

No Joint Assessment

77

Section 5.20

Reciprocal Easement Agreements

77

Section 5.21

Alterations

77

Section 5.22

Agreements

78

Section 5.23

Compliance with Prescribed Laws

79

Section 5.24

Interest Rate Cap Agreement

79

Section 5.25

Franchise Agreement

82

Section 5.26

Trade Names

83

Section 5.27

Condominium Provisions

83

Section 5.28

Ground Lease Provisions

85

Section 5.29

Operating Lease Provisions

86

Section 5.30

[Intentionally Omitted]

87

Section 5.31

O&M Program

87

Section 5.32

Mortgage Loan Reserve Funds

87

Section 5.33

Notices

88

Section 5.34

Special Distributions

88

Section 5.35

Mortgage Borrower and Senior Borrower Covenants

88

Section 5.36

Mortgage Loan and Senior Mezzanine Loan Estoppels

88

Section 5.37

Change in Business

89

Section 5.38

Limitation on Securities Issuances

90

Section 5.39

Distributions

90

Section 5.40

Refinancing or Prepayment of the Mortgage Loan and Senior Mezzanine Loan

90

Section 5.41

Acquisition of the Mortgage Loan and Senior Mezzanine Loan

90

Section 5.42

Material Agreements

91

Section 5.43

Prepayment of Mortgage Loan and Senior Mezzanine Loan

92

 

 

 

Article 6 ENTITY COVENANTS

 

Section 6.1

Single Purpose Entity/Separateness

93

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

Section 6.2

Change of Name, Identity or Structure

97

Section 6.3

Business and Operations

97

Section 6.4

Independent Director

97

 

 

 

Article 7 NO SALE OR ENCUMBRANCE

 

Section 7.1

Transfer Definitions

98

Section 7.2

No Sale/Encumbrance

99

Section 7.3

Permitted Transfers

99

Section 7.4

Assumption

101

Section 7.5

Immaterial Transfers and Easements, Etc.

104

Section 7.6

Advised Entity Transfer

104

 

 

 

Article 8 INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

 

Section 8.1

Insurance

107

Section 8.2

Casualty

107

Section 8.3

Condemnation

108

Section 8.4

Restoration

108

Section 8.5

Rights of Lender

109

 

 

 

Article 9 RESERVE FUNDS

 

Section 9.1

Deposit and Maintenance of Reserve Funds

109

Section 9.2

Transfer of Reserve Funds under Mortgage Loan

110

Section 9.3

Letters of Credit

110

 

 

 

Article 10 CASH MANAGEMENT

 

Section 10.1

Intentionally Omitted

111

Section 10.2

Cash Management Account

111

Section 10.3

Borrower Distributions

112

 

 

 

Article 11 EVENTS OF DEFAULT; REMEDIES

 

Section 11.1

Event of Default

112

Section 11.2

Remedies

118

Section 11.3

Right to Cure Defaults

119

Section 11.4

Remedies Cumulative

120

Section 11.5

Power of Attorney

120

 

 

 

Article 12 INTENTIONALLY OMITTED

 

 

 

Article 13 SECONDARY MARKET

 

Section 13.1

Transfer of Loan

120

Section 13.2

Delegation of Servicing

121

Section 13.3

Dissemination of Information

121

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

Section 13.4

Cooperation

122

Section 13.5

Securitization

123

Section 13.6

Regulation AB Obligor Information

127

Section 13.7

Other Regulation AB Information

128

Section 13.8

New Mezzanine Loan

128

Section 13.9

Intercreditor Agreement

129

Section 13.10

Reallocation of Loan Amounts

129

 

 

 

Article 14 INDEMNIFICATIONS

 

Section 14.1

General Indemnification

130

Section 14.2

Mortgage and Intangible Tax Indemnification

130

Section 14.3

ERISA Indemnification

131

Section 14.4

Survival

131

 

 

 

Article 15 EXCULPATION

 

Section 15.1

Exculpation

131

 

 

 

Article 16 NOTICES

 

Section 16.1

Notices

136

 

 

 

Article 17 FURTHER ASSURANCES

 

Section 17.1

Replacement Documents

138

Section 17.2

Execution of Pledge Agreements

138

Section 17.3

Further Acts, etc.

138

Section 17.4

Changes in Tax, Debt, Credit and Documentary Stamp Laws

139

Section 17.5

Expenses

139

Section 17.6

Cost of Enforcement

140

Section 17.7

Mortgage Loan Defaults

141

Section 17.8

Discussions with Mortgage Lender

143

Section 17.9

Independent Approval Rights

143

Section 17.10

Senior Mezzanine Loan Defaults

143

 

 

 

Article 18 WAIVERS

 

Section 18.1

Remedies Cumulative; Waivers

145

Section 18.2

Modification, Waiver in Writing

145

Section 18.3

Delay Not a Waiver

145

Section 18.4

Trial by Jury

145

Section 18.5

Waiver of Notice

146

Section 18.6

Remedies of Borrower

146

Section 18.7

Waiver of Marshalling of Assets

146

Section 18.8

Waiver of Statute of Limitations

146

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

Section 18.9

Waiver of Counterclaim

147

 

 

 

Article 19 GOVERNING LAW

 

Section 19.1

Governing Law

147

Section 19.2

Severability

148

Section 19.3

Preferences

148

 

 

 

Article 20 MISCELLANEOUS

 

Section 20.1

Survival

148

Section 20.2

Lender’s Discretion

149

Section 20.3

Headings

149

Section 20.4

Schedules Incorporated

149

Section 20.5

Offsets, Counterclaims and Defenses

149

Section 20.6

No Joint Venture or Partnership; No Third Party Beneficiaries

149

Section 20.7

Publicity

150

Section 20.8

Conflict; Construction of Documents; Reliance

151

Section 20.9

Duplicate Originals; Counterparts

151

Section 20.10

Joint and Several Liability

151

Section 20.11

Entire Agreement

151

Section 20.12

Contributions and Waivers

151

Section 20.13

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

152

Section 20.14

Certain Additional Rights of Lender (VCOC)

155

 

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JUNIOR MEZZANINE LOAN AGREEMENT

 

THIS JUNIOR MEZZANINE LOAN AGREEMENT, dated as of June 13, 2018 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, this
“Agreement”), between BANK OF AMERICA, N.A., a national banking association,
having an address at 214 North Tryon Street, NC1-027-15-01, Charlotte, North
Carolina 28255 (“BofA”), BARCLAYS BANK PLC, a public company registered in
England and Wales, having an address at 745 Seventh Avenue, New York, New York
10019 (“Barclays”) and MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York
limited liability company, having an address at 1585 Broadway, New York, New
York 10036 (“MS”; and together with BofA and Barclays, and each of their
respective successors and/or assigns, “Lender”) and ASHFORD JUNIOR C LLC, a
Delaware limited liability company, having an address c/o Ashford Hospitality
Trust, 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254 (together with its
successors and/or assigns, “Borrower”).

 

RECITALS:

 

WHEREAS, Borrower desires to obtain the Loan from Lender.

 

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents.

 

NOW, THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:

 

ARTICLE 1
DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1            Definitions

 

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

 

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

 

“Acceptable Counterparty” shall mean (a) a bank or other financial institution
which has (i) a long term senior unsecured debt rating of “A1” or higher by
Moody’s; and (ii) a long-term senior unsecured debt rating of “A+” or higher by
S&P; (b) a counterparty to the Interest Rate Cap Agreement whose obligations
thereunder are guaranteed by a bank or financial institution meeting the
requirements set forth in clause (a) above; or (c) a counterparty to the
Interest Rate Cap Agreement that is the subject of a Rating Agency Confirmation.

 

“Acceptable DE LLC” shall have the meaning set forth in Section 6.1 hereof.

 

“Act” shall mean Chapter 18 of Title 6 of the Delaware Code, as amended from
time to time, and any successor statute or statutes.

 

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“Additional Permitted Transfer” shall mean each of the following:

 

(a)           Permitted Encumbrances;

 

(b)           the Transfer, issuance, conversion or redemption of stock,
membership interests and/or partnership interests in a Parent Entity or, after a
Advised Entity Transfer, a comparable parent level entity;

 

(c)           the disposal or transfer of worn out or obsolete Personal
Property;

 

(d)           an Advised Entity Transfer;

 

(e)           a foreclosure of the Mortgage Loan or a deed in lieu of
foreclosure of the Mortgage Loan;

 

(f)            a foreclosure of the Senior Mezzanine Loan or an assignment in
lieu of foreclosure of the Senior Mezzanine Loan;

 

(g)           upon not less than thirty (30) days prior written notice to
Lender, a pledge of stock, membership interests and/or partnership interests in
a Parent Entity or, after a Advised Entity Transfer, a comparable parent level
entity, to an institutional lender of the indirect ownership interest in
Borrower, provided that such pledge is pursuant to a corporate credit facility
made to such pledgor (or its Affiliate) which secures all or substantially all
of the assets of such pledgor (or such Affiliate) (provided that, in no event
shall the Property constitute more than twenty  percent (20%) of the value of
all property secured, directly or indirectly, by such credit facility) and the
repayment of the debt which such pledge secures is not tied solely to the cash
flow from one or more Individual Property. For purposes of this definition,
Affiliate shall only include Persons that have a direct and/or indirect
ownership interest in Borrower; and

 

(h)           the merger of EC Tenant Corp. into Ashford TRS Corporation.

 

“Advised Entity Guarantor” shall have the meaning set forth in Section 7.6
hereof.

 

“Advised Entity Transfer” shall mean, subject to Section 7.6 hereof, the
transfer (but not pledge) of all or a portion of the indirect equity interests
in Borrower and Ashford Keys Junior Operating Lessee to a Publicly Traded
Company or a public or private REIT (or an Affiliate thereof which directly owns
substantially all of the assets of such Publicly Traded Company or public or
private REIT, as applicable, and is Controlled by such Publicly Traded Company
or public or private REIT, as applicable) that is externally advised by
Ashford, Inc. or its Affiliates; provided that if a transfer is made to a
private REIT (or an Affiliate thereof which directly owns substantially all of
the assets of such private REIT), immediately following such transfer and at all
times during the remaining term of the Loan or until becoming a public REIT, not
less than fifty-one percent (51%) of the direct or indirect equity interests in,
and Control of, Borrower shall be owned by Qualified Investors.

 

“Affiliate” shall mean, as to any Person, any other Person that (i) owns
directly or indirectly forty percent (40%) or more of all equity interests in
such Person, and/or (ii) is in Control of, is Controlled by or is under common
Control with such Person.

 

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“Affiliated Manager” shall mean any property manager that is, directly or
indirectly, in Control of, Controlled by, or under common Control with Borrower,
Operating Lessee, Ashford Keys Junior Operating Lessee, Guarantor, any SPE
Component Entity, Mortgage Borrower, Senior Mezzanine Borrower or any Affiliate
of any of the foregoing.

 

“Agreements” shall have the meaning set forth in the Mortgage.

 

“Allocated Loan Amount” shall mean, for each Individual Property, the amount set
forth on Schedule II hereto, as such amount may be reduced from time to time in
accordance with this Agreement.

 

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

 

“Alteration Threshold” means, with respect to each Individual Property, five
percent (5%) of the original Allocated Loan Amount (as defined in the Mortgage
Loan Agreement) of such Individual Property.

 

“Alternate Index” shall mean a published floating rate index (a) that is
commonly accepted by market participants in CMBS loans as an alternative to
LIBOR and (b) that is publicly recognized by ISDA as an alternative to LIBOR.

 

“Alternate Rate” shall mean, with respect to each Interest Accrual Period, the
per annum rate of interest of the Alternate Index, determined as of the
Determination Date immediately preceding the commencement of such Interest
Accrual Period.

 

“Alternate Rate Interest Rate” shall mean a per annum rate of interest equal to
the Alternate Rate plus the Alternate Rate Spread.

 

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

 

“Alternate Rate Spread” shall mean, in connection with any conversion of the
Loan from a LIBOR Rate Loan or a Base Rate Loan to an Alternate Rate Loan, the
difference (expressed as the number of basis points) between (a) LIBOR plus the
LIBOR Margin as of the Determination Date for which LIBOR was last available and
(b) the Alternate Rate as of such Determination Date; provided, however, that if
such difference is a negative number, then the Alternate Rate Spread shall be
zero.

 

“Annual Budget” shall mean the operating budget for the applicable fiscal year
of Mortgage Borrower detailing on a monthly basis, consistent with the manner in
which Mortgage Borrower’s operating statements are presented, projected cash
flow for such fiscal year and all planned capital expenditures for each
Individual Property, delivered in accordance with the Mortgage Loan Agreement.

 

“Applicable Contribution” shall have the meaning set forth in Section 20.12
hereof.

 

“Approved Bank” shall mean a bank or other financial institution (a) if a
Securitization has occurred, (i) with respect to which Lender shall have
received a Rating Agency Confirmation,

 

3

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or (ii) the long term unsecured debt obligations of which are rated at least “A”
(or its equivalent) by each of the Rating Agencies, or (b) if a Securitization
has not occurred, that is reasonably acceptable to Lender.

 

“Ashford” shall mean Ashford Hospitality Limited Partnership.

 

“Ashford Keys Junior Operating Lessee” shall mean each of the parties set forth
on Schedule XV attached hereto.

 

“Ashford Keys Junior Operating Lessee Principal” shall have the meaning ascribed
to the term “Operating Lessee Principal” in the Junior Mezzanine Operating Lease
Agreement.

 

“Ashford Keys Senior Operating Lessee” shall mean each of the parties set forth
on Schedule XIII attached hereto.

 

“Assignment of Management Agreement” shall mean, (a) with respect to each
Individual Property that is subject to a Management Agreement with Remington,
that certain Junior Mezzanine Subordination of Management Agreement and Consent
of Manager dated the date hereof among Lender, Borrower, the applicable Mortgage
Borrower, Operating Lessee and Remington, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time, and (b) with
respect to each Individual Property that is subject to a Management Agreement
with a Brand Manager, each subordination, non-disturbance and attornment
agreement for such Individual Property dated the date hereof among Lender,
Borrower, the applicable Mortgage Borrower, Operating Lessee and applicable
Brand Manager, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

 

“Assumed Debt Service” shall mean the aggregate amount of Debt Service which
would be due for the twelve (12) months immediately following the date of
determination assuming the maximum principal amount of the Loan is outstanding
and assuming an interest rate for the Loan equal to, as applicable (a) if the
Loan is a LIBOR Rate Loan, the applicable  LIBOR Margin plus LIBOR at the time
of determination, (b) if the Loan is an Alternate Rate Loan, the applicable
Alternate Rate Spread plus the Alternate Rate at the time of determination or
(c) if the Loan is a Base Rate Loan, the applicable Base Rate Spread plus the
Base Rate at the time of determination.

 

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

 

“Bail-In Action” shall have the meaning set forth in Section 20.13 hereof.

 

“Bail-In Legislation” shall have the meaning set forth in Section 20.13 hereof.

 

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled
“Bankruptcy”, as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
and any comparable foreign laws relating to bankruptcy, insolvency or creditors’
rights.

 

“Barclays” shall have the meaning set forth in the Preamble.

 

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“Base Rate” shall mean, with respect to each Interest Accrual Period, the
greater of (a) the Prime Rate and (b) the Federal Funds Rate, plus one half of
one percent (0.50%), determined as of the Determination Date immediately
preceding the commencement of such Interest Accrual Period.

 

“Base Rate Interest Rate” shall mean a per annum rate of interest equal to the
Base Rate plus the Base Rate Spread.

 

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

 

“Base Rate Spread” shall mean the difference (expressed as the number of basis
points) between (a) LIBOR plus the LIBOR Margin determined as of the
Determination Date for which LIBOR was last available and (b) the Base Rate as
of such Determination Date; provided, however, that if such difference is a
negative number, then the Base Rate Spread shall be zero.

 

“Benefit Amount” shall have the meaning set forth in Section 20.12 hereof.

 

“BofA” shall have the meaning set forth in the Preamble.

 

“Borrower” shall have the meaning set forth in the Preamble.

 

“Brand Manager” shall mean a management company which is an Affiliate of, and
manages a brand owned by, a Qualified Brand.

 

“Breakage Costs” shall have the meaning set forth in Section 2.5(g)(iv) hereof.

 

“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which national banks in New York, New York or the place of business of the
trustee under a Securitization (or, if no Securitization has occurred, Lender),
or any servicer of the Loan or the financial institution that maintains any
collection account for or on behalf of any servicer of the Loan or any Mortgage
Loan Reserve Funds or the New York Stock Exchange or the Federal Reserve Bank of
New York is not open for business, except that when used with respect to the
determination of LIBOR, “Business Day” shall be a day on which commercial banks
are open for international business (including dealings in U.S. Dollar deposits)
in London, England.

 

“By-Laws” shall mean, with respect to each Condominium, those certain by-laws
attached to the Declaration providing for the operation of such Condominium, as
the same may be amended, supplemented, replaced or otherwise modified from time
to time.

 

“Capital Expenditures” shall mean, with respect to any period of time, amounts
expended for items capitalized under GAAP and the Uniform System of Accounts
(including expenditures for building improvements or major repairs, leasing
commissions and tenant improvements).

 

“Cash Management Account” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

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“Cash Management Agreement” shall mean that certain Cash Management Agreement
dated as of the date hereof among Mortgage Borrower, Mortgage Lender and Cash
Management Bank, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

 

“Cash Management Bank” shall mean Wells Fargo Bank, N.A. or any successor
Eligible Institution approved or appointed by Mortgage Lender pursuant to the
terms of the Cash Management Agreement.

 

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

 

“Clearing Account” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Clearing Account Agreement” shall mean that certain agreement relating to
clearing account services by and among Mortgage Borrower, Lender and Clearing
Account Bank, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time, relating to the operation and maintenance
of, and application of funds in, the Clearing Account.

 

“Clearing Account Bank” shall mean any Eligible Institution approved or
appointed by Mortgage Lender acting as clearing account bank under the Clearing
Account Agreement.

 

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

 

“Collateral” shall mean (i) the Collateral, as defined in the Pledge Agreement,
and (ii) all other collateral for the Loan granted in the Loan Documents.

 

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

 

“Common Charges” shall mean all fees, dues, charges and assessments, whether
annual, monthly, regular, special or otherwise imposed pursuant to the
Condominium Documents.

 

“Common Elements” shall mean, with respect to each Condominium, the common
elements of such Condominium, as described in the applicable Declaration.

 

“Company” shall have the meaning set forth in Section 6.1(b)(ii) hereof.

 

“Compensating Interest” shall mean, with respect to any payment or prepayment,
(a) if made on a Payment Date, a sum equal to the amount of interest on the
principal amount of the Loan paid or prepaid calculated through the end of the
Interest Accrual Period in which such payment or prepayment occurs, and (b) if
made on a day other than a Payment Date, a sum equal to the amount of interest
on the principal amount of the Loan paid or prepaid which would have accrued
under this Agreement through the end of the Interest Accrual Period
corresponding to the next Payment Date.  With respect to any payment or
prepayment under clause (b) above that occurs after a Payment Date but prior to
the Determination Date immediately following such Payment Date, the amount of
interest determined under clause (b) shall be based on the Interest Rate

 

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applicable to the Interest Accrual Period corresponding to such Payment Date,
provided that, once the Interest Rate applicable to the next Interest Accrual
Period can be determined, Lender shall calculate the actual amount of interest
required to be paid by Borrower in connection with such payment or prepayment,
and (x) if such amount exceeds the amount actually paid by Borrower, then
Borrower shall promptly pay to Lender (not later than two (2) Business Days
after receipt of written demand) such excess amount, or (y) if such amount is
less than the amount actually paid by Borrower, then Lender shall promptly
return such excess to Borrower.

 

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

 

“Condominium” shall mean, individually and collectively, as the context may
require, each condominium regime described on Schedule XVIII attached hereto and
made a part hereof (as such Schedule may be amended from time to time upon the
release of an Individual Property).

 

“Condominium Act” shall mean, with respect to each Condominium, the applicable
local, state and federal laws, rules and regulations which effect the
establishment and maintenance of condominiums in the applicable State where such
Condominium is located, as the same may be amended from time to time.

 

“Condominium Board” shall mean, with respect to each Condominium, the “Board”,
the “Board of Directors” or the “Condominium Board” (as described in the
Declaration) managing such Condominium by virtue of the Condominium Act and the
Condominium Documents on behalf of all the owners of the Units comprising the
applicable Condominium.

 

“Condominium Board Policy” shall have the meaning set forth in Section 8.1.

 

“Condominium Proxy” shall mean, with respect to each Condominium, an irrevocable
proxy given by Borrower to Lender substantially in the form attached hereto as
Exhibit F.

 

“Condominium Documents” shall mean, with respect to each Condominium,
collectively, the Declaration, the By-Laws and any other agreements or documents
relating to the establishment, ownership, membership, management, use or
operation of such Condominium.

 

“Connection Income Taxes” shall mean Other Connection Taxes that are imposed on
or measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

 

“Consequential Loss” shall have the meaning set forth in
Section 2.5(g)(i) hereof.

 

“Contribution” shall have the meaning set forth in Section 20.12 hereof.

 

“Control” shall mean, with respect to any 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 the ownership of voting securities or
other beneficial interests, by contract or otherwise,

 

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and Control shall not be deemed absent solely because another Person shall have
veto power with respect to major decisions.  The terms “Controlled” and
“Controlling” shall have correlative meanings.

 

“controlling persons” shall have the meaning set forth in Section 17.6 hereof.

 

“Converted Interest Rate Protection Agreement” shall have the meaning set forth
in Section 5.24(f) hereof.

 

“Covered Rating Agency Information” shall have the meaning specified in
Section 13.5(f) hereof.

 

“Creditors’ Rights Laws” shall mean with respect to any Person any existing or
future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, conservatorship, arrangement, adjustment, winding
up, liquidation, dissolution, assignment for the benefit of creditors,
composition or other relief with respect to its debts or debtors.

 

“DBRS” shall mean DBRS, Inc., and its successors in interest.

 

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

 

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

 

“Debt Service Coverage Ratio” shall mean, as of any date of determination, the
ratio, as determined by Lender, of (i) Underwritten Net Cash Flow to
(ii) Assumed Debt Service.

 

“Debt Yield” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“Declaration” shall mean, with respect to each Condominium, the applicable
condominium declaration described on Schedule XVIII attached hereto and made a
part hereof (as such Schedule may be amended from time to time upon the release
of an Individual Property), as the same may be amended, restated, replaced,
supplemented or otherwise modified in accordance with the terms of this
Agreement.

 

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

 

“Default Rate” shall mean the lesser of (i) the Maximum Legal Rate, or (ii) four
percent (4%) above the Interest Rate.

 

“Determination Date” shall mean, with respect to any Interest Accrual Period,
the date that is two (2) Business Days prior to the beginning of such Interest
Accrual Period.

 

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“Distributions” shall have the meaning set forth in Section 5.39 hereof.

 

“EEA Financial Institution” shall have the meaning set forth in Section 20.13
hereof.

 

“EEA Member Country” shall have the meaning set forth in Section 20.13 hereof.

 

“EEA Resolution Authority” shall have the meaning set forth in Section 20.13
hereof.

 

“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution that is an account or accounts maintained
with a federal or state chartered depository institution or trust company which
complies with the definition of Eligible Institution. An Eligible Account shall
not be evidenced by a certificate of deposit, passbook or other instrument.

 

“Eligible Institution” shall mean (i)  a depository institution or trust company
insured by the Federal Deposit Insurance Corporation (a) the short term
unsecured debt obligations, commercial paper or other short term deposits of
which are rated at least “A 1” by S&P, “P 1” by Moody’s and “F 1” by Fitch and
“R-1 (middle)” by DBRS, in the case of accounts in which funds are held for
thirty (30) days or less, or (b) the long term unsecured debt obligations of
which are rated at least “AA” by S&P (or “A-” if the short term unsecured debt
obligations are rated at least “A-1” by S&P), “A2” by Moody’s, and “AA+” by
Fitch (or “A-” if the short term unsecured debt obligations are rated at least
“F-1” by Fitch) and “AA” by DBRS, in the case of accounts in which funds are
held for more than thirty (30) days; provided that, after a Securitization only
the foregoing ratings requirements of each Rating Agency rating such
Securitization shall apply, or (ii) an institution for which a Rating Agency
Confirmation has been obtained.

 

“Embargoed Person” shall mean any Person identified by OFAC or any other Person
with whom a Person resident in the United States of America may not conduct
business or transactions by prohibition of federal law or Executive Order of the
President of the United States of America.

 

“Environmental Indemnity” shall mean that certain Junior Mezzanine Environmental
Indemnity Agreement, dated as of the date hereof, executed by Borrower and
Guarantor in connection with the Loan for the benefit of Lender, as the same may
be amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

“Environmental Report” shall mean, with respect to each Individual Property,
those certain reports listed on Schedule VIII attached hereto and made a part
hereof.

 

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

 

“EU Bail-In Legislation Schedule” shall have the meaning set forth in
Section 20.13 hereof.

 

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

 

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

 

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“Exchange Act Filing” shall have the meaning set forth in Section 13.6 hereof.

 

“Excluded Taxes” shall mean any of the following Taxes imposed on or with
respect to Lender or required to be withheld or deducted from a payment to
Lender, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of Lender being organized under the laws of, or having its principal office or
applicable lending office located in, the jurisdiction imposing such Tax (or any
political subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S.
federal withholding Taxes imposed on amounts payable to or for the account of
Lender with respect to an applicable interest in the Loan pursuant to a law in
effect on the date on which (i) Lender acquires such interest in the Loan or
(ii) Lender changes its lending office, except in each case to the extent that,
pursuant to Section 2.7, amounts with respect to such Taxes were payable either
to Lender’s assignor immediately before Lender became a party hereto or to such
Lender immediately before it changed its lending office, (c) Taxes attributable
to Lender’s failure to comply with Section 2.7(e) and (d) any U.S. federal
withholding Taxes imposed under FATCA.

 

“Exculpated Parties” shall have the meaning set forth in Section 15.1(a) hereof.

 

“Extended Maturity Date” shall have the meaning set forth in
Section 2.5(c) hereof.

 

“Extension Option” shall have the meaning set forth in Section 2.5(c) hereof.

 

“Extension Term” shall have the meaning set forth in Section 2.5(c) hereof.

 

“Extension Term LIBOR Cap Strike Rate” shall mean a per annum rate of interest
which, when added to the LIBOR Margin, the Alternate Rate Spread or the Base
Rate Spread, as applicable, then in effect, would result in a Debt Service
Coverage Ratio of not less than 1.25:1.00.

 

“FATCA” shall mean Sections 1471 through 1474 of the Internal Revenue Code, as
of the date of this Agreement (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with), any
current or future regulations or official interpretations thereof and any
agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue
Code.

 

“Federal Funds Rate” means, for any day, the rate calculated by the Federal
Reserve Bank of New York based on such day’s federal funds transactions by
depository institutions (as determined in such manner as the Federal Reserve
Bank of New York shall set forth on its public website from time to time) and
published on the next succeeding Business Day by the Federal Reserve Bank of New
York as the federal funds effective rate.

 

“Fee Estate” shall mean, with respect to an applicable Ground Lease, the fee
interest of the lessor under such Ground Lease in the real property and the
improvements demised under such Ground Lease.

 

“Fee Owner” shall mean, with respect to an applicable Ground Lease, the owner of
the lessor’s interest in such Ground Lease and the applicable Fee Estate.

 

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“FF&E” shall mean all furniture, fixtures, equipment and personal property
located on or used in connection with the operation of the hotel at each
Individual Property.

 

“Fitch” shall mean Fitch Ratings, Inc., and its successors in interest.

 

“Foreign Lender” shall mean (a) if Borrower is a U.S. Person, a Lender that is
not a U.S. Person, and (b) if Borrower is not a U.S. Person, a Lender that is
resident or organized under the laws of a jurisdiction other than that in which
Borrower is resident for tax purposes.

 

“Fort Worth Fee Interest” shall have the meaning set forth in Section 7.7
hereof.

 

“Fort Worth Fee Interest Acquisition” shall have the meaning set forth in
Section 7.7 hereof.

 

“Fort Worth Fee Interest Acquisition Documents” shall have the meaning set forth
in Section 7.7 hereof.

 

“Fort Worth Mortgage Borrower” shall have the meaning set forth in Section 5.44
hereof.

 

“Fort Worth Property” shall mean the Fort Worth Property as shown on Schedule II
attached hereto.

 

“Fort Worth Skybridge Agreement” shall have the meaning set forth in
Section 5.44 hereof.

 

“Franchise Agreement” shall mean those certain Franchise Agreements between
Mortgage Borrower and/or Operating Lessee and Franchisor as further described on
Schedule III attached hereto, as the same may be amended or modified from time
to time in accordance with the terms and provisions of this Agreement, or, if
the context requires, the Replacement Franchise Agreement executed in accordance
with the terms and provisions of this Agreement.

 

“Franchisor” shall mean the franchisors as further described on Schedule III
attached hereto, or, if the context requires, a Qualified Franchisor.

 

“Free Prepayment Amount” shall have the meaning set forth in Section 2.9 hereof.

 

“Funding Borrower” shall have the meaning set forth in Section 20.12 hereof.

 

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

 

“Gross Revenues” shall mean, with respect to any period of time, all revenues
and receipts of every kind derived from the management and operation of the
Properties from whatever source, computed in accordance with the Uniform System
of Accounts and reconciled in accordance with GAAP, including without
limitation, all income and proceeds received from rental of rooms, Leases and
commercial space, meeting, conference and/or banquet space within the Properties
including net parking revenue, all income and proceeds received from food and
beverage

 

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operations and from catering services conducted from the Properties even though
rendered outside of the Properties, all income and proceeds from business
interruption, rental interruption and use and occupancy insurance with respect
to the operation of the Properties (after deducting therefrom all necessary
costs and expenses incurred in the adjustment or collection thereof), all Awards
for temporary use (after deducting therefrom all costs incurred in the
adjustment or collection thereof and in Restoration of the Properties), all
income and proceeds from judgments, settlements and other resolutions of
disputes with respect to the foregoing matters which would be includable in this
definition of “Gross Revenue” if received in the ordinary course of the
operation of the Properties (after deducting therefrom all necessary costs and
expenses incurred in the adjustment or collection thereof), and interest on
credit accounts, rent concessions or credits, and other required pass-throughs
and interest on Mortgage Loan Reserve Funds or any reserves required pursuant to
the terms of this Agreement, but specifically excluding gross receipts received
by lessees, licensees or concessionaires of the Properties, consideration
received at the Properties for hotel accommodations, goods and services to be
provided at other hotels, although arranged by, for or on behalf of Mortgage
Borrower or Manager, income and proceeds from the sale or other disposition of
goods, capital assets and other items not in the ordinary course of the
operation of the Properties, federal, state and municipal excise, sales and use
taxes collected directly from patrons or guests of the Properties as a part of
or based on the sales price of any goods, services or other items, such as gross
receipts, room, admission, cabaret or equivalent taxes, refunds of amounts not
included in Operating Expenses at any time and uncollectible accounts,
gratuities collected by employees at the Properties, the proceeds of any
financing, other income or proceeds resulting other than from the use or
occupancy of the Properties or any part thereof, or other than from the sale of
goods, services or other items sold on or provided from the Properties in the
ordinary course of business, and any credits or refunds made to customers,
guests or patrons in the form of allowances or adjustments to previously
recorded revenues.

 

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

 

“Ground Lease” shall mean, individually and collectively, as the context may
require, each ground lease described on Schedule XIX attached hereto and made a
part hereof, as the same may be amended, restated, replaced, supplemented or
otherwise modified in accordance with the terms of this Agreement.

 

“Ground Rent” shall have the meaning set forth in Section 9.8 of the Mortgage
Loan Agreement.

 

“Guarantor” shall mean Ashford or, if the context requires, any replacement
and/or additional guarantor in accordance with the terms hereof, including,
without limitation, an Advised Entity Guarantor.

 

“Guaranty” shall mean that certain Junior Mezzanine Guaranty Agreement, dated as
of the date hereof, executed by Guarantor in connection with the Loan for the
benefit of Lender, as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time.

 

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“Hilton” shall mean Hilton Worldwide Holdings Inc.

 

“Hotel Ground Lease” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Hotel Unit Board Members” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Improvements” shall have the meaning set forth in the granting clause of the
related Mortgage with respect to each Individual Property.

 

“Indebtedness” shall mean, for any Person, without duplication:  (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, except if
the partnership, operating or similar agreement provides that the same is waived
to the extent such Person lacks funds to pay the same, (iv) all indebtedness
guaranteed by such Person, directly or indirectly, (v) all obligations under
leases that constitute capital leases for which such Person is liable, (vi) all
obligations of such Person under interest rate swaps, caps, floors, collars and
other interest hedge agreements, in each case whether such Person is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of
which obligations such Person otherwise assures a creditor against loss,
(vii) any property-assessed clean energy loans or similar indebtedness,
including, without limitation, if such loans or indebtedness are made or
otherwise provided by any Governmental Authority and/or secured or repaid
(directly or indirectly) by any taxes or similar assessments (a “Pace
Transaction”) and (viii) any other amounts substantially similar to those listed
in clauses (i) through (vii) above.

 

“Indemnified Parties” shall mean (i) Lender, (ii) any prior owner or holder of
the Loan or any portion thereof or Participations in the Loan, (iii) any
servicer, sub-servicer or prior servicer or sub-servicer of the Loan, (iv) any
Investor or any prior Investor in any Securities, (v) any trustees, custodians
or other fiduciaries who hold or who have held a full or partial interest in the
Loan for the benefit of any Investor or other third party, (vi) any receiver or
other fiduciary appointed in a foreclosure or other enforcement action or other
Creditors Rights Laws proceeding, (vii) any officers, directors, partners,
members, employees, agents, servants, representatives, affiliates or
subsidiaries of any and all of the foregoing, and (viii) the heirs, legal
representatives, successors and assigns of any and all of the foregoing
(including, without limitation, any successors by merger, consolidation or
acquisition of all or a substantial portion of the Indemnified Parties’ assets
and business), in all cases whether during the term of the Loan or as part of or
following a foreclosure or assignment in lieu of the Pledge Agreement.

 

“Indemnified Taxes” shall mean (a) Taxes, other than Excluded Taxes, imposed on
or with respect to any payment made by or on account of any obligation of
Borrower under any Loan Document and (b) to the extent not otherwise described
in (a), Other Taxes.

 

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“Independent Director” of any limited liability company shall mean an individual
with at least three (3) years of employment experience serving as an independent
director at the time of appointment who is provided by, and is in good standing
with, CT Corporation, Corporation Service Company, National Registered
Agents, Inc., Wilmington Trust Company, Stewart Management Company, Global
Securitization Services, LLC, Lord Securities Corporation or, if none of those
companies is then providing professional independent directors or managers or,
after a Securitization all of those Companies are not acceptable to the Rating
Agencies, another nationally recognized company reasonably approved by Lender
and if required by Lender after a Securitization, the Rating Agencies, in each
case that is not an Affiliate of such limited liability company and that
provides professional independent directors or managers and other corporate
services in the ordinary course of its business, and which individual is duly
appointed as a member of the board of directors or board of managers of such
limited liability company and is not, and has never been, and will not while
serving as independent director or manager be:

 

(i)            a member (other than an independent, non-economic “springing”
member), partner, equityholder, manager, director, officer or employee of such
limited liability company, or any of its respective equityholders or Affiliates
(other than as an independent director or manager of such limited liability
company or an Affiliate of such limited liability company that is not in the
direct chain of ownership of such limited liability company and that is required
by a creditor to be a single purpose bankruptcy remote entity, provided that
such independent director or manager is employed by a company that routinely
provides professional independent directors or managers in the ordinary course
of business);

 

(ii)           a customer, creditor, supplier or service provider (including
provider of professional services) to such limited liability company or any of
its respective equityholders or Affiliates (other than a nationally recognized
company that routinely provides professional independent directors or managers
and other corporate services to such limited liability company or any of its
respective equityholders or Affiliates in the ordinary course of business);

 

(iii)          a family member of any such member, partner, equityholder,
manager, director, officer, employee, creditor, supplier or service provider; or

 

(iv)          a Person that Controls or is under common Control with (whether
directly, indirectly or otherwise) any of the Persons referred to in clauses
(i), (ii) or (iii) above.

 

A natural person who otherwise satisfies the foregoing definition other than
subparagraph (i) by reason of being the independent director or manager of a
“special purpose entity” in the direct chain of ownership of such limited
liability company shall not be disqualified from serving as an independent
director or manager of such limited liability company, provided that the fees
that such individual earns from serving as independent directors or managers of
such Affiliates in any given year constitute in the aggregate less than five
percent (5%) of such individual’s annual income for that year.  For purposes of
this paragraph, a “special purpose entity” is an entity whose organizational
documents contain restrictions on its activities and impose requirements
intended to preserve such entity’s separateness that are substantially similar
to those contained in Section 6.1 hereof.  Notwithstanding anything in this
Agreement to the contrary, at no time shall any Independent Director of Borrower
or Ashford Keys Junior Operating Lessee also be (i) an Independent Director (as
such term is defined herein and in the Mortgage Loan Agreement) of the

 

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Mortgage Borrower or the Operating Lessee, or (ii) an Independent Director (as
such term is defined herein and in the Senior Mezzanine Loan Agreement) of the
Senior Mezzanine Borrower or Ashford Keys Senior Operating Lessee (as such term
is defined in the Senior Mezzanine Loan Agreement).

 

“Independent Director Event” shall mean, with respect to an Independent
Director, (i) any acts or omissions by such Independent Director that constitute
willful disregard of such Independent Director’s duties under the applicable
organizational documents, (ii) such Independent Director engaging in or being
charged with, or being convicted of, fraud or other acts constituting a crime
under any law applicable to such Independent Director, (iii) such Independent
Director is unable to perform his or her duties as Independent Director due to
death, disability or incapacity, or (iv) such Independent Director no longer
meeting the definition of Independent Director in this Agreement.

 

“Individual Property” shall mean each parcel of real property, the Improvements
thereon and all Personal Property owned by Mortgage Borrower and encumbered by a
Mortgage, together with all rights pertaining to such Property and Improvements,
as more particularly described in each Mortgage and referred to therein as the
“Property”.

 

“Initial Maturity Date” shall mean the Payment Date occurring in June, 2020.

 

“Insurance Premiums” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Insurance Proceeds” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Interest Accrual Period” shall mean with respect to any Payment Date, the
period beginning on and including the Selected Day in the month preceding the
month in which such Payment Date occurs and ending on but excluding the Selected
Day in the month in which such Payment Date occurs; provided, however, that
(x) if Lender has elected pursuant to Section 2.4(e)(i) to change the Selected
Day in connection with a Securitization to a day that is earlier in the month
than the Selected Day as previously defined, then the Interest Accrual Period
applicable to the first Payment Date after the Securitization Closing Date will
begin on and include the Selected Day (as changed)  in the month preceding the
month in which such Payment Date occurs and end on but exclude the Selected Day
(as changed) in the month in which such Payment Date occurs and (y) if Lender
has elected to change the Selected Day in connection with a Securitization to a
day that is later in the month than the Selected Day as previously defined, then
the Interest Accrual Period applicable to the first Payment Date after the
Securitization Closing Date will begin on and include the Selected Day (as
defined prior to such change) in the month preceding the month in which such
Payment Date occurs and end on but exclude the Selected Day (as changed) in the
month in which such Payment Date occurs.  Notwithstanding the foregoing, if
Lender so elects pursuant to Section 2.4(e)(i), the “Interest Accrual Period”
with respect to the first Payment Date after the Securitization Closing Date and
each Payment Date thereafter shall be the calendar month preceding such Payment
Date.

 

“Interest Rate” shall mean (a) with respect to the Interim Interest Accrual
Period, an interest rate per annum equal to 10.5474%; and (b) with respect to
each Interest Accrual Period thereafter, through and including the Interest
Accrual Period during which the Maturity Date or

 

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Extended Maturity Date, as applicable, occurs, an interest rate per annum equal
to (i) the LIBOR Rate (in all cases where clauses (ii) or (iii) below do not
apply),  (ii) the Base Rate Interest Rate, to the extent provided in accordance
with the provisions of Section 2.4(b) hereof, or (iii) the Alternate Rate
Interest Rate, to the extent provided in accordance with the provisions of
Section 2.4(g) hereof.

 

“Interest Rate Cap Agreement” shall mean an agreement in form and substance
reasonably satisfactory to Lender (together with the confirmation and schedules
relating thereto), dated on or about the date hereof, between an Acceptable
Counterparty and Borrower, obtained by Borrower and collaterally assigned to
Lender pursuant to the Collateral Assignment of Interest Rate Cap Agreement. 
The Interest Rate Cap Agreement shall (a) be governed by the laws of the State
of New York, (b) have at all times a notional amount equal to the then
outstanding principal balance of the Loan, (c) have a term ending on the last
day of the Interest Accrual Period during which the Initial Maturity Date
occurs, and (d) require the interest rate cap provider to make payments on a
Payment Date to or for the benefit of Borrower from time to time equal to the
product of (i) the notional amount of such Interest Rate Cap Agreement and
(ii) the excess, if any, of LIBOR (or in connection with any Converted Interest
Rate Protection Agreement or Substitute Interest Rate Protection Agreement, the
Base Rate or Alternate Rate, as applicable) over the LIBOR Cap Strike Rate. 
Following the delivery of a Replacement Interest Rate Cap Agreement to Lender
pursuant to the terms of this Agreement, the term “Interest Rate Cap Agreement”
shall be deemed to mean such Replacement Interest Rate Cap Agreement.

 

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

 

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

 

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

 

“IRS” shall mean the United States Internal Revenue Service.

 

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

 

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

 

“Junior Mezzanine Loan Subaccount” shall have the meaning set forth in the Cash
Management Agreement.

 

“Junior Mezzanine Operating Lease Agreement” shall mean that certain Junior
Mezzanine Operating Lease Agreement, dated as of the date hereof, executed by
Borrower, Lender, Operating Lessee and the applicable Mortgage Borrower in
connection with the Loan for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

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“Kroll” shall mean Kroll Bond Rating Agency, Inc., and its successors in
interest.

 

“Lead Lender” shall have the meaning set forth in Section 13.1(d) hereof.

 

“Lease” shall have the meaning set forth in the Mortgage with respect to each
Individual Property.

 

“Lease Modification” shall have the meaning set forth in Section 5.13(c) hereof.

 

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

 

“Lender” shall have the meaning set forth in the Preamble.

 

“Letter of Credit” shall mean an irrevocable, auto renewing, unconditional,
transferable, clean sight draft standby letter of credit in form and substance
reasonably acceptable to Lender (i) that is issued by an Approved Bank to
Guarantor or a Person reasonably approved by Lender, (ii) that has an initial
term of not less than one year from the date of issuance and is automatically
renewable for successive one-year periods (unless the obligation being secured
by, or otherwise requiring the delivery of, such letter of credit is required to
be performed at least thirty (30) days prior to the initial expiry date of such
letter of credit), (iii) the reimbursement obligation for which is not payable
by the Borrower and is not secured by the Property or any other property pledged
to secure the Note, (iv) that is in favor of Lender and entitling Lender to draw
thereon in New York, New York, based solely on a statement that Lender has the
right to draw thereon executed by an officer or authorized signatory of Lender,
(v) that permits multiple draws, and (vi) that is transferable from time to time
by Lender and its successors and assigns without the consent of the issuing bank
and without cost or expense to the beneficiary.

 

“LIBOR” shall mean, with respect to each Interest Accrual Period, the rate
(expressed as a percentage per annum and rounded up to the nearest 1/1000th of
1%), which in no event shall be less than zero,for deposits in U.S. dollars for
a one-month period that appears on Reuters Screen LIBOR01 Page (or the successor
thereto) as of 11:00 a.m., London time, on the related Determination Date.  If
such rate does not appear on Reuters Screen LIBOR01 Page as of 11:00 a.m.,
London time, on such Determination Date, LIBOR shall be the arithmetic mean of
the offered rates (expressed as a percentage per annum) for deposits in U.S.
dollars for a one-month period that appear on the Reuters Screen LIBOR01 Page as
of 11:00 a.m., London time, on such Determination Date, if at least two such
offered rates so appear.  If fewer than two such offered rates appear on the
Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on such

 

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Determination Date, Lender shall request the principal London Office of any four
major reference banks in the London interbank market selected by Lender to
provide such bank’s offered quotation (expressed as a percentage per annum) to
prime banks in the London interbank market for deposits in U.S. dollars (with
respect to the period equal or comparable to the applicable Interest Accrual
Period) as of 11:00 a.m., London time, on such Determination Date, of amounts
not less than $1,000,000.  If at least two (2) such offered quotations are so
provided, LIBOR shall be the arithmetic mean of such quotations.  If fewer than
two such quotations are so provided, Lender shall request any three (3) major
banks in New York City selected by Lender to provide such bank’s rate (expressed
as a percentage per annum) for loans in U.S. dollars to leading European banks
for a one-month period as of approximately 11:00 a.m., New York City time on the
applicable Determination Date for amounts not less than $1,000,000.  If at least
two (2) such rates are so provided, LIBOR shall be the arithmetic mean of such
rates.  LIBOR shall be determined conclusively by Lender or its agent.
Notwithstanding anything to the contrary set forth herein, in no event shall
LIBOR ever be less than 0.00%.

 

“LIBOR Cap Strike Rate” shall mean (i) with respect to the Interest Rate Cap
Agreement in place as of the Closing Date, four and thirty-one hundredths
percent (4.31%) per annum and (ii) with respect to any (x) Converted Interest
Rate Protection Agreement, (y) Substitute Interest Rate Protection Agreement, or
(z) Replacement Interest Rate Cap Agreement required in connection with the
exercise of any Extension Option, and subject to Section 5.24(f), the Extension
Term LIBOR Cap Strike Rate.

 

“LIBOR Conversion” shall have the meaning set forth in Section 5.24(f) hereof.

 

“LIBOR Margin” shall mean eight and fifty hundredths percent (8.50%), as the
same may be increased pursuant to Section 2.5(c)(vi) hereof.

 

“LIBOR Rate” shall mean the sum of (i) LIBOR plus (ii) the LIBOR Margin.  The
determination of the LIBOR Rate by Lender shall be binding upon Borrower absent
manifest error.

 

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

 

“Lien” shall mean any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer of,
on or affecting Borrower, Mortgage Borrower, the Collateral, the Senior
Mezzanine Collateral, any Individual Property or any direct or indirect interest
in Borrower, Mortgage Borrower, the Collateral, the Senior Mezzanine Collateral,
the related Individual Property, any portion thereof or any interest therein,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, the filing of any financing statement, and mechanic’s,
materialmen’s and other similar liens and encumbrances.

 

“Liquidation Event” shall mean any event of (i) any Casualty to all or any
portion of any Individual Property, (ii) any Condemnation of all or any portion
of any Individual Property, (iii) a Transfer of any Individual Property in
connection with realization thereon by the Mortgage Lender following a Mortgage
Loan Event of Default, including without limitation a foreclosure sale, (iv) a
Transfer of all or any portion of the Senior Mezzanine Collateral in connection
with realization

 

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thereon by the Senior Mezzanine Lender following a Senior Mezzanine Loan Event
of Default, including without limitation a foreclosure sale or an
assignment-in-lieu of foreclosure, (v) any refinancing of any Individual
Property, the Mortgage Loan or the Senior Mezzanine Loan for which a release of
the applicable Collateral is not obtained pursuant to Section 2.9 hereof, and
(vi) the receipt by Mortgage Borrower of any excess proceeds realized under any
Owner’s Title Policy after application of such proceeds by Mortgage Lender
pursuant to the Mortgage Loan Documents.

 

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

 

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

 

“Loan Bifurcation” shall have the meaning set forth in Section 13.4(f) hereof.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the Pledge
Agreements, the Environmental Indemnity, the Guaranty, the Assignment of
Management Agreement, the Collateral Assignment of Interest Rate Cap Agreement,
the Junior Mezzanine Operating Lease Agreement and any and all other documents,
agreements and certificates executed and/or delivered in connection with the
Loan, as the same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.

 

“Loan Party” shall mean each of Borrower, Senior Mezzanine Borrower, Ashford
Keys Senior Operating Lessee, Ashford Keys Junior Operating Lessee, Guarantor
and Mortgage Borrower.

 

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

 

“Major Lease” shall mean as to each Individual Property, other than any
Operating Lease (i) any Lease which, individually or when aggregated with all
other leases at any Individual Property with the same Tenant or its Affiliate
demises 10,000 square feet or more of such Individual Property’s gross leasable
area, (ii) any Lease which contains any option, offer, right of first refusal or
other similar entitlement to acquire all or any portion of any Individual
Property, (iii) any Lease under which the Tenant is an Affiliate of Mortgage
Borrower or Guarantor or (iv) any instrument guaranteeing or providing credit
support for any Lease meeting the requirements of (i), (ii) or (iii) above.

 

“Management Agreement” shall mean, with respect to each Individual Property, the
property management agreement entered into by and between Mortgage Borrower
and/or Operating Lessee and Manager, as further described on Schedule IV
attached hereto pursuant to which Manager is to provide management and other
services with respect to such Individual Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified in accordance with the
terms of this Agreement, or, if the context requires, a Replacement Management
Agreement executed in accordance with the terms and provisions of this
Agreement.

 

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“Manager” shall mean the manager as further described on Schedule IV attached
hereto, or such other entity selected as the manager of the Properties or any
Individual Property in accordance with the terms of this Agreement.

 

“Marriott” shall mean Marriott International, Inc.

 

“Material Action” shall mean, as to any Person, to file any insolvency, or
reorganization case or proceeding, to institute proceedings to have such Person
be adjudicated bankrupt or insolvent, to institute proceedings under any
applicable insolvency law, to seek any relief under any law relating to relief
from debts or the protection of debtors, to consent to the filing or institution
of bankruptcy or insolvency proceedings against such Person, to file a petition
seeking, or consent to, reorganization or relief with respect to such Person
under any applicable federal or state law relating to bankruptcy or insolvency,
to seek or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian, or any similar official of or for such Person
or a substantial part of its property, to make any assignment for the benefit of
creditors of such Person, to admit in writing such Person’s inability to pay its
debts generally as they become due (unless such admission is true), or to take
action in furtherance of any of the foregoing.

 

“Material Adverse Effect” shall mean a material adverse effect on the value,
current use or operation of the Collateral, the Senior Mezzanine Collateral, any
Individual Property, the business, operations or condition (financial or
otherwise) of Borrower, Mortgage Borrower, Senior Mezzanine Borrower or
Guarantor, the security intended to be provided by the Pledge Agreement, the
current ability of the Properties to generate sufficient cash flow to service
the Loan, the Mortgage Loan and the Senior Mezzanine Loan, Borrower’s, Mortgage
Borrower’s or Senior Mezzanine Borrower’s ability to pay its obligations when
due, or Borrower’s, Mortgage Borrower’s or Senior Mezzanine Borrower’s ability
to perform its obligations under the Loan Documents, the Mortgage Loan Documents
or the Senior Mezzanine Loan Documents, as applicable.

 

“Material Agreements” shall mean any contract and agreement relating to the
ownership, management, development, use, operation, leasing, maintenance, repair
or improvement of the Properties or any Individual Property that provides for
annual payments by Mortgage Borrower, Operating Lessee or any other Loan Party
of $50,000.00 or more unless the same is cancelable without penalty or premium
on no more than thirty (30) days’ notice (other than the Management Agreements,
the Franchise Agreements, the Leases, any beverage services agreement between a
Mortgage Borrower and any entity formed to hold the liquor license applicable to
the related Individual Property and any contract or agreement entered into with
respect to any Individual Property or on the behalf of Borrower, Senior
Mezzanine Borrower and/or Mortgage Borrower by Manager pursuant to the
Management Agreement).

 

“Maturity Date” shall mean the Initial Maturity Date, or if the Initial Maturity
Date has been extended pursuant to Section 2.5(c) hereof, the applicable
Extended Maturity Date, or such other date on which the final payment of the
Debt becomes due and payable, whether at such stated maturity date, by
declaration of acceleration, or otherwise.

 

“Maximum Legal Rate” shall have the meaning set forth in Section 2.4(f) hereof.

 

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

 

“Mezzanine Entities” shall have the meaning set forth in Section 7.4(e) hereof.

 

“Monthly Payment Amount” shall mean, with respect to each Payment Date, a
payment equal to the amount of interest which has accrued during the related
Interest Accrual Period, computed at the Interest Rate.

 

“Moody’s” shall mean Moody’s Investors Service, Inc., and its successors in
interest.

 

“Morningstar” shall mean Morningstar Credit Ratings, LLC, and its successors in
interest.

 

“Mortgage” shall mean, with respect to each Individual Property, that certain
first priority mortgage/deed of trust/deed to secure debt and security
agreement, dated as of the date hereof, executed and delivered by Mortgage
Borrower to Mortgage Lender as security for the Mortgage Loan and encumbering an
Individual Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

“Mortgage Borrower” shall mean each of the parties set forth on Schedule XI
attached hereto.

 

“Mortgage Borrower’s Condominium Unit” shall mean, with respect to each
Condominium, the Unit in such Condominium owned by the applicable individual
Mortgage Borrower.

 

“Mortgage Borrower SPE Component Entity” shall mean any SPE Component Entity of
any Mortgage Borrower.

 

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

 

“Mortgage Default” shall have the meaning ascribed to the term “Default” in the
Mortgage Loan Agreement.

 

“Mortgage Lender” shall mean the owner and holder of the Mortgage Loan.

 

“Mortgage Loan” shall mean that certain loan made by Mortgage Lender to Mortgage
Borrower on the date hereof pursuant to the Mortgage Loan Agreement, as the same
may be amended or split pursuant to the terms of the Mortgage Loan Documents.

 

“Mortgage Loan Agreement” shall mean that certain Loan Agreement dated as of the
date hereof between Mortgage Borrower and Mortgage Lender as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

 

“Mortgage Loan Documents” shall mean all documents or instruments evidencing,
securing or guaranteeing the Mortgage Loan including, without limitation, the
Mortgage Loan Agreement.

 

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“Mortgage Loan Event of Default” shall have the meaning ascribed to the term
“Event of Default” in the Mortgage Loan Agreement.

 

“Mortgage Loan Reserve Accounts” shall mean the Reserve Accounts, as defined in
the Mortgage Loan Agreement.

 

“Mortgage Loan Reserve Funds” shall mean the Reserve Funds, as defined in the
Mortgage Loan Agreement.

 

“Mortgage Note” shall have the meaning ascribed to the term “Note” in the
Mortgage Loan Agreement.

 

“MS” shall have the meaning set forth in the Preamble.

 

“Net Liquidation Proceeds After Debt Service” shall mean, with respect to any
Liquidation Event, all amounts paid to or received by or on behalf of Mortgage
Borrower or Senior Mezzanine Borrower in connection with such Liquidation Event,
including, without limitation, proceeds of any sale, refinancing or other
disposition or liquidation, less (i) in the event of a Liquidation Event
consisting of a Casualty or Condemnation, Lender’s, Mortgage Lender’s and/or
Senior Mezzanine Lender’s reasonable costs incurred in connection with the
recovery thereof, (ii) in the event of a Liquidation Event consisting of a
Casualty or Condemnation, the costs incurred by Mortgage Borrower in connection
with a Restoration of all or any portion of any applicable Individual Property
made in accordance with the Mortgage Loan Documents, (iii) in the event of a
Liquidation Event consisting of a Casualty or Condemnation or a Transfer,
amounts required or permitted to be deducted therefrom and amounts paid pursuant
to the Mortgage Loan Documents to Mortgage Lender and amounts required or
permitted to be deducted therefrom and amounts paid pursuant to the Senior
Mezzanine Loan Documents to Senior Mezzanine Lender (including amounts paid to
Senior Mezzanine Lender under Mortgage Borrower’s Owner’s title insurance
policy), (iv) in the case of a foreclosure sale, disposition or transfer of any
applicable Individual Property in connection with realization thereon following
a Mortgage Loan Event of Default, such reasonable and customary costs and
expenses of sale or other disposition (including attorneys’ fees and brokerage
commissions) incurred by Mortgage Lender, (v) in the case of a foreclosure sale,
such costs and expenses incurred by Mortgage Lender under the Mortgage Loan
Documents as Mortgage Lender shall be entitled to receive reimbursement for
under the terms of the Mortgage Loan Documents, (vi) in the case of a
refinancing of the Mortgage Loan or Senior Mezzanine Loan, such reasonable costs
and expenses (including attorneys’ fees) of such refinancing incurred by
Mortgage Lender or Senior Mezzanine Lender, (vii) the amount of any prepayments
required pursuant to the Mortgage Loan Documents and the Senior Mezzanine Loan
Documents in connection with any such Liquidation Event, (viii) in the case of a
foreclosure sale, disposition or Transfer of any Senior Mezzanine Collateral in
connection with realization thereon following a Senior Mezzanine Loan Event of
Default, such reasonable and customary costs and expenses of sale or other
disposition (including attorneys’ fees and brokerage commissions) incurred by
Senior Mezzanine Lender and (ix) in the case of a foreclosure sale of any Senior
Mezzanine Collateral, such costs and expenses incurred by Senior Mezzanine
Lender under the Senior Mezzanine Loan Documents as Senior Mezzanine Lender
shall be entitled to receive reimbursement for under the terms of the Senior
Mezzanine Loan Documents.

 

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“Net Proceeds” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“Net Proceeds Deficiency” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“New PIP” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“New Mezzanine Loan” shall have the meaning set forth in Section 13.8 hereof.

 

“New Non-Consolidation Opinion” shall mean a bankruptcy non-consolidation
opinion from the counsel to Borrower and Ashford Keys Junior Operating Lessee
that delivered the Non-Consolidation Opinion or other outside counsel to
Borrower and Ashford Keys Junior Operating Lessee reasonably acceptable to
Lender, in form and substance satisfactory to Lender and, after a
Securitization, the Rating Agencies, and which is required to be delivered
subsequent to the Closing Date pursuant to, and in connection with, this
Agreement.

 

“Non-Consolidation Opinion” shall mean that certain bankruptcy non-consolidation
opinion dated the date hereof delivered by Jackson Walker LLP in connection with
the Loan and relating to Borrower and Ashford Keys Junior Operating Lessee.

 

“Note” shall mean individually and collectively as the context may require, Note
A-1, Note A-2, and Note A-3.

 

“Note A-1” shall mean that certain Junior Mezzanine Promissory Note A-1 of even
date herewith in the principal amount of $12,000,000.00, made by Borrower in
favor of MS, as the same may be amended, restated, replaced, severed,
supplemented or otherwise modified from time to time.

 

“Note A-2” shall mean that certain Junior Mezzanine Promissory Note A-2 of even
date herewith in the principal amount of $4,000,000.00, made by Borrower in
favor of Barclays, as the same may be amended, restated, replaced, severed,
supplemented or otherwise modified from time to time.

 

“Note A-3” shall mean that certain Junior Mezzanine Promissory Note A-3 of even
date herewith in the principal amount of $4,000,000.00, made by Borrower in
favor of BofA, as the same may be amended, restated, replaced, severed,
supplemented or otherwise modified from time to time.

 

“O&M Program” shall mean, with respect to the Individual Properties listed on
Schedule XX attached hereto, the asbestos operations and maintenance program
developed by the applicable Mortgage Borrower and approved by Lender, as the
same may be amended, replaced, supplemented or otherwise modified from time to
time.

 

“OFAC” shall have the meaning set forth in Section 4.38 hereof.

 

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

 

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“Operating Expenses” shall mean, with respect to any period of time, the total
of all expenses actually paid or payable in connection with the operation and
management of the Properties, determined in accordance with GAAP and the Uniform
System of Accounts, including without limitation and without duplication,
utilities, routine repairs and maintenance, Insurance Premiums, franchise,
license and royalty fees, Taxes and Other Charges, Ground Rent, advertising
expenses, payroll and related taxes, the cost of inventories and fixed asset
supplies consumed in the operation of the Properties, computer processing
charges, property management fees, costs and fees of independent professionals
(including, without limitation, legal, accounting, consultants and other
professional expenses), technical consultants, operational experts (including
quality assurance inspectors) or other third parties retained to perform
services required or permitted hereunder, operational equipment and other lease
payments as reasonably approved by Lender, but specifically excluding
depreciation or amortization, income taxes or other charges in the nature of
income taxes, Debt Service, Mortgage Debt Service, debt service due on the
Senior Mezzanine Loan, Capital Expenditures, deposits into the Mortgage Loan
Reserve Accounts or any deposits to any reserves required pursuant to the terms
of the Senior Mezzanine Loan Agreement or this Agreement, any expenses
(including legal, accounting and other professional fees, expenses and
disbursements) incurred in connection with the making of the Loan or the sale,
exchange or transfer of all or any portion of the Properties or in connection
with the recovery of Insurance Proceeds or Awards which are applied to prepay
the Note and/or the Mortgage Note, and any item of expense which would otherwise
be considered within Operating Expenses pursuant to the provisions above but is
paid directly by any Tenant.

 

“Operating Lease” shall mean those certain Lease Agreements executed by Mortgage
Borrower, as lessor, and Operating Lessee, as further described on Schedule V
attached hereto, as the same may be amended or modified from time to time in
accordance with the terms and provisions of this Agreement.

 

“Operating Lessee” shall mean, individually or collectively, as the context so
requires, the operating lessees as further described on Schedule V attached
hereto.

 

“Organizational Documents” shall mean (i) with respect to a corporation, such
Person’s certificate of incorporation and bylaws, and any shareholder agreement,
voting trust or similar arrangement applicable to any of such Person’s
authorized shares of capital stock, (ii) with respect to a partnership, such
Person’s certificate of limited partnership, partnership agreement, voting
trusts or similar arrangements applicable to any of its partnership interests,
(iii) with respect to a limited liability company, such Person’s certificate of
formation, limited liability company agreement or other document affecting the
rights of holders of limited liability company interests, and (iv) any and all
agreements between any constituent member, partner or shareholder of the Person
in question, including any contribution arrangement or indemnification
agreements.  In each case, “Organizational Documents” shall include any
indemnity, contribution, shareholders or other agreement among any of the owners
of the entity in question.

 

“Other Charges” shall mean all ground rents (excluding Ground Rent), maintenance
charges, impositions other than Property Taxes, and any other charges,
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining any Individual Property, now or
hereafter levied or assessed or imposed against any Individual Property or any
part thereof, including Mortgage Borrower’s or Operating Lessee’s, as
applicable,

 

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proportionate share of all Common Charges payable with respect to any Individual
Property pursuant to the Condominium Documents.

 

“Other Connection Taxes” shall mean, with respect to Lender, Taxes imposed as a
result of a present or former connection between Lender and the jurisdiction
imposing such Tax (other than connections arising from Lender having executed,
delivered, become a party to, performed its obligations under, received payments
under, received or perfected a security interest under, engaged in any other
transaction pursuant to or enforced any Loan Document, or sold or assigned an
interest in the Loan or any Loan Document).

 

“Other Taxes” shall mean all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment.

 

“Outside Date” shall be the date required to complete a PIP pursuant to the
terms of any applicable Management Agreement (or Replacement Management
Agreement) and/or Franchise Agreement (or Replacement Franchise Agreement), as
such date may be extended by Franchisor or Manager from time to time in
accordance with the terms and provisions of this Agreement.

 

“Owner’s Title Policy” shall mean any ALTA extended coverage owners’ policies of
title insurance issued in connection with the closing of the Mortgage Loan (or,
if no such policy was issued at such time, the then existing owner’s policy of
title insurance) insuring a Mortgage Borrower as the owner of an Individual
Property.

 

“Ownership Interest” means (i) any interest in any Individual Property or
(ii) in the case of any Loan Party, any ownership interest in such Loan Party,
direct or indirect, contingent or fixed, at any level or any tier, of any nature
whatsoever, whether in the form of a partnership interest, stock interest,
membership interest, equitable interest, beneficial interests, profit interest,
loss interest, voting rights, control rights, management rights or otherwise.

 

“PACE Transaction” shall have the meaning ascribed to such term in the
definition of “Indebtedness” above.

 

“Parent Entity” shall mean (i) Ashford Hospitality Trust, Inc., (ii) Ashford OP
General Partner LLC, (iii) Ashford OP Limited Partner LLC, (iv) Ashford
Hospitality Limited Partnership, (v) EC Tenant Corp., and (vi) Ashford TRS
Corporation.

 

“Parking Ground Lease” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Participant Register” shall have the meaning set forth in
Section 13.1(c) hereof.

 

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

 

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“Patriot Act” shall mean 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.

 

“Payment Date” shall mean the ninth (9th) day of each month beginning on July,
2018, and continuing through and including the Maturity Date, and if such date
is not a Business Day, the immediately preceding Business Day, as such Payment
Date may be adjusted pursuant to the terms of Section 2.4(e) hereof.

 

“Permitted Debt” shall mean trade and operational indebtedness incurred in the
ordinary course of business relating to the ownership of the Collateral and the
routine administration of Borrower, provided such indebtedness is (a) unsecured,
(b) not evidenced by a note, (c) on commercially reasonable terms and
conditions, and (d) due not more than sixty (60) days past the date incurred and
paid on or prior to such date; provided, however, the aggregate amount of the
indebtedness shall not exceed at any time $10,000.

 

“Permitted Encumbrances” shall mean, with respect to any Individual Property,
Collateral or Senior Mezzanine Collateral,  collectively, (i) the Lien and
security interests created by the Loan Documents, the Mortgage Loan Documents
and the Senior Mezzanine Loan Documents, (ii) all Liens, encumbrances and other
matters expressly set forth as exceptions in the Title Insurance Policy,
(iii) Liens, if any, for Property Taxes imposed by any Governmental Authority
not yet due or delinquent, (iv) Liens relating to Permitted Transfers,
(v) Ground Leases, Management Agreements, Franchise Agreements and Operating
Leases in accordance with the terms hereof, (vi) Leases and Liens of Tenants,
liens and security interests created by licensees and concessionaires in
accordance with the terms hereof, (vii) Permitted Debt (as defined in this
Agreement, the Mortgage Loan Agreement and the Senior Mezzanine Loan Agreement),
(viii) the Mortgage Loan, (ix) the Senior Mezzanine Loan, (x) Liens that are
being contested in accordance with the terms hereof or in accordance with the
Senior Mezzanine Loan Agreement or the Mortgage Loan Agreement and (xi) such
other encumbrances entered into after the date hereof which (a) do not,
individually or in the aggregate, have a Material Adverse Effect or (b) are
otherwise approved by Lender in Lender’s reasonable discretion.

 

“Permitted Transfer” shall mean those Transfers described in Section 7.3 hereof.

 

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

 

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

 

“PIP” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“PIP Guaranty” shall mean a guaranty given by Guarantor to Lender which guaranty
shall be in the form attached hereto as Exhibit E and shall guaranty to Lender
the payment and performance of any PIP described therein on or prior to the
Outside Date.

 

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“PIP Required Deposit” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“PIP Reserve Account” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“PIP Reserve Deposits” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“PIP Reserve Funds” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Pledge Agreement” shall mean, individually or collectively, as the context so
requires, that certain (i) Junior Mezzanine Pledge and Security Agreement dated
as of the date hereof, executed and delivered by Ashford Junior C LLC to Lender,
(ii) Junior Mezzanine Pledge and Security Agreement dated as of the date hereof,
executed and delivered by Ashford TRS Junior C1 LLC to Lender, and (iii) Junior
Mezzanine Pledge and Security Agreement dated as of the date hereof, executed
and delivered by Ashford TRS Junior C2 LLC to Lender (as each of the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time).

 

“Pledged Entity” shall mean, individually or collectively, as the context so
requires, Senior Mezzanine Borrower, Senior Mezzanine Borrower SPE Component
Entity and Ashford Keys Senior Operating Lessee.

 

“Pledged Interests” shall mean individually or collectively, as the context so
requires, all membership and manager interests in Senior Mezzanine Borrower,
Senior Mezzanine Borrower SPE Component Entity and Ashford Keys Senior Operating
Lessee.

 

“Policies” shall have the meaning set forth in the Mortgage Loan Agreement
together with any and all insurance policies required under Section 8.1 hereof.

 

“Pre-Approved Manager” shall mean (i) Remington and/or (ii) a Brand Manager for
a brand comparable or better than the brand being terminated.

 

“Prescribed Laws” shall mean, collectively, (i) Patriot Act, (ii) Executive
Order No. 13224 on Terrorist Financing, effective September 24, 2001, and
relating to Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism, (iii) the International
Emergency Economic Power Act, 50 U.S.C. § 1701 et seq., and (iv) all other Legal
Requirements relating to money laundering or terrorism.

 

“Prime Rate” shall mean the annual rate of interest published in The Wall Street
Journal from time to time as the “Prime Rate.” If more than one “Prime Rate” is
published in The Wall Street Journal for a day, the average of such “Prime
Rates” shall be used, and such average shall be rounded up to the nearest
1/1000th of one percent (0.001%). If The Wall Street Journal ceases to publish
the “Prime Rate,” Lender shall select an equivalent publication that publishes
such “Prime Rate,” and if such “Prime Rates” are no longer generally published
or are limited, regulated or administered by a governmental or
quasi-governmental body, then Lender shall select a comparable interest rate
index. Notwithstanding the foregoing, in no event shall the Prime Rate be less
than zero percent.

 

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

 

“Properties” shall mean collectively, each and every Individual Property which
is subject to the terms of this Agreement.

 

“Property” shall mean, as the context may require, the Properties or an
Individual Property.

 

“Property Condition Report” shall mean, with respect to each Individual
Property, those certain reports listed on Schedule VII attached hereto and made
a part hereof.

 

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

 

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

 

“Prudent Lender Standard” shall, with respect to any matter, be deemed to have
been met if the matter in question (i) prior to a Securitization, is reasonably
acceptable to Lender and (ii) after a Securitization, (A) if permitted by REMIC
Requirements applicable to such matter, would be reasonably acceptable to Lender
or (B) if the Lender discretion in the foregoing subsection (A) is not permitted
under such applicable REMIC Requirements, would be acceptable to a prudent
lender of securitized commercial mortgage loans.

 

“Publicly Traded Company” shall mean a corporation whose shares of stock are
listed on the New York Stock Exchange or any other nationally recognized stock
exchange.

 

“Qualified Brand” shall mean (i) Marriott, (ii) Hilton, (iii) Hyatt Hotels
Corporation and (iv) Starwood Hotels and Resorts Worldwide.

 

“Qualified Franchisor” shall mean either (i) Franchisor, (ii) if a Franchisor is
not then in place, brand owned by a Qualified Brand, or if a Franchisor is then
in place, brand comparable or better than the brand being terminated and owned
by a Qualified Brand or (iii) a reputable and experienced franchisor possessing
experience in flagging hotel properties similar in size, scope, use and value as
the Properties and which is approved by Lender pursuant to Section 5.25 hereof
and which may, at Lender’s option, be conditioned upon Lender’s receipt of a
Rating Agency Confirmation, provided that, with respect to any Person that is an
Affiliate of Borrower, Lender has received a New Non-Consolidation Opinion.

 

“Qualified Investor” means any of the following, in each case, exclusive of the
Properties and immediately prior to the applicable Transfer:

 

(i)            a pension fund or plan with at least $600,000,000 in real estate
assets, at least $300,000,000 of which are hospitality assets;

 

(ii)           a pension fund plan advisor who controls at least $600,000,000 in
real estate assets, at least $300,000,000 of which are hospitality assets, and
is acting on behalf of a party that satisfies clause (i) above;

 

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(iii)          a U.S. insurance company with a net worth of at least
$300,000,000 that owns and controls at least $600,000,000 in real estate assets,
at least $300,000,000 of which are hospitality assets;

 

(iv)          a U.S. banking corporation, with combined capital and surplus of
at least $300,000,000 that owns and controls at least $600,000,000 in real
estate assets, at least $300,000,000 of which are hospitality assets;

 

(v)           any entity with a long term unsecured debt rating of at least BBB+
by S&P and (if covered by Moody’s) at least Baa1 by Moody’s (and not on negative
watch by either Rating Agency) with combined capital and surplus of at least
$300,000,000 that owns and controls at least $600,000,000 in real estate assets,
at least $300,000,000 of which are hospitality assets; or

 

(vi)          institutional “accredited investor” within the meaning of
Regulation D under the Securities Act of 1933, as amended;

 

provided, however, that in each case in clauses (i) through (v) above, if the
proposed transferee is an individual and will obtain Control of or obtain a
direct or indirect interest of 20% or more in Borrower as a result of such
proposed transfer,  Lender shall have received evidence that such proposed
transferee (i) has never been indicted or convicted of, or plead guilty or no
contest to, a felony, (ii) has never been indicted or convicted of, or pled
guilty or no contest to, a Patriot Act Offense and is not on any Government
List, (iii) has never been the subject of a voluntary or involuntary (to the
extent the same has not been discharged) bankruptcy proceeding and (iv) has no
material outstanding judgments against such proposed transferee.

 

“Qualified Manager” shall mean (i) Manager, (ii) a Pre-Approved Manager or
(iii) a reputable and experienced professional property management organization
that is reasonably approved by Lender pursuant to Section 5.14 hereof, which
may, at Lender’s option, be conditioned upon Lender’s receipt of a Rating Agency
Confirmation, provided that with respect to any Affiliated Manager, Lender has
received a New Non Consolidation Opinion.

 

“Rating Agencies” shall mean each of S&P, Moody’s, Fitch, Morningstar, Kroll and
DBRS or any other nationally recognized statistical rating agency (and any
successor to any of the foregoing) designated by Lender, provided that each of
the foregoing shall be deemed included within the definition of “Rating
Agencies” only if such rating agency is rating the Securities.

 

“Rating Agency Confirmation” shall mean, with respect to any matter,
confirmation in writing (which may be in electronic form) by each applicable
Rating Agency that a proposed action, failure to act or other event with respect
to which such confirmation is sought will not in and of itself result in the
downgrade, withdrawal or qualification of the then-current rating assigned to
any Securities (if then rated by such Rating Agency); provided that upon receipt
of a written acknowledgment or waiver (which may be in electronic form and
whether or not specifically identifying the matter or in general, press release
form) from a Rating Agency indicating its decision not to review or to waive
review of the matter for which confirmation is sought, or following the failure
of a Rating Agency to respond to the request for which confirmation is sought
within the time frames and in the manner prescribed in any pooling or trust and
servicing

 

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agreement governing the administration of all or any portion of the Loan, the
requirement to obtain confirmation from the Rating Agencies for such matter at
such time will be considered not to apply (as if such requirement did not exist
for such matter at such time) with respect to such Rating Agency.

 

“REA” shall mean any construction, operation and reciprocal easement agreement
or similar agreement (including any separate agreement or other agreement
between Mortgage Borrower and one or more other parties thereto) affecting any
Individual Property or portion thereof.

 

“Recourse Entity” shall mean, individually or collectively, as the context so
requires, Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Mortgage
Borrower SPE Component Entity, Senior Mezzanine Borrower SPE Component Entity,
Operating Lessee, Ashford Keys Senior Operating Lessee, Ashford Keys Junior
Operating Lessee and SPE Component Entity (if any).

 

“Register” shall have the meaning set forth in Section 13.1(b) hereof.

 

“Regulation AB” shall mean Subpart 229.1100 — Asset Backed Securities
(Regulation AB), 17 C.F.R. §§229.1100-229.1123, as such may be amended from time
to time, and subject to such clarifications and interpretations as have been
provided by the United States Securities and Exchange Commission in the adopting
release (Asset Backed Securities, Securities Act Release No. 33-8518, 70 Fed.
Reg. 1,506-1,631 (Jan. 7, 2005)) or by the staff of the United States Securities
and Exchange Commission, or as may be provided by the United States Securities
and Exchange Commission or its staff from time to time.

 

“Reimbursement Contribution” shall have the meaning set forth in Section 20.12
hereof.

 

“Release Date” shall have the meaning set forth in Section 2.9(c) hereof.

 

“Release Price” shall mean those prices reflected on Schedule XVI attached
hereto.

 

“Related Loan” shall have the meaning set forth in Section 13.6 hereof.

 

“Related Property” shall have the meaning set forth in Section 13.6 hereof.

 

“REMIC Opinion” shall mean, with respect to any proposed matter or transaction,
an opinion of counsel acceptable to Lender, in form and substance satisfactory
to Lender and, if required in accordance with the terms of the transaction
documents relating to a Securitization, the Rating Agencies, that the completion
of such matter or transaction will not directly or indirectly result in or cause
the REMIC Trust or any of its assets to fail to qualify or maintain its status
as a REMIC Trust.

 

“REMIC Requirements” shall mean any applicable legal requirements relating to
any REMIC Trust (including, without limitation, any constraints, rules and/or
other regulations and/or requirements relating to the servicing, modification
and/or other similar matters with respect to the Loan (or any portion thereof
and/or interest therein)).

 

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“REMIC Trust” shall mean any “real estate mortgage investment conduit” within
the meaning of Section 860D of the Internal Revenue Code that holds an interest
in all or any portion of the Loan.

 

“Remington” shall mean Remington Lodging & Hospitality, LLC and its Affiliates.

 

“Renewal Lease” shall have the meaning set forth in Section 5.13(a) hereof.

 

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

 

“Replacement Franchise Agreement” shall mean either (a) a franchise, trademark
and license agreement with a Qualified Franchisor substantially in the same form
and substance as the Franchise Agreement for the applicable Individual Property
or any other Properties, or (b) a franchise, trademark and license agreement
with a Qualified Franchisor either (i) on the applicable Franchisor’s then
current franchise disclosure document (FDD) with only such modifications as are
not materially adverse to Mortgage Borrower or Lender or (ii) in form and
substance reasonably approved by Lender, and which is approved by Lender
pursuant to Section 5.25 hereof and which may, at Lender’s option, be
conditioned upon Lender’s receipt of a Rating Agency Confirmation.

 

“Replacement Interest Rate Cap Agreement” shall mean an interest rate cap
agreement from an Acceptable Counterparty with terms that are the same in all
material respects as the terms of the Interest Rate Cap Agreement (except in the
event Borrower exercises an Extension Option pursuant to Section 2.5(c) hereof,
in which case the Replacement Interest Rate Cap Agreement shall (i) have an
effective date and term as prescribed in Section 2.5(c) hereof and (ii) have a
“strike price” equal to the Extension Term LIBOR Cap Strike Rate).

 

“Replacement Management Agreement” shall mean, collectively, (a)(i) with respect
to Remington, a management agreement substantially in the form of that certain
Hotel Master Management Agreement dated September 29, 2006, and (ii) with
respect to any other Manager,  a management agreement in the form of a
Management Agreement for any other Individual Property or otherwise approved by
Lender pursuant to Section 5.14 hereof with a Qualified Manager and (b) a
subordination of management agreement substantially approved by Lender pursuant
to Section 5.14 hereof, executed and delivered to Lender by Operating Lessee and
such Qualified Manager at Borrower’s expense.

 

“Required Approval Lease” shall have the meaning set forth in
Section 5.13(a) hereof.

 

“Restoration” shall have the meaning set forth in the Mortgage Loan Agreement.

 

“Restoration Consultant” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

“Restoration Threshold” shall have the meaning set forth in the Mortgage Loan
Agreement.

 

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

 

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“Scheduled PIP” shall mean each PIP listed on Schedule VI attached hereto, as
the same may be amended in accordance with the terms hereof.

 

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

 

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

 

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

 

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

 

“Securitization Closing Date” shall mean the date designated or deemed to be
designated by Lender as the “Securitization Closing Date” in accordance with
Section 2.4(e) hereof.

 

“Securitization Initialization Period” shall mean, with respect to a
Securitization, the period beginning on and including the Securitization Closing
Date and ending on and excluding, at the election of Lender, either (x) in the
event the first distribution to certificateholders occurs during the
Securitization Month, the Selected Day in the Securitization Month or (y) in the
event the first distribution to certificateholders occurs during the month
following the Securitization Month, the Selected Day in the month after the
Securitization Month.

 

“Securitization Initialization Period LIBOR” shall mean, with respect to a
Securitization Initialization Period, LIBOR as determined two (2) Business Days
prior to the related Securitization Closing Date.

 

“Securitization Month” shall mean the month in which the Securitization Closing
Date occurs.

 

“Selected Day” means the fifteenth (15th) day of each calendar month, or such
other date as determined by Lender pursuant to Section 2.4(e) hereof.

 

“Senior Mezzanine Borrower” shall mean Ashford Senior C LLC.

 

“Senior Mezzanine Borrower SPE Component Entity” shall mean any SPE Component
Entity of any Senior Mezzanine Borrower.

 

“Senior Mezzanine Collateral” shall have the meaning ascribed to the term
“Collateral” in the Senior Mezzanine Loan Agreement.

 

“Senior Mezzanine Default” shall have the meaning ascribed to the term “Default”
in the Senior Mezzanine Loan Agreement.

 

“Senior Mezzanine Lender” shall mean the owner and holder of the Senior
Mezzanine Loan.

 

“Senior Mezzanine Loan” shall mean that certain loan made by Senior Mezzanine
Lender to Senior Mezzanine Borrower on the date hereof pursuant to the Senior
Mezzanine Loan

 

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Agreement, as the same may be amended or split pursuant to the terms of the
Senior Mezzanine Loan Documents.

 

“Senior Mezzanine Loan Agreement” shall mean that certain Senior Mezzanine Loan
Agreement dated as of the date hereof between Senior Mezzanine Borrower and
Senior Mezzanine Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time pursuant to the terms of
the Senior Mezzanine Loan Documents.

 

“Senior Mezzanine Loan Documents” shall mean all documents or instruments
evidencing, securing or guaranteeing the Senior Mezzanine Loan, including
without limitation, the Senior Mezzanine Loan Agreement.

 

“Senior Mezzanine Loan Event of Default” shall have the meaning ascribed to the
term “Event of Default” in the Senior Mezzanine Loan Agreement.

 

“Senior Mezzanine Loan Subaccount” shall have the meaning set forth in the Cash
Management Agreement.

 

“Senior Mezzanine Note” shall have the meaning ascribed to the term “Note” in
the Senior Mezzanine Loan Agreement.

 

“Senior Mezzanine Operating Lease Agreement” shall have the meaning ascribed to
the term “Senior Mezzanine Operating Lease Agreement” in the Senior Mezzanine
Loan Agreement.

 

“Senior Mezzanine Pledge Agreement” shall have the meaning ascribed to the term
“Pledge Agreement” in the Senior Mezzanine Loan Agreement.

 

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

 

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

 

“Spread Maintenance Date” shall mean the Payment Date occurring in
December 2019.

 

“Spread Maintenance Premium” shall mean, with respect to any payment or
prepayment, an amount equal to the product of the following: (i) the LIBOR
Margin, the Alternate Rate Spread or the Base Rate Spread then applicable to
each such future installment of interest, multiplied by (ii) the principal
amount of the Loan so prepaid, and multiplied by (iii) a fraction, the numerator
of which is the number of days following the date through which interest on the
prepaid amount has been paid through and including December 14, 2019, and the
denominator of which is 360.

 

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw
Hill Companies, Inc., and its successors in interest.

 

“State” shall mean, with respect to an Individual Property, the State in which
such Individual Property or any part thereof is located.

 

“Substitute Interest Rate Protection Agreement” shall have the meaning set forth
in Section 5.24(f) hereof.

 

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“Substitute Reserves” shall have the meaning set forth in Section 9.1(b) hereof.

 

“Survey” shall mean, with respect to each Individual Property, those certain
surveys listed on Schedule X attached hereto and made a part hereof.

 

“Taxes” shall mean all present or future taxes, levies, imposts, duties,
deductions, withholdings (including backup withholding), assessments, fees or
other charges imposed by any Governmental Authority, including any interest,
additions to tax or penalties applicable thereto.

 

“Tenant” shall mean any Person leasing, subleasing or otherwise occupying any
portion of any Individual Property under a Lease or other occupancy agreement
with Mortgage Borrower or Operating Lessee.

 

“Title Insurance Policy” shall mean each ALTA (or its state-specific equivalent)
mortgagee title insurance policy issued with respect to the applicable
Individual Property and insuring the lien of the applicable Mortgage.

 

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

 

“Transferee” shall have the meaning set forth in Section 7.4 hereof.

 

“Transferee Principal” shall have the meaning set forth in
Section 7.4(d) hereof.

 

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

 

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

 

“UCC Financing Statements” shall mean the UCC financing statement executed in
connection with each Pledge Agreement and the other Loan Documents and filed in
the applicable filing offices.

 

“UCC Title Insurance Policy” shall mean, with respect to the Collateral, a UCC
title insurance policy in the form acceptable to Lender issued with respect to
the Collateral and insuring the lien of the Pledge Agreements encumbering such
Collateral.

 

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

 

“Underwritten Net Cash Flow” shall mean, as of any date of determination and
calculated with respect to the preceding twelve (12) month period for which
financial statements are available pursuant to Section 5.11 hereof, the amount
determined by Lender as the excess of (a) Gross Revenues over (b) Operating
Expenses, adjusted to (i) include amounts for (A) management fees equal to the
greater of (1) three percent (3%) of Gross Revenues and (2) the management fees
actually paid under the Management Agreement, (B) any franchise, license and
marketing fees and reimbursables paid or payable to Franchisor under any
Franchise Agreement and/or Management Agreement, as applicable, and (C) Capital
Expenditures (i) equal to the greater of (1) four percent

 

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(4%) of Gross Revenues per annum (regardless of whether deposits to a reserve
account for such items is required under this Agreement) and (2) the Capital
Expenditures actually paid under the Franchise Agreement; and (ii) exclude
amounts (A) which are non-recurring items and (B) received from any Affiliate of
Borrower, Mortgage Borrower or Guarantor or from any Tenant in default under its
Lease or in bankruptcy (unless such Lease has been assumed in the bankruptcy
proceeding).  Lender’s calculation of Underwritten Net Cash Flow shall be final
absent manifest error.

 

“Uniform System of Accounts” shall mean the most recent edition of the Uniform
System of Accounts for Hotels as adopted by the American Hotel and Motel
Association.

 

“Unit” or “Units” shall mean any Condominium units created pursuant to the
Condominium Documents.

 

“U.S. Person” shall mean a Person that is a “United States person” as defined in
Section 7701(a)(30) of the Internal Revenue Code.

 

“U.S. Tax Compliance Certificate” shall have the meaning set forth in
Section 2.7(e) hereof.

 

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

 

“Write-Down and Conversion Powers” shall have the meaning set forth in
Section 20.13 hereof.

 

“Zoning Report” shall mean, with respect to each Individual Property, those
certain zoning reports listed on Schedule IX attached hereto and made a part
hereof.

 

Section 1.2            Principles of Construction

 

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

 

With respect to terms defined by cross-reference to the Mortgage Loan Documents,
such defined terms shall have the definitions set forth in the Mortgage Loan
Documents as of the date hereof, and no modifications to the Mortgage Loan
Documents shall have the effect of changing such definitions for the purpose of
this Agreement unless Lender expressly agrees that such definitions as used in
this Agreement have been revised or Lender consents to the modification
documents.  With respect to any provisions or definitions incorporated by
reference herein from the Mortgage Loan Documents, such provisions or
definitions shall be deemed a part of this Agreement notwithstanding the fact
that the Mortgage Loan shall no longer be effective for any reason, including,
without limitation, after the repayment of the Mortgage Loan.

 

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ARTICLE 2
GENERAL TERMS

 

Section 2.1            The Loan

 

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

 

Section 2.2            Disbursement to Borrower

 

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

 

Section 2.3            The Note, Pledge Agreements and Loan Documents

 

The Loan shall be evidenced by the Note and this Agreement and secured by the
Pledge Agreements and the other Loan Documents.

 

Section 2.4            Interest Rate

 

(a)           General.  Interest on the outstanding principal balance of the
Loan shall accrue at the Interest Rate from the Closing Date through and
including the last day of the Interest Accrual Period during which the Maturity
Date occurs.  Except as otherwise set forth herein or in the other Loan
Documents, interest shall be paid in arrears.

 

(b)           Unavailability of LIBOR Rate.  Subject to Section 2.4(g), in the
event that Lender shall have determined (which determination shall be conclusive
and binding upon Borrower absent manifest error) that by reason of circumstances
affecting the interbank eurodollar market, adequate and reasonable means do not
exist for ascertaining the LIBOR Rate (and LIBOR has not been succeeded by an
Alternate Index as set forth in Section 2.4(g) below), then Lender shall
forthwith give notice by telephone of such determination, confirmed in writing,
to Borrower at least one (1) day prior to the last day of the related Interest
Accrual Period.  If such notice is given, the Loan, commencing with the first
(1st) day of the next succeeding Interest Accrual Period, shall be converted to
a Base Rate Loan bearing interest based on the Base Rate Interest Rate in effect
on the related Determination Date, and thereafter the Interest Rate shall be the
Base Rate Interest Rate.

 

If, pursuant to the terms of this Agreement, the Loan has been converted to a
Base Rate Loan and thereafter: (i) Lender shall determine (which determination
shall be conclusive and binding upon Borrower absent manifest error) that the
event(s) or circumstance(s) which resulted in such conversion shall no longer be
applicable, Lender shall give notice thereof to Borrower, and the Base Rate
Interest Rate shall convert to the LIBOR Rate effective on the first (1st) day
of the next succeeding Interest Accrual Period; or (ii) if LIBOR cannot be
determined and has been succeeded by an Alternate Index pursuant to
Section 2.4(g) below, then Lender shall give notice thereof to Borrower and
convert the Base Rate Loan to an Alternate Rate Loan by delivering to Borrower
notice of such conversion no later than 11:00 a.m. (New York City Time), three
(3) Business Days prior to the next succeeding Determination Date, in which
event the Base Rate Loan shall be converted to an Alternate Rate Loan from,
after and including the first day of the

 

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next succeeding Interest Accrual Period.  Notwithstanding any provision of this
Agreement to the contrary, in no event shall Borrower have the right to elect to
convert a LIBOR Rate Loan to a Base Rate Loan, or to convert a Base Rate Loan to
a LIBOR Rate Loan or an Alternate Rate Loan.

 

(c)           Default Rate.  Upon the occurrence and during the continuance of
an Event of Default, interest on the outstanding principal balance of the Loan
and, to the extent permitted by law, overdue interest and other amounts due in
respect of the Loan shall accrue at a rate per annum equal to the Default Rate
and all references in the Note, this Agreement or the other Loan Documents to
the “Interest Rate” shall be deemed to refer to the Default Rate.  Interest at
the Default Rate shall be computed from the occurrence of the Event of Default
until the earlier of (i) the actual receipt and collection of the Debt (or that
portion thereof that is then due) and (ii) the cure of such Event of Default. 
To the extent permitted by applicable law, interest at the Default Rate shall be
added to the Debt, shall itself accrue interest at the same rate as the Loan and
shall be secured by the Pledge Agreements.  This paragraph shall not be
construed as an agreement or privilege to extend the date of the payment of the
Debt, nor as a waiver of any other right or remedy accruing to Lender by reason
of the occurrence of any Event of Default; the acceptance of any payment from
Borrower shall not be deemed to cure or constitute a waiver of any Event of
Default; and Lender retains its rights under the Note, this Agreement and the
other Loan Documents to accelerate and to continue to demand payment of the Debt
upon the occurrence of and during the continuance of any Event of Default,
despite any payment by Borrower to Lender.

 

(d)           Interest Calculation.  Interest shall be computed based on the
daily rate produced assuming a three hundred sixty (360) day year, multiplied by
the actual number of days elapsed during each Interest Accrual Period.  Borrower
understands and acknowledges that such interest accrual method results in more
interest accruing on the Loan than if either a thirty (30) day month and a three
hundred sixty (360) day year or the actual number of days and a three hundred
sixty five (365) day year were used to compute the accrual of interest on the
Loan.  Lender shall determine the Interest Rate applicable to the Debt in
accordance with this Agreement and its determination thereof shall be conclusive
in the absence of manifest error.  The books and records of Lender shall be
prima facie evidence of all sums owing to Lender from time to time under this
Agreement, but the failure to record any such information shall not limit or
affect the obligations of Borrower under the Loan Documents.

 

(e)           Selected Day and Securitization Closing Date; Securitization
Interest Adjustments.  (i) Lender may in its sole discretion designate the
Securitization Closing Date by providing not less than twenty-four (24) hours
prior notice to Borrower.  Lender may in its sole discretion designate a day of
the calendar month as the Selected Day for purposes of establishing, in
accordance with the definition of “Interest Accrual Period”, the beginning and
ending dates of the Interest Accrual Period that commences in the month in which
the Securitization Closing Date occurs (and, to the extent contemplated in the
definition of Interest Accrual Period, the prior month) and each Interest
Accrual Period thereafter.  In lieu of such designation, Lender may elect that
the Interest Accrual Period with respect to the first Payment Date after the
Securitization Closing Date and each Payment Date thereafter shall be the
calendar month preceding such Payment Date.  The designation of the Selected Day
or election of calendar-month Interest Accrual Periods shall be a one-time
event; once made, such designation or election shall apply for purposes of
establishing, in accordance with the definition of “Interest Accrual Period”,
the beginning and ending dates of the Interest Accrual Period that commences in
the month in which the

 

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Securitization Closing Date occurs (and, to the extent contemplated in the
definition of Interest Accrual Period, the prior month) and each Interest
Accrual Period thereafter.

 

(ii)           With respect to any portion of any Interest Accrual Period that
also comprises all or any portion of a Securitization Initialization Period, if
the amount of interest payable by Borrower hereunder (based on the Interest Rate
using LIBOR as of the applicable Determination Date) is less than the amount of
interest which would be payable if the Interest Rate were determined using the
Securitization Initialization Period LIBOR in lieu of LIBOR (such deficiency
being the “Securitization Interest Adjustment Amount” for such Interest Accrual
Period), then Borrower shall pay to Lender on the Payment Date related to any
such Interest Accrual Period (or, if such Payment Date occurred prior to the
Securitization Closing Date, then on the next succeeding Payment Date) the
Securitization Interest Adjustment Amount.

 

(iii)          Similarly, if Lender exercises its option pursuant to clause
(i) of this Section 2.4(e) to elect calendar Interest Accrual Periods for
Payment Dates after the Securitization Closing Date, in respect of any portion
of the first such calendar Interest Accrual Period that overlaps with an
Interest Accrual Period with respect to which a payment was already made on a
prior Payment Date, in respect of the number of days of overlap, Borrower shall
be credited with the interest already paid and, on the first Payment Date after
the Securitization Closing Date, shall be obligated to pay in respect of such
overlapping days only an amount equal to the greater of (A)(1) the amount of
interest accrued for such overlapping days using LIBOR as determined two
(2) Business Days prior to the first day of the month prior to the
Securitization Month minus (2) the amount of interest accrued for such
overlapping days using the LIBOR determined as of the Determination Date in the
month prior to the Securitization Month and (B) zero.

 

(iv)          In the event that Lender changes the Selected Day to a day
pursuant to clause (i) of this Section 2.4(e) to a day that is earlier in the
month than the Selected Day as previously defined, then, with respect to the
first Payment Date after the Securitization Closing Date and the portion (if
any) of the applicable Interest Accrual Period that does not overlap with the
Securitization Initialization Period, if Borrower has already paid the amount of
interest it owed in respect of such non-overlapping portion as calculated prior
to such change in the Selected Day on the most recent Payment Date prior to such
change in the Selected Day, then Borrower shall not owe any further amount of
interest in respect of such non-overlapping portion.

 

(f)            Usury Savings.  This Agreement and the Note are subject to the
express condition that at no time shall Borrower be obligated or required to pay
interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
indebtedness evidenced by the Note and as provided for herein or in the other
Loan Documents, under the laws of such state or states whose laws are held by
any court of competent jurisdiction to govern the interest rate provisions of
the Loan (such rate, the “Maximum Legal Rate”).  If, by the terms of the Note,
this Agreement or the other Loan Documents, Borrower is at any time required or
obligated to pay interest on the principal balance due on the Loan at a rate in
excess of the Maximum Legal Rate, the Interest Rate or the Default Rate, as the
case may be, shall be deemed to be immediately reduced to the Maximum Legal Rate
and all previous payments in excess of the Maximum Legal Rate shall be deemed to
have been payments in reduction of principal and not on

 

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account of the interest due hereunder (and any such payments shall not require
the payment of a Spread Maintenance Premium or any other prepayment premium). 
All sums paid or agreed to be paid to Lender for the use, forbearance, or
detention of the sums due under the Loan, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Loan until payment in full so that the rate or amount of
interest on account of the Loan does not exceed the Maximum Legal Rate of
interest from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.

 

(g)           If at any time the Loan is outstanding as a LIBOR Rate Loan or a
Base Rate Loan and Lender has determined in good faith that LIBOR cannot be
determined and LIBOR has been succeeded by an Alternate Index, then the Loan
shall be converted from a LIBOR Rate Loan or a Base Rate Loan, as applicable, to
an Alternate Rate Loan, provided that Lender shall have received (i) an opinion
of nationally recognized REMIC counsel as to the compliance of such conversion
with applicable REMIC requirements as determined under the Code, the
regulations, revenue rulings, revenue procedures and other administrative,
legislative and judicial guidance relating to the tax treatment of REMIC Trusts
(which such opinion shall be, in form and substance and from a provider, in each
case, acceptable to Lender in its sole discretion and acceptable to the Rating
Agencies), (ii) a Rating Agency Confirmation in connection with such conversion,
and (iii) evidence satisfactory to Lender that such conversion does not violate
ERISA.  Lender shall provide notice of the foregoing conversion by giving notice
of such determination in writing to Borrower at least five (5) Business Days
prior to the next succeeding Determination Date.  If such notice is given, the
Loan shall be converted, as of the first day of the next succeeding Interest
Accrual Period, to an Alternate Rate Loan.  Notwithstanding any provision of
this Agreement to the contrary, in no event shall Borrower have the right to
convert a LIBOR Rate Loan to an Alternate Rate Loan, or to convert an Alternate
Rate Loan to a LIBOR Rate Loan or a Base Rate Loan.

 

If, pursuant to the terms of this Agreement, the Loan has been converted to an
Alternate Rate Loan and, thereafter, such Alternate Index cannot be determined,
then Lender shall give notice thereof to Borrower and convert the Alternate Rate
Loan to a Base Rate Loan by delivering to Borrower notice of such conversion no
later than 11:00 a.m. (New York City Time), three (3) Business Days prior to the
next succeeding Determination Date, in which event the Alternate Rate Loan shall
be converted to a Base Rate Loan from, after and including the first day of the
next succeeding Interest Accrual Period. If the Loan has been converted from an
Alternate Rate Loan to a Base Rate Loan pursuant to the foregoing and,
thereafter, Lender shall determine (which determination shall be conclusive and
binding upon Borrower absent manifest error) that the event(s) or
circumstance(s) which resulted in such conversion shall no longer be applicable,
Lender shall give notice thereof to Borrower, and the Base Rate Interest Rate
shall convert to the Alternate Rate Interest Rate effective on the first (1st)
day of the next succeeding Interest Accrual Period. Notwithstanding any
provision of this Agreement to the contrary, in no event shall Borrower have the
right to elect to convert an Alternate Rate Loan to a Base Rate Loan.

 

Section 2.5            Loan Payments

 

(a)           Payment Before Maturity.  On the Closing Date, Borrower shall pay
to Lender interest for the Interim Interest Accrual Period and on each Payment
Date thereafter through and including the Maturity Date, Borrower shall pay to
Lender all interest that has accrued

 

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or will accrue during the Interest Accrual Period in which such Payment Date (or
Maturity Date, as applicable) occurs.

 

(b)           Payment on Maturity.  Borrower shall pay to Lender on the Maturity
Date the outstanding principal balance of the Loan, all accrued and unpaid
interest and all other amounts due hereunder and under the Note, the Pledge
Agreements and the other Loan Documents.

 

(c)           Extension of the Maturity Date.  Borrower shall have the option to
extend the term of the Loan beyond the Initial Maturity Date for five
(5) successive terms of one (1) year each (each, an “Extension Option”) to
(v) the Payment Date occurring in June 2021, (w) the Payment Date occurring in
June 2022, (x) the Payment Date occurring in June 2023, (y) the Payment Date
occurring in June 2024 and (z) the Payment Date occurring in June 2025 (each
such date, an “Extended Maturity Date” and each such one-year period an
“Extension Term”), respectively, and, as to each Extension Option, upon
satisfaction of the following terms and conditions:

 

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

 

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

 

(iii)          Borrower shall obtain and deliver to Lender prior to the
commencement of such Extension Term, a Replacement Interest Rate Cap Agreement,
which Replacement Interest Rate Cap Agreement shall be effective commencing on
the first day following the end of the Interest Accrual Period in which such
Extension Term commences and shall have a term extending through and including
the end of the Interest Accrual Period in which the Maturity Date, as extended,
falls; provided, however, the confirmation evidencing such Replacement Interest
Rate Cap Agreement, any guaranty or guaranties therefor, the executed
counterparts to the Collateral Assignment of Interest Rate Cap Agreement, and
any opinion from counsel to the Acceptable Counterparty may be delivered within
a reasonable period of time after the commencement of such Extension Term;

 

(iv)          the Mortgage Loan shall have been extended in accordance with the
terms of the Mortgage Loan Agreement;

 

(v)           the Senior Mezzanine Loan shall have been extended in accordance
with the terms of the Senior Mezzanine Loan Agreement;

 

(vi)          in connection with the exercise of each of the fourth and fifth
Extension Options, the LIBOR margin, Alternate Rate Spread or Base Rate Spread,
as applicable, shall be increased by 0.125% for each such Extension Option;

 

(vii)         in connection with (A) the exercise of the fourth Extension
Option, the Debt Yield as of the end of the third Extension Term shall be at
least 10.40% and (B) the

 

40

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exercise of the fifth Extension Option, the Debt Yield as of the end of the
fourth Extension Term shall be at least 10.40% in each case, provided that
Borrower may prepay the Loan in accordance with the terms of this Agreement for
the purposes of satisfying the Debt Yield required under this subclause
2.5(c)(vii); and

 

(viii)        Borrower shall have paid all of Lender’s reasonable out of pocket
costs and expenses, including, without limitation, reasonable attorneys’ fees
and disbursements, in connection with Borrower’s exercise of each applicable
Extension Option; provided, however, Borrower shall not be required to pay any
consent, processing, administrative or similar fee in connection with Borrower’s
exercise of any Extension Option.

 

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

 

(d)           Application of Payments.  Prior to the occurrence of an Event of
Default, all monthly payments made as scheduled pursuant to this Agreement and
the Note shall be applied first to the payment of interest computed at the
Interest Rate, and the balance toward the reduction of the principal amount of
the Debt (and, in connection with any New Mezzanine Loan or any Loan
Bifurcation, be applied sequentially among any components within such New
Mezzanine Loan or Loan Bifurcation).  All voluntary and involuntary prepayments
on the Debt shall be applied, to the extent thereof, to accrued but unpaid
interest on the amount prepaid, to the outstanding principal amount, and any
other sums due and unpaid to Lender in connection with the Loan, in such manner
and order as Lender may elect in its sole and absolute discretion, including,
but not limited to, application to principal installments in inverse order of
maturity.  Following the occurrence and during the continuance of an Event of
Default, any payment made on the Debt shall be applied to accrued but unpaid
interest, late charges, accrued fees, the unpaid principal amount of the Debt,
and any other sums due and unpaid to Lender in connection with the Loan, in such
manner and order as Lender may elect in its sole and absolute discretion.  The
Monthly Payment Amount shall be applied to Note A-1, Note A-2, and Note A-3 on a
pari passu basis.

 

(e)           Method and Place of Payment.

 

(i)            Each payment by Borrower hereunder shall be made to Lender at its
offices or at such other place as Lender may designate from time to time in
writing.

 

(ii)           All payments and prepayments under this Agreement and the Note
shall be made to Lender not later than 2:00 P.M., New York City time.

 

(iii)          Whenever any payment hereunder shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the first Business
Day preceding such Payment Date.

 

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

 

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

 

(f)            Late Payment Charge.  If any principal, interest or other payment
due under the Loan Documents (other than the outstanding principal amount of the
Loan due on the Maturity Date) is not paid by Borrower on or prior to the date
the same is due (after taking into account the payment date convention set forth
in Section 2.5(e) hereof) (or such greater period, if any, required by
applicable Legal Requirements), Borrower shall pay to Lender upon demand an
amount equal to the lesser of four percent (4%) of such unpaid sum or the
maximum amount permitted by applicable Legal Requirements in order to defray the
expense incurred by Lender in handling and processing such delinquent payment
and to compensate Lender for the loss of the use of such delinquent payment. 
Any such amount shall be secured by the Pledge Agreements and the other Loan
Documents to the extent permitted by applicable law.  In the event that any late
payment charges are received, such amounts shall be applied to Note A-1, Note
A-2, and Note A-3 on a pari passu basis.

 

(g)           Additional Payment Provisions.

 

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

 

(ii)           If any requirement of law or any change therein or in the
interpretation or application thereof, shall hereafter make it unlawful for
Lender to make or maintain a Loan with the Interest Rate being based on LIBOR as
contemplated hereunder, (A) the obligation of Lender hereunder to make such Loan
based on LIBOR or to convert the Loan from the Base Rate Interest Rate to the
LIBOR Rate shall be canceled forthwith and (B) any outstanding LIBOR Rate Loan
shall be converted automatically to a loan bearing interest at the Base Rate
Interest Rate on the next succeeding Payment Date or within such earlier period
as required by

 

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law.  Borrower hereby agrees promptly to pay Lender, upon demand, any additional
amounts necessary to compensate Lender for any costs incurred by Lender in
making any conversion in accordance with this Agreement, including, without
limitation, any interest or fees payable by Lender to lenders of funds obtained
by it in order to make or maintain the LIBOR Rate Loan hereunder.  If Lender
becomes entitled to claim any additional amounts pursuant to this
Section 2.5(g)(ii), Lender shall provide Borrower with not less than ninety (90)
days written notice specifying in reasonable detail the event by reason of which
it has become so entitled and the additional amount required to fully compensate
Lender for such additional costs.  Lender’s notice of such costs, as certified
to Borrower, shall be conclusive absent manifest error.

 

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

 

shall hereafter impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of Lender
which is not otherwise included in the determination of LIBOR (or the Alternate
Index, as applicable) hereunder,

 

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

 

shall subject Lender to any Taxes (other than (I) Indemnified Taxes, (II) Taxes
described in clauses (b) through (d) of the definition of Excluded Taxes and
(III) Connection Income Taxes) on its loans, loan principal, letters of credit,
commitments, or other obligations, or its deposits, reserves, or other
liabilities or capital attributable thereto; or

 

shall hereafter impose on Lender any other condition (other than Taxes);

 

and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining loans or extensions of credit or to reduce any
amount receivable hereunder, then, in any such case, Borrower shall promptly pay
Lender, upon demand, any additional amounts necessary to compensate Lender for
such additional cost or reduced amount receivable which Lender deems to be
material as determined by Lender.  If Lender becomes entitled to claim any
additional amounts pursuant to this Section 2.5(g)(iii), Lender shall provide
Borrower with not less than ninety (90) days written notice specifying in
reasonable detail the event by reason of which it has become so entitled and the
additional amount required to fully compensate Lender for such additional cost
or reduced amount.  A certificate as to any additional costs or amounts payable
pursuant to the foregoing sentence submitted by Lender to Borrower shall be
conclusive in the absence of manifest error.  This provision shall survive
payment of the Note and the satisfaction of all other obligations of Borrower
under this Agreement and the Loan Documents.

 

(iv)          Borrower agrees to indemnify Lender and to hold Lender harmless
from any loss or expense which Lender sustains or incurs as a consequence of
(A) any default by

 

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

 

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

 

Section 2.6            Loan Prepayments

 

(a)           Voluntary.  Except as otherwise expressly permitted under this
Agreement, including, without limitation, Section 2.9 hereof, no voluntary
prepayments, whether in whole or in part, of the Loan or any other amount at any
time due and owing under this Agreement can be made by Borrower or any other
Person without the express prior written consent of Lender, and Lender shall
have no obligation to accept any prepayment except when made in accordance with
the terms hereof.  Borrower may, on any Business Day at its option and upon
giving Lender not less than thirty (30) (and not more than ninety (90)) days
prior written notice (such notice being revocable or may be modified by Borrower
on at least two (2) Business Days prior written notice to Lender provided
Borrower pays all of Lender’s reasonable costs and expenses incurred in
connection with the notice of prepayment), prepay the Loan (i) on or before the
Spread Maintenance Date, in whole or in part, with payment of the Spread
Maintenance Premium on that portion of the Loan which exceeds an amount equal to
the Free Prepayment Amount, and (ii) after

 

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the Spread Maintenance Date, in whole or in part, without payment of any
premium, fee or penalty.  Any prepayment shall include the payment of all
additional amounts required to be paid by Borrower and all other amounts owing
by Borrower to Lender under the Note, this Agreement and the other Loan
Documents, including, without limitation, (A) any Breakage Costs incurred by
Lender in connection with the cancellation or termination of a LIBOR (or the
Alternate Index, as applicable) or swap contract entered into in connection with
the Loan, and (B) Compensating Interest; provided, however, Borrower shall not
be required to pay any consent, processing, administrative or similar fee in
connection with any prepayment pursuant to this Section 2.6(a).  As a condition
to any prepayment contemplated by this Section 2.6(a), Borrower shall have
delivered evidence satisfactory to Lender that the Mortgage Loan and Senior
Mezzanine Loan are simultaneously being prepaid on a pro-rata basis in
accordance with the terms of the Mortgage Loan Agreement and Senior Mezzanine
Loan Agreement, respectively.

 

(b)           Mandatory; Liquidation Event.

 

(i)            In the event of a Liquidation Event, Borrower shall cause the
related Net Liquidation Proceeds After Debt Service to be deposited directly
into an account designated by Lender.  On each date on which Lender actually
receives a distribution of Net Liquidation Proceeds After Debt Service, if such
date is a Payment Date, other than during the occurrence and continuation of an
Event of Default, such Net Liquidation Proceeds After Debt Service shall be
applied to the outstanding principal balance of the Note in an amount equal to
one hundred percent (100%) of such Net Liquidation Proceeds After Debt Service,
together with (a) in the event that such Net Liquidation Proceeds After Debt
Service are received on or before a Payment Date, interest accruing on such
amount calculated through and including the end of the Interest Accrual Period
in which such Payment Date occurs, or (b) in the event that such Net Liquidation
Proceeds After Debt Service are received on a date after a Payment Date,
interest accruing on such amount calculated through and including the end of the
Interest Accrual Period in which the next Payment Date occurs and all other sums
then due and payable in connection with such prepayment.

 

(ii)           Borrower shall immediately notify Lender of any Liquidation Event
once Borrower has knowledge of such event.  Borrower shall be deemed to have
knowledge of (i) a sale (other than a foreclosure sale) of any Individual
Property on the date on which a contract of sale for such sale is entered into,
and a foreclosure sale, on the date written notice of such foreclosure sale is
given, and (ii) a refinancing of the Property, on the date on which a commitment
for such refinancing is entered into.  The provisions of this
Section 2.6(b) shall not be construed to contravene in any manner the
restrictions and other provisions regarding refinancing of the Mortgage Loan or
Transfer of the Property set forth in this Agreement and the other Loan
Documents.

 

(c)           Any prepayments received hereunder, including, without limitation,
the application of Net Liquidation Proceeds After Debt Service, shall (i) be
applied to Note A-1, Note A-2, and Note A-3 on a pari passu basis (and, in
connection with any New Mezzanine Loan or any Loan Bifurcation, be applied
sequentially among any components within such New Mezzanine Loan or Loan
Bifurcation, except during the continuance of an Event of Default) and
(ii) proportionately reduce the Allocated Loan Amounts of all Properties
(provided that this clause (ii) shall not apply to any prepayment pursuant to
Section 2.9 hereof).  Upon any voluntary prepayment of the Loan in accordance
with the terms hereof (other than a paydown pursuant to Section 2.9

 

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hereof, which such paydown shall be calculated in accordance with
Section 2.9(d) hereof), each Allocated Loan Amount shall be decreased by an
amount equal to the product of (x) the amount of such payment and (y) a
fraction, the numerator of which is the applicable Allocated Loan Amount (prior
to the adjustment in question) and the denominator of which is the total of all
Allocated Loan Amounts (prior to the adjustment in question).

 

Section 2.7            Taxes

 

(a)           Payments Free of Taxes.  Any and all payments by or on account of
any obligation of any Loan Party under any Loan Document shall be made without
deduction or withholding for any Taxes, except as required by applicable law. 
If any applicable law (as determined in the good faith discretion of Borrower)
requires the deduction or withholding of any Tax from any such payment by
Borrower, then Borrower shall be entitled to make such deduction or withholding
and shall timely pay the full amount deducted or withheld to the relevant
Governmental Authority in accordance with applicable law and, if such Tax is an
Indemnified Tax, then the sum payable by the applicable Loan Party shall be
increased as necessary so that after such deduction or withholding has been made
(including such deductions and withholdings applicable to additional sums
payable under this Section 2.7) the applicable Lender receives an amount equal
to the sum it would have received had no such deduction or withholding been
made.

 

(b)           Payment of Other Taxes.  The Loan Parties shall timely pay to the
relevant Governmental Authority in accordance with applicable law any Other
Taxes.

 

(c)           Indemnification.  The Loan Parties shall jointly and severally
indemnify Lender, within 10 days after demand therefor, for the full amount of
any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or
attributable to amounts payable under this Section 2.7) payable or paid by
Lender or required to be withheld or deducted from a payment to Lender and any
reasonable expenses arising therefrom or with respect thereto, whether or not
such Indemnified Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority.  A certificate as to the amount of such payment
or liability delivered to Borrower by Lender shall be conclusive absent manifest
error.

 

(d)           Evidence of Payments.  As soon as practicable after any payment of
Taxes by any Loan Party to a Governmental Authority pursuant to this
Section 2.7, such Loan Party shall deliver to Lender the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to Lender.

 

(e)           Status of Lenders.

 

(i)            In the event Lender is entitled to an exemption from or reduction
of withholding Tax with respect to payments made under any Loan Document, Lender
shall deliver to Borrower, at the time or times reasonably requested by
Borrower, such properly completed and executed documentation reasonably
requested by Borrower as will permit such payments to be made without
withholding or at a reduced rate of withholding.  In addition, Lender, if
reasonably requested by Borrower, shall deliver such other documentation
prescribed by applicable law or reasonably requested by Borrower as will enable
Borrower to determine whether or not Lender is

 

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subject to backup withholding or information reporting requirements. 
Notwithstanding anything to the contrary in the preceding two sentences, the
completion, execution and submission of such documentation (other than such
documentation set forth in Section 2.7(e)(ii)(A), (ii)(B) and (ii)(D) below)
shall not be required if in Lender’s reasonable judgment such completion,
execution or submission would subject Lender to any material unreimbursed cost
or expense or would materially prejudice the legal or commercial position of
Lender.

 

(ii)           Without limiting the generality of the foregoing, in the event
that Borrower is a U.S. Person,

 

(A)          Lender shall deliver to Borrower from time to time upon the
reasonable request of Borrower executed originals of IRS Form W-9 certifying
that Lender is exempt from U.S. federal backup withholding tax;

 

(B)          if Lender is or becomes a Foreign Lender, Lender shall, to the
extent it is legally entitled to do so, deliver to Borrower (in such number of
copies as shall be requested by the recipient) on or prior to the date hereof if
Lender is already a Foreign Lender, or on or prior to the date on which Lender
becomes a Foreign Lender under this Agreement (and from time to time thereafter
upon the reasonable request of Borrower, whichever of the following is
applicable):

 

(1)                                 in the case of a Foreign Lender claiming the
benefits of an income tax treaty to which the United States is a party (x) with
respect to payments of interest under any Loan Document, executed originals of
IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “interest” article of such tax treaty and
(y) with respect to any other applicable payments under any Loan Document, IRS
Form W-8BEN establishing an exemption from, or reduction of, U.S. federal
withholding Tax pursuant to the “business profits” or “other income” article of
such tax treaty;

 

(2)                                 executed originals of IRS Form W-8ECI;

 

(3)                                 in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under Section 881(c) of the
Internal Revenue Code, (x) a certificate to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal
Revenue Code, a “10 percent shareholder” of Borrower within the meaning of
Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign
corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code,
which shall be in the form attached hereto as Exhibit C (a “U.S. Tax Compliance
Certificate”) and (y) executed originals of IRS Form W-8BEN; or

 

(4)                                 to the extent a Foreign Lender is not the
beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS
Form W-

 

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8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate,  IRS Form W-9, and/or
other certification documents from each beneficial owner, as applicable;
provided that if the Foreign Lender is a partnership and one or more direct or
indirect partners of such Foreign Lender are claiming the portfolio interest
exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate on
behalf of each such direct and indirect partner;

 

(C)          any Foreign Lender shall, to the extent it is legally entitled to
do so, deliver to Borrower (in such number of copies as shall be requested by
Borrower) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the reasonable
request of Borrower), executed originals of any other form prescribed by
applicable law as a basis for claiming exemption from or a reduction in U.S.
federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by applicable law to permit Borrower to
determine the withholding or deduction required to be made; and

 

(D)          if a payment made to Lender under any Loan Document would be
subject to U.S. federal withholding Tax imposed by FATCA if Lender were to fail
to comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as
applicable), Lender shall deliver to Borrower at the time or times prescribed by
law and at such time or times reasonably requested by Borrower such
documentation prescribed by applicable law (including as prescribed by
Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional
documentation reasonably requested by Borrower as may be necessary for Borrower
to comply with their obligations under FATCA and to determine that Lender has
complied with Lender’s obligations under FATCA or to determine the amount to
deduct and withhold from such payment.  Solely for purposes of this clause (D),
“FATCA” shall include any amendments made to FATCA after the date of this
Agreement.

 

(E)           Lender agrees that if any form or certification it previously
delivered expires or becomes obsolete or inaccurate in any respect, it shall
update such form or certification or promptly notify Borrower in writing of its
legal inability to do so.

 

(f)            Treatment of Certain Refunds.  If any party determines, in its
sole discretion exercised in good faith, that it has received a refund of any
Taxes as to which it has been indemnified pursuant to this Section 2.7
(including by the payment of additional amounts pursuant to this Section 2.7),
it shall pay to the indemnifying party an amount equal to such refund (but only
to the extent of indemnity payments made under this Section 2.7 with respect to
the Taxes giving rise to such refund), net of all out-of-pocket expenses
(including Taxes) of such indemnified party and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund).  Such indemnifying party, upon the request of such indemnified party,
shall repay to such indemnified party the amount paid over pursuant to this
Section 2.7(f) (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) in the

 

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event that such indemnified party is required to repay such refund to such
Governmental Authority.  Notwithstanding anything to the contrary in this
Section 2.7(f), in no event will the indemnified party be required to pay any
amount to an indemnifying party pursuant to this Section 2.7(f) the payment of
which would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the Tax subject to
indemnification and giving rise to such refund had not been deducted, withheld
or otherwise imposed and the indemnification payments or additional amounts with
respect to such Tax had never been paid.  This paragraph shall not be construed
to require any indemnified party to make available its tax returns (or any other
information relating to its Taxes that it deems confidential) to the
indemnifying party or any other Person.

 

(g)           Survival.  Each party’s obligations under this Section 2.7 shall
survive any assignment of rights by, or the replacement of, Lender, and the
repayment, satisfaction or discharge of all obligations under any Loan Document.

 

Section 2.8            Intentionally Omitted

 

Section 2.9            Property Releases

 

Mortgage Borrower may obtain the release of an Individual Property from the Lien
of the Mortgage thereon (and related Mortgage Loan Documents) pursuant to
Section 2.9 of the Mortgage Loan Agreement, and Senior Mezzanine Borrower may
obtain the release of a portion of the Senior Mezzanine Collateral related to
such Individual Property (other than those expressly stated to survive) pursuant
to Section 2.9 of the Senior Mezzanine Loan Agreement, upon the satisfaction of
each of the following conditions:

 

(a)           No Event of Default shall then exist (other than a non-monetary
Event of Default that is specific to the Individual Property being released
pursuant to this Section 2.9 and which non-monetary Event of Default would be
cured as a result of the release of the applicable Individual Property);

 

(b)           (i) The amount of the outstanding principal balance of the Loan to
be prepaid in accordance with the terms hereof shall equal or exceed the Release
Price for the Individual Property being released pursuant to the terms of the
Mortgage Loan Agreement for which the portion of the Collateral relates, and
such prepayment shall be deemed a voluntary prepayment for all purposes
hereunder, and (ii) the amount of the outstanding principal balance of the
Senior Mezzanine Loan to be prepaid in accordance with the terms hereof shall
equal or exceed the Release Price for the Individual Property being released
pursuant to the terms of the Mortgage Loan Agreement for which the portion of
the Senior Mezzanine Collateral relates, and such prepayment shall be deemed a
voluntary prepayment for all purposes hereunder;

 

(c)           Borrower shall provide Lender with at least thirty (30) days but
no more than ninety (90) days prior written notice of its request to obtain a
release of the Collateral related to the Individual Property (the “Release
Date”) (such notice being revocable or may be modified by Borrower on at least
two (2) Business Days prior written notice to Lender provided Borrower pays all
of Lender’s reasonable costs and expenses incurred in connection with the notice
of intended release);

 

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(d)           Borrower shall prepay the portion of the Note equal to the Release
Price of the Individual Property being released pursuant to the terms of the
Mortgage Loan Agreement for which the portion of the Collateral relates
(together with all (i) accrued and unpaid interest on the principal amount being
prepaid, (ii) Breakage Costs, if applicable, (iii) Compensating Interest, if
applicable and (iv) the applicable Spread Maintenance Premium (if any) pursuant
to Section 2.6(a) hereof) in accordance with the terms and conditions hereof.
Such prepayment in the amount of the applicable Release Price (and any
additional amounts prepaid pursuant to Section 2.9(f) hereof) shall,
notwithstanding anything to the contrary contained herein, be applied (A) first,
to reduce the Allocated Loan Amount of the Individual Property being released to
zero and (B) second, pro-rata to reduce the Allocated Loan Amount of the
remaining Individual Properties;

 

(e)           Borrower shall submit to Lender, not less than ten (10) Business
Days prior to the Release Date, a release of Lien (and related Loan Documents)
for the portion of the Collateral related to the Individual Property for
execution by Lender.  Such release shall be in a form satisfactory to a prudent
institutional lender and shall contain standard provisions, if any, protecting
the rights of the releasing lender.  In addition, Borrower shall provide all
other documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with a certification certifying that such
documentation (i) is in compliance with all applicable Legal Requirements,
(ii) will, following execution by Lender, effect such releases in accordance
with the terms of this Agreement, and (iii) will not impair or otherwise
adversely affect the Liens, security interests and other rights of Lender under
the Loan Documents not being released (or as to the parties to the Loan
Documents and the Collateral subject to the Loan Documents not being released). 
Lender shall deliver such executed release of Lien for the portion of the
Collateral related to such Individual Property to Borrower on or prior to the
Release Date, or if requested by Borrower, to an escrow agent or title company
designated by Borrower, to be held in escrow, at least three (3) Business Days
prior to the Release Date;

 

(f)            After giving effect to such release, Lender shall have determined
that the Debt Yield for the Properties then remaining subject to the Liens of
the Mortgages shall be at least equal to the greater of (i) 10.15% and (ii) the
Debt Yield for all of the then remaining Properties (including the Individual
Property to be released) for the twelve (12) full calendar months immediately
preceding the release of the Individual Property, provided that Borrower shall
be permitted to make a prepayment of the Loan in accordance with the terms of
Section 2.6 for the purpose of satisfying the Debt Yield requirement in this
Section;

 

(g)           Lender shall have received payment of all Lender’s reasonable,
out-of-pocket costs and expenses, including due diligence review costs and
reasonable counsel fees and disbursements incurred in connection with the
release of the portion of the Collateral related to the Individual Property from
the lien of the related Pledge Agreement and the review and approval of the
documents and information required to be delivered in connection therewith;
provided, however, Borrower shall not be required to pay any consent,
processing, administrative or similar fee in connection with any prepayment
pursuant to this Section 2.9;

 

(h)           Borrower shall have delivered evidence satisfactory to Lender that
(i) Mortgage Borrower has complied with all of the terms and conditions set
forth in the Mortgage Loan Agreement with respect to a release of the security
interest corresponding to the release

 

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requested pursuant to this Section and (ii) Mortgage Lender has delivered (or is
simultaneously delivering) such release to Mortgage Borrower (if applicable);
and

 

(i)            Borrower shall have delivered evidence satisfactory to Lender
that (i) Senior Mezzanine Borrower has complied with all of the terms and
conditions set forth in the Senior Mezzanine Loan Agreement with respect to a
release of the security interest (if applicable) corresponding to the release
requested pursuant to this Section and (ii) Senior Mezzanine Lender has
delivered (or is simultaneously delivering) such release to Senior Mezzanine
Borrower (if applicable).

 

Notwithstanding anything in Section 2.6(a) or this Section 2.9 to the contrary,
on or prior to the expiration of the Spread Maintenance Date, no Spread
Maintenance Premium shall be payable under Section 2.6(a) with respect to a
release of the portion of the Collateral related to an Individual Property
pursuant to this Section 2.9 in the event and to the extent that the Allocated
Loan Amount of such Individual Property to be released together with the
Allocated Loan Amounts of all Individual Properties previously released and any
other prepayments made pursuant to Sections 2.6(a) or 2.9 is less than
twenty-five percent (25%) of the original principal balance of the Loan (the
“Free Prepayment Amount”).

 

ARTICLE 3
CONDITIONS PRECEDENT

 

Section 3.1            Conditions Precedent

 

The obligation of Lender to make the Loan hereunder is subject to the
fulfillment by Borrower or waiver by Lender of all of the conditions precedent
to closing set forth in the application or term sheet for the Loan delivered by
Borrower to Lender and the commitment or commitment rider, if any, to the
application for the Loan issued by Lender.  The making of the Loan shall be
deemed Lender’s acknowledgement that all such conditions precedent have been
satisfied or waived.

 

ARTICLE 4
REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants to Lender as of the Closing Date that:

 

Section 4.1            Organization

 

Borrower (a) has been duly organized and is validly existing and in good
standing with requisite power and authority to own its assets and to transact
the businesses in which it is now engaged, (b) is duly qualified to do business
and is in good standing in each jurisdiction where it is required to be so
qualified in connection with its assets, businesses and operations,
(c) possesses all rights, licenses, permits and authorizations, governmental or
otherwise, necessary to entitle it to own its assets and to transact the
businesses in which it is now engaged, and the sole business of Borrower is the
ownership and management of the Senior Mezzanine Borrower, each SPE Component
Entity (if any) and each Senior Mezzanine Borrower SPE Component Entity (if
any), and (d) has full power, authority and legal right to mortgage, grant,
bargain, sell, pledge, assign,

 

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warrant, transfer and convey the Collateral pursuant to the terms of the Loan
Documents, and has full power, authority and legal right to keep and observe all
of the terms of the Loan Documents to which it is a party.  Borrower represents
and warrants that the chart attached hereto as Exhibit A sets forth an accurate
listing of the direct and indirect owners of the equity interests in Mortgage
Borrower, Borrower, Senior Mezzanine Borrower, Ashford Keys Senior Operating
Lessee, Ashford Keys Junior Operating Lessee, each SPE Component Entity (if
any), each Senior Mezzanine Borrower SPE Component Entity (if any) and each
Guarantor (when not an individual).

 

Borrower and Ashford Keys Junior Operating Lessee have the power and authority
and the requisite Ownership Interests to control the actions of Senior Mezzanine
Borrower and the Ashford Keys Senior Operating Lessee, respectively, and upon
the realization of the Collateral under the Pledge Agreements, Lender or any
other party succeeding to Borrower’s or Ashford Keys Junior Operating Lessee’s
interest in the Collateral described in the Pledge Agreements will have such
control.  Without limiting the foregoing, Borrower and Ashford Keys Junior
Operating Lessee each have sufficient control over Senior Mezzanine Borrower or
Ashford Keys Senior Operating Lessee, as applicable, to cause Senior Mezzanine
Borrower or Ashford Keys Senior Operating Lessee, as applicable, to (i) take any
action on Senior Mezzanine Borrower’s or Ashford Keys Senior Operating Lessee’s,
as applicable, part required by the Loan Documents and (ii) refrain from taking
any action prohibited by the Loan Documents.

 

Section 4.2            Status of Borrower

 

Borrower’s exact legal name is correctly set forth on the first page of this
Agreement, on the Pledge Agreements and on any UCC-1 Financing Statements filed
in connection with the Loan.  Borrower is an organization of the type specified
on Schedule I. Borrower is incorporated in or organized under the laws of the
State as set forth on Schedule I.  Borrower’s principal place of business and
chief executive office, and the place where Borrower keeps its books and
records, including recorded data of any kind or nature, regardless of the medium
of recording, including software, writings, plans, specifications and
schematics, has been for the preceding four months (or, if less, the entire
period of the existence of Borrower) the address of Borrower set forth on the
first page of this Agreement.  Borrower’s organizational identification number,
if any, assigned by the state of incorporation or organization is correctly set
forth on the first page of the Note.

 

Section 4.3            Validity of Documents

 

Borrower has taken all necessary action to authorize the execution, delivery and
performance of this Agreement and the other Loan Documents to which it is a
party.  This Agreement and such other Loan Documents have been duly executed and
delivered by or on behalf of Borrower and constitute the legal, valid and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

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Section 4.4            No Conflicts

 

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

 

Section 4.5            Litigation

 

There are no actions, suits or proceedings at law or in equity by or before any
Governmental Authority, arbitral body or other agency now pending or, to
Borrower’s knowledge, threatened against or affecting Borrower, Mortgage
Borrower, any Guarantor, Operating Lessee, Ashford Keys Senior Operating Lessee,
Ashford Keys Junior Operating Lessee, the Collateral, the Senior Mezzanine
Collateral or any Individual Property, which actions, suits or proceedings, if
determined against Borrower, Mortgage Borrower, Senior Mezzanine Borrower, any
Guarantor, Operating Lessee, Ashford Keys Senior Operating Lessee, Ashford Keys
Junior Operating Lessee, the Collateral, the Senior Mezzanine Collateral or any
Individual Property, in each case which would reasonably be expected to have or
does have a Material Adverse Effect.

 

Section 4.6            Agreements

 

Borrower is not a party to any agreement or instrument or subject to any
restriction which would reasonably be expected to have or does have a Material
Adverse Effect.  Neither Borrower, Mortgage Borrower nor Senior Mezzanine
Borrower is in default in any material respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which Borrower, Mortgage
Borrower, Senior Mezzanine Borrower or the Collateral, the Senior Mezzanine
Collateral or any Individual Property is bound, which would reasonably be
expected to have a Material Adverse Effect.  Neither Borrower, Mortgage Borrower
nor Senior Mezzanine Borrower has any material financial obligation under any
agreement or instrument to which Borrower, Mortgage Borrower or Senior Mezzanine
Borrower is a party or by which Borrower, Mortgage Borrower, Senior Mezzanine
Borrower or the Collateral, the Senior Mezzanine Collateral or any Individual
Property is otherwise bound, other than (a) obligations incurred in connection
with any Permitted Debt (as defined in this Agreement, the Mortgage Loan
Agreement and the Senior Mezzanine Loan Agreement), (b) obligations under the
Loan Documents, Senior Mezzanine Loan Documents and Mortgage Loan Documents,
(c) obligations which have been disclosed to Lender in writing and/or
(d) Permitted Encumbrances (as defined in this Agreement, the Mortgage Loan
Agreement and the Senior Mezzanine Loan Agreement).

 

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Section 4.7            Solvency

 

Borrower has (a) not entered into the transaction or executed the Note, this
Agreement or any other Loan Documents with the actual intent to hinder, delay or
defraud any creditor and (b) received reasonably equivalent value in exchange
for their obligations under such Loan Documents.  Giving effect to the Loan, the
fair saleable value of the assets of Borrower exceeds and will, immediately
following the making of the Loan, exceed the total liabilities of Borrower,
including, without limitation, subordinated, unliquidated, disputed and
contingent liabilities.  No petition in bankruptcy has been filed against
Borrower, Mortgage Borrower, Senior Mezzanine Borrower, any Guarantor, any SPE
Component Entity (if any) or Affiliated Manager in the last ten (10) years, and
neither Borrower, Mortgage Borrower, Senior Mezzanine Borrower nor any
Guarantor, any SPE Component Entity (if any) or Affiliated Manager in the last
ten (10) years has made an assignment for the benefit of creditors or taken
advantage of any Creditors Rights Laws.  Neither Borrower, Mortgage Borrower,
Senior Mezzanine Borrower nor any Guarantor, any SPE Component Entity (if any)
or Affiliated Manager is contemplating either the filing of a petition by it
under any Creditors Rights Laws or the liquidation of all or a major portion of
Borrower’s assets or property, and Borrower has no knowledge of any Person
contemplating the filing of any such petition against Borrower, Mortgage
Borrower, Senior Mezzanine Borrower or any Guarantor, any SPE Component Entity
(if any) or Affiliated Manager.

 

Section 4.8            Full and Accurate Disclosure

 

No statement of fact made by or on behalf of Borrower in this Agreement or in
any of the other Loan Documents or in any other document or certificate
delivered by or on behalf of Borrower contains any untrue statement of a
material fact or omits to state any material fact, to Borrower’s knowledge,
necessary to make statements contained herein or therein not misleading.  There
is no material fact presently known to Borrower which has not been disclosed
which would reasonably be expected to have or does have a Material Adverse
Effect.

 

Section 4.9            No Plan Assets

 

Neither Borrower, Mortgage Borrower, Senior Mezzanine Borrower nor Operating
Lessee is an employee benefit plan, as defined in Section 3(3) of ERISA, subject
to Title I of ERISA and none of the assets of Borrower, Mortgage Borrower,
Senior Mezzanine Borrower or Operating Lessee constitute or will constitute
“plan assets” of one or more such plans within the meaning of 29 C.F.R.
Section 2510.3-101.  Neither Borrower, Mortgage Borrower, Senior Mezzanine
Borrower nor Operating Lessee is a governmental plan within the meaning of
Section 3(32) of ERISA Transactions by or with Borrower, Mortgage Borrower,
Senior Mezzanine Borrower or Operating Lessee are not subject to state statutes
regulating investment of, and fiduciary obligations with respect to,
governmental plans similar to the provisions of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code currently in effect, which prohibit or
otherwise restrict the transactions contemplated by this Agreement.  With
respect to any multiemployer plan to which Borrower, Mortgage Borrower or
Operating Lessee or any entity that is under common control with Borrower,
Mortgage Borrower, Senior Mezzanine Borrower or Operating Lessee within the
meaning of ERISA Section 4001(a)(14) is or has been obligated to contribute,
neither Borrower, Mortgage Borrower, Senior Mezzanine Borrower nor any such
entity has incurred any

 

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material liability under ERISA Section 515 of ERISA or Title IV of ERISA which
is or remains unsatisfied.

 

Section 4.10         Not a Foreign Person

 

Borrower is not a foreign corporation, foreign partnership, foreign trust,
foreign estate or nonresident alien or a disregarded entity owned by any of them
(as those terms are defined in the Internal Revenue Code), and if requested by
Lender, Borrower will so certify (or in the case of a disregarded entity, its
owner will certify) to Lender or a person designated by Lender under penalties
of perjury to the accuracy of this representation, and will provide in such
certification such additional information as Lender may reasonably request
related thereto.

 

Section 4.11         Enforceability

 

The Loan Documents are not subject to any right of rescission, set off,
counterclaim or defense by Borrower, including the defense of usury, nor would
the operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and Borrower has not
asserted any right of rescission, set off, counterclaim or defense with respect
thereto.  No Default or Event of Default exists under or with respect to any
Loan Document.

 

Section 4.12         Business Purposes

 

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

 

Section 4.13         Compliance

 

Except as expressly disclosed in a Zoning Report, a Property Condition Report
and/or an Environmental Report, Mortgage Borrower and each Individual Property,
and the use and operation thereof, comply in all material respects with all
Legal Requirements, including, without limitation, building and zoning
ordinances and codes and the Americans with Disabilities Act.  Neither Borrower,
Mortgage Borrower nor Senior Mezzanine Borrower is in default or in violation of
any order, writ, injunction, decree or demand of any Governmental Authority
which would reasonably be expected to have a Material Adverse Effect, and
neither Borrower, Mortgage Borrower nor Senior Mezzanine Borrower has received
any written notice of any such default or violation.  There has not been
committed by Borrower, Mortgage Borrower or Senior Mezzanine Borrower or, to
Borrower’s knowledge, any other Person in occupancy of or involved with the
operation or use of any Individual Property any act or omission affording any
Governmental Authority the right of forfeiture as against such Individual
Property, the Collateral or any part thereof or any monies paid in performance
of Borrower’s obligations under any of the Loan Documents.

 

Section 4.14         Financial Information

 

All financial data, including, without limitation, the balance sheets,
statements of cash flow, statements of income and operating expense and rent
rolls, that have been delivered to Lender in respect of Borrower, Mortgage
Borrower, Senior Mezzanine Borrower, any Guarantor, the

 

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Collateral and/or each Individual Property (a) are true, complete and correct in
all material respects, (b) accurately represent the financial condition of
Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Guarantor, the
Collateral or the Properties, as applicable, as of the date of such reports in
all material respects, and (c) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with GAAP throughout the periods covered, except as disclosed therein.  Neither
Borrower, Mortgage Borrower nor Senior Mezzanine Borrower has any contingent
liabilities, liabilities for taxes, unusual forward or long term commitments or
unrealized or anticipated losses from any unfavorable commitments that are known
to Borrower, Senior Mezzanine Borrower or Mortgage Borrower except as referred
to or reflected in said financial statements.  Since the date of such financial
statements, there has been no change in the financial condition, operations or
business of Borrower, Mortgage Borrower, Senior Mezzanine Borrower or Guarantor
from that set forth in said financial statements which would reasonably be
expected to have or has had a Material Adverse Effect.

 

Section 4.15         Condemnation

 

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

 

Section 4.16         Utilities and Public Access; Parking

 

Each Individual Property is (i) located on or adjacent to a public road and has
access to such road directly, or has access via an irrevocable perpetual
easement or right of way permitting ingress and egress to and from a public road
and (ii) served by water, sewer, sanitary sewer and storm drain facilities
adequate to service such Individual Property for full utilization of such
Individual Property for its intended uses.  Except as expressly set forth on a
Survey, all public utilities necessary to the full use and enjoyment of each
Individual Property as currently used and enjoyed are located either in the
public right of way abutting such Individual Property (which are connected so as
to serve the Individual Property without passing over other property) or in
recorded easements serving the Individual Property.  Except as expressly set
forth on a Survey, all roads necessary for the use of each Individual Property
for its current purposes have been completed and dedicated to public use and
accepted by all Governmental Authorities.  Except as expressly set forth in a
Zoning Report, each Individual Property has, or is served by, parking to the
extent required to comply with all Legal Requirements.

 

Section 4.17         Separate Lots

 

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

 

Section 4.18         Assessments

 

To Borrower’s knowledge, there are no pending or proposed special or other
assessments for public improvements or otherwise affecting any Individual
Property, nor are there any

 

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contemplated improvements to such Individual Property that may result in such
special or other assessments.

 

Section 4.19         Insurance

 

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

 

Section 4.20         Use of Property

 

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

 

Section 4.21         Certificate of Occupancy; Licenses

 

All material certifications, permits, licenses and approvals, including, without
limitation, certificates of completion or occupancy and any applicable liquor
license required for the legal use, occupancy and operation of each Individual
Property for the purpose intended herein, have been obtained and are valid and
in full force and effect.  Borrower shall cause Senior Mezzanine Borrower to
cause Mortgage Borrower to keep and maintain (or cause to be kept and
maintained) all licenses necessary for the operation of each Individual Property
for the purpose intended herein.  The use being made of each Individual Property
is in conformity with the final certificate of occupancy (or compliance, if
applicable) and any other permits or licenses issued for such Individual
Property.

 

Section 4.22         Flood Zone

 

None of the Improvements on any Individual Property are located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards, or, if any portion of the Improvements is located within such
area, Mortgage Borrower has obtained the insurance prescribed in the Mortgage
Loan Agreement.

 

Section 4.23         Physical Condition

 

Except as set forth in the Property Condition Report, to Borrower’s knowledge
after due inquiry, the Properties, including, without limitation, all buildings,
improvements, parking facilities, sidewalks, storm drainage systems, roofs,
plumbing systems, HVAC systems, fire protection systems, electrical systems,
equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, are in good condition, order and repair
in all material respects (ordinary wear and tear excepted).  Except as set forth
in the Property Condition Report, to Borrower’s knowledge after due inquiry,
there exists no structural or other material defects or damages in any
Individual Property, as a result of a Casualty or otherwise, and whether latent
or otherwise.  Neither Borrower, Mortgage Borrower nor Senior Mezzanine Borrower
has received written notice from any insurance company or bonding company of any

 

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defects or inadequacies in any Individual Property, or any part thereof, which
would adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.

 

Section 4.24         Boundaries

 

(a)           To Borrower’s knowledge and in reliance on, and except as
otherwise specifically disclosed on a Survey, none of the Improvements which
were included in determining the appraised value of the any Individual Property
lie outside the boundaries and building restriction lines of such Individual
Property to any material extent, and (b) no improvements on adjoining properties
encroach upon the such Individual Property and no easements or other
encumbrances upon such Individual Property encroach upon any of the Improvements
so as to have a Material Adverse Effect.

 

Section 4.25         Leases

 

Borrower represents and warrants to Lender that the Property is not subject to
any Major Leases as of the Closing Date.

 

Section 4.26         Filing and Recording Taxes

 

All transfer taxes, deed stamps, intangible taxes or other amounts in the nature
of transfer taxes required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the transfer of each
Individual Property to the applicable Mortgage Borrower, the Collateral to
Borrower, the making of the Mortgage Loan, the Loan or the other transactions
contemplated by this Agreement have been paid.  All recording, stamp, intangible
or other similar tax required to be paid by any Person under applicable Legal
Requirements currently in effect in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including, without limitation, the Pledge Agreements, have been paid
or will be paid by Borrower.

 

Section 4.27         Management Agreement

 

The Management Agreement is in full force and effect and there is no default
thereunder by any party thereto and, to Borrower’s knowledge, no event has
occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder.  No management fees (which are due and payable)
under the Management Agreement are accrued and unpaid.  Neither Mortgage
Borrower nor Operating Lessee are obligated to pay any key money to any
Franchisor or Manager under any Franchise Agreement or Management Agreement.

 

Section 4.28         Illegal Activity

 

No portion of the Properties or the Collateral have been or will be purchased,
improved, equipped or fixtured with proceeds of any illegal activity, and no
part of the proceeds of the Loan or the Mortgage Loan will be used in connection
with any illegal activity.

 

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Section 4.29         Construction Expenses

 

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

 

Section 4.30         Personal Property

 

Mortgage Borrower has paid in full for, and is the owner of, all Personal
Property (other than Tenants’ property) used in connection with the operation of
the Properties, free and clear of any and all security interests, liens or
encumbrances, except for Permitted Encumbrances and the Lien and security
interest created by the Loan Documents and the Mortgage Loan Documents.

 

Section 4.31         Taxes

 

Borrower has filed all federal, state, county, municipal, and city income,
personal property and other tax returns required to have been filed by it and
has paid all taxes and related liabilities which have become due pursuant to
such returns or pursuant to any assessments received by it.  Borrower does not
know of any basis for any additional assessment in respect of any such taxes and
related liabilities for prior years.

 

Section 4.32         Title

 

(a)           Borrower and Ashford Keys Junior Operating Lessee each are the
record and beneficial owner of, and have good and marketable title to, the
applicable Collateral, free and clear of all Liens whatsoever.  Each Pledge
Agreement, together with the UCC Financing Statements relating to the Collateral
when properly filed in the appropriate records, will create a valid, perfected
first priority security interests in and to the Collateral, all in accordance
with the terms thereof for which a Lien can be perfected by filing a UCC
Financing Statement.  For so long as the Lien of the Pledge Agreement is
outstanding, Borrower and Ashford Keys Junior Operating Lessee shall forever
warrant, defend and preserve such title and the validity and priority of the
Lien of the Pledge Agreement and shall forever warrant and defend such title,
validity and priority to Lender against the claims of all persons whomsoever.

 

(b)           Each Mortgage Borrower has good, marketable and insurable fee
simple title to the applicable Individual Property (and valid leasehold interest
in the case of the Ground Lease) free and clear of all liens, encumbrances and
charges whatsoever except for the Permitted Encumbrances.  The Permitted
Encumbrances do not and will not materially adversely affect or interfere with
the value, or materially adversely affect or interfere with the current use or
operation, of such Property or the ability of Borrower to repay the Note or any
other amount owing under the Note, the Pledge Agreements, the Loan Agreement, or
the other Loan Documents or to perform its obligations thereunder in accordance
with the terms of the Loan Agreement, the Note, the Pledge Agreements or the
other Loan Documents.  Borrower shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower to forever warrant, defend and preserve the title to the
Property and to forever warrant and defend the same to Lender against the claims
of all persons whomsoever subject to the Permitted Encumbrances.

 

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Section 4.33         Federal Reserve Regulations

 

No part of the proceeds of the Loan will be used for the purpose of purchasing
or acquiring any “margin stock” within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System or for any other purpose which would
be inconsistent with such Regulation U or any other Regulations of such Board of
Governors, or for any purposes prohibited by Legal Requirements or prohibited by
the terms and conditions of this Agreement or the other Loan Documents.

 

Section 4.34         Investment Company Act

 

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

 

Section 4.35         Reciprocal Easement Agreements

 

(a)           To Borrower’s knowledge, neither Borrower, nor Mortgage Borrower
nor any other party is currently in default (nor has any notice been given or
received with respect to an alleged or current default) under any of the terms
and conditions of the REA, and the REA remains unmodified and in full force and
effect;

 

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

 

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

 

(d)           To Borrower’s knowledge, the terms, conditions, covenants, uses
and restrictions contained in the REA do not conflict in any manner with any
terms, conditions, covenants, uses and restrictions contained in any Major Lease
or in any agreement between Mortgage Borrower and occupant of any peripheral
parcel, including without limitation, conditions and restrictions with respect
to kiosk placement, tenant restrictions (type, location or exclusivity), sale of
certain goods or services, and/or other use restrictions.

 

Section 4.36         No Change in Facts or Circumstances; Disclosure

 

All information submitted by Borrower, Mortgage Borrower or their respective
agents to Lender and in all financial statements, rent rolls, reports,
certificates and other documents submitted in connection with the Loan or in
satisfaction of the terms thereof and all statements of

 

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fact made by Borrower in this Agreement or in any other Loan Document, are
accurate, complete and correct in all material respects.  There has been no
material adverse change in any condition, fact, circumstance or event that would
make any such information inaccurate, incomplete or otherwise misleading in any
material respect or that otherwise would reasonably expected to have or does
have a Material Adverse Effect.  Borrower has disclosed to Lender all material
facts and has not failed to disclose any material fact that could cause any
representation or warranty made herein to be materially misleading.

 

Section 4.37         Intellectual Property

 

To Borrower’s knowledge, all trademarks, trade names and service marks necessary
to the business of Borrower, Mortgage Borrower, Senior Mezzanine Borrower,
Operating Lessee, Ashford Keys Senior Operating Lessee or Ashford Keys Junior
Operating Lessee as presently conducted or as Borrower, Mortgage Borrower or
Senior Mezzanine Borrower contemplates conducting its business are in good
standing and uncontested.  To Borrower’s knowledge, Borrower, Mortgage Borrower,
Senior Mezzanine Borrower, Operating Lessee, Ashford Keys Senior Operating
Lessee and Ashford Keys Junior Operating Lessee have not infringed, are not
infringing, and have not received written notice of infringement with respect to
asserted trademarks, trade names and service marks of others.  To Borrower’s
knowledge, there is no infringement by others of trademarks, trade names and
service marks of Borrower, Mortgage Borrower, Senior Mezzanine Borrower,
Operating Lessee, Ashford Keys Senior Operating Lessee or Ashford Keys Junior
Operating Lessee.

 

Section 4.38         Compliance with Prescribed Laws

 

None of Borrower, Mortgage Borrower, Senior Mezzanine Borrower or any Person who
Controls Borrower, Mortgage Borrower or Senior Mezzanine Borrower currently is
identified by the Office of Foreign Assets Control, Department of the Treasury
(“OFAC”) or otherwise qualifies as a Embargoed Person, and Borrower, Mortgage
Borrower and Senior Mezzanine Borrower have implemented procedures to ensure
that no Person who now or hereafter owns a direct or indirect equity interest in
Borrower, Mortgage Borrower or Senior Mezzanine Borrower is an Embargoed Person
or is Controlled by an Embargoed Person.  Borrower, Mortgage Borrower and Senior
Mezzanine Borrower are not in violation of any Prescribed Laws.

 

Section 4.39         Brokers and Financial Advisors

 

Borrower has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the transactions contemplated by
this Agreement other than Lismore Capital, whose fees shall be paid in full by
Borrower on or prior to the date hereof.

 

Section 4.40         Franchise Agreements

 

The Franchise Agreements are in full force and effect and there is no default
thereunder by any party thereto and no circumstance, condition or event has
occurred that, with the passage of time and/or giving of notice, would
constitute a default thereunder or entitle Franchisor to terminate any Franchise
Agreement.  All franchise fees, reservation fees, royalties, marketing fees and
other sums and payable due under the Franchise Agreements have been paid in full
or are

 

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current.  A true, correct and complete copy of the Franchise Agreements,
together with all amendments and ancillary agreements or side letters related
thereto, have been delivered to Lender.  The Loan, and the encumbrance of the
Collateral as security for the Loan, will not cause Mortgage Borrower to violate
any financial covenants contained in any Franchise Agreement.

 

Section 4.41         PIPS

 

Other than the Scheduled PIP, there are no PIPs affecting any Individual
Property as of the Closing Date.

 

Section 4.42         [Intentionally Omitted]

 

Section 4.43         Labor Matters

 

There are no collective bargaining agreements or similar agreement to which
Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Ashford Keys Senior
Operating Lessee, Ashford Keys Junior Operating Lessee or Operating Lessee is a
party

 

Section 4.44         Condominium Representations

 

Borrower represents and warrants that to the best of Borrower’s knowledge
(a) the Condominium Documents are in full force and effect; (b) all amounts due
and payable by Mortgage Borrower under the Condominium Documents have been paid;
(c) there is no existing material default or breach of any covenant or condition
on the part of Mortgage Borrower or any other Person under any Condominium
Document; (d) except as set forth on Schedule 4.44(d), no other party to any of
the Condominium Documents has any defense, set-off or counterclaim against
Mortgage Borrower or Operating Lessee; and (e) there are no amendments of or
modifications to any Condominium Documents except as disclosed in writing to
Lender.

 

Section 4.45         Ground Lease Representations

 

(a)           (i) The Ground Leases are in full force and effect and have not
been modified or amended, except as reflected in the definition thereof,
(ii) there are no existing defaults under the Ground Leases by Mortgage
Borrower, or, to Borrower’s knowledge, the lessor thereunder, and, to Borrower’s
knowledge, no event has occurred which but for the passage of time, or notice,
or both would constitute a default under the Ground Leases, (iii) all rents,
additional rents and other sums due and payable under the Ground Leases have
been paid in full, (iv) neither Borrower, Mortgage Borrower, Senior Mezzanine
Borrower nor the lessor under any Ground Leases has commenced any action or
given or received any notice for the purpose of terminating any Ground Lease,
(v) to Borrower’s knowledge, no Fee Owner, as debtor in possession or by a
trustee for such Fee Owner, has given any notice of, and Borrower, Mortgage
Borrower or Senior Mezzanine Borrower have not consented to, any attempt to sell
or transfer the applicable Fee Estate free and clear of the applicable Ground
Lease under Section 363(f) (or any similar provision) of the U.S. Bankruptcy
Code, and (vi) to Borrower’s knowledge, no Fee Owner under any Ground Lease is
subject to any voluntary or involuntary bankruptcy, reorganization or insolvency
proceeding and no Fee Estate is an asset being administered in any voluntary or
involuntary bankruptcy, reorganization or insolvency proceeding;

 

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(b)           The Ground Leases permit the interest of the lessee thereunder to
be encumbered by the Mortgages;

 

(c)           Except as indicated in the Title Insurance Policy, Mortgage
Borrower’s interest in the Ground Leases is not subject to any Lien superior to,
or of equal priority with, the Mortgages;

 

(d)           Mortgage Borrower’s interest in the Ground Leases is assignable
upon notice to, but without the consent of, the lessor thereunder and, in the
event that it is so assigned, it is further assignable upon notice to, but
without the need to obtain the consent of, such lessor;

 

(e)           Each Ground Lease provides that any right of Mortgage Borrower to
terminate such Ground Lease shall not be effectively exercised by Mortgage
Borrower, nor honored by the lessor unless such right of termination shall be
joined in and consented to by Mortgage Lender;

 

(f)            Intentionally Omitted;

 

(g)           The Hotel Ground Lease has a term that extends fourteen (14) years
beyond the Maturity Date. The Parking Lease has a term (with extensions) which
extends not less than twenty (20) years beyond the Maturity Date;

 

(h)           Intentionally Omitted;

 

(i)            Under the terms of each Ground Lease and the applicable Mortgage
Loan Documents, taken together, any Net Proceeds will be applied either to the
Restoration of all or part of the applicable Individual Property or to the
payment of the outstanding principal balance of the Mortgage Loan together with
any accrued interest thereon in the manner, and subject to the provisions of,
such Ground Lease; and

 

(j)            The Ground Leases do not impose restrictions on subletting that
would be viewed as commercially unreasonable.

 

Section 4.46         Operating Lease Representations.

 

(a)           (i) The Operating Leases are in full force and effect, (ii) there
are no defaults under the Operating Leases by Mortgage Borrower or Operating
Lessee, and no event has occurred which but for the passage of time, or notice,
or both would constitute a default under the Operating Leases, (iii) all rents,
additional rents and other sums due and payable under the Operating Leases have
been paid current and (iv) neither tenant nor the landlord under the Operating
Leases has commenced any action or given or received any notice for the purpose
of terminating the Operating Leases;

 

(b)           Except for the Liens of the Senior Mezzanine Pledge Agreement and
the Mortgages, Ashford Keys Junior Operating Lessee’s interest in the Operating
Leases is not subject to any Liens superior to, or of equal priority with, the
Pledge Agreements;

 

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(c)           Except for the Liens of the Mortgages, Ashford Keys Senior
Operating Lessee’s interest in the Operating Leases is not subject to any Liens
superior to, or of equal priority with, the Senior Mezzanine Pledge Agreement;

 

(d)           Except for the Liens of the Mortgages, Mortgage Borrower’s
interest in the Operating Leases is not subject to any Liens superior to, or of
equal priority with, the Mortgages; and

 

(e)           Borrower has delivered or caused to be delivered to Lender a true,
correct and complete copy of the Operating Leases.

 

Section 4.47         Survival

 

Borrower agrees that, unless expressly provided otherwise, all of the
representations and warranties of Borrower set forth in this Article 4 and
elsewhere in this Agreement and in the other Loan Documents shall be deemed
given and made as of the date hereof and shall survive for so long as any
portion of the Debt remains owing to Lender.  All representations, warranties,
covenants and agreements made in this Agreement or in the other Loan Documents
by Borrower shall be deemed to have been relied upon by Lender notwithstanding
any investigation heretofore or hereafter made by Lender or on its behalf.

 

Section 4.48         Affiliates

 

Borrower does not own any equity interests in any Person other than the
applicable Pledged Interests.

 

Section 4.49         Mortgage Borrower and Senior Mezzanine Borrower
Representations

 

Borrower has reviewed the representations and warranties made by, and covenants
of, Mortgage Borrower to and for the benefit of Mortgage Lender contained in the
Mortgage Loan Documents and of Senior Mezzanine Borrower to and for the benefit
of Senior Mezzanine Lender contained in the Senior Mezzanine Loan Documents, and
such representations and warranties are true, correct and complete and such
representations and warranties are incorporated herein by this reference as if
set forth at length herein.

 

Section 4.50         List of Mortgage Loan Documents

 

There are no Mortgage Loan Documents other than those set forth on Schedule XII
attached hereto.  Borrower has or has caused to be delivered to Lender true,
complete and correct copies of all Mortgage Loan Documents, and none of the
Mortgage Loan Documents has been amended or modified as of the date thereof.

 

Section 4.51         List of Senior Mezzanine Loan Documents

 

There are no Senior Mezzanine Loan Documents other than those set forth on
Schedule XIV attached hereto.  Borrower has or has caused to be delivered to
Lender true, complete and correct copies of all Senior Mezzanine Loan Documents,
and none of the Senior Mezzanine Loan Documents has been amended or modified as
of the date thereof.

 

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Section 4.52         Mortgage Loan Event of Default and Senior Mezzanine Loan
Event of Default

 

No Mortgage Loan Event of Default, Senior Mezzanine Loan Event of Default or, to
the best of Borrower’s knowledge, information and belief, after due inquiry,
Mortgage Default or Senior Mezzanine Default exists as of the date hereof.

 

ARTICLE 5
BORROWER COVENANTS

 

From the date hereof and until repayment of the Debt in full and performance in
full of all obligations of Borrower under the Loan Documents or the earlier
release in full of Lender’s Lien encumbering the Collateral (and all related
obligations) in accordance with the terms of this Agreement and the other Loan
Documents, Borrower hereby covenants and agrees with Lender that:

 

Section 5.1            Existence; Compliance with Requirements

 

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

 

(b)           After prior written notice to Lender, Borrower, at its own
expense, may contest or permit Senior Mezzanine Borrower to permit Mortgage
Borrower to contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the Legal Requirements affecting
Borrower, Mortgage Borrower, an Individual Property or the Collateral, provided
that (i) no Event of Default has occurred and is continuing; (ii) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower, Mortgage Borrower, the
Collateral or any Individual Property is subject and shall not constitute a
default thereunder; (iii) none of the Collateral or the Properties, any part
thereof or interest therein, nor Borrower, Mortgage Borrower or Senior Mezzanine
Borrower shall be affected in any material adverse way as a result of such
proceeding; (iv) non compliance with the Legal Requirements shall not impose
civil or criminal liability on Borrower, Mortgage Borrower or Lender;
(v) Borrower shall, or shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower to, have furnished the security as may be required in the proceeding,
or required by Lender if no such security has been furnished in the proceeding
or to Mortgage Lender, to ensure compliance by Borrower and Mortgage Borrower
with the Legal Requirements; and (vi) Borrower shall, or shall cause Senior
Mezzanine Borrower to cause Mortgage Borrower to, have furnished to Lender all
other items reasonably requested by Lender in connection therewith.

 

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(c)           At the request of Lender and subject to the rights of Mortgage
Lender under the Mortgage Loan Documents, Borrower shall, and shall cause Senior
Mezzanine Borrower to cause Mortgage Borrower to, upon the occurrence and during
the continuance of an Event of Default under the Loan Agreement or any of the
other Loan Documents, cooperate with Lender to cause all licenses and permits
related to each Individual Property to be assigned to Lender (or its nominee) if
such permits or licenses are assignable or otherwise cause such licenses or
permits to be held by Borrower, Mortgage Borrower, Senior Mezzanine Borrower,
Manager or Operating Lessee, if applicable, for the benefit of Lender until such
time as Lender can obtain such licenses or permits in its own name or the name
of a nominee.

 

Section 5.2            Maintenance and Use of Property

 

Borrower shall cause Senior Mezzanine Borrower to cause Mortgage Borrower and/or
Operating Lessee to cause the Property to be maintained in a good, safe and
insurable condition and in compliance with all applicable Legal Requirements,
and shall promptly cause Senior Mezzanine Borrower to cause Mortgage Borrower to
make (and shall promptly make or cause each Condominium Board (if it is the
responsibility of such Condominium Board pursuant to the applicable Condominium
Documents)) all repairs to the Properties, above grade and below grade, interior
and exterior, structural and nonstructural, ordinary and extraordinary,
unforeseen and foreseen except where the failure to so comply would not
reasonably be expected to have and does not have a Material Adverse Effect.  All
repairs made by Mortgage Borrower shall be made in a good and workmanlike
manner, shall be equal or better in quality and class to the original work and
shall comply with all applicable Legal Requirements and insurance requirements. 
The Improvements and the Personal Property shall not be removed, demolished or
other than in accordance with the provisions of Section 5.21, materially altered
(except for normal replacement of the Personal Property) without the prior
written consent of Lender, which consent shall not be unreasonably withheld,
conditioned or delayed.  If under applicable zoning provisions the use of all or
any portion of the Property is or shall become a nonconforming use, Borrower
will not, and will not cause or permit Mortgage Borrower to, cause or permit the
nonconforming use to be discontinued or the nonconforming Improvement to be
abandoned without the express prior written consent of Lender.  Borrower shall
cause Senior Mezzanine Borrower to cause Mortgage Borrower to operate the
applicable Individual Properties in accordance with the terms and provisions of
the applicable O&M Program.

 

Section 5.3            Waste

 

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

 

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Section 5.4            Taxes and Other Charges

 

(a)           Borrower shall pay or shall cause Senior Mezzanine Borrower to
cause Mortgage Borrower to pay all Property Taxes and Other Charges now or
hereafter levied or assessed or imposed against the Properties or any part
thereof as the same become due and payable; provided, however, Borrower’s
obligation to directly pay or to cause Senior Mezzanine Borrower to cause
Mortgage Borrower to pay Property Taxes shall be suspended for so long as
Mortgage Borrower complies with the terms and provisions of Section 9.4 of the
Mortgage Loan Agreement and Section 9.1 hereof.  Borrower shall furnish to
Lender receipts for the payment of the Property Taxes and the Other Charges at
least five (5) days prior to the date the same shall become delinquent
(provided, however, that Borrower is not required to furnish such receipts for
payment of Property Taxes in the event that such Property Taxes have been paid
by Mortgage Lender pursuant to Section 9.4 of the Mortgage Loan Agreement). 
Subject to the terms of Section 5.4(b) hereof, Borrower shall not suffer and
shall promptly cause to be paid and discharged any Lien or charge whatsoever
which may be or become a Lien or charge against any Individual Property, and
shall promptly pay for all utility services provided to the Properties.  If
Mortgage Borrower shall fail to pay any Property Taxes or Other Charges in
accordance with this Section 5.4 and is not contesting or causing a contesting
of such Property Taxes or Other Charges in accordance with Section 5.4(b) below,
or if there are insufficient funds in the Tax and Insurance Reserve Account (as
defined in the Mortgage Loan Agreement) to pay any Property Taxes or Other
Charges, Lender shall have the right, but shall not be obligated, to pay such
Property Taxes or Other Charges, and Borrower shall repay to Lender, on demand,
any amount paid by Lender, with interest thereon at the Default Rate from the
date of the advance thereof to the date of repayment, and such amount shall
constitute a portion of the Debt secured by the Pledge Agreements.

 

(b)           After prior written notice to Lender, Borrower, at its own
expense, may, or may cause Senior Mezzanine Borrower to cause Mortgage Borrower
to, contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any Property Taxes or Other Charges, provided that (i) no
Event of Default is continuing; (ii) such proceeding shall be permitted under
and be conducted in accordance with the provisions of any other instrument to
which Borrower, Mortgage Borrower or Senior Mezzanine Borrower is subject and
shall not constitute a default thereunder and such proceeding shall be conducted
in accordance with all applicable Legal Requirements; (iii) neither the
Properties nor any part thereof or direct or indirect interest therein, nor the
Collateral, the Senior Mezzanine Collateral nor any part thereof or direct or
indirect interest therein, will be in danger of being sold, forfeited,
terminated, canceled or lost; (iv) Borrower shall promptly upon final
determination thereof pay, or cause Senior Mezzanine Borrower to cause Mortgage
Borrower to pay, the amount of any such Property Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of such
contested Property Taxes or Other Charges from each Individual Property;
(vi) Borrower shall, or shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower to, furnish such security as may be required in the proceeding, or if
no such security has been furnished in the proceeding or to Mortgage Lender,
Borrower shall, or shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower to, furnish such reserve deposits as may be requested by Lender, to
ensure the payment of any such Property Taxes or Other Charges, together with
all interest and penalties thereon (unless Mortgage Borrower has paid all of the
Property Taxes or Other Charges under protest); (vii) failure to pay such
Property Taxes or Other

 

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Charges will not subject Borrower, Mortgage Borrower or Lender to any civil or
criminal liability; (viii) such contest is not reasonably expected to have and
does not have a Material Adverse Effect; and (ix) Borrower shall, upon request
by Lender, give Lender prompt notice of the status of such proceedings and/or
confirmation of the continuing satisfaction of the conditions set forth in
clauses (i) through (viii) of this Section 5.4(b).  Lender may pay over any such
cash deposit or part thereof held by Lender to the claimant entitled thereto at
any time when, in the reasonable judgment of Lender, the entitlement of such
claimant is established or any Individual Property (or part thereof or interest
therein) shall be in danger of being sold, forfeited, terminated, canceled or
lost or there shall be any danger of the Liens of the Mortgages being primed by
any related Lien.

 

(c)           Each Loan Party will timely file all U.S. federal, state, and
other material tax returns required to be filed by it and will timely pay all
Taxes shown on such returns or any assessments received by it and all other
material Taxes (other than any Property Taxes, which shall be governed by
Section 5.4(a) and (b)).

 

Section 5.5            Litigation

 

Borrower shall give prompt written notice to Lender of any litigation or
governmental proceedings pending or threatened in writing against any of
Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Guarantor, the
Collateral or any Individual Property which would reasonably be expected to have
or does have a Material Adverse Effect.

 

Section 5.6            Access to Properties

 

Borrower shall cause Senior Mezzanine Borrower to cause Mortgage Borrower to
permit agents, representatives and employees of Lender to inspect each
Individual Property or any part thereof during normal business hours on Business
Days upon reasonable advance notice (which may be given telephonically or by
e-mail), subject to Mortgage Borrower’s usual and customary safety requirements
and accompanied by a representative of Mortgage Borrower.

 

Section 5.7            Notice of Default

 

Borrower shall, and shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower to, promptly advise Lender (a) of any event or condition that would
reasonably be expected to have or does have a Material Adverse Effect of which
Borrower, Mortgage Borrower or Senior Mezzanine Borrower has knowledge, and
(b) of the occurrence of any Default or Event of Default of which Borrower,
Mortgage Borrower or Senior Mezzanine has knowledge.

 

Section 5.8            Cooperate in Legal Proceedings

 

Borrower shall, and shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower to, at Borrower’s expense cooperate fully with Lender with respect to
any proceedings before any court, board or other Governmental Authority which
would reasonably be expected to have, or does have, a Material Adverse Effect
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings, other than those proceedings where Borrower and Lender are
adverse parties.

 

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Section 5.9            Performance by Borrower

 

(a)           Borrower shall, and shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower to, in a timely manner observe, perform and fulfill each and
every covenant, term and provision to be observed and performed by Borrower
under this Agreement and the other Loan Documents, or by Mortgage Borrower under
the Mortgage Loan Documents, as applicable, and any other agreement or
instrument affecting or pertaining to the Collateral or each Individual Property
and any amendments, modifications or changes thereto (except to the extent
waived by the counterparty thereto, provided that such action or failure to act
by Borrower does not otherwise require Lender’s consent under the Loan
Documents).

 

(b)           Borrower shall not cause or permit Mortgage Borrower, Operating
Lessee or Guarantor to enter into or otherwise suffer or permit any amendment,
waiver, supplement, termination or other modification of any Mortgage Loan
Document executed and delivered by, or applicable to, Mortgage Borrower,
Operating Lessee or Guarantor as of the date hereof without the prior written
consent of Lender.  Borrower shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower, Operating Lessee and Guarantor to provide Lender with a copy
of any amendment, waiver, supplement, termination or other modification to the
Mortgage Loan Documents entered into in accordance with the terms hereof within
five (5) days after the execution thereof.  Except with respect to any
amendments or modifications which are immaterial and do not bear on Borrower’s,
Mortgage Borrower’s or any Pledged Entity’s status as a single-purpose,
bankruptcy remote entity or are otherwise permitted pursuant to the Mortgage
Loan Documents, Senior Mezzanine Loan Documents and/or Loan Documents, Borrower
shall not, and shall not permit Mortgage Borrower or any Pledged Entity to,
amend or modify its respective Organizational Documents in any respect, without
Lender’s prior written consent.

 

Section 5.10         Awards; Insurance Proceeds

 

Borrower shall cooperate with Lender in obtaining for Lender (to the extent that
this Agreement provides for such Awards or Insurance Proceeds to be paid to
Lender) the benefits of any Awards or Insurance Proceeds lawfully or equitably
payable in connection with the Properties, and Lender shall be reimbursed for
any expenses incurred in connection therewith (including reasonable, actual
attorneys’ fees and disbursements, the cost of any Restoration Consultant and
the payment by Borrower of the expense of an appraisal on behalf of Lender in
case of a Casualty or Condemnation affecting any Individual Property or any part
thereof) out of such Awards or Insurance Proceeds.

 

Section 5.11         Financial Reporting

 

(a)           Borrower shall keep adequate books and records of account on an
accrual basis and in all material respects accordance with the Uniform System of
Accounts, consistently applied and shall furnish, or shall cause to be
furnished, to Lender:

 

(i)            intentionally omitted;

 

(ii)           monthly and quarterly, including year to date, annual and
trailing twelve (12) months operating statements of the Properties, prepared and
certified by Borrower in a form approved by Lender, detailing Gross Revenues
received, Operating Expenses incurred, the net operating income before and after
Debt Service and Capital Expenditures and containing

 

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occupancy, average daily room, and revenue per available room statistics as well
as such other information as is necessary and sufficient to fairly represent the
financial position and results of operation of the Properties, within twenty
(20) days after the end of each calendar month and quarter; provided, however,
monthly and quarterly operating statements for the period ending on December 31
shall be delivered pursuant to clause (iv) below;

 

(iii)          the most current Smith Travel Research Reports then available (or
if not available, any successor thereto) to Borrower reflecting market
penetration and relevant hotel properties competing with the Properties, within
thirty (30) days after the end of each calendar month;

 

(iv)          annual balance sheet, profit and loss statement, statement of cash
flows, and statement of change in financial position of Borrower and Guarantor,
which are (a) with respect to Borrower, prepared and certified by Borrower and
(b) with respect to Guarantor, (I) prepared and certified by Guarantor and
(II) unless Guarantor is a Publicly Traded Company, audited by an Acceptable
Accountant, in each case, within ninety (90) days after the close of each fiscal
year of Borrower and Guarantor, as the case may be; provided, however,
Guarantor’s obligations under this Section 5.11(a)(iv) shall be deemed satisfied
for so long as (1) Guarantor’s financial statements are consolidated with the
financial statements of an Affiliate in accordance with GAAP and (2) on or
before the dates required hereunder, Borrower delivers to Lender all financial
statements of such Affiliate, including, without limitation, those required
pursuant to the Exchange Act, the Sarbanes-Oxley Act of 2002 and the listing
requirements of any applicable stock exchange;

 

(v)           an Annual Budget not later than thirty (30) days prior to the
commencement of each fiscal year of Mortgage Borrower, which shall be subject to
the reasonable approval of Lender (to the extent that Mortgage Borrower or
Operating Lessee has an approval right over the Annual Budget pursuant to the
terms of the applicable Management Agreement), along with any amendments or
modifications thereto.  In the event that Lender objects to a proposed Annual
Budget submitted by Borrower, Lender shall advise Borrower of such objections
within fifteen (15) days after receipt thereof (and deliver to Borrower a
reasonably detailed description of such objections) and Mortgage Borrower or
Operating Lessee shall promptly cause the revision of 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
Mortgage Borrower or Operating Lessee shall promptly cause the revision of the
same in accordance with the process described in this subsection until Lender
approves the Annual Budget.  Until such time that Lender approves a proposed
Annual Budget, which approval shall not be unreasonably withheld, conditioned or
delayed, the most recent Annual Budget shall apply; provided that, such approved
Annual Budget shall be adjusted to reflect (A) actual increases in Property
Taxes, Insurance Premiums, utilities expenses and expenses under the Management
Agreement and (B) up to five percent (5%) increases in any budgeted line items
provided such increases do not exceed a five percent (5%) increase in the Annual
Budget in the aggregate; and

 

(vi)          a quarterly calculation of the Debt Yield for the immediately
preceding twelve (12) months as of the last day of such quarter, prepared and
certified by Borrower, within thirty (30) days of the end of the quarter.

 

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(b)           Borrower shall furnish, or shall cause to be furnished, to Lender
such other additional financial or management information as may, from time to
time, be reasonably required by Lender in form and substance satisfactory to
Lender (including, without limitation, any financial reports required to be
delivered by any Tenant or any guarantor of any Major Lease pursuant to the
terms of such Major Lease or otherwise in Borrower’s possession), and shall
furnish to Lender and its agents convenient facilities for the examination and
audit of any such books and records.

 

(c)           All items requiring the certification of Borrower pursuant to this
Section 5.11 shall, except where Borrower is an individual, require a
certificate executed by an authorized officer of Borrower or the general partner
or managing member of Borrower, as applicable, and shall contain a statement by
Borrower as to whether there exists, to Borrower’s knowledge, an Event of
Default under the Loan Documents, and if an Event of Default exists, the nature
thereof, the period of time it has existed and the action then being taken to
remedy the same.

 

Section 5.12         Estoppel Statement

 

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

 

(b)           Borrower shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower to use commercially reasonable efforts to deliver to Lender, consistent
with the terms of the Major Leases but not more than twice in any twelve (12)
month period (so long as no Event of Default is then continuing), promptly upon
request, duly executed estoppel certificates from any one or more Tenants as
required by Lender attesting to such facts regarding the related Major Lease as
Lender may require, including, but not limited to attestations that each Major
Lease covered thereby is in full force and effect with no defaults thereunder on
the part of any party, that none of the Rents have been paid more than one month
in advance, except as security, and that the Tenant claims no defense or offset
against the full and timely performance of its obligations under the Major
Lease.

 

(c)           Upon Lender’s request, Borrower shall cause Senior Mezzanine
Borrower to cause Mortgage Borrower to use commercially reasonable efforts to
deliver to Lender an estoppel certificate from the lessor under each Ground
Lease stating that (i) such Ground Lease is in full force and effect and has not
been modified, amended or assigned, (ii) neither the lessor nor Mortgage
Borrower is in default under any of the terms, covenants or provisions of such
Ground Lease and such lessor knows of no event which, but for the passage of
time or the giving of notice or both, would constitute an event of default under
such Ground Lease, (iii) neither the lessor nor Mortgage Borrower has commenced
any action or given or received any notice for the purpose of

 

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terminating such Ground Lease and (iv) all sums due and payable under such
Ground Lease have been paid in full.

 

(d)           Borrower shall, upon request of Lender, cause Senior Mezzanine
Borrower to cause Mortgage Borrower to use commercially reasonable efforts to
deliver an estoppel certificate from each Franchisor stating (i) whether the
applicable Franchise Agreement is in full force and effect and has been
modified, amended or assigned, (ii) whether the Franchisor, Operating Lessee or
Mortgage Borrower is in default under any of the terms, covenants or provisions
of the Franchise Agreement and whether the Franchisor know of any event which,
but for the passage of time or the giving of notice or both, would constitute a
default under the Franchise Agreement, (iii) whether Franchisor, Operating
Lessee or Mortgage Borrower has commenced any action or given or received any
notice for the purpose of terminating the Franchise Agreement and (iv) whether
all sums due and payable to Franchisor under the Franchise Agreement have been
paid in full.

 

(e)           Within ten (10) Business Days of request by Lender, Borrower shall
furnish Lender an estoppel certificate from Ashford Keys Junior Operating
Lessee, Ashford Keys Senior Operating Lessee and Operating Lessee in form and
substance reasonably satisfactory to Lender.

 

Section 5.13         Leasing Matters

 

(a)           Borrower shall be permitted to cause Senior Mezzanine Borrower to
cause Mortgage Borrower or Operating Lessee to enter into a proposed Lease
(including the renewal or extension of an existing Lease (a “Renewal Lease”))
that is not a Major Lease without the prior written consent of Lender, provided
such proposed Lease or Renewal Lease (i) provides for rental rates and terms
comparable to existing local market rates and terms (taking into account the
type and quality of the tenant) as of the date such Lease is executed by
Mortgage Borrower or Operating Lessee (unless, in the case of a Renewal Lease,
the rent payable during such renewal, or a formula or other method to compute
such rent, is provided for in the original Lease), (ii) is an arm’s length
transaction with a bona fide, independent third party tenant, (iii) does not
contain any terms which would reasonably be expected to have or do have a
Material Adverse Effect, (iv) is subject and subordinate to the Mortgages and
the Tenant thereunder agrees to attorn to Mortgage Lender and any purchaser at a
foreclosure sale and (v) does not contain any option, offer, right of first
refusal, right of first offer or other similar right to acquire all or any
portion of any Individual Property.  Each Major Lease and all other proposed
Leases which do not satisfy the requirements set forth in this subsection,
unless Manager has the right to enter into such Lease without Mortgage
Borrower’s or Operating Lessee’s prior written consent pursuant to the
Management Agreement (each a “Required Approval Lease”) shall be subject to the
prior approval of Lender.  Borrower shall cause Senior Mezzanine Borrower to
cause Mortgage Borrower to promptly deliver to Lender copies of all Leases which
are entered into pursuant to this subsection together with Borrower’s
certification that Mortgage Borrower or Operating Lessee has satisfied all of
the conditions of this Section.  Borrower shall pay the costs and expenses
associated with Lender’s counsel review of any Lease for which Lender’s consent
may be required under this Section 5.13.

 

(b)           Except as provided in clause (c) below, Borrower shall cause
Senior Mezzanine Borrower to cause Mortgage Borrower to, or cause Operating
Lessee to, if applicable, (i) observe and perform all the obligations imposed
upon the landlord under the Leases in all

 

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material respects and shall not do or permit to be done anything to impair the
value of any of the Leases as security for the Debt; (ii) promptly send copies
to Lender of all notices of material default which Mortgage Borrower or
Operating Lessee shall send or receive under a Major Lease; (iii) enforce all of
the material terms, covenants and conditions contained in the Leases upon the
part of the tenant thereunder to be observed or performed; (iv) not collect any
Rents more than one (1) month in advance (except security deposits shall not be
deemed Rents collected in advance); (v) hold all security deposits in accordance
with the terms of the applicable Lease and Legal Requirements; (vi) not execute
any assignment of the landlord’s interest in any of the Leases or the Rents
except as contemplated by the Mortgage Loan Documents; and (vi) not consent to
any assignment of or subletting under any Major Leases not in accordance with
their terms, without the prior written consent of Lender, such consent not to be
unreasonably withheld, conditioned or delayed.

 

(c)           Borrower shall be permitted to cause Senior Mezzanine Borrower to
cause Mortgage Borrower and/or Operating Lessee to, without the prior written
consent of Lender, amend, modify or waive the provisions of or terminate, reduce
Rents or accept a surrender of space under, or shorten the term of, any Lease
which is not a Major Lease (including any guaranty, letter of credit or other
credit support with respect thereto) provided that (i) such action (taking into
account, in the case of a termination, reduction in rent, surrender of space or
shortening of term, the planned alternative use of the affected space) is not
reasonably expected to have and does not have a Material Adverse Effect, and
(ii) such amendment, modification, waiver, termination, rent reduction, space
surrender or term shortening, is otherwise in compliance with the requirements
of this Agreement, the Mortgage Loan Agreement, the Senior Mezzanine Loan
Agreement and any subordination agreement binding upon Mortgage Lender with
respect to such Lease.  A termination of a Lease with a tenant who is in
monetary default beyond applicable notice and grace periods shall not be
considered an action which has a Material Adverse Effect.  Any amendment,
modification, waiver, termination, rent reduction, space surrender or term
shortening which does not satisfy the requirements set forth in this subsection
shall be subject to the prior written approval of Lender (not to be unreasonably
withheld or delayed) (each, a “Lease Modification”), at Borrower’s expense. 
Borrower shall, or shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower to, promptly deliver to Lender copies of amendments, modifications and
waivers which are entered into pursuant to this subsection together with
Borrower’s certification that it and Mortgage Borrower have satisfied all of the
conditions of this subsection.

 

(d)           Notwithstanding anything contained herein to the contrary,
Borrower shall not and shall not permit Senior Mezzanine Borrower to permit
Mortgage Borrower or Operating Lessee to, without the prior written consent of
Lender, such consent not to be unreasonably withheld, conditioned or delayed,
enter into, renew, extend, amend, modify, waive any provisions of, terminate,
reduce Rents under, accept a surrender of space under, or shorten the term of
any Major Lease; provided, however, Borrower and/or Operating Lessee may
terminate a Major Lease with a tenant who is in default beyond applicable notice
and grace periods without the prior written approval of Lender.

 

(e)           Each request by Borrower for approval and consent by Lender
pursuant to this Section 5.13 shall be in writing and contain a legend in
capitalized bold letters on the top of the cover page stating:  “LENDER’S
RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE TO
RESPOND WITHIN SUCH TIME PERIOD

 

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SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED” and Borrower
shall include the following documentation with such request all materials
reasonably necessary in order for Lender to evaluate such matter.  In the event
that Lender fails to grant or withhold its approval and consent to such matter
within such ten (10) Business Day period (and, in the case of a withholding of
consent, stating the grounds therefor in reasonable detail), then, so long as no
Event of Default is continuing, Lender’s approval and consent shall be deemed to
have been granted.  There shall be no administrative or approval fee in
connection with this Section 5.13(e), but Borrower shall pay any out-of-pocket
costs and expenses incurred by Lender.

 

Section 5.14         Property Management

 

(a)           Borrower shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower to cause Operating Lessee to (i) diligently perform and observe all of
the terms, covenants and conditions required to be performed and observed by it
under the Management Agreement and do all things necessary to preserve and to
keep unimpaired its material rights thereunder; (ii) promptly notify Lender of
any default under the Management Agreement of which it is aware; (iii) promptly
deliver to Lender a copy of any notice of default or other material notice
received by Mortgage Borrower and Operating Lessee under the Management
Agreement; (iv) promptly give notice to Lender of any notice or information that
Mortgage Borrower or Operating Lessee receives which indicates that Manager is
terminating the Management Agreement or that Manager is otherwise discontinuing
its management of any Individual Property; and (v) promptly enforce the
performance and observance of all of the covenants required to be performed and
observed by Manager under the Management Agreement.

 

(b)           Subject to the rights of Mortgage Lender and Senior Mezzanine
Lender under the Mortgage Loan Documents and Senior Mezzanine Loan Documents,
respectively, if at any time, (i) Manager shall become insolvent or a debtor in
a bankruptcy proceeding; (ii) unless managed by a Brand Manager, Lender has
accelerated the Loan as a result of an Event of Default hereunder; (iii) a
default has occurred and is continuing under the Management Agreement after the
expiration of all notice and cure periods contained thereunder, or (iv) Manager
has engaged in gross negligence, fraud, willful misconduct or misappropriation
of funds, Borrower shall, at the request of Lender and if permitted pursuant to
the terms of the Management Agreement or any other agreement of Manager, cause
Senior Mezzanine Borrower to cause Mortgage Borrower to cause Operating Lessee
to terminate the Management Agreement upon thirty (30) days prior notice to
Manager and replace Manager with a Qualified Manager pursuant to a Replacement
Management Agreement.

 

(c)           Borrower shall not, without the prior written consent of Lender
(which consent shall not be unreasonably withheld, conditioned or delayed),
permit Senior Mezzanine Borrower to permit Mortgage Borrower to permit Operating
Lessee to:  (i) except as provided in clause (e) below, surrender, terminate or
cancel, or consent to the surrender, termination or cancellation of, the
Management Agreement or replace Manager or enter into any other management
agreement with respect to any Individual Property; (ii) consent to the
assignment by Manager of its interest under the Management Agreement except to a
Qualified Manager or (iii) if such action could reasonably be expected to have a
Material Adverse Effect, (1) reduce or consent to the reduction of the term of
the Management Agreement; (2) increase or consent to the increase of the amount
of any charges under the Management Agreement; or (3) otherwise modify, change,

 

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supplement, alter or amend, or waive or release any of the terms and conditions
under, the Management Agreement in any material respect.  In the event that
Borrower, Mortgage Borrower, Senior Mezzanine Borrower or Operating Lessee
replaces Manager at any time during the term of Loan pursuant to this
subsection, such Manager shall be deemed to be a Qualified Manager.

 

(d)           Each request by Borrower for approval and consent by Lender
pursuant to this Section 5.14 shall be in writing and contain a legend in
capitalized bold letters on the top of the cover page stating:  “LENDER’S
RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE TO
RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO
HAVE BEEN GRANTED” and Borrower shall include the following documentation with
such request all materials reasonably necessary in order for Lender to evaluate
such matter.  In the event that Lender fails to grant or withhold its approval
and consent to such matter within such ten (10) Business Day period (and, in the
case of a withholding of consent, stating the grounds therefor in reasonable
detail), then, so long as no Event of Default is continuing, Lender’s approval
and consent shall be deemed to have been granted.  There shall be no
administrative or approval fee in connection with this Section 5.14(d), but
Borrower shall pay any out-of-pocket costs and expenses incurred by Lender.

 

(e)           Notwithstanding the foregoing, provided no Event of Default is
continuing, Borrower shall have the right to cause Mortgage Borrower to cause
Operating Lessee, and the right to permit Manager, without the prior written
approval of Lender (but upon prior written notice to Lender), to terminate a
Management Agreement at an Individual Property; provided, however, it shall be
an Event of Default hereunder in the event that within sixty (60) days of the
termination of such Management Agreement (i) Borrower shall have failed (or
shall have failed to cause Senior Mezzanine Borrower to cause Mortgage Borrower
or Operating Lessee in the case of clause (2) hereof) to deliver to Lender
either (1) a PIP Guaranty relating to any New PIP contemplated by the
Replacement Management Agreement or (2) Cash to be deposited into the PIP
Reserve Account in an amount equal to the PIP Required Deposit contemplated by
the Replacement Management Agreement, which Cash shall be held and distributed
in accordance with the terms of Section 9.9 of the Mortgage Loan Agreement and
(ii) Borrower fails to deliver evidence reasonably acceptable to Lender that a
Replacement Management Agreement is in full force and effect at the applicable
Individual Property; provided, however, (1) if the terminated Management
Agreement was with a Brand Manager (for which no separate Franchise Agreement
existed), and the Replacement Management Agreement is with a Qualified Manager
that is not a Brand Manager or Borrower, shall deliver evidence to Lender that
Mortgage Borrower or Operating Lessee has entered into a Replacement Franchise
Agreement within such sixty (60) day period and (2) if a Franchise Agreement for
the applicable Individual Property exists, and the Replacement Management
Agreement is with a Brand Manager for which no separate Franchise Agreement is
required by such Brand Manager or Borrower, shall deliver evidence to Lender
that Mortgage Borrower or Operating Lessee has terminated the existing Franchise
Agreement within such sixty (60) day period.

 

Section 5.15         Liens

 

Borrower shall not, without the prior written consent of Lender, cause or permit
Mortgage Borrower or Senior Mezzanine Borrower to, create, incur, assume or
suffer to exist any Lien on any portion of any Individual Property or the Senior
Mezzanine Collateral or permit any such

 

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action to be taken, except Permitted Encumbrances and Liens created by or
permitted pursuant to the Mortgage Loan Documents and the Senior Mezzanine Loan
Documents.  Neither Borrower nor Ashford Keys Junior Operating Lessee shall
create, incur, assume or suffer to exist any Lien on any portion of the
Collateral or permit any such action to be taken, except Permitted Encumbrances.

 

Section 5.16         Debt Cancellation

 

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

 

Section 5.17         Zoning

 

Borrower shall not cause or permit Senior Mezzanine Borrower to permit Mortgage
Borrower to (i) initiate or consent to any zoning reclassification of any
portion of any Individual Property or seek any variance under any existing
zoning ordinance or (ii) use or permit the use of any portion of the Properties
in any manner that could result in such use becoming a non conforming use under
any zoning ordinance or any other applicable land use law, rule or regulation,
in each case without the prior written consent of Lender.

 

Section 5.18         ERISA

 

(a)           Neither Borrower, Mortgage Borrower, Senior Mezzanine Borrower nor
Operating Lessee shall engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.

 

(b)           Borrower shall deliver to Lender such certifications or other
evidence from time to time throughout the term of the Loan, as requested by
Lender in its sole discretion, that (i) neither Borrower, Mortgage Borrower,
Senior Mezzanine Borrower nor Operating Lessee are, and neither Borrower,
Mortgage Borrower nor Senior Mezzanine Borrower maintains, an “employee benefit
plan” as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA,
or a “governmental plan” within the meaning of Section 3(32) of ERISA;
(ii) neither Borrower, Mortgage Borrower, Senior Mezzanine Borrower nor
Operating Lessee are subject to state statutes regulating investments of, or
fiduciary obligations with respect to, governmental plans; and (iii) one or more
of the following circumstances is true:

 

(c)           Equity interests in Borrower, Mortgage Borrower, Senior Mezzanine
Borrower and Operating Lessee are publicly offered securities, within the
meaning of 29 C.F.R. §2510.3 101(b)(2);

 

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

 

(e)           Borrower, Mortgage Borrower, Senior Mezzanine Borrower and
Operating Lessee qualify as an “operating company” or a “real estate operating
company” within the meaning of 29 C.F.R. §2510.3 101(c) or (e).

 

Section 5.19         No Joint Assessment

 

Borrower shall not cause or permit Senior Mezzanine Borrower to cause or permit
Mortgage Borrower to suffer, permit or initiate (other than as currently in
effect with respect to the other respective Units in any Condominium) the joint
assessment of the real property comprising the Property with (a) any other real
property constituting a tax lot separate from the Property, or (b) any portion
of the Property which may be deemed to constitute personal property, or any
other procedure whereby the Lien of any taxes which may be levied against such
personal property shall be assessed or levied or charged to such real property.

 

Section 5.20         Reciprocal Easement Agreements

 

Borrower shall not cause or permit Senior Mezzanine Borrower to cause or permit
Mortgage Borrower to enter into, terminate or modify in any material respect any
REA without Lender’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed.  Borrower shall cause Senior
Mezzanine Borrower to cause Mortgage Borrower to enforce, comply with, and cause
each of the parties to the REA to comply with all of the material economic terms
and conditions contained in the REA.  Each request by Borrower for approval and
consent by Lender pursuant to this Section 5.20 shall be in writing and contain
a legend in capitalized bold letters on the top of the cover page stating: 
“LENDER’S RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE
TO RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT IN LENDER’S CONSENT BEING DEEMED
TO HAVE BEEN GRANTED” and Borrower shall include the following documentation
with such request all materials reasonably necessary in order for Lender to
evaluate such matter.  In the event that Lender fails to grant or withhold its
approval and consent to such matter within such ten (10) Business Day period
(and, in the case of a withholding of consent, stating the grounds therefor in
reasonable detail), then, so long as no Event of Default is continuing, Lender’s
approval and consent shall be deemed to have been granted.  There shall be no
administrative or approval fee in connection with this Section 5.20, but
Borrower shall pay any out-of-pocket costs and expenses incurred by Lender.

 

Section 5.21         Alterations

 

Lender’s prior written approval shall be required in connection with any
alterations to any Improvements, exclusive of (1) alterations to tenant spaces
required under any Lease existing on the date hereof or entered into in
accordance with the terms of this Agreement, (2) alterations specifically
provided for in an Annual Budget which has been approved by Lender or pursuant
to an Annual Budget which Mortgage Borrower or Operating Lessee does not have
the right to approve pursuant to the applicable Management Agreement,
(3) alterations undertaken as part of

 

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a Restoration in accordance with the terms of this Agreement or as required by
Franchisor or a Brand Manager to comply with the Franchisor’s or Brand Manager’s
standards under the Franchise Agreement or Management Agreement or any (4) PIP
required by Franchisor, (a) that are reasonably expected to have or does have a
Material Adverse Effect on any Individual Property, (b) that are structural in
nature or have an adverse effect on any utility or HVAC system contained in the
Improvements or the exterior of any building constituting a part of any
Improvements or (c) that, together with any other alterations undertaken at the
same time (including any related alterations, improvements or replacements), are
reasonably anticipated to have a cost in excess of the Alteration Threshold.  If
the total unpaid amounts incurred and to be incurred with respect to such
alterations to the Improvements shall at any time exceed the Alteration
Threshold (with credit given for any balance in the FF&E Reserve (as defined in
the Mortgage Loan Agreement) which is specifically allocated to the applicable
Individual Property), Borrower shall promptly deliver to Lender, or shall cause
Senior Mezzanine Borrower to cause Mortgage Borrower to promptly deliver to
Mortgage Lender, as security for the payment of such amounts and as additional
security for Borrower’s obligations under the Loan Documents and Mortgage
Borrower’s obligations under the Mortgage Loan Documents any of the following: 
(i) cash, (ii) direct non callable obligations of the United States of America
or other obligations which are “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, to the extent acceptable
to the applicable Rating Agencies, or (iii) a Letter of Credit acceptable to
Lender in its sole and absolute discretion.  Such security shall be in an amount
equal to the excess of the total unpaid amounts incurred and to be incurred with
respect to such alterations to the Improvements over the Alteration Threshold.

 

Section 5.22         Agreements

 

During the term of the Loan:  (a) Borrower shall cause Senior Mezzanine Borrower
to cause Mortgage Borrower to fulfill and perform each and every material term,
covenant and provision of the Agreements to be fulfilled or performed by
Mortgage Borrower thereunder, if any, in a commercially reasonable manner;
(b) Borrower shall, in the manner provided for in this Agreement, give prompt
notice to Lender of any material written default notice received by Mortgage
Borrower under any material Agreement, together with a complete copy of any such
notice; (c) Borrower shall and shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower to enforce, short of termination thereof, the performance and
observance of each and every material term, covenant and provision of the
Agreements to be performed or observed, if any, by the other parties thereto in
a commercially reasonable manner; and (d) Borrower shall cause Senior Mezzanine
Borrower to cause Mortgage Borrower to not enter into, terminate or amend any of
the terms or provisions of any of the Agreements, except done in the ordinary
course of business or as may be commercially reasonable in Mortgage Borrower’s
ordinary course of business, without the prior written consent of Lender, which
consent shall not be unreasonably withheld, conditioned or delayed.  Each
request by Borrower for approval and consent by Lender pursuant to this
Section 5.22 shall be in writing and contain a legend in capitalized bold
letters on the top of the cover page stating:  “LENDER’S RESPONSE IS REQUESTED
WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE TO RESPOND WITHIN SUCH TIME
PERIOD SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED” and
Borrower shall include the following documentation with such request all
materials reasonably necessary in order for Lender to evaluate such matter.  In
the event that Lender fails to grant or withhold its approval and consent to
such matter within such ten (10) Business Day period (and,

 

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in the case of a withholding of consent, stating the grounds therefor in
reasonable detail), then, so long as no Event of Default is continuing, Lender’s
approval and consent shall be deemed to have been granted.

 

Section 5.23         Compliance with Prescribed Laws

 

Borrower shall not and shall not cause or permit Senior Mezzanine Borrower to
cause or permit Mortgage Borrower to (a) be or become subject at any time to any
law, regulation, or list of any government agency (including, without
limitation, the list maintained by OFAC and accessible through the OFAC website)
that prohibits or limits any lender from making any advance or extension of
credit to Borrower, Mortgage Borrower or Senior Mezzanine Borrower from
otherwise conducting business with Borrower, Mortgage Borrower or Senior
Mezzanine Borrower, or (b) fail to provide documentary and other evidence of
Borrower’s, Mortgage Borrower’s or Senior Mezzanine Borrower’s identity as may
be requested by any Lender at any time to enable any Lender to verify
Borrower’s, Mortgage Borrower’s or Senior Mezzanine Borrower’s identity or to
comply with Prescribed Laws.  In addition, Borrower hereby agrees to, and shall
cause Senior Mezzanine Borrower to, and cause Senior Mezzanine Borrower to cause
Mortgage Borrower to, provide to Lender any additional information with respect
to Borrower, Mortgage Borrower or Senior Mezzanine Borrower that Lender deems
necessary from time to time in order to ensure compliance with Prescribed Laws.

 

Section 5.24         Interest Rate Cap Agreement

 

(a)           Prior to or contemporaneously with the Closing Date, Borrower
shall have obtained the Interest Rate Cap Agreement.  The Interest Rate Cap
Agreement shall be maintained throughout the term of the Loan with an Acceptable
Counterparty.  If, at any time, the interest rate cap provider ceases to be an
Acceptable Counterparty, Borrower shall replace the Interest Rate Cap Agreement
with a Replacement Interest Rate Cap Agreement at Borrower’s sole cost and
expense within ten (10) days of receipt of notice from Lender that the interest
rate cap provider is no longer an Acceptable Counterparty.

 

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

 

(c)           Borrower shall comply with all of its obligations under the terms
and provisions of the Interest Rate Cap Agreement.  All amounts paid by the
Acceptable Counterparty under the Interest Rate Cap Agreement to Borrower or
Lender shall be deposited immediately into an account designated by Lender. 
Borrower shall take all actions reasonably requested by Lender to enforce
Lender’s rights under the Interest Rate Cap Agreement in the event of a default
by the

 

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Acceptable Counterparty and shall not waive, amend or otherwise modify any of
its rights thereunder.

 

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

 

(e)           In connection with the Interest Rate Cap Agreement and any
Replacement Interest Rate Cap Agreement, Borrower shall, within a reasonable
period of time after the effectiveness of such Interest Rate Cap Agreement or
Replacement Interest Rate Cap Agreement, obtain and deliver to Lender (1) a
confirmation evidencing such Interest Rate Cap Agreement or Replacement Interest
Rate Cap Agreement, (2) any guaranty or guaranties therefor, (3) executed
counterparts to the Collateral Assignment of Interest Cap Agreement, and (4) an
opinion from counsel (which counsel may be in house counsel for the Acceptable
Counterparty) for the Acceptable Counterparty (upon which Lender and its
successors and assigns may rely) which shall provide, in relevant part, that:

 

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

 

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

 

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

 

(iv)          the Interest Rate Cap Agreement or the Replacement Interest Cap
Agreement, as applicable, and any other agreement which the Acceptable
Counterparty has executed and delivered pursuant thereto, has been duly executed
and delivered by the Acceptable

 

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Counterparty and constitutes the legal, valid and binding obligation of the
Acceptable Counterparty, enforceable against the Acceptable Counterparty in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).

 

(f)            Notwithstanding anything to the contrary contained in this
Section 5.24 or elsewhere in this Agreement, if, at any time, Lender converts
the Loan from a LIBOR Rate Loan to either a Base Rate Loan or an Alternate Rate
Loan in accordance with Section 2.4 above (each, a “LIBOR Conversion”), then
within thirty (30) days after such LIBOR Conversion, Borrower shall either
(A) enter into, make all payments under, and satisfy all conditions precedent to
the effectiveness of, a Substitute Interest Rate Protection Agreement (and in
connection therewith, but not prior to Borrower taking all the actions described
in this clause (f), Borrower shall have the right to terminate any then-existing
Interest Rate Protection Agreement) or (B) cause the then-existing Interest Rate
Protection Agreement to be modified such that such then-existing Interest Rate
Protection Agreement satisfies the requirements of a Substitute Interest Rate
Protection Agreement as set forth below in the definition thereof (a “Converted
Interest Rate Protection Agreement”).

 

As used herein, “Substitute Interest Rate Protection Agreement” shall mean an
interest rate cap agreement between an Acceptable Counterparty and Borrower,
obtained by Borrower and collaterally assigned to Lender pursuant to this
Agreement and shall contain each of the following:

 

(i)            a term expiring no earlier than the then-applicable Maturity Date
or, to the extent a rated Securitization has occurred, through the end of the
Interest Accrual Period associated with the then applicable Maturity Date;

 

(ii)           the notional amount of the Substitute Interest Rate Protection
Agreement shall be equal to or greater than the then outstanding principal
balance of the Loan;

 

(iii)          it provides that the only material obligation of Borrower
thereunder is the making of a single payment to the Acceptable Counterparty
thereunder upon the execution and delivery thereof;

 

(iv)          it provides to Lender and Borrower (as reasonably determined by
Lender), for the term of the Substitute Interest Rate Protection Agreement, a
hedge against rising interest rates that is no less beneficial to Borrower and
Lender than that which was provided by the Interest Rate Protection Agreement
being obtained by Borrower in connection with the origination of the Loan; and

 

(v)           without limiting any of the provisions of the preceding clauses
(i) through (iv) above, it satisfies all of the other requirements set forth in
this Section 5.24.

 

From and after the date of any LIBOR Conversion, all references to “Interest
Rate Protection Agreement” and “Replacement Interest Rate Protection Agreement”
herein (other than in the definition of “Interest Rate Protection Agreement”,
the definition of “Replacement Interest Rate Protection Agreement” and as
referenced in the first sentence of Section 5.24(a) hereof) shall

 

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be deemed to refer or relate, as applicable, to a Substitute Interest Rate
Protection Agreement or a Converted Interest Rate Protection Agreement, as the
case may be.

 

Notwithstanding anything to the contrary set forth in this Section 5.24(f),
Borrower shall not be required to obtain a Substitute Interest Rate Protection
Agreement or Converted Interest Rate Protection Agreement, as applicable, during
any period when the Loan is outstanding as a Base Rate Loan or Alternate Rate
Loan if such a Substitute Interest Rate Protection Agreement or Converted
Interest Rate Protection Agreement, as the case may be, is not then commercially
available or would have a cost to Borrower that is not commercially reasonable,
in which event Borrower and Lender shall work together to find a mutually
agreeable alternative to a Substitute Interest Rate Protection Agreement or
Converted Interest Rate Protection Agreement that would afford Lender
substantially equivalent protection from increases in the applicable interest
rate.

 

Section 5.25         Franchise Agreement

 

(a)           Except as provided in this Agreement, the Properties shall at all
times be operated in accordance with the terms and conditions of the Franchise
Agreements.  Borrower shall, or shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower or Operating Lessee to cause Manager to, (i) pay all sums
required to be paid by Mortgage Borrower, Operating Lessee and/or Manager under
the Franchise Agreements, (ii) diligently perform, observe and enforce all of
the terms, covenants and conditions of the Franchise Agreements, (iii) promptly
deliver to Lender a copy of any written notice to Mortgage Borrower or Operating
Lessee of any default by Mortgage Borrower, Operating Lessee and/or Manager
under the Franchise Agreements and notify Lender of any material default under
the Franchise Agreements of which it is aware, (iv) promptly deliver to Lender a
copy of any written notice to Franchisor of any default by Franchisor under the
Franchise Agreements, (v) promptly deliver to Lender a copy of each financial
statement, business plan, capital expenditure plan, notice of non-performance,
report and estimate (a) received by Mortgage Borrower or Operating Lessee under
the Franchise Agreements and (b) required to be delivered by Mortgage Borrower,
Operating Lessee and/or Manager to Franchisor under the Franchise Agreements,
(vi) complete all work required under any PIP on or prior to the Outside Date,
(vii) not modify or amend the Franchise Agreements to the extent such
modification or amendment could reasonably be expected to have a Material
Adverse Effect, and (viii) except as provided in clause (b) below not terminate,
cancel, or replace the Franchise Agreements, nor replace the Franchisor, nor
waive or release any of its rights and remedies under the Franchise Agreements
in any material respect, without Lender’s prior written consent.  Each request
by Borrower for approval and consent by Lender pursuant to this Section 5.25
shall be in writing and contain a legend in capitalized bold letters on the top
of the cover page stating:  “LENDER’S RESPONSE IS REQUESTED WITHIN TEN
(10) BUSINESS DAYS.  LENDER’S FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL
RESULT IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED” and Borrower shall
include the following documentation with such request all materials reasonably
necessary in order for Lender to evaluate such matter.  In the event that Lender
fails to grant or withhold its approval and consent to such matter within such
ten (10) Business Day period (and, in the case of a withholding of consent,
stating the grounds therefor in reasonable detail), then, so long as no Event of
Default is continuing, Lender’s approval and consent shall be deemed to have
been granted.  There shall be no administrative or approval fee in connection
with this Section 5.25(a), but Borrower shall pay any out-of-pocket costs and
expenses incurred by Lender.

 

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(b)           Notwithstanding the foregoing, provided no Event of Default is
continuing, Mortgage Borrower and/or Operating Lessee shall have the right, and
the right to permit Franchisor, without the prior written approval of Lender
(but upon prior written notice to Lender), to terminate a Franchise Agreement at
an Individual Property; provided, however, it shall be an Event of Default
hereunder in the event that within sixty (60) days of the termination of such
Franchise Agreement (i) Borrower shall have failed (or shall have failed to
cause Senior Mezzanine Borrower to cause Mortgage Borrower or Operating Lessee
in the case of clause (2) hereof) to deliver to Lender either (1) a PIP Guaranty
relating to any New PIP contemplated by the Replacement Franchise Agreement or
the Replacement Management Agreement with a Brand Manager or (2) Cash to be
deposited into the PIP Reserve Account in an amount equal to the PIP Required
Deposit contemplated by the Replacement Franchise Agreement or the Replacement
Management Agreement with a Brand Manager, which Cash shall be held and
distributed in accordance with the terms of Section 9.9 of the Mortgage Loan
Agreement and (ii) Borrower fails to deliver evidence reasonably acceptable to
Lender that a Replacement Franchise Agreement or a Replacement Management
Agreement with a Brand Manager is in full force and effect at the applicable
Individual Property (and such Replacement Franchise Agreement or Replacement
Management Agreement, as the case may be, shall not violate or be prohibited by
any applicable Ground Lease).

 

(c)           WITH RESPECT TO THE SHERATON BUCKS COUNTY PROPERTY, THE APPLICABLE
MORTGAGE BORROWER IS A PARTY TO A LICENSE AGREEMENT WITH THE SHERATON CORPORATON
THAT ENABLES IT TO OPERATE A HOTEL USING THE SERVICE MARK “SHERATON®.” NEITHER
THE SHERATON CORPORATION NOR ITS AFFILIATES OWN SUCH HOTEL OR ARE A PARTY TO
THIS FINANCING AND HAVE NOT PROVIDED OR REVIEWED, AND ARE NOT RESPONSIBLE FOR,
ANY DISCLOSURES OR OTHER INFORMATION SET FORTH HEREIN.

 

Section 5.26         Trade Names

 

Except as expressly provided herein, Borrower shall not cause or permit Senior
Mezzanine Borrower to cause or permit Mortgage Borrower to change the trade name
or names under which it operates any Individual Property without Lender’s prior
written consent.

 

Section 5.27         Condominium Provisions

 

With respect to each Condominium:

 

(a)           Borrower shall, and shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower and/or Operating Lessee to, observe and perform each and every
material term to be observed or performed by Mortgage Borrower or Operating
Lessee pursuant to the Condominium Documents.

 

(b)           Borrower shall, and shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower and/or Operating Lessee to, pay all assessments for Common
Charges and all Taxes, Insurance Premiums and Other Charges made against or
relating to the Property, whether pursuant to the Declaration, the By-Laws or
otherwise, as the same shall become due and payable.

 

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(c)           After request by Lender, Borrower will cause Senior Mezzanine
Borrower to cause Mortgage Borrower and/or Operating Lessee to make commercially
reasonable efforts to promptly obtain from the Condominium Board and deliver to
Lender an estoppel certificate which shall include without limitation (i) the
amount of the unpaid Common Charges, if any, accrued against each Mortgage
Borrower’s Condominium Unit, (ii) a statement that the Condominium Documents
have not been modified or amended or setting forth the amendments or
modifications, (iii) that all payments due and payable by Borrower, Mortgage
Borrower or Operating Lessee under the Condominium Documents have been paid in
full or setting forth any unpaid amounts, and (iv) that, to such party’s
knowledge, neither Mortgage Borrower, Operating Lessee nor the Condominium Board
is in default under the Condominium Documents or setting forth in reasonable
detail any continuing defaults thereunder.

 

(d)           Borrower shall promptly deliver to Lender a true and full copy of
all written notices of default received by Borrower, Mortgage Borrower or
Operating Lessee with respect to any obligation or duty of Borrower or Operating
Lessee under the Condominium Documents.

 

(e)           Borrower shall not, and shall not permit Senior Mezzanine Borrower
to permit Mortgage Borrower or Operating Lessee to, except with the prior
written consent of Lender, (a) institute any action or proceeding for partition
of Mortgage Borrower’s Condominium Unit; (b) vote for or consent to any
modification of, or amendment to or material relaxation in the enforcement of
the Condominium Documents or the termination of the Condominium; and (c) in the
event of damage to or destruction of Mortgage Borrower’s Condominium Unit, vote
not to repair, restore or rebuild Mortgage Borrower’s Condominium Unit if
Mortgage Borrower or Operating Lessee shall have such a voting right.

 

(f)            Borrower shall not cause or permit Senior Mezzanine Borrower to
cause or permit Mortgage Borrower or Operating Lessee to revoke any Condominium
Proxy delivered to Mortgage Lender in connection with the Mortgage Loan and
relating to any voting rights Mortgage Borrower or Operating Lessee may have as
a unit owner in the Condominium.

 

(g)           On the date hereof, Borrower shall have caused Senior Mezzanine
Borrower to cause the applicable Mortgage Borrower to have delivered to Mortgage
Lender two (2) written letters of resignation from the current Hotel Unit Board
Members to be held by Mortgage Lender in escrow and used in accordance with the
terms hereof. After the date hereof, including, without limitation, upon the
occurrence and during the continuance of an Event of Default, Borrower agrees to
cause Senior Mezzanine Borrower to cause the Mortgage Borrower to promptly
deliver (i) a replacement written letter of resignation upon the replacement of
any current Hotel Unit Board Member or an additional written letter of
resignation upon the appointment of any new Hotel Unit Board Member, and
(ii) upon Lender’s reasonable request, replacement written letters of
resignation, with all such letters of resignation referenced in (i) and
(ii) above to be in form and substance as reasonably determined by Lender. Upon
the occurrence and during the continuance of an Event of Default, Mortgage
Lender shall have the right to submit the letters of resignation in its
possession and replace the Hotel Unit Board Members with Persons elected or
appointed by Mortgage Lender.

 

(h)           To the extent that any approval rights, consent rights or other
rights or privileges granted to the holder of a mortgage on Mortgage Borrower’s
Condominium Unit in the

 

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Condominium Documents are conditioned upon such approval rights, consent rights
or other rights or privileges being required or contained in any mortgage, then
such approval rights, consent rights or other rights or privileges shall be
deemed to be required by this Agreement.

 

Section 5.28         Ground Lease Provisions

 

With respect to each Ground Lease:

 

(a)           Borrower shall or shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower to (i) except to the extent reserved for by Mortgage Lender
pursuant to Section 9.8 of the Mortgage Loan Agreement, pay all rents,
additional rents and other sums required to be paid by Mortgage Borrower, as
tenant under and pursuant to the provisions of the Ground Lease, (ii) diligently
perform and observe all of the terms, covenants and conditions of the Ground
Lease on the part of Mortgage Borrower, as tenant thereunder, (iii) promptly
notify Lender of the giving of any written notice by the Fee Owner under the
Ground Lease to Mortgage Borrower of any default by Mortgage Borrower, as tenant
thereunder, and deliver to Lender a true copy of each such notice within two
(2) Business Days of receipt and (iv) promptly notify Lender of any bankruptcy,
reorganization or insolvency proceeding of the Fee Owner under the Ground Lease
or of any notice thereof, and deliver to Lender a true copy of such notice
within two (2) Business Days of Mortgage Borrower’s receipt, together with
copies of all notices, pleadings, schedules and similar matters received by
Mortgage Borrower in connection with such bankruptcy, reorganization or
insolvency proceeding within two (2) Business Days after receipt.  Borrower
shall not, and shall not cause or permit Mortgage Borrower to, without the prior
consent of Lender, (x) surrender the leasehold estate created by the Ground
Lease or terminate or cancel the Ground Lease or modify, change, supplement,
alter or amend the Ground Lease, either orally or in writing, or (y) vacate the
premises upon the land underlying the Ground Lease.

 

(b)           With respect to the Ground Lease, if Mortgage Borrower shall
default in the performance or observance of any term, covenant or condition of
the Ground Lease on the part of Mortgage Borrower, as tenant thereunder, and
shall fail to cure the same prior to the expiration of any applicable cure
period provided thereunder, Lender shall have the right, but shall be under no
obligation, to pay any sums and to perform any act or take any action as may be
appropriate to cause all of the terms, covenants and conditions of the Ground
Lease on the part of Mortgage Borrower to be performed or observed on behalf of
Mortgage Borrower, to the end that the rights of Mortgage Borrower in, to and
under the Ground Lease shall be kept unimpaired and free from default. If the
landlord under the Ground Lease shall deliver to Lender a copy of any written
notice of default under the Ground Lease, such notice shall constitute full
protection to Lender for any action taken or omitted to be taken by Lender, in
good faith, in reliance thereon.  Borrower shall or shall cause Senior Mezzanine
Borrower to cause Mortgage Borrower to exercise each individual option, if any,
to extend or renew the term of the Ground Lease upon demand by Lender made at
any time within one (1) year prior to the last day upon which any such option
may be exercised, and subject to Mortgage Lender’s rights under the Mortgage
Loan Agreement, 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 and/or Mortgage Borrower, which power of attorney shall be irrevocable
and shall be deemed to be coupled with an interest.

 

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Section 5.29         Operating Lease Provisions

 

With respect to each Operating Lease:

 

(a)           Borrower shall and shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower to (i) diligently perform and observe all of the terms,
covenants and conditions of the Operating Lease on the part of Mortgage
Borrower, as landlord thereunder, (ii) promptly notify Lender of the giving of
any notice under the Operating Lease to Mortgage Borrower of any default by
Mortgage Borrower, as landlord thereunder, and deliver to Lender a true copy of
each such notice within five (5) Business Days of receipt and (iii) promptly
notify Lender of any bankruptcy, reorganization or insolvency of any party under
the Operating Lease or of any notice thereof, and deliver to Lender a true copy
of such notice within five (5) Business Days of Mortgage Borrower’s receipt,
together with copies of all notices, pleadings, schedules and similar matters
received by Mortgage Borrower in connection with such bankruptcy, reorganization
or insolvency within five (5) Business Days after receipt.  Borrower shall not,
and shall not cause or permit Senior Mezzanine Borrower to cause or permit
Mortgage Borrower to, without the prior consent of Lender, which consent shall
not be unreasonably withheld, conditioned or delayed, (x) surrender the
leasehold estate created by the Operating Lease or terminate or cancel the
Operating Lease or materially modify, change, supplement, alter or amend the
Operating Lease (to the extent such modification, change, supplement, alteration
or amendment would reasonably be expected to have a Material Adverse Effect),
either orally or in writing, or (y) consent to, acquiesce in, or fail to object
to, any attempt by any party, as debtor in possession or by a trustee for such
party, to sell or transfer such party’s estate free and clear of the Operating
Lease under Section 363(f) of the Bankruptcy Code or otherwise.  Borrower shall
and shall cause Senior Mezzanine Borrower to cause Mortgage Borrower to object
to any such attempt, as debtor in possession or by a trustee for any such party,
to sell or transfer such estate free and clear of the Operating Lease under
Section 363(f) of the Bankruptcy Code or otherwise, and in such event shall
affirmatively assert and pursue its right to adequate protection under
Section 363(e) of the Bankruptcy Code.  Borrower hereby assigns to Lender all of
its rights under Section 363 of the Bankruptcy Code to consent or object to any
sale or transfer of any estate free and clear of the Operating Lease, and grants
to Lender the right to object to any such sale or transfer on behalf of Borrower
and/or Mortgage Borrower, and Borrower shall not, and shall not permit Senior
Mezzanine Borrower to permit Mortgage Borrower to, contest any pleadings,
motions documents or other actions filed or taken on Lender’s or Borrower’s
behalf by Lender in the event that the landlord, as debtor in possession or by a
trustee, attempts to sell or transfer the fee estate free and clear of the
Operating Lease under Section 363(f) of the Bankruptcy Code or otherwise.

 

(b)           If Mortgage Borrower shall default in the performance or
observance of any term, covenant or condition of the Operating Lease on the part
of Mortgage Borrower, as landlord thereunder, and shall fail to cure the same
prior to the expiration of any applicable cure period provided thereunder,
Lender shall have the right, but shall be under no obligation, to pay any sums
and to perform any act or take any action as may be appropriate to cause all of
the terms, covenants and conditions of the Operating Lease on the part of
Mortgage Borrower to be performed or observed on behalf of Mortgage Borrower, to
the end that the rights of Mortgage Borrower in, to and under the Operating
Lease shall be kept unimpaired and free from default.  If the tenant or landlord
under the Operating Lease shall deliver to Lender a copy of any written notice
of default under the Operating Lease, such notice shall constitute full
protection to Lender for any action taken or omitted to be taken by Lender, in
good faith, in reliance thereon.

 

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(c)           Notwithstanding anything contained herein to the contrary, with
respect to each Individual Property, an Operating Lease shall at all times be in
full force and effect.  Upon the expiration of the existing Operating Lease
pursuant to its terms, provided no Event of Default is continuing and upon prior
written notice to Lender, Borrower shall have the right to cause Senior
Mezzanine Borrower to cause Mortgage Borrower to (without the prior written
approval of Lender) extend the term of the Operating Lease for a period of five
(5) years provided that such extension contains the same material terms and
conditions as are set forth in the existing Operating Lease, except for a
modification of the rent which shall be “market rent” in accordance with REIT
rule requirements (which “market rent” shall be determined by reference to a
transfer pricing report that is prepared by an independent national accounting
firm).  Borrower shall promptly delivery a copy of any such extension to Lender.

 

(d)           Each request by Borrower for approval and consent by Lender
pursuant to this Section 5.29 shall be in writing and contain a legend in
capitalized bold letters on the top of the cover page stating:  “LENDER’S
RESPONSE IS REQUESTED WITHIN TEN (10) BUSINESS DAYS.  LENDER’S FAILURE TO
RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT IN LENDER’S CONSENT BEING DEEMED TO
HAVE BEEN GRANTED” and Borrower shall include the following documentation with
such request all materials reasonably necessary in order for Lender to evaluate
such matter.  In the event that Lender fails to grant or withhold its approval
and consent to such matter within such ten (10) Business Day period (and, in the
case of a withholding of consent, stating the grounds therefor in reasonable
detail), then, so long as no Event of Default is continuing, Lender’s approval
and consent shall be deemed to have been granted.  There shall be no
administrative or approval fee in connection with this Section 5.29(e), but
Borrower shall pay any out-of-pocket costs and expenses incurred by Lender.

 

Section 5.30         [Intentionally Omitted]

 

Section 5.31         O&M Program

 

Borrower covenants and agrees to cause Senior Mezzanine Borrower to cause
Mortgage Borrower to implement and follow the terms and conditions of each O&M
Program for the Properties during the term of the Loan, including any extension
or renewal thereof.  Lender’s requirement that Borrower cause Senior Mezzanine
Borrower to cause Mortgage Borrower to comply with each O&M Program shall not be
deemed to constitute a waiver or modification of any of Borrower’s or Mortgage
Borrower’s covenants and agreements with respect to Hazardous Materials (as
defined in the Environmental Indemnity) or Environmental Laws.

 

Section 5.32         Mortgage Loan Reserve Funds

 

Borrower shall cause Senior Mezzanine Borrower to cause Mortgage Borrower to
deposit and maintain each of the Mortgage Loan Reserve Funds as more
particularly set forth in the Mortgage Loan Agreement and to perform and comply
with all the terms and provisions relating thereto.

 

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Section 5.33         Notices

 

Borrower shall give notice, or cause notice to be given, to Lender promptly upon
the occurrence of any Mortgage Loan Event of Default or any Senior Mezzanine
Loan Event of Default.

 

Section 5.34         Special Distributions

 

On each date on which amounts are required to be disbursed to Lender pursuant to
the Mortgage Loan Agreement or the Senior Mezzanine Loan Agreement, or are
required to be paid to Lender pursuant to any of the Loan Documents or the
Senior Mezzanine Loan Documents, Borrower shall exercise its rights under the
Organizational Documents of Mortgage Borrower and Senior Mezzanine Borrower, as
applicable, to cause Mortgage Borrower or Senior Mezzanine Borrower, as
applicable, to make to Borrower a distribution in an aggregate amount such that
Lender shall receive the amount required to be disbursed pursuant to the
Mortgage Loan Agreement or the Senior Mezzanine Loan Agreement.

 

Section 5.35         Mortgage Borrower and Senior Borrower Covenants

 

For as long as the Debt remains outstanding, Borrower shall cause Senior
Mezzanine Borrower to comply with all obligations with which Senior Mezzanine
Borrower has covenanted to comply under the Senior Mezzanine Loan Agreement and
all other Senior Mezzanine Loan Documents (including the covenants of the
Mortgage Borrower incorporated therein by reference pursuant to Section 5.34 of
the Senior Mezzanine Loan Agreement) whether the Senior Mezzanine Loan has been
repaid or the related Senior Mezzanine Loan Document has been otherwise
terminated, unless otherwise consented to in writing by Lender.  Borrower shall
cause Senior Mezzanine Borrower to promptly notify Lender of all notices
received by Senior Mezzanine Borrower under or in connection with the Senior
Mezzanine Loan, including, without limitation, any notice by the Senior
Mezzanine Lender to Senior Mezzanine Borrower of any default by Senior Mezzanine
Borrower in the performance or observance of any of the terms, covenants or
conditions of the Senior Mezzanine Loan Documents on the part of Senior
Mezzanine Borrower to be performed or observed, and deliver to Lender a true
copy of each such notice, together with any other consents, notices, requests or
other written correspondence between Senior Mezzanine Borrower and Senior
Mezzanine Lender. Borrower shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower to promptly notify Lender of all notices received by Mortgage
Borrower under or in connection with the Mortgage Loan, including, without
limitation, any notice by the Mortgage Lender to Mortgage Borrower of any
default by Mortgage Borrower in the performance or observance of any of the
terms, covenants or conditions of the Mortgage Loan Documents on the part of
Mortgage Borrower to be performed or observed, and deliver to Lender a true copy
of each such notice, together with any other consents, notices, requests or
other written correspondence between Mortgage Borrower and Mortgage Lender.

 

Section 5.36         Mortgage Loan and Senior Mezzanine Loan Estoppels

 

(a)           Borrower shall, or shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower to, use commercially reasonable efforts from time to time, to
obtain from the Mortgage Lender such certificates of estoppel with respect to
compliance by Mortgage Borrower

 

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with the terms of the Mortgage Loan Documents as may be requested by Lender.  In
the event or to the extent that Mortgage Lender is not legally obligated to
deliver such certificates of estoppel and is unwilling to deliver the same, or
is legally obligated to deliver such certificates of estoppel but breaches such
obligation, then Borrower shall not be in breach of this provision so long as
Borrower furnishes to Lender an estoppel executed by Borrower and Mortgage
Borrower and expressly representing to Lender the information reasonably
requested by Lender regarding compliance by Mortgage Borrower with the terms of
the Mortgage Loan Documents.  Borrower hereby indemnifies Lender from and
against all out-of-pocket 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 based in whole or in part upon any fact, event,
condition, or circumstances relating to the Mortgage Loan which was materially
misrepresented in, or which due to its material nature warrants disclosure and
was omitted from such estoppel executed by Borrower and Mortgage Borrower.

 

(b)           Borrower shall cause Senior Mezzanine Borrower to, use
commercially reasonable efforts from time to time, to obtain from the Senior
Mezzanine Lender such certificates of estoppel with respect to compliance by
Senior Mezzanine Borrower with the terms of the Senior Mezzanine Loan Documents
as may be requested by Lender, but in no event more than two times in any twelve
month period.  In the event or to the extent that Senior Mezzanine Lender is not
legally obligated to deliver such certificates of estoppel and is unwilling to
deliver the same, or is legally obligated to deliver such certificates of
estoppel but breaches such obligation, then Borrower shall not be in breach of
this provision so long as Borrower furnishes to Lender an estoppel executed by
Borrower and Senior Mezzanine Borrower and expressly representing to Lender the
information requested by Lender regarding compliance by Senior Mezzanine
Borrower with the terms of the Senior Mezzanine Loan Documents.  Borrower hereby
indemnifies Lender from and against all out-of-pocket 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
based in whole or in part upon any fact, event, condition, or circumstances
relating to the Senior Mezzanine Loan which was misrepresented in, or which
warrants disclosure and was omitted from such estoppel executed by Borrower and
Senior Mezzanine Borrower.

 

Section 5.37         Change in Business

 

(a)           Borrower shall not enter into any line of business other than the
ownership of the Collateral, or make any material change in the scope or nature
of its business purposes, or undertake or participate in activities other than
the continuance of its present business.

 

(b)           Borrower shall not cause or permit Senior Mezzanine Borrower to
cause or permit Mortgage Borrower to enter into any line of business other than
the ownership and operation of the Property, or make any material change in the
scope or nature of its business objectives, purposes or operations, or undertake
or participate in activities other than the continuance of its present business.

 

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(c)           Borrower shall not permit Senior Mezzanine Borrower to enter into
any line of business other than the ownership of the Senior Mezzanine
Collateral, or make any material change in the scope or nature of its business
objectives, purposes or operations, or undertake or participate in activities
other than the continuance of its present business.

 

Section 5.38         Limitation on Securities Issuances

 

Borrower shall not and shall not permit Senior Mezzanine Borrower, Ashford Keys
Senior Mezzanine Operating Lessee, Mortgage Borrower or Operating Lessee to
issue any membership interests or other securities other than those that have
been issued as of the date hereof.

 

Section 5.39         Distributions

 

(a)           Any and all dividends, including capital dividends, stock or
liquidating dividends, distributions of property, redemptions or other
distributions made by Mortgage Borrower or Senior Mezzanine Borrower on or in
respect of any interests in Mortgage Borrower or Senior Mezzanine Borrower,
respectively, and any and all cash and other property received in payment of the
principal of or in redemption of or in exchange for any such interests
(collectively, the “Distributions”), shall become part of the Collateral. 
Notwithstanding the foregoing, Lender expressly agrees that Borrower shall be
permitted to distribute to its members or shareholders, as applicable, any
Distributions Borrower receives only upon the express condition that no Event of
Default has occurred and is continuing under the Loan.

 

(b)           If any Distributions shall be received by Borrower or any
Affiliate of Borrower while an Event of Default exists, Borrower shall hold, or
shall cause the same to be held, in trust for the benefit of Lender.  Any and
all revenue derived from the Property paid directly by tenants, subtenants or
occupants of the Property shall be held and applied in accordance with the terms
and provisions of the Mortgage Loan Agreement.

 

Section 5.40         Refinancing or Prepayment of the Mortgage Loan and Senior
Mezzanine Loan

 

Neither Borrower, Mortgage Borrower nor Senior Mezzanine Borrower shall be
required to obtain the consent of Lender to refinance the Mortgage Loan or the
Senior Mezzanine Loan, as applicable, provided that the Loan shall have been (or
shall simultaneously be) paid in full in accordance with the terms of this
Agreement.  Borrower shall cause Senior Mezzanine Borrower to obtain the prior
written consent of Lender to enter into any other refinancing of the Senior
Mezzanine Loan and Borrower shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower to obtain the prior written consent of Lender to enter into
any other refinancing of the Mortgage Loan.

 

Section 5.41         Acquisition of the Mortgage Loan and Senior Mezzanine Loan

 

(a)           No Loan Party or any Affiliate or any Person acting at any such
Person’s request or direction, shall acquire or agree to acquire the Mortgage
Lender’s interest in the Mortgage Loan or Senior Mezzanine Lender’s interest in
the Senior Mezzanine Loan, or any portion thereof or any interest therein, or
any direct or indirect ownership interest in the holder of

 

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the Mortgage Loan or Senior Mezzanine Loan, as applicable, via purchase,
transfer, exchange or otherwise, and any breach or attempted breach of this
provision shall constitute an Event of Default hereunder.  If, solely by
operation of applicable subrogation law, Borrower shall have failed to comply
with the foregoing, then Borrower: (i) shall immediately notify Lender of such
failure; (ii) shall cause any and all such prohibited parties acquiring any
interest in the Mortgage Loan Documents or Senior Mezzanine Loan Documents, as
applicable: (A) not to enforce the Mortgage Loan Documents or Senior Mezzanine
Loan Documents, as applicable; and (B) upon the request of Lender, to the extent
any of such prohibited parties has or have the power or authority to do so, to
promptly: (1) cancel the promissory note evidencing the Mortgage Loan or Senior
Mezzanine Loan, as applicable, (2) reconvey and release the Lien securing the
Mortgage Loan or Senior Mezzanine Loan, as applicable, and any other collateral
under the Mortgage Loan Documents or Senior Mezzanine Loan Documents, as
applicable, and (3) discontinue and terminate any enforcement
proceeding(s) under the Mortgage Loan Documents or Senior Mezzanine Loan
Documents, as applicable.

 

(b)           Lender shall have the right at any time to acquire all or any
portion of the Mortgage Loan or Senior Mezzanine Loan, as applicable, or any
interest in any holder of, or participant in, the Mortgage Loan or Senior
Mezzanine Loan, as applicable, without notice or consent of Borrower or any
other Loan Party, in which event Lender shall have and may exercise all rights
of Mortgage Lender or Senior Mezzanine Lender thereunder, as applicable (to the
extent of its interest), including the right (i) to declare that the Mortgage
Loan or Senior Mezzanine Loan, as applicable, is in default and (ii) to
accelerate the Mortgage Loan or Senior Mezzanine Loan indebtedness, as
applicable, in accordance with the terms thereof and (iii) to pursue all
remedies against any obligor under the Mortgage Loan Documents or Senior
Mezzanine Loan Documents, as applicable.

 

Section 5.42         Material Agreements

 

(a)           Borrower shall not, and shall not permit Senior Mezzanine Borrower
or Mortgage Borrower to, enter into any Material Agreement without the consent
of Lender, provided, however, Lender’s consent shall not be required in
connection with any Material Agreement contemplated by the Annual Budget
approved by Mortgage Lender (unless Mortgage Borrower, and thus Mortgage Lender,
have no approval rights in the Annual Budget under the applicable Management
Agreement) in accordance with the Mortgage Loan Agreement or any contract or
agreement entered into by Borrower, Senior Mezzanine Borrower and/or Mortgage
Borrower with a bona-fide third party, in the ordinary course of business,
consistent with past business practices, provided the same does not have a
Material Adverse Effect.  Lender may condition its consent upon Mortgage
Borrower or Senior Mezzanine Borrower also obtaining the consent of Mortgage
Lender or Senior Mezzanine Lender, if and as applicable.  Upon the request of
Lender with respect to Material Agreements, Borrower shall, or shall cause the
applicable Loan Party to, deliver to Lender a recognition agreement from such
service or material provider, among other things, providing for such Person’s
continued performance should Lender become the owner of the Collateral.  Each
such Material Agreement and each recognition agreement relating thereto, shall
be in form and substance acceptable to Lender in all respects, including the
amount of the costs and fees thereunder.  Each request by Borrower for approval
and consent by Lender pursuant to this Section 5.42 shall be in writing and
contain a legend in capitalized bold letters on the top of the cover
page stating: “LENDER’S RESPONSE IS REQUESTED WITHIN TEN (10)

 

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BUSINESS DAYS.  LENDER’S FAILURE TO RESPOND WITHIN SUCH TIME PERIOD SHALL RESULT
IN LENDER’S CONSENT BEING DEEMED TO HAVE BEEN GRANTED” and Borrower shall
include the following documentation with such request all materials reasonably
necessary in order for Lender to evaluate such matter.  In the event that Lender
fails to grant or withhold its approval and consent to such matter within such
ten (10) Business Day period (and, in the case of a withholding of consent,
stating the grounds therefor in reasonable detail), then, so long as no Event of
Default is continuing, Lender’s approval and consent shall be deemed to have
been granted.

 

(b)           Except as specifically set forth herein, Borrower will not, and
will not permit or cause Senior Mezzanine Borrower or Mortgage Borrower to,
amend, modify, supplement, rescind or terminate any Material Agreement that
could reasonably be expected to result in a Material Adverse Effect on the
Properties or any Individual Property, without Lender’s approval.  If a material
or service provider under a Material Agreement is in default in its obligations
thereunder to the extent entitling the applicable Loan Party to rescind or
terminate that agreement, then Borrower may, or if Lender so requires (but not
otherwise), Borrower will, or will cause the applicable Loan Party to, promptly
use all reasonable efforts to terminate that agreement.

 

(c)           Borrower shall, and shall cause Senior Mezzanine Borrower to,
cause Mortgage Borrower or Operating Lessee to, as applicable, observe and
perform each and every term to be observed or performed by such Loan Party under
the Material Agreements the non-performance of which would cause a Material
Adverse Effect.

 

Section 5.43         Prepayment of Mortgage Loan and Senior Mezzanine Loan

 

Borrower shall not cause or permit the prepayment of the Mortgage Loan or the
Senior Mezzanine Loan in whole or in part, unless either (i) the Loan is
simultaneously repaid in whole or in part on a pro rata basis in accordance with
and subject to the limitations hereof or (ii) the conditions set forth in
Section 2.6 of the Mortgage Loan Agreement or Senior Mezzanine Loan Agreement,
as applicable, are satisfied.

 

Section 5.44         Fort Worth Skybridge Agreement. Notwithstanding anything to
the contrary contained herein, Borrower shall have the right to cause New Fort
Tower I Hotel limited partnership, a Delaware limited partnership (“Fort Worth
Mortgage Borrower”) to terminate that certain 7th Street Bridge Agreement dated
as of March 4, 1981 by and between Hunt Hotel/Fort Worth, Ltd.,
predecessor-in-interest to Fort Worth Mortgage Borrower and CP Fort Worth
Limited Partnership (the “Fort Worth Skybridge Agreement”) without Lender’s
consent, provided that, (i) after termination of the Fort Worth Skybridge
Agreement, Fort Worth Mortgage Borrower completes any work necessary to make the
Fort Worth Property an architectural whole whereby access to any portion of the
Fort Worth Property is not impaired and the shell of the applicable Improvements
is fully closed and complete in the event of any removal or closing of the
skybridge subject to the Fort Worth Skybridge Agreement and the Fort Worth
Property is in full compliance with all zoning requirements and applicable Legal
Requirements and (ii) Fort Worth Mortgage Borrower completes any such work in a
good and workmanlike manner, lien free and otherwise in accordance with the
terms of this Agreement.

 

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ARTICLE 6
ENTITY COVENANTS

 

Section 6.1            Single Purpose Entity/Separateness

 

Borrower represents, warrants and covenants as follows:

 

(a)           Borrower has not and will not:

 

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

 

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

 

(iii)          merge into or consolidate with any Person, or dissolve,
terminate, liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure;

 

(iv)          (A) fail to observe all organizational formalities necessary to
maintain its separate existence, or fail to preserve its existence as an entity
duly organized, validly existing and in good standing (if applicable) under the
applicable Legal Requirements of the jurisdiction of its organization or
formation, or (B) amend, modify, terminate or fail to comply with the single
purpose entity provisions of its organizational documents, in each case without
the prior written consent of Lender;

 

(v)           own any subsidiary, or make any investment in, any Person other
than the Senior Mezzanine Borrower;

 

(vi)          except prior loans that have been satisfied in full as of the date
hereof, commingle its assets with the assets of any other Person, or permit any
Affiliate or constituent party independent access to its bank accounts;

 

(vii)         incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Debt and Permitted Debt
and prior loans that have been satisfied in full as of the date hereof;

 

(viii)        fail to maintain its records, books of account, bank accounts,
financial statements, accounting records and other entity documents separate and
apart from those of any other Person; except that Borrower’s financial position,
assets, liabilities, net worth and operating results may be included in the
consolidated financial statements of an Affiliate, provided that (A) appropriate
notation shall be made on such consolidated financial statements to indicate the
separate identity of Borrower from such Affiliate and that Borrower’s assets and
credit are not available to satisfy the debts and other obligations of such
Affiliate or any other Person, and (B) Borrower’s assets, liabilities and net
worth shall also be listed on Borrower’s own separate balance sheet;

 

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(ix)          except for capital contributions or capital distributions
permitted under the terms and conditions of Borrower’s organizational documents
and properly reflected on its books and records, enter into any transaction,
contract or agreement with any general partner, member, shareholder, principal,
guarantor of the obligations of Borrower, or any Affiliate of the foregoing,
except upon terms and conditions that are intrinsically fair, commercially
reasonable and substantially similar to those that would be available on an
arm’s length basis with unaffiliated third parties;

 

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

 

(xi)          assume or guaranty the debts of any other Person, hold itself out
to be responsible for the debts of any other Person, or otherwise pledge its
assets to secure the obligations of any other Person or hold out its credit or
assets as being available to satisfy the obligations of any other Person;

 

(xii)         make any loans or advances to any Person, or own any stock or
securities of, any Person (other than the Collateral), or buy or hold evidence
of indebtedness issued by any other Person;

 

(xiii)        fail to (A) file its own tax returns separate from those of any
other Person, except to the extent that Borrower is treated as a “disregarded
entity” for tax purposes and is not required to file tax returns under
applicable Legal Requirements and (B) pay any taxes required to be paid under
applicable Legal Requirements; provided, however, that Borrower shall not have
any obligation to reimburse its equityholders or their Affiliates for any taxes
that such equityholders or their Affiliates may incur as a result of any profits
or losses of Borrower;

 

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

 

(xv)         fail to intend to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and
in light of its contemplated business operations; provided, however, that the
foregoing shall not require Borrower’s members, partners or shareholders to make
additional capital contributions to Borrower;

 

(xvi)        without the unanimous written consent of all of its partners or
members, as applicable, and the written consent of all directors or managers of
Borrower or each SPE Component Entity, as applicable including, without
limitation, each Independent Director, take any Material Action or action that
is intended to cause such entity to become insolvent;

 

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

 

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

 

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that the foregoing shall not require Borrower’s members, partners or
shareholders to make additional capital contributions to Borrower;

 

(xix)        acquire obligations or securities of its partners, members,
shareholders or other affiliates, as applicable, other than the Collateral;

 

(xx)         violate or cause to be violated the assumptions made with respect
to Borrower and its principals in the Non-Consolidation Opinion or any New
Non-Consolidation Opinion;

 

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

 

(xxii)       fail to maintain and use separate stationery, invoices and checks
bearing its own name;

 

(xxiii)      have any of its obligations guaranteed by an Affiliate, except as
contemplated by the Loan Documents and prior loans that have been satisfied in
full as of the date hereof; or

 

(xxiv)     identify itself as a department or division of any other Person.

 

(b)           (i) If Borrower is a partnership or limited liability company
(other than a single-member Delaware limited liability company formed under the
Act which complies with the requirements of subsection (b)(ii) below) (an
“Acceptable DE LLC”), each general partner in the case of a partnership, or the
managing member in the case of a limited liability company (each an “SPE
Component Entity”) of Borrower, as applicable, shall be an Acceptable DE LLC. 
Each SPE Component Entity (A) will at all times comply with each of the
covenants, terms and provisions contained in Sections 6.1(a)(iii) through
(vi) and (viii) through (xxiv) inclusive, as if such representation, warranty or
covenant was made directly by such SPE Component Entity; (B) will not engage in
any business or activity other than owning an interest in Borrower; (C) will not
acquire or own any assets other than its partnership, membership, or other
equity interest in Borrower; (D) will not own any subsidiary, or make any
investment in any Person other than its investment in Borrower; (E) will not
incur any debt, secured or unsecured, direct or contingent (including
guaranteeing any obligation) and (F) will cause Borrower to comply with the
provisions of this Section 6.1 and Section 6.4.  Prior to the withdrawal or the
disassociation of any SPE Component Entity from Borrower, Borrower shall
immediately appoint a new general partner or managing member whose limited
liability company agreement is substantially similar to that of such SPE
Component Entity and, if an opinion letter pertaining to substantive
consolidation was required at closing, deliver a new opinion letter acceptable
to Lender and the Rating Agencies with respect to the new SPE Component Entity
and its equity owners.  Notwithstanding the foregoing, to the extent Borrower is
an Acceptable DE LLC, so long as Borrower maintains such formation status and
complies with the requirements set forth in subsection (b)(ii) below, the SPE
Component Entity requirement as set forth in this section shall not be
applicable.  Furthermore, in no event shall Borrower or any SPE Component Entity
be a corporation unless such corporation has a shareholder that is an Acceptable
DE LLC that complies with Section 6.4 hereof and no Material

 

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Action may be taken with respect to such corporation without the vote of such
Acceptable DE LLC and its Independent Directors.

 

(ii)           In the event Borrower or SPE Component Entity is an Acceptable DE
LLC (as referred to in this clause (ii), the “Company”), the limited liability
company agreement of the Company (the “LLC Agreement”) shall provide that
(A) upon the occurrence of any event that causes the sole member of the Company
(“Member”) to cease to be the member of the Company (other than (1) upon an
assignment by Member of all of its limited liability company interest in the
Company and the admission of the transferee in accordance with the Loan
Documents and the LLC Agreement, or (2) the resignation of Member and the
admission of an additional member of the Company in accordance with the terms of
the Loan Documents and the LLC Agreement), the personal representative of Member
shall, within ninety (90) days, agree in writing to continue the existence of
the Company and to the admission of such personal representative or its nominee
or designee, as the case may be, as a substitute member of the Company,
effective as of the occurrence of the event that caused the Member to cease to
be a member of the Company, and a natural person duly designated under the LLC
Agreement any person acting as Independent Director of the Company and executing
the LLC Agreement (“Special Member”) shall, without any action of any other
Person and simultaneously with the Member ceasing to be the member of the
Company, automatically be admitted to the Company and shall continue the
existence of the Company without dissolution, and (B) Special Member may not
resign from the Company or transfer its rights as Special Member unless (1) a
successor Special Member has been admitted to the Company as Special Member in
accordance with the requirements of the Act and (2) after giving effect to such
resignation, such successor Special Member has also accepted its appointment as
an Independent Director.  The LLC Agreement shall further provide that
(v) Special Member shall automatically cease to be a member of the Company upon
the admission to the Company of a substitute Member, (w) Special Member shall be
a member of the Company that has no interest in the profits, losses and capital
of the Company and has no right to receive any distributions of the assets of
the Company, (x) pursuant to Section 18-301 of the Act, Special Member shall not
be required to make any capital contributions to the Company and shall not
receive a limited liability company interest in the Company, (y) Special Member,
in its capacity as Special Member, may not bind the Company, and (z) except as
required by any mandatory provision of the Act, Special Member, in its capacity
as Special Member, shall have no right to vote on, approve or otherwise consent
to any action by, or matter relating to, the Company, including, without
limitation, the merger, consolidation or conversion of the Company; provided,
however, such prohibition shall not limit the obligations of Special Member, in
its capacity as Independent Director, to vote on such matters required by the
Loan Documents or the LLC Agreement.  Prior to its admission to the Company as
Special Member, Special Member shall not be a member of the Company, but the
Special Member may serve as an Independent Director of the Company.  Any action
initiated by or brought against Member or Special Member under any Creditors
Rights Laws shall not cause Member or Special Member to cease to be a member of
the Company and upon the occurrence of such an event, the existence of the
Company shall continue without dissolution.  The LLC Agreement shall also
provide that each of Member and Special Member waives any right it might have to
agree in writing to dissolve the Company upon the occurrence of any action
initiated by or brought against Member or Special Member under any Creditors
Rights Laws, or the occurrence of an event that causes Member or Special Member
to cease to be a member of the Company.

 

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(c)           The organizational documents of Borrower and each SPE Component
Entity shall provide an express acknowledgment that Lender is an intended third
party beneficiary of the “special purpose” provisions of such organizational
documents.

 

(d)           Borrower shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower and Mortgage Borrower SPE Component Entity to comply with and to
continue to comply with the provisions of Section 6.1 of the Mortgage Loan
Agreement.

 

Section 6.2            Change of Name, Identity or Structure

 

Borrower shall not, and shall not cause or permit any Loan Party, Ashford Keys
Senior Operating Lessee, Ashford Keys Junior Operating Lessee, Mortgage Borrower
SPE Component Entity, Senior Mezzanine Borrower SPE Component Entity or
Operating Lessee to, change or permit to be changed (a) its name, (b) its
identity (including its trade name or names), (c) its principal place of
business set forth on the first page of this Agreement, (d) the corporate,
partnership or other organizational structure of any Loan Party, Ashford Keys
Senior Operating Lessee, Ashford Keys Junior Operating Lessee, Mortgage Borrower
SPE Component Entity, Senior Mezzanine Borrower SPE Component Entity, Operating
Lessee, or SPE Component Entity (if any), (e) its state of organization, or
(f) its organizational identification number, without in each case notifying
Lender of such change in writing at least thirty (30) days prior to the
effective date of such change and, in the case of a change in its structure or
state of organization, without first obtaining the prior written consent of
Lender, which consent shall not be unreasonably withheld, conditioned or
delayed.  At the request of Lender, Borrower shall execute a certificate in form
satisfactory to Lender listing the trade names under which Borrower and Ashford
Keys Junior Operating Lessee intend to maintain the Collateral, and representing
and warranting that Borrower and Ashford Keys Junior Operating Lessee do
business under no other trade name with respect to the Collateral.  If Borrower
or Ashford Keys Junior Operating Lessee do not now have an organizational
identification number and later obtain one, or if the organizational
identification number assigned to Borrower or Ashford Keys Junior Operating
Lessee subsequently changes, Borrower shall promptly notify Lender of such
organizational identification number or change.

 

Section 6.3            Business and Operations

 

Borrower will cause Senior Mezzanine Borrower to cause Mortgage Borrower to
qualify to do business and will remain in good standing under the laws of the
States as and to the extent the same are required for the ownership,
maintenance, management and operation of the Properties.

 

Section 6.4            Independent Director

 

The organizational documents of Borrower (where Borrower is an Acceptable DE
LLC) or SPE Component Entity, as applicable, shall include the following
provisions:  (a) at all times there shall be, and Borrower or SPE Component
Entity, as applicable, shall cause there to be, at least two (2) Independent
Directors; (b) the board of directors or managers of Borrower or SPE Component
Entity, as applicable, shall not take any Material Action which, under the terms
of any certificate of incorporation, by laws, voting trust agreement with
respect to any common stock, articles of organization or operating agreement
requires unanimous vote of the board of directors

 

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or managers of Borrower or SPE Component Entity, as applicable, unless at the
time of such action there shall be at least two members of the board of
directors or managers who are Independent Directors; (c) Borrower or SPE
Component Entity, as applicable, shall not, without the unanimous written
consent of its board of directors or managers, including the Independent
Directors, on behalf of itself or Borrower, as the case may be, take any
Material Action or any action that might cause such entity to become insolvent,
and when voting with respect to such matters, the Independent Directors shall,
to the fullest extent permitted by law, including Section 18-1101(c) of the Act,
and notwithstanding any duty otherwise existing at law or in equity, consider
only the interests of Borrower and the SPE Component Entity (including their
respective creditors), and except for its duties to Borrower and the SPE
Component Entity with respect to voting on matters as set forth immediately
above (which duties shall extend to the constituent equity owners of Borrower
and the SPE Component Entity solely to the extent of their respective economic
interests in Borrower or the SPE Component Entity but shall exclude (i) all
other interests of such constituent equity owners, (ii) the interests of other
affiliates of Borrower or the SPE Component Entity, and (iii) the interests of
any group of affiliates of which Borrower and the SPE Component Entity are a
part), the Independent Directors shall not have any fiduciary duties to such
constituent equity owners, any officer or any other Person; provided, however,
the foregoing shall not eliminate the implied contractual covenant of good faith
and fair dealing; and (d) no Independent Director of Borrower or SPE Component
Entity may be removed or replaced other than as a result of an Independent
Director Event, and any such removal or replacement shall not occur unless
Borrower or SPE Component Entity provides Lender with not less than five
(5) Business Days’ prior written notice of (i) any proposed removal of an
Independent Director, together with a statement as to the reasons for such
removal, and (ii) the identity of the proposed replacement Independent Director,
together with a certification that such replacement satisfies the requirements
set forth in the organizational documents for an Independent Director; provided,
however, no resignation or removal of an Independent Director shall be effective
until a successor Independent Director is appointed and has accepted his or her
appointment.  Notwithstanding anything to the contrary contained herein, it
shall be an additional covenant and requirement under this Section 6.4 that any
entity housing an Independent Director (whether Borrower and/or any SPE
Component Entity) shall be an Acceptable DE LLC.

 

ARTICLE 7
NO SALE OR ENCUMBRANCE

 

Section 7.1            Transfer Definitions

 

For purposes of this Article 7 “Restricted Party” shall mean Borrower, Mortgage
Borrower, Senior Mezzanine Borrower, Mortgage Borrower SPE Component Entity,
Senior Mezzanine Borrower SPE Component Entity, Operating Lessee, Ashford Keys
Senior Operating Lessee, Ashford Keys Junior Operating Lessee, Guarantor, any
SPE Component Entity (if any), any Affiliated Manager, or any shareholder,
partner, member or non member manager, or any direct or indirect legal or
beneficial owner of Borrower, Mortgage Borrower, Senior Mezzanine Borrower,
Ashford Keys Senior Operating Lessee, Ashford Keys Junior Operating Lessee,
Operating Lessee, Guarantor, any SPE Component Entity (if any), any Affiliated
Manager or any non member manager, other than a natural person; and a “Transfer”
shall mean a voluntary or involuntary sale, conveyance, mortgage, grant,
bargain, encumbrance, pledge, assignment, grant of any options with respect to,
or any other transfer or disposition of (directly or indirectly,

 

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voluntarily or involuntarily, by operation of law or otherwise, and whether or
not for consideration or of record) of a legal or beneficial interest.

 

Section 7.2            No Sale/Encumbrance

 

(a)           Borrower shall not, without the prior written consent of Lender,
cause or permit a Transfer of the Properties or the Collateral or any part
thereof or any legal or beneficial interest therein nor permit a Transfer of an
interest in any Restricted Party, nor otherwise permit a dissolution of a
Restricted Party, other than pursuant to Leases of space in the Improvements to
Tenants in accordance with the provisions of Section 5.13 or as otherwise
expressly permitted in accordance with the terms of this Agreement (in each
case, a “Prohibited Transfer”).

 

(b)           A Prohibited Transfer shall include, but not be limited to, (i) an
installment sales agreement wherein Borrower agrees to sell the Properties or
the Collateral or any part thereof, or Senior Mezzanine Borrower agrees to sell
the Senior Mezzanine Collateral or any part thereof, in each case for a price to
be paid in installments; (ii) an agreement by Mortgage Borrower leasing all or a
substantial part of the Properties for other than actual occupancy by a space
tenant thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Mortgage Borrower’s right, title and interest in and to
any Leases or any Rents; (iii) if a Restricted Party is a corporation, any
merger, consolidation or Transfer of such corporation’s stock or the creation or
issuance of new stock in one or a series of transactions; (iv) if a Restricted
Party is a limited, general or limited liability partnership or joint venture,
any merger or consolidation or the change, removal, resignation or addition of a
general partner or the Transfer of the partnership interest of any general or
limited partner or any profits or proceeds relating to such partnership
interests or the creation or issuance of new partnership interests; (v) if a
Restricted Party is a limited liability company, any merger or consolidation or
the change, removal, resignation or addition of a managing member or non member
manager (or if no managing member, any member) or the Transfer of the membership
interest of any member or any profits or proceeds relating to such membership
interest or the creation or issuance of new membership interests; (vi) if a
Restricted Party is a trust or nominee trust, any merger, consolidation or the
Transfer of the legal or beneficial interest in such Restricted Party or the
creation or issuance of new legal or beneficial interests; (vii) if any
Condominium is partitioned pursuant to any action for partition by any unit
owner (other than the owner of any residential unit), by operation of law or
otherwise; (viii) if any Individual Property is withdrawn from a Condominium
regime established by the Condominium Act; (ix) any deed-in-lieu,
assignment-in-lieu or consensual sale relating to the Property with or for the
benefit of Mortgage Lender or an Affiliate thereof, provided, however, Borrower
shall be permitted to enter into a deed-in-lieu, assignment-in-lieu or
consensual sale with Mortgage Lender or Senior Mezzanine Lender, as applicable,
or an Affiliate thereof, provided Borrower has provided Lender with at least
ninety (90) days prior written notice of Mortgage Borrower’s or Senior Mezzanine
Borrower’s, as applicable, good faith intention to deliver a deed-in-lieu,
assignment-in-lieu or to consent to a sale of the Property or Senior Mezzanine
Collateral, as applicable; or (x) the entering into of a Pace Transaction.

 

Section 7.3            Permitted Transfers

 

Notwithstanding anything contained in the Loan Documents to the contrary, the
following Transfers of legal or beneficial equity interests shall not be deemed
to be a Prohibited Transfer and

 

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shall not require the consent of Lender:  (a) a Transfer (but not the pledge) by
devise or descent or by operation of law upon the death or as a result of the
legal incapacity of a natural person of such Person’s interest in a Restricted
Party (other than Borrower, Ashford Keys Junior Operating Lessee or any Pledged
Entity) to the person or persons lawfully entitled thereto, provided Borrower
delivers written notice to Lender as soon as practicable thereafter and that
such Restricted Party is promptly reconstituted, if applicable, following the
death or incapacity of such person; (b) Transfers (but not pledges) made in good
faith for estate planning purposes of an individual’s interests in any
Restricted Party (other than Borrower, Ashford Keys Junior Operating Lessee or
any Pledged Entity) to the spouse or any lineal descendant of such individual,
or to a trust for the benefit of any one or more of such individual, spouse or
lineal descendant, provided such Restricted Party is reconstituted, if required,
following such Transfer; (c) the Transfer (but not the pledge) of the stock,
partnership or membership interests (as the case may be) in a Restricted Party
(other than Borrower, Ashford Keys Junior Operating Lessee or any Pledged
Entity); and (d) an Additional Permitted Transfer; provided, however, with
respect to clauses (a), (b), (c), and (d) above, (i) other than after an Advised
Entity Transfer, no such Transfers shall result in a change in Control of any
Recourse Entity, Guarantor, or any Affiliated Manager, (ii) following such
Transfer, a Guarantor shall own not less than fifty-one percent (51%) of the
direct or indirect equity interests in, and Control, each Recourse Entity,
(iii) following such Transfer, Borrower, Ashford Keys Senior Operating Lessee,
each Pledged Entity and any SPE Component Entity shall continue to satisfy the
requirements of Section 6.1 hereof, (iv) as a condition to each such Transfer,
(A) except with respect to clause (a) and (d), Lender shall receive not less
than thirty (30) days prior written notice of such proposed Transfer,
(B) Borrower shall continue to comply with the representations, warranties and
covenants contained in Sections 4.38, 5.18 and 5.23 hereof (and upon request of
Lender, deliver to Lender a statement signed by an authorized officer of
Borrower which certifies to such compliance), (C) to the extent any transferee
will own twenty percent (20%) or more (or, if such transferee is not formed,
organized or incorporated in, or is not a citizen of, the United States of
America, ten percent (10%)) of the direct or indirect ownership interests in
Borrower immediately following such transfer (provided such transferee owned
less than twenty percent (20%) (or ten percent (10%), as applicable) of the
direct or indirect ownership interests in Borrower as of the Closing Date),
Lender may request and Borrower shall deliver, at Borrower’s sole cost and
expense, customary searches (including without limitation credit, judgment,
lien, litigation, bankruptcy, criminal and watch list) the results of which
shall be reasonably acceptable to Lender with respect to such transferee; and
(D) if such Transfer shall cause any transferee, together with its Affiliates,
to acquire direct or indirect equity interests in Borrower, Ashford Keys Junior
Operating Lessee or any SPE Component Entity aggregating to more than forty-nine
percent (49%), or to increase its equity interests in Borrower, Ashford Keys
Junior Operating Lessee or any SPE Component Entity from an amount that is less
than forty-nine percent (49%) to an amount that is greater than forty-nine
percent (49%), Borrower shall deliver a New Non-Consolidation Opinion addressing
such Transfer or (e) the sale, transfer or issuance of shares of common stock in
any Restricted Party (other than Borrower, Mortgage Borrower or Senior Mezzanine
Borrower) that is publicly traded and listed on the New York Stock Exchange or
another nationally recognized publicly traded stock exchange.  Upon request from
Lender, Borrower shall promptly deliver to Lender an updated organizational
chart reflecting each Transfer made pursuant to this Section 7.3.  All
out-of-pocket reasonable costs and expenses incurred by Lender in connection
with its review of any of the foregoing Transfers shall be paid by Borrower
whether or not any such Transfer is consummated.

 

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Notwithstanding anything to the contrary contained in this Article 7,
(i) Borrower must at all times own one hundred percent (100%) of the direct
equity interests in each Pledged Entity (other than Ashford Keys Senior
Operating Lessee) and (ii) Ashford Keys Junior Operating Lessee must at all
times own one hundred percent (100%) of the direct equity interests in Ashford
Keys Senior Operating Lessee.

 

Section 7.4            Assumption

 

Notwithstanding the foregoing provisions of this Article 7, following the date
which is six (6) months from the Closing Date, Lender shall not unreasonably
withhold consent to (A) a Transfer of the Properties in their entirety and the
assumption of the Loan, the Mortgage Loan and the Senior Mezzanine Loan by any
Person, (B) a Transfer of the Senior Mezzanine Collateral and assumption of the
Senior Mezzanine Loan and the entire Loan by any Person, or (C) a Transfer of
the Collateral and assumption of the entire Loan by any Person (any such Person
shall be hereinafter referred to as a “Transferee”) provided that each of the
following terms and conditions are satisfied:

 

(a)           no Event of Default shall be continuing at the time the notice in
clause (b) below is received by Lender or at the time of the Transfer;

 

(b)           Borrower shall deliver written notice to Lender of the terms of
such proposed Transfer not less than sixty (60) days before the date on which
such Transfer is scheduled to close and, concurrently therewith, all such
information concerning the proposed Transfer and Transferee as Lender shall
reasonably require in evaluating an initial extension of credit, which
information shall include, without limitation, a fully executed copy of the
purchase and sale agreement and all amendments and assignments thereof, as well
as the sources and uses of funds or closing or settlement statement relating to
the Transfer.  Lender shall have the right to approve or disapprove the proposed
Transfer based on its (or the servicer’s on behalf of Lender) then current
underwriting and credit requirements for similar loans secured by similar
properties which loans are sold in the secondary market, such approval not to be
unreasonably withheld.  In determining whether to give or withhold its approval
of the proposed Transfer, Lender shall consider the experience and track record
of Transferee and its principals in owning and operating facilities similar to
the Properties, the financial strength of Transferee and its principals, the
general business standing of Transferee and its principals and Transferee’s and
its principals’ relationships and experience with contractors, vendors, tenants,
lenders and other business entities; provided, however, that, notwithstanding
Lender’s agreement to consider the foregoing factors in determining whether to
give or withhold such approval, such approval shall be given or withheld based
on what Lender determines to be commercially reasonable and, if given, may be
given subject to such conditions as Lender may deem reasonably appropriate; and
without limiting the foregoing, all of the direct or indirect ownership
interests in the Transferee, as applicable, all payments thereon and all
proceeds thereof shall be pledged to Lender on terms no less favorable than the
pledge of the Collateral under the Pledge Agreement);

 

(c)           Borrower shall pay to Lender, concurrently with the closing of
such proposed Transfer, (i) a non refundable assumption fee in an amount equal
to one-half of one percent (0.5%) of the then outstanding principal balance of
the Note, and (ii) all out of pocket costs and expenses, including reasonable
attorneys’ fees and disbursements and Rating Agency fees,

 

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incurred by Lender in connection with the proposed Transfer (which shall be paid
whether or not the proposed Transfer actually occurs);

 

(d)           to the extent the Permitted Transfer is a Transfer of all of the
Properties, Transferee shall assume all of the obligations of Mortgage Borrower
under the Mortgage Loan Documents in a manner reasonably satisfactory to Lender
in all respects, including, without limitation, by entering into an assumption
agreement in form and substance reasonably satisfactory to Lender; (B) to the
extent the Permitted Transfer is a Transfer of all of the Senior Mezzanine
Collateral, Transferee shall assume all of the obligations of Senior Mezzanine
Borrower under the Senior Mezzanine Loan Documents in a manner reasonably
satisfactory to Lender in all respects, including, without limitation, by
entering into an assumption agreement in form and substance reasonably
satisfactory to Lender; and (C) to the extent the Permitted Transfer is a
Transfer of all of the Collateral, Transferee shall assume all of the
obligations of Borrower under the Loan Documents in a manner reasonably
satisfactory to Lender in all respects, including, without limitation, by
entering into an assumption agreement in form and substance reasonably
satisfactory to Lender;

 

(e)           (i) Transferee shall (A) if such Permitted Transfer is a Transfer
of the Properties, assume and agree to pay the Debt (as defined in the Mortgage
Loan Agreement) as and when due and shall assume all other obligations of
Mortgage Borrower under the Mortgage Loan Documents subject to the provisions of
Article 15 of the Mortgage Loan Agreement, (B) if such Permitted Transfer is a
Transfer of the Senior Mezzanine Collateral, assume and agree to pay the Debt
(as defined in the Senior Mezzanine Loan Agreement) as and when due and shall
assume all other obligations of Senior Mezzanine Borrower under the Senior
Mezzanine Loan Documents subject to the provisions of Article 15 of the Senior
Mezzanine Loan Agreement and, (C) if such Permitted Transfer is a Transfer of
the Collateral, assume and agree to pay the Debt as and when due and shall
assume all other obligations of Borrower under the Loan Documents subject to the
provisions of Article 15 hereof and, prior to or concurrently with the closing
of such Transfer, Transferee and its constituent partners, members or
shareholders as Lender may require, including, without limitation, all of the
entities which own interests similar to the interests in Senior Mezzanine
Borrower owned by Borrower (the “Mezzanine Entities”), shall execute, without
any cost or expense to Lender, such documents and agreements as Lender shall
reasonably require to evidence and effectuate said assumption, including,
without limitation, a pledge and security agreement, whereby all of the direct
ownership interests in all entities owned by the Mezzanine Entities, all
payments with respect to such ownership interests and all proceeds of such
ownership interests shall be pledged to Lender on terms satisfactory to Lender,
and (ii) if required by Lender, a Person affiliated with Transferee and
acceptable to Lender (a “Transferee Principal”) shall assume the obligations of
Guarantor under the Loan Documents with respect to all acts and events occurring
or arising after the closing of the Transfer and the then existing Guarantor
shall be released under the Guaranty with respect to all acts and events first
occurring or arising after the date of such Transfer; provided, however,
Guarantor shall bear the burden of proof to show that an event triggering
liability of Guarantor under the Guaranty first occurred after the Transfer of
the Properties or the Collateral or a Transfer of the Senior Mezzanine
Collateral, as applicable; provided further, in no event shall any Transferee
Principal be required to have or maintain any net worth or liquidity covenant of
Guarantor under the Loan Documents as a condition to such Transfer;

 

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

 

(g)           Transferee shall deliver to Lender, without any cost or expense to
Lender, a UCC Title Insurance Policy insuring that equity interests of all
owners of the Collateral are vested in the Mezzanine Entities and such
certificates and other similar materials as Lender may deem necessary at the
time of the transfer, all in form and substance satisfactory to Lender;

 

(h)           Transferee shall furnish to Lender, all documents evidencing
Transferee’s and Mezzanine Entities’ organization and good standing, and the
qualification of the signers to execute the assumption of the Debt, which
documents shall include certified copies of all documents relating to the
organization and formation of Transferee and of the entities, if any, which are
partners or members of Transferee.  Transferee and such constituent partners,
members or shareholders of Transferee (as the case may be), as Lender shall
require, shall comply with the covenants set forth in Article 6 hereof;

 

(i)            to the extent the Permitted Transfer is a Transfer of all of the
Properties, Transferee shall assume the obligations of Mortgage Borrower or
Operating Lessee under any Management Agreement or provide a new management
agreement with a new manager which meets with the requirements of Section 5.14
hereof and assign to Lender as additional security such new management agreement
pursuant to an Assignment of Management Agreement in form and substance
reasonably satisfactory to Lender;

 

(j)            intentionally omitted;

 

(k)           Transferee shall furnish to Lender, if required by Lender, a REMIC
Opinion, a New Non-Consolidation Opinion, and an opinion of counsel satisfactory
to Lender and its counsel (A) that Transferee’s formation documents provide for
the matters described in subparagraph (h) above, (B) that the assumption of the
Debt has been duly authorized, executed and delivered, and that the assumption
agreement and the other Loan Documents are valid, binding and enforceable
against Transferee in accordance with their terms, (C) that Transferee and any
entity which is a controlling stockholder, member or general partner of
Transferee, have been duly organized, and are in existence and good standing,
and (D) with respect to such other matters as Lender may reasonably request;

 

(l)            if required by Lender, Lender shall receive a Rating Agency
Confirmation;

 

(m)          to the extent the Permitted Transfer is a Transfer of all of the
Properties, Transferee shall assume the obligations of Mortgage Borrower or
Operating Lessee under the Franchise Agreement or enter into (i) a Replacement
Franchise Agreement with a Qualified Franchisor and (ii) a tri-party or similar
agreement with such Qualified Franchisor and Lender that is in form and
substance reasonably satisfactory to Lender;

 

(n)           intentionally omitted;

 

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(o)           the Senior Mezzanine Loan shall simultaneously be assumed by the
equity owners of the Transferee in accordance with the Senior Mezzanine Loan
Agreement; and

 

(p)           Borrower’s obligations under the purchase and sale agreement
pursuant to which the Transfer is proposed to occur shall expressly be subject
to the satisfaction of the terms and conditions of this Section 7.4.

 

The consent of Lender with respect to a Transfer of the Collateral in its
entirety to, and the assumption of the Loan by, a Transferee pursuant to this
Section 7.4 shall not be construed to be a waiver of the right of Lender to
consent to any subsequent Transfer of the Collateral.  Upon the Transfer of the
Collateral pursuant to this Section 7.4, Borrower and Guarantor (if a Transferee
Principal has assumed the obligations of Guarantor under the Loan Documents
pursuant to this Section 7.4) shall be relieved of all liability under the Loan
Documents for acts, events, conditions, or circumstances occurring or arising
after the date of such transfer, except to the extent that such acts, events,
conditions, or circumstances are the proximate result of acts, events,
conditions, or circumstances that existed prior to the date of such transfer,
whether or not discovered prior or subsequent to the date of such transfer.

 

Section 7.5            Immaterial Transfers and Easements, Etc.

 

Borrower shall be permitted to cause Senior Mezzanine Borrower to cause Mortgage
Borrower to, in accordance with the terms of the Mortgage Loan Agreement and the
Senior Mezzanine Loan Agreement, without the consent of Lender, (i) make
immaterial Transfers of unimproved, non-income producing portions of an
Individual Property to Governmental Authorities for dedication or public use,
and (ii) grant easements, restrictions, covenants, reservations and rights of
way in the ordinary course of business for access, water and sewer lines,
telephone or other fiber optic or other data transmission lines, electric lines
or other utilities or for other similar purposes, provided that no such
Transfer, conveyance or encumbrance set forth in the foregoing clauses (i) or
(ii) shall materially impair the utility and operation of such Individual
Property or reasonably be expected to, or does, have a Material Adverse Effect. 
In connection with any Transfer permitted pursuant to this Section 7.5, Borrower
shall (i) provide fifteen (15) days’ prior written notice to Lender,
(ii) execute and deliver to Lender the equivalent of all documents required to
be delivered to Mortgage Lender pursuant to Section 7.5 of the Mortgage Loan
Agreement, and (iii) reimburse Lender for all of Lender’s reasonable
out-of-pocket costs and expenses (including reasonable attorneys’ fees and
disbursements) incurred in connection with such Transfer (which shall be paid by
Borrower whether or not the proposed Transfer actually occurs).

 

Section 7.6            Advised Entity Transfer

 

As a condition precedent to an Advised Entity Transfer, Borrower shall provide
Lender with at least thirty (30) days prior written notice and comply with the
provisions of Section 7.4(a), (k) and (l) hereof and the applicable Publicly
Traded Company or public or private REIT (or its operating partnership, provided
such operating partnership directly owns substantially all of the assets of such
Publicly Traded Company or public or private REIT, as applicable) shall assume
the obligations of Guarantor (the “Advised Entity Guarantor”) under the Loan
Documents, and Guarantor shall be relieved of all liability under the Loan
Documents for acts, events, conditions,

 

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or circumstances occurring or arising after the date of the closing date of the
Advised Entity Transfer, except to the extent that such acts, events,
conditions, or circumstances are the proximate result of acts, events,
conditions, or circumstances that existed prior to the closing date of the
Advised Entity Transfer, whether or not discovered prior or subsequent to the
closing date of the Advised Entity Transfer.

 

Section 7.7            Acqusition of Fort Worth Fee Interest         Borrower
shall be entitled to cause Mortgage Borrower to acquire the fee interest (the
“Fort Worth Fee Interest”) in the Fort Worth Property (the “Fort Worth Fee
Interest Acquisition”); provided that, in connection therewith, each of the
following conditions are satisfied: (i) no Event of Default shall have occurred
and be continuing, (ii) Borrower shall cause Mortgage Borrower to provide Lender
with at least thirty (30) days prior written notice of the Fort Worth Fee
Interest Acquisition, (iii) Borrower shall cause Mortgage Borrower to provide
Lender an Officer’s Certificate certifying that the Fort Worth Fee Interest
Acquisition (including, without limitation, the closing costs thereof and any
transfer or similar taxes payable in connection therewith) shall be paid for in
full from Mortgage Borrower’s funds derived from (A) excess cash flow of the
Property which would otherwise be distributable to Borrower’s constituent
members in accordance with the terms hereof, the terms of the Loan Documents,
the Mortgage Loan Documents, the Senior Mezzanine Loan Documents and of
Borrower’s organizational documents, (B) a capital infusion to Borrower from one
or more of its constituent members made in accordance with the applicable terms
and conditions hereof, the terms of the Loan Documents, the Mortgage Loan
Documents and Senior Mezzanine Loan Documents, and of Borrower’s organizational
documents, and/or (C) another source reasonably acceptable to Lender and, unless
otherwise expressly consented to by Lender, derived in accordance with the terms
and conditions hereof and of the other Loan Documents, the Mortgage Loan
Documents and of the Senior Mezzanine Loan Documents, (iv) neither the Fort
Worth Fee Interest Acquisition nor the documents and/or instruments entered into
in connection therewith (the “Fort Worth Fee Acquisition Documents”) shall have
a Material Adverse Effect or cause Borrower or the Fort Worth Property to be in
violation of any Legal Requirements, (v) the Fort Worth Fee Interest Acquisition
shall be permitted under applicable REMIC Requirements and Borrower shall
deliver a REMIC Opinion with respect to the same to the extent Lender deems such
opinion reasonably necessary in connection with the Fort Worth Fee Interest
Acquisition, (vi) Borrower and, if required by Lender, Guarantor, shall enter
into such amendments or other modifications to the Loan Documents as may be
required to satisfy the Prudent Lender Standard (which such amendments or
modifications shall be limited to such amendments or modifications as may be
reasonably required to add the Fort Worth Fee Interest to the definition of
“Property” thereunder and otherwise collateralize the same unless a specific
fact or circumstance related to the Fort Worth Fee Interest, Borrower,
Guarantor, the seller of the Fort Worth Fee Interest and/or the Fort Worth
Property shall exist and shall reasonably necessitate additional amendments or
modifications to the Loan Documents in order to satisfy the Prudent Lender
Standard), (viii) Borrower shall provide Lender (A) a title search for the Fort
Worth Property indicating that the Fort Worth Property is free from all liens,
claims and other encumbrances other than Permitted Encumbrances and (B) such
title insurance as may be required in order to satisfy the Prudent Lender
Standard (which such title insurance shall be limited to the same as may be
reasonably required for Lender to add the Fort Worth Fee Interest to the Title
Insurance Policy unless a specific fact or circumstance related to the Fort
Worth Fee Interest, Mortgage Borrower, Borrower, Guarantor, the seller of the
Fort Worth Fee Interest and/or the Fort Worth Property shall exist that

 

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would have a Material Adverse Effect and shall reasonably necessitate additional
title insurance in order to satisfy the Prudent Lender Standard), (ix) to the
extent that any Tenant under any Major Lease has any interest in the Fort Worth
Property, Borrower shall cause Mortgage Borrower to provide Lender an Officer’s
Certificate certifying that, after giving effect to the Fort Worth Fee Interest
Acquisition and, if applicable, the termination of the Ground Lease, the
applicable Major Lease will remain in full force and effect and said Tenant
will, if applicable, attorn to the Fort Worth Mortgage Borrower as owner of the
Fort Worth Fee Interest, (x) Borrower shall cause Mortgage Borrower to provide
Lender with copies of the Fort Worth Fee Acquisition Documents and such legal
opinions, in each case, as may be required in order to satisfy the Prudent
Lender Standard (which such opinions shall be limited to the due authorization,
execution, delivery and enforceability of any Loan Document amendments entered
into in connection with this Section 7.7 unless a specific fact or circumstance
related to the Fort Worth Fee Interest, Mortgage Borrower, Borrower, Guarantor,
the seller of the Fort Worth Fee Interest and/or the Fort Worth Property shall
exist that would have a Material Adverse Effect and shall reasonably necessitate
additional opinions in order to satisfy the Prudent Lender Standard), (xi) after
the occurrence of the Fort Worth Fee Interest Acquisition, the Franchise
Agreement and Management Agreement shall continue in full force and effect and
Borrower shall have obtained any consents required thereunder, if any, in
connection with the Fort Worth Fee Interest Acquisition, (xii) Borrower shall
provide Lender UCC, judgment, lien, tax lien, litigation searches and such other
searches as may be required in order to satisfy the Prudent Lender Standard, in
each case, with respect to Borrower, Mortgage Borrower, the seller of the Fort
Worth Fee Interest, and the Fort Worth Property, which such searches (including,
without limitation, the form and results thereof and jurisdictions searches)
shall satisfy the Prudent Lender Standard, (xiii) Borrower shall cause Mortgage
Borrower to pay all of its own costs and expenses (including, without
limitation, the sums required to consummate the Fort Worth Fee Interest
Acquisition) and shall cause Mortgage Borrower to pay all of Lender’s
reasonable, out-of-pocket costs and expenses incurred in connection therewith
(including, without limitation, reasonable attorneys’ fees, mortgage or similar
taxes and recording fees), (xiv) the Fort Worth Fee Interest Acquisition is
permitted under the Mortgage Loan Documents, the Loan Documents and the Senior
Mezzanine Loan Documents or is otherwise consented to by the Mortgage Lender,
Senior Mezzanine Lender and Lender, and (xv) Borrower shall provide Lender an
Officer’s Certificate certifying that, as of the consummation of the Fort Worth
Fee Interest Acquisition, the terms and conditions of this Section 7.7 have been
satisfied.  Notwithstanding anything to the contrary contained herein or in any
other Loan Document, after the consummation of any Fort Worth Fee Interest
Acquisition in accordance with the terms and conditions hereof, (x) the defined
terms “Fort Worth Property”, “Individual Property” and “ Property” hereunder and
under the other Loan Documents shall be deemed to include the Fort Worth Fee
Interest and (y) Borrower shall have the right, without the prior consent of
Lender, but subject to applicable REMIC Requirements and delivery of a REMIC
Opinion with respect to the same to the extent Lender deems such opinion
reasonably necessary in connection with the termination of the Ground Lease, to
terminate the Ground Lease.

 

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ARTICLE 8
INSURANCE; CASUALTY; CONDEMNATION; RESTORATION

 

Section 8.1            Insurance

 

(a)           Notwithstanding that the Mortgage Loan and/or Senior Mezzanine
Loan may have been repaid or prepaid in full, Borrower shall cause Senior
Mezzanine Borrower to cause Mortgage Borrower to maintain at all times during
the term of the Loan the insurance required under the Mortgage Loan Agreement,
including, without limitation, meeting all insurer requirements thereunder.  In
addition, Borrower shall cause Lender to be named as an additional named insured
under each of the insurance policies described in Section 8.1(a) of the Mortgage
Loan Agreement, including without limitation, the Condominium Board Policy, and
in the case of property damage, boiler and machinery, flood and earthquake
insurance, contain a standard non-contributing mortgagee clause in favor of
Lender providing that the loss thereunder shall be payable to Lender.  Borrower
shall also cause all Policies required under this Section 8.1 to provide for at
least ten (10) days prior notice to Lender in the event of policy cancellation
for nonpayment and at least thirty (30) days prior notice to Lender in the event
of any other policy cancellation.  Not less than ten (10) days following the
inception of the Policies theretofore furnished to Lender, certificates of
insurance and a copy of the primary all risk Policy shall be furnished to
Lender.  Within forty five (45) days following inception of policies Borrower
shall provide satisfactory evidence of payment of premiums as required or
requested by Lender, and a copy of the primary all risk “special form” Policy
within ninety (90) days of inception of policies.

 

(b)           Borrower shall promptly forward to Lender a copy of any written
notice received by Borrower from any insurer noticing any policy cancellation or
cancellation of any coverages afforded under any of the Policies.

 

(c)           If at any time Lender is not in receipt of written evidence that
all insurance required hereunder is in full force and effect, Lender shall have
the right to take such action as Lender deems necessary to protect its interest
in the Collateral, including, without limitation, the obtaining of such
insurance coverage as Lender in its sole discretion deems appropriate after ten
(10) days’ written notice to Borrower if prior to the date upon which any such
coverage will lapse or at any time Lender deems necessary (regardless of prior
notice to Borrower) to avoid the lapse of any such coverage.  All premiums
incurred by Lender in connection with such action or in obtaining such insurance
and keeping it in effect shall be paid by Borrower to Lender upon demand and,
until paid, shall be secured by the Pledge Agreements and shall bear interest at
the Default Rate.

 

(d)           For purposes of this Agreement, Lender shall have the same
approval rights over the insurance referred to above (including, without
limitation, the insurers, deductibles and coverages thereunder, as well as the
right to require other reasonable insurance) as are provided in favor of the
Mortgage Lender in the Mortgage Loan Agreement.  All liability insurance
provided for in the Mortgage Loan Agreement shall provide insurance with respect
to the liabilities of both the Mortgage Borrower and Borrower.  The insurance
policies delivered pursuant to the Mortgage Loan Agreement shall include
endorsements of the type described therein, but pursuant to which Lender shall
have the same rights as the Mortgage Lender as referred to therein.

 

Section 8.2            Casualty

 

If any Individual Property shall be damaged or destroyed, in whole or in part,
by fire or other casualty (a “Casualty”), Borrower shall cause Senior Mezzanine
Borrower to cause Mortgage Borrower to give prompt notice of such damage to
Lender and shall cause Senior Mezzanine

 

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Borrower to cause Mortgage Borrower to promptly commence and diligently
prosecute the Restoration in accordance with the Mortgage Loan Agreement.
 Borrower shall cause Senior Mezzanine Borrower to cause Mortgage Borrower to
pay all costs of such Restoration whether or not such costs are covered by
insurance.  Lender may, but shall not be obligated to, make proof of loss if not
made promptly by Borrower.  Borrower shall permit Senior Mezzanine Borrower to
permit Mortgage Borrower to adjust all claims for Insurance Proceeds that are in
amounts less than the Restoration Threshold and Lender shall have the right to
approve any adjustment of claims for Insurance Proceeds in amounts equal to or
in excess of the Restoration Threshold; provided, however, if an Event of
Default has occurred and is continuing, Lender shall, subject to the rights of
Mortgage Lender and Senior Mezzanine Lender set forth in the Mortgage Loan
Agreement and the Senior Mezzanine Loan Agreement, respectively, have the
exclusive right to participate in the adjustment of claims for Insurance
Proceeds.  Borrower shall cooperate with Lender in obtaining for Lender the
benefits of any Insurance Proceeds lawfully or equitably payable in connection
with any Individual Property and Borrower shall reimburse Lender for any
expenses incurred by Lender in connection therewith, including without
limitation, reasonable out-of-pocket attorneys’ fees.

 

Section 8.3            Condemnation

 

Borrower shall cause Senior Mezzanine Borrower to cause Mortgage Borrower to
promptly give Lender notice of the actual or threatened commencement of any
proceeding for the Condemnation of any Individual Property of which Mortgage
Borrower has knowledge and shall deliver to Lender copies of any and all
documents served in connection with such proceedings.  Lender may participate in
any such proceedings, and Borrower shall cause Senior Mezzanine Borrower to
cause Mortgage Borrower from time to time deliver to Lender all documents
requested by it to permit such participation.  Borrower shall cause Senior
Mezzanine Borrower to cause Mortgage Borrower to, at its expense, diligently
prosecute any such proceedings, and shall consult with Lender, its attorneys and
experts, and cooperate with them in the carrying on or defense of any such
proceedings.  Notwithstanding any taking by any public or quasi public authority
through Condemnation or otherwise (including but not limited to any transfer
made in lieu of or in anticipation of the exercise of such taking), Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Note and in this Agreement.  If the Property or any portion
thereof is taken by a condemning authority, Borrower shall cause Senior
Mezzanine Borrower to cause Mortgage Borrower to promptly commence and
diligently prosecute the Restoration of such Individual Property and otherwise
comply with the provisions of Section 8.5 of the Mortgage Loan Agreement,
whether or not Mortgage Lender makes any Net Proceeds available pursuant to
Section 8.5 of the Mortgage Loan Agreement.

 

Section 8.4            Restoration

 

(a)           Borrower shall, or shall cause Senior Mezzanine Borrower to cause
Mortgage Borrower to, deliver to Lender all reports, plans, specifications,
documents and other materials that are delivered to Mortgage Lender under the
Mortgage Loan Agreement in connection with a Restoration of the Property after a
Casualty or Condemnation.  If any Insurance Proceeds or Awards are to be
disbursed by Mortgage Lender for Restoration, Borrower shall deliver or cause to
be delivered to Lender copies of all written correspondence delivered to and
received from Mortgage Lender that relates to the Restoration and release of the
Insurance Proceeds or Awards.

 

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(b)           Notwithstanding any provision in this Agreement to the contrary,
all Insurance Proceeds and Awards will be made available to Mortgage Borrower in
accordance with the Mortgage Loan Agreement.  In the event the Mortgage Loan has
been paid in full and Lender receives any Insurance Proceeds or Awards, Lender
shall either apply such proceeds to the Debt or for the Restoration of the
Property in accordance with the same terms and conditions contained in the
Mortgage Loan Agreement.

 

Section 8.5            Rights of Lender

 

For purposes of this Article 8, Borrower shall obtain the approval of Lender for
each matter requiring the approval of Mortgage Lender and Senior Mezzanine
Lender under the provisions of the Mortgage Loan Agreement and the Senior
Mezzanine Loan Agreement, with each reference in any such provisions to the
“Loan” to include the Mortgage Loan, the Senior Mezzanine Loan and the Loan, and
the reference in any such provisions to the “Maturity Date” to mean the Maturity
Date, as defined herein.  If the Mortgage Lender and Senior Mezzanine Lender do
not require the deposit by the Mortgage Borrower or Senior Mezzanine Borrower of
the “Net Proceeds Deficiency” pursuant to the Mortgage Loan Agreement or the
Senior Mezzanine Loan Agreement, as applicable, Lender shall have the right to
demand that Borrower make a deposit of said “Net Proceeds Deficiency” in
accordance with the terms of such Section (as if each reference therein to
“Borrower” and “Lender” referred to Borrower and Lender, respectively).

 

ARTICLE 9
RESERVE FUNDS

 

Section 9.1            Deposit and Maintenance of Reserve Funds

 

(a)           Borrower shall cause Senior Mezzanine Borrower to cause Mortgage
Borrower to deposit and maintain each of the Mortgage Loan Reserve Funds as
required under the Mortgage Loan Documents and to perform and comply with all
the terms and provisions relating thereto; provided, however, in the event
Mortgage Borrower and Senior Mezzanine Borrower do not (or are not required to)
make such deposits pursuant to the Mortgage Loan Documents and the Senior
Mezzanine Loan Documents, as applicable, Borrower shall be obligated to make, or
to cause to be made, such deposits to Lender hereunder substantially in
accordance with the provisions of the Mortgage Loan Agreement, as more fully set
forth in Section 9.1(b) hereof.  If requested by Lender, Borrower will promptly
provide evidence reasonably acceptable to Lender of compliance with the
foregoing.

 

(b)           Notwithstanding anything to the contrary contained in this
Agreement, if at any time and for any reason the Mortgage Loan Reserve Funds
required to be maintained pursuant to the Mortgage Loan Agreement are no longer
being maintained (including, without limitation, because the Mortgage Loan has
been paid off or otherwise satisfied) and/or are reduced, waived or modified in
any material respect (in each case, including, without limitation, due to any
waiver, amendment or refinance) (such Mortgage Loan Reserve Funds, the “Waived
Reserve Funds”), Borrower shall promptly (i) notify Lender of the same and
establish and maintain with Lender and for the benefit of Lender reserves in
replacement and substitution thereof (the “Substitute Reserves”), which
Substitute Reserves shall be subject to all of the same terms and conditions
applicable under the Mortgage Loan Documents, (ii) execute any amendments to
this Agreement

 

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and/or the Loan Documents relating to the Substitute Reserves required by Lender
and shall cause Senior Mezzanine Borrower to cause Mortgage Borrower to
acknowledge and agree to the same, and (iii) remit to Lender (and shall cause
Senior Mezzanine Borrower to cause Mortgage Borrower to remit to Lender) any
Mortgage Loan Reserve Funds remaining in the Waived Reserve Funds.

 

Section 9.2            Transfer of Reserve Funds under Mortgage Loan

 

If Borrower is required to deposit with Lender reserves pursuant to this
Article 9, Borrower shall enter into a cash management agreement for the benefit
of Lender for the purpose of covering deposits to the required reserve accounts
substantially similar to the terms of the Cash Management Agreement

 

Section 9.3            Letters of Credit

 

(a)           Other than in connection with any Letter of Credit delivered in
connection with the closing of the Loan, to the extent Borrower is expressly
permitted to deliver a Letter of Credit to Lender pursuant to the terms of any
Loan Document, Borrower shall give Lender no less than ten (10) days’ written
notice of Borrower’s election to deliver a Letter of Credit together with a
draft of the proposed Letter of Credit and Borrower shall pay to Lender all of
Lender’s reasonable out of pocket costs and expenses (including reasonable
attorneys’ fees and disbursements) in connection therewith.  No party other than
Lender shall be entitled to draw on any such Letter of Credit.

 

(b)           Each Letter of Credit delivered hereunder shall be additional
security for the payment of the Debt.  Upon the occurrence and during the
continuance of an Event of Default, Lender shall have the right, at its option,
to draw on any Letter of Credit and to apply all or any part thereof to the
payment of the items for which such Letter of Credit was established or to apply
such Letter of Credit to payment of the Debt in such order, proportion or
priority as Lender may determine in its sole discretion.  Any such application
to the Debt shall be subject to the terms and conditions hereof relating to
application of sums to the Debt.  Lender shall have the additional rights to
draw in full any Letter of Credit:  (i) if Lender has received a notice from the
issuing bank that the Letter of Credit will not be renewed and a substitute
Letter of Credit is not provided at least thirty (30) days prior to the date on
which the outstanding Letter of Credit is scheduled to expire; (ii) if Lender
has not received a notice from the issuing bank that it has renewed the Letter
of Credit at least thirty (30) days prior to the date on which such Letter of
Credit is scheduled to expire and a substitute Letter of Credit is not provided
to Lender at least thirty (30) days prior to the date on which the outstanding
Letter of Credit is scheduled to expire; (iii) upon receipt of notice from the
issuing bank that the Letter of Credit will be terminated (except if the
termination of such Letter of Credit is permitted pursuant to the terms and
conditions hereof or a substitute Letter of Credit is provided to Lender by no
later than thirty (30) days prior to such termination); (iv) if the issuing bank
shall cease to be an Approved Bank and a substitute Letter of Credit from an
Approved Bank is not delivered to Lender within fifteen (15) days after notice
is delivered to Borrower that the issuing bank is no longer an Approved Bank;
and/or (v) if the issuing bank shall fail to issue a replacement Letter of
Credit in the event the original Letter of Credit has been lost, mutilated,
stolen and/or destroyed.  If Lender draws upon a Letter of Credit pursuant to
the terms and conditions of this Agreement, provided no Event of Default exists,
Lender shall apply all or any part thereof for the purposes for which such
Letter of Credit was established.  Notwithstanding

 

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anything to the contrary contained in the above, Lender is not obligated to draw
upon any Letter of Credit upon the happening of an event specified in (i), (ii),
(iii), (iv) or (v) above and shall not be liable for any losses sustained by
Borrower due to the insolvency of the issuing bank if Lender has not drawn upon
the Letter of Credit.

 

(c)           In the event Borrower delivers to Lender a Letter of Credit
pursuant to the provisions of this Section 9.3 after the Closing Date, Borrower
shall deliver to Lender a New Non-Consolidation Opinion or a “no effect letter”
with respect to the Non-Consolidation Opinion delivered to Lender on the Closing
Date, the applicant under such Letter of Credit shall be a direct or indirect
parent of the Borrower and the right to draw any funds on such Letter of Credit
shall be a direct or indirect capital contribution to the Borrower by such
parent and shall be accompanied by the execution and delivery of a contribution
agreement in form reasonably acceptable to Lender.

 

(d)           The applicant under each Letter of Credit shall be required, until
such time the Debt has been paid in full, to waive, release and abrogate any and
all rights it may have under any agreement, at law or in equity (including,
without limitation, any law subrogating the applicant to the rights of Lender),
to assert any claim against or seek contribution, indemnification or any other
form of reimbursement from Borrower or any other party liable for payment of the
amounts which the Letter of Credit is intended to cover for any draw made on any
such Letter of Credit or otherwise.

 

ARTICLE 10
CASH MANAGEMENT

 

Section 10.1         Section 10.1         Intentionally Omitted

 

Section 10.2         Section 10.2         Cash Management Account

 

(a)           Borrower has caused Senior Mezzanine Borrower to cause Mortgage
Borrower to establish the Clearing Account and Cash Management Account, which
Clearing Account and Cash Management Account shall be under the sole dominion
and control of Mortgage Lender.  Borrower will cause Senior Mezzanine Borrower
to cause Mortgage Borrower to at all times comply with the provisions of
Section 10.1 and 10.2 of the Mortgage Loan Agreement.  Borrower will not cause
or permit Senior Mezzanine Borrower to cause or permit Mortgage Borrower in any
way to alter or modify the Clearing Account or Cash Management Account and will
notify Lender of the account numbers thereof.  Mortgage Lender shall have the
sole right to make withdrawals from the Clearing Account and Cash Management
Account and all costs and expenses for establishing and maintaining the Clearing
Account and Cash Management Account shall be paid by Mortgage Borrower. 
Borrower shall direct, or cause Senior Mezzanine Borrower to cause Mortgage
Borrower to direct, that all cash distributions from the Cash Management Account
be paid to Lender in accordance with the Cash Management Agreement (including
the Net Liquidation Proceeds After Debt Service) and be deposited into the
Senior Mezzanine Loan Subaccount and Junior Mezzanine Loan Subaccount maintained
in accordance with the Cash Management Agreement.  Disbursements from the Senior
Mezzanine Loan Subaccount and Junior Mezzanine Loan Subaccount will be made in
accordance with the terms and conditions of the Cash Management Agreement.

 

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(b)           The insufficiency of funds on deposit in the Junior Mezzanine Loan
Subaccount shall not relieve Borrower from the obligation to make any payments,
as and when due pursuant to this Agreement and the other Loan Documents, and
such obligations shall be separate and independent, and not conditioned on any
event or circumstance whatsoever other than any notices expressly required by
the terms of the Loan Documents.

 

(c)           All funds on deposit in the Junior Mezzanine Loan Subaccount
following the occurrence and during the continuation of an Event of Default may
be applied by Lender in such order and priority as Lender shall determine.

 

(d)           Borrower hereby agrees that Mortgage Lender may modify the Cash
Management Agreement only for the purpose of establishing additional
sub-accounts in connection with any payments otherwise required under the
Mortgage Loan Agreement and the other Mortgage Loan Documents and Lender shall
provide prompt written notice thereof to Borrower.

 

(e)           In the event Mortgage Lender and Senior Mezzanine Lender waive the
terms and conditions of the Mortgage Loan Documents and Senior Mezzanine Loan
Documents, respectively, relating to cash management (including, without
limitation, those relating to the Cash Management Account), or the Mortgage Loan
and the Senior Mezzanine Loan have been repaid in full, Borrower shall promptly
(i) notify Lender of the same and establish and maintain with Lender and for the
benefit of Lender in replacement and substitution thereof, substitute accounts
which shall be subject to all of the same terms and conditions applicable under
the Mortgage Loan Documents and the Senior Mezzanine Loan Documents,
(ii) execute any amendments to this Agreement and/or the Loan Documents
implementing the waived cash management provisions as may be required by Lender
and shall cause Senior Mezzanine Borrower to cause Mortgage Borrower to
acknowledge and agree to the same and (iii) remit to Lender (and shall cause
Mortgage Borrower to remit to Lender) any funds remaining in the Clearing
Account and Cash Management Account.

 

Section 10.3         Borrower Distributions

 

All transfers of Mortgage Borrower’s funds from the Cash Management Account or
pursuant to any of the Loan Documents are intended by Borrower , Mortgage
Borrower and Senior Mezzanine Borrower to constitute and shall constitute
distributions from Mortgage Borrower to Borrower, and must comply with the
requirements as to distributions of all applicable Legal Requirements. No
provision of the Loan Documents shall create a debtor-creditor relationship
between Mortgage Borrower and Lender.

 

ARTICLE 11
EVENTS OF DEFAULT; REMEDIES

 

Section 11.1         Event of Default

 

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

 

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(a)           if any portion of the Debt is not paid on or prior to the date the
same is due or if the entire Debt is not paid on or before the Maturity Date;
provided, however, no Event of Default shall be deemed to have occurred
hereunder by reason of the failure to pay the Monthly Payment Amount where sums
sufficient to timely pay such amount are then available from funds held by
Lender in the Junior Mezzanine Loan Subaccount established under the Cash
Management Agreement and Lender is then entitled to fund such amount from such
subaccount and Lender fails to pay the same;

 

(b)           except as otherwise expressly provided in the Loan Documents, if
any of the Property Taxes or Other Charges are not paid when the same are due
and payable, unless sufficient money has been deposited with Mortgage Lender in
accordance with the terms of the Mortgage Loan Agreement for payment of amounts
then due and payable and Mortgage Lender’s, Senior Mezzanine Lender’s or
Lender’s access to such money has not been constrained or restricted in any
manner;

 

(c)           if (i) the Policies are not kept in full force and effect, or
(ii) the Acord 28 (or similar) certificate is not delivered to Lender in
accordance with Section 8.1 within five (5) Business Days of written request
therefor;

 

(d)           if (i) Borrower breaches in any material respect any covenant with
respect to itself or any SPE Component Entity (if any) contained in Article 6,
(ii) if Ashford Keys Junior Operating Lessee breaches in any material respect
any covenant with respect to itself or any Ashford Keys Junior Operating Lessee
Principal (if any) contained in Paragraph 14 of the Junior Mezzanine Operating
Lease Agreement or (iii) a Prohibited Transfer occurs;

 

(e)           if any representation or warranty of, or with respect to,
Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Guarantor, any SPE
Component Entity, Operating Lessee, Ashford Keys Senior Operating Lessee,
Ashford Keys Junior Operating Lessee, or any member, general partner, principal
or beneficial owner of any of the foregoing, made herein, in any other Loan
Document, or in any certificate, report, financial statement or other instrument
or document furnished to Lender at the time of the closing of the Loan or during
the term of the Loan shall have been false or misleading in any material respect
when made; provided, however, (i) if Borrower, Mortgage Borrower, Senior
Mezzanine Borrower, Guarantor, any SPE Component Entity, Operating Lessee,
Ashford Keys Senior Operating Lessee, Ashford Keys Junior Operating Lessee, or
any member, general partner, principal or beneficial owner of any of the
foregoing did not know any such representation or warranty was false and
misleading in any material respect when it made it, (ii) if the condition
causing the representation or warranty to be false or misleading is susceptible
of being cured, and (iii) if the condition once cured would not cause a Material
Adverse Effect, then such false or misleading representation or warranty shall
be an Event of Default hereunder only if such condition is not cured within ten
(10) days after written notice to Borrower from Lender; provided, however, that
if such Default is susceptible of cure but cannot reasonably be cured within
such ten (10) day period and Borrower shall have commenced such cure within such
ten (10) day period and thereafter diligently and expeditiously proceeds to cure
the same, such ten (10) day period shall be extended for a period reasonably
required to effect such cure, but in no event in excess of ninety (90) days from
Borrower’s receipt of Lender’s original notice;

 

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(f)            if any of the assumptions contained in the Non-Consolidation
Opinion or in any New Non-Consolidation Opinion, is or shall become untrue in
any material respect;

 

(g)           if (i) Borrower, Mortgage Borrower, Senior Mezzanine Borrower,
Operating Lessee, Operating Lessee, Ashford Keys Senior Operating Lessee, 
Ashford Keys Junior Operating Lessee, or any managing member or general partner
of Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Ashford Keys Senior
Operating Lessee, Operating Lessee, Ashford Keys Junior Operating Lessee,
Guarantor, Ashford Keys Senior Operating Lessee Principal (if any), Ashford Keys
Junior Operating Lessee Principal (if any) or any other Recourse Entity shall
commence any case, proceeding or other action (A) under any Creditors Rights
Laws, seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization, or
(B) seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or
Borrower, Mortgage Borrower, Operating Lessee, Senior Mezzanine Borrower, any
managing member or general partner of Borrower, Mortgage Borrower, Senior
Mezzanine Borrower, Operating Lessee, Ashford Keys Senior Operating Lessee,
Guarantor, Ashford Keys Junior Operating Lessee or any SPE Component Entity (if
any) or Ashford Keys Junior Operating Lessee Principal (if any) shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against Borrower, Mortgage Borrower, Senior Mezzanine Borrower, any
managing member or general partner of Borrower, Mortgage Borrower, Senior
Mezzanine Borrower, Operating Lessee, Ashford Keys Senior Operating Lessee,
Ashford Keys Junior Operating Lessee, Guarantor, or any SPE Component Entity (if
any) or Ashford Keys Junior Operating Lessee Principal (if any) any case,
proceeding or other action of a nature referred to in clause (i) above which
(A) results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a period of
sixty (60) days; or (iii) there shall be commenced against Borrower, Mortgage
Borrower, Senior Mezzanine Borrower, any managing member or general partner of
Borrower, Mortgage Borrower, Senior Mezzanine Borrower, Operating Lessee,
Ashford Keys Senior Operating Lessee, Ashford Keys Junior Operating Lessee,
Guarantor, or any SPE Component Entity (if any) or Ashford Keys Junior Operating
Lessee Principal (if any) any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of any order
for any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or
(iv) Borrower, Mortgage Borrower, Senior Mezzanine Borrower, any managing member
or general partner of Borrower, Mortgage Borrower, Operating Lessee, Ashford
Keys Senior Operating Lessee, Senior Mezzanine Borrower, Ashford Keys Junior
Operating Lessee, Guarantor, or any Ashford Keys Junior SPE Component Entity (if
any) or Ashford Keys Junior Operating Lessee Principal (if any) shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) Borrower, Mortgage Borrower, Senior Mezzanine Borrower,, any managing
member or general partner of Borrower, Mortgage Borrower, Operating Lessee,
Senior Mezzanine Borrower, Ashford Keys Senior Operating Lessee, Ashford Keys
Junior Operating Lessee, Guarantor, or any SPE Component Entity (if any) or
Ashford Keys Junior Operating Lessee Principal (if any) shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its debts as
they become due;

 

(h)           if Borrower or Ashford Keys Junior Operating Lessee shall be in
default beyond applicable notice and grace periods under the applicable Pledge
Agreement or other

 

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security agreement covering any part of the Collateral, whether it be superior
or junior in lien to the Pledge Agreement;

 

(i)            unless the same is being contested in accordance with the terms
hereof, if any Individual Property or the Collateral becomes subject to any
mechanic’s, materialman’s or other Lien other than a Lien for any Property Taxes
or Other Charges not then due and payable and the Lien shall remain undischarged
of record (by payment, bonding or otherwise) for a period of thirty (30) days;

 

(j)            unless the same is being contested in accordance with the terms
hereof, if any federal tax lien is filed against Borrower, Mortgage Borrower,
Operating Lessee, Ashford Keys Senior Mezzanine Operating Lessee, Senior
Mezzanine Borrower, Ashford Keys Junior Operating Lessee, any member or general
partner of Borrower, Mortgage Borrower, Operating Lessee, Ashford Keys Senior
Mezzanine Operating Lessee, Senior Mezzanine Borrower, Guarantor, or any SPE
Component Entity (if any) or any Ashford Keys Junior Operating Lessee Principal
(if any) or any Individual Property or the Collateral and same is not discharged
of record (by payment, bonding or otherwise) within thirty (30) days after same
is filed;

 

(k)           unless Lender reasonably determines that the same is adequately
covered by insurance, if a judgment is filed against Borrower, Mortgage
Borrower, Ashford Keys Junior Operating Lessee, Ashford Keys Senior Mezzanine
Operating Lessee, Senior Mezzanine Borrower or Operating Lessee in excess of
$100,000 which is not vacated, dismissed, discharged or bonded over within
thirty (30) days;

 

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

 

(m)          if (i) Borrower, Senior Mezzanine Borrower or Operating Lessee
shall permit any event within its control or within Mortgage Borrower’s control
to occur that would cause any REA to terminate without notice or action by any
party thereto or would entitle any party to terminate any REA and the term
thereof by giving notice to Borrower, Mortgage Borrower or Operating Lessee; or
(ii) any REA shall be surrendered, terminated or canceled for any reason or
under any circumstance whatsoever except as provided for in such REA; or
(iii) any term of any REA shall be modified or supplemented without Lender’s
prior written consent, such consent not to be unreasonably withheld, conditioned
or delayed; or (iv) Borrower, Mortgage Borrower or Operating Lessee shall fail,
within ten (10) Business Days after demand by Lender, to exercise its option to
renew or extend the term or to cause Senior Mezzanine Borrower to cause Mortgage
Borrower to extend or renew the term of any REA or shall fail or neglect to
pursue diligently all actions necessary to exercise such renewal rights pursuant
to such REA except as provided for in such REA, in each case, to the extent that
the occurrence of same is reasonably likely to have, or does have, a Material
Adverse Effect;

 

(n)           if Borrower or Senior Mezzanine Borrower breaches the provisions
of Section 5.14, Section 5.25 or Section 5.29 hereof; provided, however, no
Event of Default shall be deemed to have occurred under this Section 11.1 by
reason of any default by Borrower, Mortgage Borrower, Senior Mezzanine Borrower
or Operating Lessee under any Management Agreement

 

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or Franchise Agreement (including any default under any quality assurance
program applicable to such Management Agreement or Franchise Agreement, as the
case may be), so long as Borrower (i) is diligently and expeditiously proceeding
to cause Senior Mezzanine Borrower to cause Mortgage Borrower to cure such
default to the satisfaction of the applicable Manager or Franchisor or
(ii) (A) with respect to a Management Agreement, has caused Senior Mezzanine
Borrower to cause Mortgage Borrower to terminate, or caused Senior Mezzanine
Borrower to cause Mortgage Borrower to accept a termination of, such Management
Agreement and caused Senior Mezzanine Borrower to cause Mortgage Borrower to
replace Manager with a Qualified Manager pursuant to a Replacement Management
Agreement in accordance with Section 5.14(e) hereof and (B) with respect to a
Franchise Agreement, has terminated, or accepted a termination of, such
Franchise Agreement and replaced Franchisor with a Qualified Franchisor pursuant
to a Replacement Franchise Agreement in accordance with Section 5.25(b) hereof
or replaced the Franchise Agreement with a Replacement Management Agreement with
a Brand Manager;

 

(o)           if Borrower shall fail to cause Senior Mezzanine Borrower to cause
Mortgage Borrower to pay any rent or any additional rent or other charge
mentioned in or made payable by any Ground Lease when said rent or other charge
is due and payable; provided, however, no Event of Default shall be deemed to
have occurred hereunder by reason of the failure to pay the rent or other sums
pursuant to any Ground Lease where sums sufficient to timely pay such amount are
then available from funds held by Lender or Mortgage Lender, as applicable, in
the Ground Lease Reserve Account (as defined in the Mortgage Loan Agreement)
established hereunder or under the Mortgage Loan Agreement, as applicable, and
Lender or Mortgage Lender, as applicable, is then entitled to fund such amount
from such subaccount and Lender or Mortgage Lender, as applicable, fails to pay
the same;

 

(p)           if there shall occur any default not described in
Section 11.1(o) above by Borrower, Mortgage Borrower or Operating Lessee, as
tenant under any Ground Lease, in the observance or performance of any term,
covenant or condition of such Ground Lease on the part of Mortgage Borrower or
Operating Lessee to be observed or performed and said default is not cured
following the expiration of any applicable grace and notice periods therein
provided, or if the leasehold estate created by any Ground Lease shall be
surrendered or if any Ground Lease shall cease to be in full force and effect or
such Ground Lease shall be terminated or canceled for any reason or under any
circumstances whatsoever, or if any of the terms, covenants or conditions of
such Ground Lease shall in any manner be modified, changed, supplemented,
altered, or amended without the consent of Lender;

 

(q)           if there shall occur any default by Operating Lessee, as tenant,
or Mortgage Borrower, as landlord, under the Operating Lease, in the observance
or performance of any term, covenant or condition of the Operating Lease on the
part of Operating Lessee or Mortgage Borrower, as applicable, to be observed or
performed and said default is not cured following the expiration of any
applicable grace, notice and cure periods therein provided, or if the leasehold
estate created by the Operating Lease shall be surrendered or if the Operating
Lease shall cease to be in full force and effect or the Operating Lease shall be
terminated or canceled for any reason, or if any of the terms, covenants or
conditions of the Operating Lease shall in any materially manner be modified,
changed, supplemented, altered, or amended in violation of the terms of this
Agreement;

 

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(r)            if any of the Common Charges to be paid by Mortgage Borrower or
Operating Lessee pursuant to the Condominium Documents that could result in a
lien are not paid by Mortgage Borrower or Operating Lessee when the same are due
and payable (subject to the right of Mortgage Borrower or Operating Lessee to
contest the same in accordance with the terms hereof and the Condominium
Documents), beyond any applicable notice and cure period;

 

(s)            if Mortgage Borrower or Operating Lessee fails to, and fails to
cause its members of the Condominium Board to fail to (but only to the extent
that the relevant Condominium Documents give Mortgage Borrower or Operating
Lessee authority to prevent the same) exercise its rights (i) to promptly comply
in all material respects with all laws, orders, and ordinances affecting the
applicable Individual Property or the use thereof, beyond any applicable notice
and cure period, or (ii) to substantially complete and pay for any structure at
any time in the process of construction or repair on applicable Individual
Property, beyond any applicable notice and cure period;

 

(t)            if Mortgage Borrower or Operating Lessee fails to, and fails to
cause its members of the Condominium Board to fail to (but only to the extent
that the relevant Condominium Documents give Mortgage Borrower or Operating
Lessee authority to prevent the same) exercise its rights (i) to keep the
applicable Common Elements and/or the applicable Individual Property, as
applicable, insured against the hazards specified in the applicable Condominium
Documents in the amounts and pursuant to policies in the form specified therein
and (ii) to pay, as and when the same becomes due and payable, any charge or
encumbrance which, if unpaid, would become a lien against the applicable
Individual Property or any part thereof prior to or on a parity with the lien of
the Mortgage or the Pledge Agreement, unless contested in accordance with the
terms hereof, provided that such contest is not reasonably expected to have and
does not have a Material Adverse Effect;

 

(u)           if, without the prior written consent of Lender, Mortgage Borrower
or Operating Lessee votes for, or permits (but only to the extent that the
relevant Condominium Documents give Mortgage Borrower authority to prevent the
same) a Condominium Board to effectuate, any material modification or amendment
to any of the terms or provisions of the Condominium Documents;

 

(v)           if, without the prior written consent of Lender, Mortgage Borrower
or Operating Lessee fails to comply with any material terms of the Condominium
Documents and the Condominium Act, beyond any applicable notice and cure period;

 

(w)          if any Condominium is partitioned pursuant to any action for
partition by any Unit owner without Lender’s written consent;

 

(x)           if, without the prior written consent of Lender, Mortgage Borrower
or Operating Lessee expands or causes the expansion of any Condominium and
annexes to the land covered by any Condominium additional land and improvements
thereon;

 

(y)           if Mortgage Borrower or Operating Lessee causes, consents to or
fails to diligently contest the withdrawal of any Individual Property from a
Condominium regime established by the Condominium Act in connection with any
condemnation, any casualty or

 

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otherwise, in accordance with the Condominium Act without Lender’s written
consent (such consent not to be unreasonably delayed or withheld);

 

(z)           if any Condominium is terminated by Mortgage Borrower or Operating
Lessee without Lender’s written consent, which consent shall not be unreasonably
withheld, delayed or conditioned;

 

(aa)         subject to the terms of the Management Agreement, if Mortgage
Borrower or Operating Lessee ceases to operate a hotel on any Property or
terminates such business for any reason whatsoever;

 

(bb)         [intentionally omitted];

 

(cc)         if any Franchise Agreement or Management Agreement is canceled,
terminated or surrendered, expires pursuant to its terms or otherwise ceases to
be in full force and effect, unless, in each such case, Operating Lessee or
Mortgage Borrower, in connection with such cancellation, termination, surrender,
expiration or cessation, enters into a Replacement Franchise Agreement with a
Qualified Franchisor or enters into a Replacement Management Agreement with a
Qualified Manager, in each case, in accordance with the applicable terms and
provisions hereof within sixty (60) days of such cancellation, termination,
surrender or expiration of the Franchise Agreement or Management Agreement, as
applicable;

 

(dd)         if Borrower shall continue to be in default under any other term,
covenant or condition of this Agreement or any of the Loan Documents not covered
in the foregoing clauses of this Section 11.1, for more than ten (10) days after
notice from Lender in the case of any default which can be cured by the payment
of a sum of money or for thirty (30) days after notice from Lender in the case
of any other default, provided that if such default (other than any default
which can be cured by the payment of a sum of money) cannot reasonably be cured
within such thirty (30) day period and Borrower shall have commenced to cure
such default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for so long as it shall require Borrower in the exercise of due
diligence to cure such default, it being agreed that no such extension shall be
for a period in excess of sixty (60) days;

 

(ee)         if a Mortgage Loan Event of Default shall occur; or

 

(ff)          if a Senior Mezzanine Loan Event of Default shall occur.

 

Section 11.2         Remedies

 

(a)           Upon the occurrence and during the continuance of an Event of
Default (other than an Event of Default described in Section 11.1(g) above with
respect to Borrower and SPE Component Entity only) and at any time thereafter
Lender may, in addition to any other rights or remedies available to it pursuant
to this Agreement and the other Loan Documents or at law or in equity, take such
action, without notice or demand, that Lender deems advisable to protect and
enforce its rights against Borrower and in the Collateral, including, without
limitation, declaring the Debt to be immediately due and payable, and Lender may
enforce or avail itself of any or all

 

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rights or remedies provided in the Loan Documents against Borrower and the
Collateral, including, without limitation, all rights or remedies available at
law or in equity.  Upon any Event of Default described in Section 11.1(g) above
(with respect to Borrower and SPE Component Entity only), the Debt and all other
obligations of Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.

 

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

 

(c)           If an Event of Default shall have occurred and be continuing, any
amounts recovered from the Collateral may be applied to the repayment of the
Debt in such order, proportion and priority as Lender may determine in its sole
and absolute discretion.

 

Section 11.3         Right to Cure Defaults

 

Upon the occurrence and during the continuance of any Event of Default, Lender
may, but without any obligation to do so and without notice to or demand on
Borrower and without releasing Borrower from any obligation hereunder, make any
payment or do any act required of Borrower hereunder in such manner and to such
extent as Lender may deem necessary to protect the security hereof.  Lender is
authorized to enter upon the Property for such purposes, or appear in, defend,
or bring any action or proceeding to protect its interest in the Property for
such purposes, and the cost and expense thereof (including reasonable attorneys’
fees to the extent permitted by law), with interest as provided in this
Section 11.3, shall constitute a portion of the Debt and shall be due and
payable to Lender upon demand.  All such costs and expenses incurred by Lender
in remedying such Event of Default or such failed payment or act or in appearing
in, defending, or bringing any action or proceeding shall bear interest at the
Default Rate, for the period after written notice from Lender that such cost or
expense was incurred to the date of payment to Lender.  All such costs and
expenses incurred by Lender together with interest thereon calculated at the
Default Rate shall be deemed to constitute a portion of the Debt and be secured
by the liens, claims and security interests provided to Lender under the Loan
Documents and shall be immediately due and payable upon demand by Lender
therefor.

 

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Section 11.4         Remedies Cumulative

 

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

 

Section 11.5         Power of Attorney

 

For the purpose of carrying out the provisions and exercising the rights, powers
and privileges granted in this Section 11, Borrower hereby irrevocably appoints
Lender as its true and lawful attorney-in-fact to execute, acknowledge and
deliver any instruments and do and perform any acts such as are referred to in
this subsection in the name and on behalf of Borrower.  This power of attorney
is a power coupled with an interest and cannot be revoked.

 

ARTICLE 12
INTENTIONALLY OMITTED

 

ARTICLE 13
SECONDARY MARKET

 

Section 13.1         Transfer of Loan

 

(a)           Lender may, at any time, sell, transfer or assign the Loan or any
portion thereof or interest therein, or grant participations therein
(“Participations”) or issue mortgage pass through certificates or other
securities (“Securities”) evidencing a beneficial interest in a rated or unrated
public offering or private placement (each of the foregoing, a
“Securitization”).  Borrower agrees that each participant hereunder shall be
entitled to the benefits of Section 2.5(g) and Section 2.7 (subject to the
requirements and limitations therein, including the requirements under
Section 2.7(e) (it being understood that the documentation required under
Section 2.7(e) shall be delivered to the participating Lender)) to the same
extent as if it were Lender and had acquired its interest by assignment;
provided that such participant shall not be entitled to receive any greater
payment under Section 2.5(g) or Section 2.7, with respect to any Participation,
than its participating Lender would have been entitled to receive, except to the
extent such entitlement to receive a greater payment results from a change in
any requirement of law that occurs after the participant acquired the applicable
Participation.

 

(b)           Morgan Stanley Mortgage Capital Holdings LLC (or a person
delegated by Morgan Stanley Mortgage Capital Holdings LLC), acting solely for
this purpose as an agent of Borrower, shall maintain a register for the
recordation of the names and addresses of the Lenders, and the principal amounts
(and stated interest) of the Loan owing to each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive

 

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absent manifest error, and Borrower and Lender shall treat each person whose
name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement.  The Register shall be available
for inspection by Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.

 

(c)           Each Lender that sells a participation pursuant to
Section 13.1(a) shall, acting solely for this purpose as an agent of the
Borrower, maintain a register on which it enters the name and address of each
participant and the principal amounts (and stated interest) of each
participant’s interest in the Loan or other obligations under the Loan Documents
(the “Participant Register”); provided that no Lender shall have any obligation
to disclose all or any portion of the Participant Register (including the
identity of any participant or any information relating to a participant’s
interest in any obligations under any Loan Document) to any Person except to the
extent that such disclosure is necessary to establish that such Obligation is in
registered form under Section 5f.103-1(c) of the United States Treasury
Regulations.  The entries in the Participant Register shall be conclusive absent
manifest error, and such Lender shall treat each Person whose name is recorded
in the Participant Register as the owner of such participation for all purposes
of this Agreement notwithstanding any notice to the contrary.

 

(d)           Each Lender hereby appoints and authorizes Morgan Stanley Capital
Holdings LLC as the “Lead Lender” (such Lender, at all times thereafter and
until resignation or replacement of such Lender by written notice to Borrower,
the “Lead Lender”) to serve as non-fiduciary administrative agent and collateral
agent for each Lender and hereby agrees that Lead Lender shall be the sole party
authorized to grant or withhold consents or approvals hereunder on behalf of
each Lender (subject, in each case, to appointment of a servicer to receive such
notices, requests and other communications and/or to grant or withhold consents
or approvals, as the case may be).

 

Section 13.2         Delegation of Servicing

 

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

 

Section 13.3         Dissemination of Information

 

Lender may forward to each purchaser, transferee, assignee, or servicer of, and
each participant, or investor in, the Loan, or any interest therein, or any
Securities or any of their respective successors (collectively, the “Investor”)
or any Rating Agency evaluating the Loan (and any other credit rating agency
that has elected to be treated as a nationally recognized statistical rating
organization for purposes of Section 15E of the Exchange Act without regard to
whether or not such credit rating agency has been engaged by Lender or other
Person in anticipation of a Securitization) or any Securities, each prospective
Investor, and any organization maintaining databases on the underwriting and
performance of commercial loans, all documents and information which Lender now
has or may hereafter acquire relating to the Debt and to Borrower and Mortgage
Borrower, any managing member or general partner thereof, Guarantor, Ashford,
any SPE Component Entity (if any), the Collateral, the Senior Mezzanine
Collateral and the

 

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Properties, including financial statements, whether furnished by Borrower,
Mortgage Borrower or Senior Mezzanine Borrower or otherwise, as Lender
determines necessary or desirable.  Borrower irrevocably waives any and all
rights it may have under applicable Legal Requirements to prohibit such
disclosure, including but not limited to any right of privacy.

 

Section 13.4         Cooperation

 

Subject to the terms of Section 13.8 hereof, at the request of the holder of the
Note and, to the extent not already required to be provided by Borrower under
this Agreement, Borrower shall, and shall cause Senior Mezzanine Borrower to
cause Mortgage Borrower to, use reasonable efforts to provide information not in
the possession of the holder of the Note in order to satisfy the market
standards to which the holder of the Note customarily adheres or which may be
reasonably required in the marketplace or by the Rating Agencies in connection
with any Securitization, including, without limitation, to:

 

(a)           provide updated financial, budget and other information with
respect to the Collateral, the Properties, Borrower, Mortgage Borrower, Senior
Mezzanine Borrower and Guarantor and provide modifications and/or updates to the
appraisals, market studies, environmental reviews and reports (Phase I reports
and, if appropriate, Phase II reports) and engineering reports of the Properties
obtained in connection with the making of the Loan (all of the foregoing being
referred to as the “Provided Information”), together, if customary, with
appropriate verification and/or consents of the Provided Information through
letters of auditors or opinions of counsel of independent attorneys acceptable
to Lender and the Rating Agencies;

 

(b)           make changes to the special purpose entity provisions of the
organizational documents of Borrower, Mortgage Borrower, Senior Mezzanine
Borrower, any SPE Component Entity and their respective principals;

 

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

 

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

 

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

 

(f)            execute such amendments to the Loan Documents as may be requested
by the holder of the Note or the Rating Agencies or otherwise to effect the
Securitization including, without limitation, bifurcation of the Loan into two
or more components and/or separate notes and/or creating a pari passu or
senior/subordinate note structure (a “Loan Bifurcation”); provided, however,
that Borrower shall not be required to modify or amend any Loan Document if such

 

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modification or amendment would (i) change the interest rate, the stated
maturity, the aggregate principal balance of the Loan or the amortization of
principal as set forth herein or in the Note, except in connection with a Loan
Bifurcation which may result in varying fixed interest rates, principal balances
and amortization schedules on the components/notes, but which components shall
have the same weighted average interest rate as the original Note prior to the
Loan Bifurcation as well as the same aggregate principal balance and weighted
amortization schedule except following an Event of Default or following any
prepayment (whether resulting from the application of Net Proceeds after a
Casualty or Condemnation or otherwise) of any portion of the principal amount of
the Loan, (ii) modify or amend any other economic term of the Loan, or
(iii) otherwise increase the obligations or decrease the rights of Borrower
under the Loan Documents;

 

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

 

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

 

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

 

(j)            supply to Lender such documentation, financial statements and
reports in form and substance required for Lender to comply with Regulations S X
and AB of the federal securities laws, if applicable; and

 

(k)           upon Lender’s modification of the Selected Day pursuant to the
terms of Section 2.4(e) above, Borrower shall promptly deliver to Lender such
modifications to the Interest Rate Cap Agreement and the Collateral Assignment
of Interest Rate Cap reasonably required by Lender as result of such designation

 

Other than cost and expenses of attorneys, accountants and other professionals
engaged by Borrower or its Affiliates, Borrower shall not be obligated to incur
any material cost or expense in connection with complying with requests made
under this Section 13.4; provided, however, any modifications and/or updates to
the appraisals, market studies, environmental reviews and reports (Phase I
reports and, if appropriate, Phase II reports) and engineering reports of the
Properties obtained in connection with the making of the Loan shall be at
Lender’s cost and expense.

 

Section 13.5         Securitization

 

(a)           Borrower understands that certain of the Provided Information may
be included in disclosure documents in connection with the Securitization,
including, without limitation, a prospectus, prospectus supplement, offering
memorandum or private placement

 

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memorandum (each, a “Disclosure Document”) and may also be included in filings
with the Securities and Exchange Commission pursuant to the Securities Act or
the Exchange Act, or provided or made available to investors or prospective
investors in the Securities, the Rating Agencies, and service providers relating
to the Securitization.  In the event that the Disclosure Document is required to
be revised prior to the sale of all Securities, Borrower will cooperate with the
holder of the Note in updating the Disclosure Document by providing all current
information necessary to keep the Disclosure Document accurate and complete in
all material respects.

 

(b)           Borrower agrees to provide, and to cause Senior Mezzanine Borrower
to cause Mortgage Borrower and to cause Guarantor to provide, in connection with
each of (i) a preliminary and a final offering memorandum or private placement
memorandum or similar document (including any Investor or Rating Agency “term
sheets” or presentations relating to the Properties and/or the Loan) or (ii) a
preliminary and final prospectus or prospectus supplement, as applicable, an
indemnification certificate (A) certifying that Borrower and Guarantor have
carefully examined such memorandum or prospectus or other document (including
any Investor or Rating Agency “term sheets” or presentations relating to the
Properties and/or the Loan), as applicable, including without limitation, the
sections entitled “Special Considerations,” and/or “Risk Factors,” and “Certain
Legal Aspects of the Mezzanine Loan,” or similar sections, and all sections
relating to Borrower, Mortgage Borrower, Guarantor, Manager, their Affiliates,
the Loan, the Loan Documents, the Collateral and the Properties, and any risks
or special considerations relating thereto, and that, to the best of Borrower’s
knowledge, such sections (and any other sections reasonably requested) do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, (B) certifying that
Mortgage Borrower and Guarantor have carefully examined such memorandum or
prospectus or other document (including any Investor or Rating Agency “term
sheets” or presentations relating to the Property and/or the Loan), as
applicable, including without limitation, the sections entitled “Special
Considerations,” and/or “Risk Factors,” and “Certain Legal Aspects of the
Mortgage Loan,” or similar sections, and all sections relating to Borrower,
Mortgage Borrower, Guarantor, Manager, their Affiliates, the Loan, the Loan
Documents and the Properties, and any risks or special considerations relating
thereto, and that, to the best of Borrower’s knowledge, such sections (and any
other sections reasonably requested) do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading, (C) indemnifying Lender (and for purposes of this Section 13.5,
Lender hereunder shall include its officers and directors) and the Affiliate of
Lender that (i) has filed the registration statement, if any, relating to the
Securitization and/or (ii) which is acting as issuer, depositor, sponsor and/or
a similar capacity with respect to the Securitization (any Person described in
(i) or (ii), an “Issuer Person”), and each director and officer of any Issuer
Person, and each Person or entity who controls any Issuer Person within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
(collectively, the “Issuer Group”), and each Person which is acting as an
underwriter, manager, placement agent, initial purchaser or similar capacity
with respect to the Securitization, each of its directors and officers and each
Person who controls any such Person within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act (collectively, the
“Underwriter Group”) for any Losses to which Lender, the Issuer Group or the
Underwriter Group may become subject insofar as the Losses arise out of or are
based upon any untrue statement or alleged untrue statement of

 

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any material fact contained in such sections (including any Investor or Rating
Agency “term sheets” or presentations relating to the Collateral, Properties
and/or the Loan) 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 sections
(including any Investor or Rating Agency “term sheets” or presentations relating
to the Collateral, Properties and/or the Loan) or necessary in order to make the
statements in such sections (including any Investor or Rating Agency “term
sheets” or presentations relating to the Collateral, Properties and/or the Loan)
or in light of the circumstances under which they were made, not misleading
(collectively the “Securities Liabilities”) and (D) agreeing to reimburse
Lender, the Issuer Group and the Underwriter Group for any legal or other
expenses reasonably incurred by Lender and Issuer Group in connection with
investigating or defending the Securities Liabilities; provided, however, that
Borrower will be liable in any such case under clauses (C) or (D) above only to
the extent that any such Securities Liabilities arise out of or is based upon
any such untrue statement or omission made therein in reliance upon and in
conformity with information furnished to Lender or any member of the Issuer
Group or Underwriter Group by or on behalf of Borrower, Mortgage Borrower or
Guarantor in connection with the preparation of the memorandum or prospectus or
other document (including any Investor or Rating Agency “term sheets” or
presentations relating to the Collateral, Properties and/or the Loan) or in
connection with the underwriting of the Loan, including, without limitation,
financial statements of Borrower, Mortgage Borrower or Guarantor, operating
statements, rent rolls, environmental site assessment reports and property
condition reports with respect to the Properties.  This indemnity agreement will
be in addition to any liability which Borrower, Mortgage Borrower and Guarantor
may otherwise have.  Moreover, the indemnification provided for in clauses
(C) and (D) above shall be effective whether or not an indemnification
certificate described in clauses (A) and (B) above is provided and shall be
applicable based on information previously provided by Borrower, Mortgage
Borrower and Guarantor or their Affiliates if Borrower, Mortgage Borrower or
Guarantor do not provide the indemnification certificate.

 

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

 

(d)           Promptly after receipt by an indemnified party under this
Section 13.5 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 13.5, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party.  In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the

 

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indemnifying party will be entitled, jointly with any other indemnifying party,
to participate therein and, to the extent that it (or they) may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party.  After notice from the
indemnifying party to such indemnified party under this Section 13.5 the
indemnifying party shall be responsible for any reasonable legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there are any legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties.  The indemnifying party shall not be liable for the expenses of more
than one such separate counsel unless an indemnified party shall have reasonably
concluded that there may be legal defenses available to it that are different
from or additional to those available to another indemnified party.

 

(e)           In order to provide for just and equitable contribution in
circumstances in which the indemnity agreements provided for in
Section 13.5(c) or Section 13.5(d) is or are for any reason held to be
unenforceable by an indemnified party in respect of any losses, claims, damages
or liabilities (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under Section 13.5(c) or Section 13.5(d), the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such losses, claims, damages or liabilities (or
action in respect thereof); provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.  In determining the amount of
contribution to which the respective parties are entitled, the following factors
shall be considered:  (i) the indemnified party’s, Borrower’s and Guarantor’s
relative knowledge and access to information concerning the matter with respect
to which claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances.  Lender and Borrower hereby agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation.

 

(f)            Borrower shall, and shall cause Guarantor to, indemnify Lender
and its officers, directors, partners, employees, representatives, agents and
Affiliates against any Losses to which Lender and each of its officers,
directors, partners, employees, representatives, agents and Affiliates, may
become subject in connection with any indemnification to the Rating Agencies in
connection with issuing, monitoring or maintaining the Securities insofar as the
Losses arise out of or are based upon any untrue statement of any material fact
in any information provided by or on behalf of Borrower to the Rating Agencies
(the “Covered Rating Agency Information”) or arise out of or are based upon the
omission to state a material fact in the Covered Rating Agency Information
required to be stated therein or necessary in order to make the statements in
the Covered Rating Agency Information, in light of the circumstances under which
they were made, not misleading.

 

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

 

Section 13.6         Regulation AB Obligor Information

 

(a)           If, at the time one or more Disclosure Documents are being
prepared for a Securitization, Lender expects that Borrower alone or Borrower
and one or more affiliates of Borrower collectively, or the Properties alone or
the Properties and any other parcel(s) of real property, together with
improvements thereon and personal property related thereto, that is “related”,
within the meaning of the definition of Significant Obligor (as defined in Item
1101(k) of Regulation AB), to the Properties (a “Related Property”)
collectively, will be a Significant Obligor, Borrower shall furnish to Lender
upon request (i) the selected financial data or, if applicable, net operating
income, required under Item 1112(b)(1) of Regulation AB and meeting the
requirements thereof, if Lender expects that the principal amount of the Loan,
together with any loans made to an affiliate of Borrower or secured by a Related
Property that is included in a Securitization with the Loan (a “Related Loan”),
as of the cut off date for such Securitization may, or if the principal amount
of the Loan together with any Related Loans as of the cut off date for such
Securitization and at any time during which the Loan and any Related Loans are
included in a Securitization does, equal or exceed ten percent (10%) (but less
than twenty percent (20%)) of the aggregate principal amount of all mortgage
loans included or expected to be included, as applicable, in the Securitization
or (ii) the financial statements required under Item 1112(b)(2) of Regulation AB
and meeting the requirements thereof, if Lender expects that the principal
amount of the Loan together with any Related Loans as of the cut off date for
such Securitization may, or if the principal amount of the Loan together with
any Related Loans as of the cut off date for such Securitization and at any time
during which the Loan and any Related Loans are included in a Securitization
does, equal or exceed twenty percent (20%) of the aggregate principal amount of
all mortgage loans included or expected to be included, as applicable, in the
Securitization.  Such financial data or financial statements shall be furnished
to Lender (A) within ten (10) Business Days after notice from Lender in
connection with the preparation of Disclosure Documents for the Securitization,
(B) not later than thirty (30) days after the end of each fiscal quarter of
Borrower and (C) not later than seventy five (75) days after the end of each
fiscal year of Borrower; provided, however, that Borrower shall not be obligated
to furnish financial data or financial statements pursuant to clauses (B) or
(C) of this sentence with respect to any period for which a filing pursuant to
the Exchange Act in connection with or relating to the Securitization (an
“Exchange Act Filing”) is not required.

 

(b)           If requested by Lender, Borrower shall furnish, or shall cause the
applicable tenant to furnish, to Lender financial data and/or financial
statements in accordance with Regulation AB for any tenant of any Individual
Property if, in connection with a Securitization, Lender expects there to be,
with respect to such tenant or group of affiliated tenants, a concentration
within all of the loans included or expected to be included, as applicable, in
such Securitization such that such tenant or group of affiliated tenants would
constitute a Significant Obligor; provided, however, that in the event the
related lease does not require the related tenant to provide the foregoing
information, Borrower shall use commercially reasonable efforts to cause the
applicable tenant to furnish such information.

 

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Section 13.7         Other Regulation AB Information

 

In addition to, and notwithstanding anything to the contrary in the foregoing
provisions of, this Article 13, in the event Lender reasonably determines, in
connection with a Securitization, that financial statements and financial data
required in order to comply with Regulation AB or any amendment, modification or
replacement thereto or any other requirement of law applicable to the
Securitization (including without limitation the Securities Act, the Exchange
Act, Regulation AB, the rules and regulations promulgated pursuant to the
Dodd-Frank Wall Street Reform and Consumer Protection Act), Lender may request,
and Borrower shall promptly provide, such other financial statements and
financial data as Lender reasonably determines to be necessary or appropriate
for such compliance.  Without limiting the generality of the foregoing, if
reasonably requested by the holder of the Note, Borrower shall promptly provide
the holder of the Note with any financial statements or financial, statistical,
operating or other information as the holder of the Note shall reasonably
determine to be required pursuant to Regulation AB or any amendment,
modification or replacement thereto or any other requirement of law applicable
to the Securitization in connection with any Disclosure Document, any filing
under the Exchange Act or any report that is required to be made available to
holders of the Securities under Regulation AB or other requirement of law or as
shall otherwise be reasonably requested by the holder of the Note.

 

Section 13.8         New Mezzanine Loan

 

Lender, without in any way limiting Lender’s other rights hereunder, shall have
the right, in its sole and absolute discretion, at any time to require Borrower
to restructure a portion of the Loan and create a mezzanine loan (the “New
Mezzanine Loan”) to the owners of the direct equity interests in Borrower which
shall be secured by a pledge of such direct equity interests, and for which
different interest rates and debt service payments may be established for the
Loan and the New Mezzanine Loan in such order of priority as may be designated
by Lender; provided, that (i) the total amounts of the Loan and the New
Mezzanine Loan shall equal the amount of the Loan immediately prior to the
restructuring, (ii) the weighted average interest rate of the Loan and the New
Mezzanine Loan, shall on the date created equal the interest rate which was
applicable to the Loan immediately prior to the restructuring and (iii) the debt
service payments on the Loan and the New Mezzanine Loan shall on the date
created equal the debt service payment which was due under the Loan immediately
prior to the restructuring; and provided further that any such restructuring
carried out after the closing of the Loan shall be at no material cost to
Borrower.  Borrower shall cooperate with all reasonable requests of Lender in
order to restructure the Loan and create the New Mezzanine Loan and shall
(A) execute and deliver such documents including, without limitation, in the
case of the New Mezzanine Loan, a mezzanine note, a mezzanine loan agreement, a
pledge and security agreement and a mezzanine deposit account agreement,
(B) cause Borrower’s counsel to deliver such legal opinions and (C) create such
bankruptcy remote borrower under the New Mezzanine Loan as, in the case of each
of (A), (B) and (C) above, shall be reasonably required by Lender and required
by any Rating Agency in connection therewith, all in form and substance
reasonably satisfactory to Lender and satisfactory to any such Rating Agency,
including the severance of this Agreement, the Pledge Agreements and other Loan
Documents if requested.  In the event such documents are in a form reasonably
acceptable to Borrower and Borrower fails to execute and deliver such documents
to Lender within ten (10) Business Days following such request by Lender,
Borrower hereby absolutely and irrevocably appoints Lender as its true and
lawful attorney, coupled with an interest, in its name and stead to make and
execute all documents necessary or desirable to effect such transactions,
Borrower ratifying all that such attorney shall do by virtue thereof.  It shall
be an Event of Default if Borrower fails to comply with

 

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any of the terms, covenants or conditions of this Section 13.8 after the
expiration of ten (10) Business Days after notice thereof.  Borrower shall not
be obligated to spend more than $10,000 in complying with the terms of this
Section 13.8.

 

Section 13.9         Intercreditor Agreement

 

(a)           Lender, Mortgage Lender and Senior Mezzanine Lender are parties to
a certain intercreditor agreement dated as of the date hereof (the
“Intercreditor Agreement”) memorializing their relative rights and obligations
with respect to the Loan, the Mortgage Loan, the Senior Mezzanine Loan,
Borrower, Mortgage Borrower, Senior Mezzanine Borrower, the Collateral and the
Properties.  Borrower, Mortgage Borrower and Senior Mezzanine Borrower hereby
acknowledge and agree that (i) such Intercreditor Agreement is intended solely
for the benefit of Lender, Mortgage Lender and Senior Mezzanine Lender and
(ii) Borrower, Mortgage Borrower and Senior Mezzanine Borrower are not intended
third-party beneficiaries of any of the provisions therein and shall not be
entitled to rely on any of the provisions contained therein.  Lender, Mortgage
Lender and Senior Mezzanine Lender shall have no obligation to disclose to
Borrower the contents of the Intercreditor Agreement.  Borrower’s obligations
hereunder are independent of such Intercreditor Agreement and remain unmodified
by the terms and provisions thereof.

 

(b)           In the event Lender is required pursuant to the terms of the
Intercreditor Agreement to pay over to Mortgage Lender any payment or
distribution of assets, whether in cash, property or securities which has been
applied to the Debt, including, without limitation, any proceeds of the
Collateral previously received by Lender on account of the Loan, then Borrower
agrees to indemnify Lender for any amounts so paid, and any amount so paid shall
continue to be owing pursuant to the Loan Documents as part of the Debt
notwithstanding the prior receipt of such payment by Lender.

 

Section 13.10       Reallocation of Loan Amounts

 

Lender, without in any way limiting its other rights hereunder, in its sole and
absolute discretion, shall have the right, at any time prior to a
Securitization, to reallocate the amount of the Loan, the Mortgage Loan and the
Senior Mezzanine Loan and/or adjust the interest rates thereon provided that
(i) the aggregate principal amount of the Loan, the Mortgage Loan and the Senior
Mezzanine Loan immediately following such reallocation shall equal the
outstanding principal balance of the Loan, the Mortgage Loan and the Senior
Mezzanine Loan immediately prior to such reallocation, and (ii) the initial
weighted average interest rate of the Note, the Mortgage Note and the Senior
Mezzanine Note immediately following such reallocation shall equal the weighted
average interest rate which was applicable to the Note, the Mortgage Note and
the Senior Mezzanine Note immediately prior to such reallocation.  Borrower
shall cooperate with all reasonable requests of Lender in order to reallocate
the amount of the Loan, the Mortgage Loan and the Senior Mezzanine Loan and
shall execute and deliver such documents as shall reasonably be required by
Lender in connection therewith, including, without limitation, amendments to the
Loan Documents, the Mortgage Loan Documents and the Senior Mezzanine Loan
Documents, and endorsements to the title insurance policy and the UCC title
insurance policy, all in form and substance reasonably satisfactory to Lender. 
Borrower shall pay all costs and expenses in connection such reallocation
pursuant to this Section 13.10, including, without limitation, any

 

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additional title insurance and UCC insurance premiums and any additional
mortgage, mortgage recording, stamp, intangible or other similar tax required to
be paid by any Person under applicable Legal Requirements currently in effect in
connection with the execution, delivery, recordation, filing, registration,
perfection or enforcement of any amendments of the Loan Documents, the Mortgage
Loan Documents or the Senior Mezzanine Loan Documents in connection with the
reallocation, provided, however, Borrower shall not be obligated to spend more
than $10,000 in complying with the terms of this Section 13.10.

 

ARTICLE 14
INDEMNIFICATIONS

 

Section 14.1         General Indemnification

 

Borrower shall indemnify, defend and hold harmless the Indemnified Parties from
and against any and all Losses imposed upon or incurred by or asserted against
any Indemnified Parties and directly or indirectly arising out of or in any way
relating to any one or more of the following:  (a) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about the
Properties or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (b) any use, nonuse or
condition in, on or about the Properties or any part thereof or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(c) performance of any labor or services or the furnishing of any materials or
other property in respect of the Properties or any part thereof; (d) any failure
of the Properties to be in compliance with any Legal Requirements; (e) any and
all claims and demands whatsoever which may be asserted against Lender by reason
of any alleged obligations or undertakings on its part to perform or discharge
any of the terms, covenants, or agreements contained in any Lease; (f) the
holding or investing of the Reserve Accounts or the Cash Management Account, or
(g) the payment of any commission, charge or brokerage fee to anyone which may
be payable in connection with the funding of the Loan (collectively, the
“Indemnified Liabilities”); provided, however, that Borrower shall not have any
obligation to Lender hereunder to the extent that such Indemnified Liabilities
arise (1) from the gross negligence, illegal acts, fraud or willful misconduct
of Lender or (2) with respect to an act and event first occurring or arising
(I) after the date Mortgage Borrower no longer owned fee (or leasehold, as
applicable) title to the Properties as a result of a foreclosure of the Mortgage
Loan or deed-in-lieu of foreclosure or (II) following a foreclosure or
assignment-in-lieu of the Loan or the Senior Mezzanine Loan, as applicable;
provided, however, Borrower shall bear the burden of proof to show that the
event triggering liability hereunder first occurred after the such transfer of
ownership.

 

To the extent that the undertaking to indemnify, defend and hold harmless set
forth in the preceding sentence may be unenforceable because it violates any law
or public policy, Borrower shall pay the maximum portion that it is permitted to
pay and satisfy under applicable Legal Requirements to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnified Parties.

 

Section 14.2         Mortgage and Intangible Tax Indemnification

 

Borrower shall pay and, at its sole cost and expense, protect, defend,
indemnify, release and hold harmless the Indemnified Parties from and against
any and all Losses imposed upon or

 

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incurred by or asserted against any Indemnified Parties and directly or
indirectly arising out of or in any way relating to, any tax on or with respect
to the making and/or recording of the Pledge Agreements, the UCC Financing
Statements, the Note or any of the other Loan Documents, but excluding any
income, franchise or other similar taxes.

 

Section 14.3         ERISA Indemnification

 

Borrower shall, at its sole cost and expense, protect, defend, indemnify,
release and hold harmless the Indemnified Parties from and against any and all
Losses (including, without limitation, reasonable attorneys’ fees and costs
incurred in the investigation, defense, and settlement of Losses incurred in
correcting any prohibited transaction or in the sale of a prohibited loan, and
in obtaining any individual prohibited transaction exemption under ERISA that
may be required, in Lender’s sole discretion) that the Indemnified Parties may
incur, directly or indirectly, as a result of a default under Section 4.9 or
Section 5.18 of this Agreement.

 

Section 14.4         Survival

 

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

 

ARTICLE 15
EXCULPATION

 

Section 15.1         Exculpation

 

(a)           Except as otherwise provided herein or in the other Loan
Documents, Lender shall not enforce the liability and obligation of Borrower to
perform and observe the obligations contained herein or in the other Loan
Documents by any action or proceeding wherein a money judgment shall be sought
against (1) Borrower (except as set forth in this Section 15.1 and the
Environmental Indemnity), (2) Guarantor (except as set forth in the Guaranty and
the Environmental Indemnity), (3) any Affiliate of Borrower, (4) any Person
owning, directly or indirectly, any legal or beneficial interest in Borrower or
any Affiliate of Borrower or (5) any direct or indirect limited partner, member,
principal, officer, beneficiary, trustee, shareholder, Affiliate or director of
any Persons described in clauses (1) through (5) above (collectively, subject to
the exceptions in clauses (i) and (ii) below, the “Exculpated Parties”), except
that Lender may bring a foreclosure action, action for specific performance or
other appropriate action or proceeding to enable Lender to enforce and realize
upon this Agreement, the Note, the Pledge Agreements and the other Loan
Documents, and the interest in the Collateral and any other collateral given to
Lender created by this Agreement, the Note, the Pledge Agreements and the other
Loan Documents; provided, however, that any judgment in any such action or
proceeding shall be enforceable against Borrower, only to the extent of
Borrower’s interest in the Collateral and in any other collateral given to
Lender.  Lender, by accepting this Agreement, the Note, the Pledge Agreements
and the other Loan Documents, agrees that it shall not, except as otherwise
provided in this Section 15.1, sue for, seek or demand any deficiency judgment
against any Exculpated Party in any such action or proceeding, under or by
reason of or under or in connection with this

 

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Agreement, the Note, the Pledge Agreements or the other Loan Documents.  The
provisions of this Section 15.1 shall not, however, (i) constitute a waiver,
release or impairment of any obligation evidenced or secured by this Agreement,
the Note, the Pledge Agreements or the other Loan Documents; (ii) impair the
right of Lender to name Borrower or Ashford Keys Junior Operating Lessee as a
party defendant in any action or suit for judicial foreclosure and sale under
this Agreement and the Pledge Agreements; (iii) affect the validity or
enforceability of any indemnity (including, without limitation, those contained
in Article 14 of this Agreement and the Environmental Indemnity), guaranty,
master lease or similar instrument made in connection with this Agreement, the
Note, the Pledge Agreements and the other Loan Documents; (iv) impair the right
of Lender to obtain the appointment of a receiver; (v) impair the enforcement of
the provisions contained in the Pledge Agreements; or (vi) impair the right of
Lender to obtain a deficiency judgment or other judgment on the Note against
Borrower if necessary to obtain any Net Liquidation Proceeds After Debt Service
to which Lender would otherwise be entitled under this Agreement; provided,
however, Lender shall only enforce such judgment to the extent of the Insurance
Proceeds and/or Awards.

 

(b)           Notwithstanding the provisions of this Section 15.1 to the
contrary, Borrower shall be personally liable to Lender for Losses incurred by
Lender due to:

 

(i)            fraud or intentional misrepresentation by Borrower, Mortgage
Borrower, Senior Mezzanine Borrower, Operating Lessee, Ashford Keys Senior
Operating Lessee, Ashford Keys Junior Operating Lessee, Guarantor or any
Affiliate of any of the foregoing in connection with the execution and the
delivery of this Agreement, the Note, the Pledge Agreements, any of the other
Loan Documents, or any certificate, report, financial statement or other
instrument or document furnished to Lender at the time of the closing of the
Loan or during the term of the Loan;

 

(ii)           the gross negligence or willful misconduct of an Exculpated
Party;

 

(iii)          Remington’s or any Exculpated Party’s misapplication,
misappropriation or conversion of Rents received by Mortgage Borrower during the
continuance of an Event of Default;

 

(iv)          any Exculpated Party’s misapplication, misappropriation or
conversion of tenant security deposits (including the failure to deliver to
Mortgage Lender tenant security deposits upon foreclosure or deed in lieu
thereof, to the extent not applied in accordance with the applicable Leases
prior to the occurrence of an Event of Default) or Rents collected in advance;

 

(v)           the misapplication, misappropriation or conversion of Insurance
Proceeds or Awards by any Exculpated Party;

 

(vi)          Borrower’s, Mortgage Borrower’s or Senior Mezzanine Borrower’s
failure to pay Property Taxes, Insurance Premiums, Other Charges (provided that
there shall be no liability hereunder to the extent that (A) sums sufficient to
pay such amounts have been deposited in escrow with Lender, Mortgage Lender or
Senior Mezzanine Lender pursuant to the terms hereof or the Mortgage Loan
Agreement or the Senior Mezzanine Loan Agreement and neither Borrower,

 

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Mortgage Borrower nor Senior Mezzanine Borrower have made a claim against such
escrowed amounts or otherwise taken action to restrict Lender,  Mortgage Lender
or Senior Mezzanine Lender from applying such sums for the purpose of paying
such items) or (B) there is insufficient cash flow from the operation of the
Properties to pay such items), charges for labor or materials or other charges
that can create liens on any Individual Property beyond any applicable notice
and cure periods specified herein;

 

(vii)         Borrower’s, Mortgage Borrower’s or Senior Mezzanine Borrower’s
failure to return or to reimburse Lender for all Personal Property taken from
any Individual Property by or on behalf of Borrower, Mortgage Borrower, Senior
Mezzanine Borrower, Ashford Keys Senior Operating Lessee, Ashford Keys Junior
Operating Lessee or Operating Lessee and not replaced with Personal Property of
the same utility and of the same or greater value;

 

(viii)        material physical waste to any Individual Property caused by the
intentional acts or omissions of any Exculpated Party when there is sufficient
cash flow from the operation of any Individual Property to avoid such waste from
occurring;

 

(ix)          intentionally omitted;

 

(x)           Borrower’s, Mortgage Borrower’s or Senior Mezzanine Borrower’s
assertion or raising of any defense to a proceeding instituted by Lender
(whether judicial or otherwise) for the foreclosure of the Pledge Agreements or
the Collateral following an Event of Default caused by Borrower’s failure to
timely pay the Monthly Payment Amount or the Debt due on the Maturity Date,
which defense is determined by a court of competent jurisdiction to be without
merit or brought in bad faith;

 

(xi)          Borrower’s failure to cause Senior Mezzanine Borrower to cause
Mortgage Borrower to pay to Mortgage Lender each PIP Required Deposit (as
defined in the Mortgage Loan Agreement) in accordance with the terms hereof or
the Mortgage Loan Agreement or the Senior Mezzanine Loan Agreement;

 

(xii)         the breach of any representation, warranty or covenant of
(i) Borrower with respect to itself or any SPE Component Entity set forth in
Article 6 hereof (other than Section 6.1(a)(xv) and (xviii)) or (ii) any
Ashford  Keys Junior Operating Lessee with respect to itself or any Ashford Keys
Junior Operating Lessee Principal as set forth in Paragraph 14 of the Junior
Mezzanine Operating Lease Agreement (other than Paragraph 14(h) and
(q) thereof);

 

(xiii)        Borrower’s, Mortgage Borrower’s or Senior Mezzanine Borrower’s
misappropriation or conversion of Net Liquidation Proceeds After Debt Service or
any distributions or other payments with respect thereto in violation of this
Agreement;

 

(xiv)        Borrower, Senior Mezzanine Borrower, Ashford Keys Senior Operating
Lessee or Ashford Keys Junior Operating Lessee making a distribution to its
direct or indirect legal or beneficial owners after the occurrence and during
the continuance of an Event of Default in violation of this Agreement or the
other Loan Documents;

 

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(xv)         (A) if without the prior written consent of Lender, Borrower,
Mortgage Borrower or Operating Lessee votes for, or permits any Condominium
Board to effectuate (but only to the extent that the relevant Condominium
Documents give Mortgage Borrower or Operating Lessee authority to prevent the
same), any material modification or amendment to any of the terms or provisions
of such Condominium Documents so as to decrease the value of the applicable
Individual Property in any material respect (including but not limited to any
modification or amendment that decreases Mortgage Borrower’s or Operating
Lessee’s voting rights and control with respect to such Condominium Board);
(B) if Mortgage Borrower votes or elects to have any Individual Property be
withdrawn from a Condominium regime established by the Condominium Act in
connection with any condemnation, any casualty or otherwise, without Lender’s
written consent, which consent shall not be unreasonably withheld, delayed or
conditioned; or (C) if Mortgage Borrower or Operating Lessee votes or elects to
have any Condominium be terminated without Lender’s written consent; and

 

(xvi)        with respect to the Individual Property commonly referred to as
Sheraton San Diego Mission Valley, following the occurrence of a Casualty or
Condemnation, any shortfall (which shortfall shall be reasonably determined by
Lender) between (A) the sum of any Net Proceeds and any insurance proceeds
referred to in Section 8.1(a)(iii) of the Mortgage Loan Agreement and (B) the
Allocated Loan Amount of such Individual Property, but only solely due to the
fact, if applicable, that the complete Restoration of such Individual Property
is not permitted by applicable law due to any legal nonconforming status of such
Individual Property.

 

(c)           Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability as set forth in subsection (a) above SHALL BECOME NULL
AND VOID and shall be of no further force and effect and the Debt shall be fully
recourse to Borrower in the event (i) of a breach by any Recourse Entity of any
of the covenants set forth in Article 6 hereof, Paragraph 14 of the Senior
Mezzanine Operating Lease Agreement or Paragraph 14 of the Junior Mezzanine
Operating Lease Agreement, that is cited as a factor in a court’s decision that
results in a substantive consolidation (other than a substantive consolidation
petitioned for or joined in by Lender) of any Recourse Entity with any other
Person (excluding another Borrower or Ashford Keys Junior Operating Lessee) in a
proceeding under any Creditors’ Rights Laws, (ii) Borrower or Ashford Keys
Junior Operating Lessee incurs any voluntary secured Indebtedness other than the
Debt and Permitted Debt (as defined in this Agreement, the Mortgage Loan
Agreement and the Senior Mezzanine Loan Agreement) without the prior written
consent of Lender or except as expressly permitted in this Agreement, the
Mortgage Loan Agreement or the Senior Mezzanine Loan Agreement, (iii) Mortgage
Borrower or Operating Lessee incurs any Indebtedness other than the Debt and
Permitted Debt (as defined in the Mortgage Loan Agreement) (excluding
Indebtedness relating to trade payables incurred in the ordinary course of
business, mechanic’s or other similar liens, such as statutory liens, judgment
liens or lis pendens) without the prior written consent of Mortgage Lender or
except as expressly permitted in the Mortgage Loan Agreement, (iv) of the
occurrence of a Prohibited Transfer (provided, however, Borrower’s liability
pursuant to this Section 15.1(c)(iv) resulting from a Prohibited Transfer under
Section 7.2(b)(vii) or Section 7.2(b)(viii) shall be limited to the Release
Price attributable to the applicable Individual Property), excluding a
foreclosure or deed in lieu of the Properties, a foreclosure of the Collateral
or assignment-in-lieu of the Collateral or a foreclosure of the Senior Mezzanine
Collateral or an assignment-in-lieu of the Senior Mezzanine Collateral,
(v) Senior Mezzanine Borrower or Ashford Keys Senior Operating Lessee incurs any
Indebtedness other than the Debt and Permitted Debt (as

 

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defined in the Senior Mezzanine Loan Agreement) (excluding Indebtedness relating
to mechanic’s or other similar liens, such as statutory liens, judgment or lis
pendens) without the prior written consent of Senior Mezzanine Lender or except
as expressly permitted in the Senior Mezzanine Loan Agreement, (vi) the
Properties, the Senior Mezzanine Collateral or the Collateral or any part
thereof shall become an asset in a bankruptcy or insolvency proceeding initiated
by any Recourse Entity, Guarantor or any Affiliate, officer, director, or
representative which Controls, directly or indirectly, any Recourse Entity or
Guarantor files, or joins in the filing of, an involuntary petition against any
Recourse Entity under any Creditors Rights Laws, or solicits or causes to be
solicited petitioning creditors or colludes with petitioning creditors for the
filing of any involuntary petition against any Recourse Entity from any Person
under any Creditors Rights Laws; (vii)  any Recourse Entity files an answer
consenting to or otherwise acquiescing in or joining in any involuntary petition
filed against it, by any other Person under any Creditors Rights Laws, or
solicits or causes to be solicited petitioning creditors for any involuntary
petition from any Person; (viii) other than with the written consent of Lender,
any Affiliate, officer, director, or representative which Controls any Recourse
Entity consents to or acquiesces in or joins in an application for the
appointment of a custodian, receiver, trustee, or examiner for any Recourse
Entity or any portion of the Properties or the Collateral; (ix) any amendment or
modification of any Ground Lease in violation of the terms hereof which would
reasonably be expected to have or does have a Material Adverse Effect; or
(x) any cancellation or termination of any Ground Lease, or the surrender of the
leasehold estate thereunder in violation of the terms hereof (other than due to
non-payment of Ground Rent if funds are reserved with Mortgage Lender for such
purposes pursuant to Section 9.8 of the Mortgage Loan Agreement); provided,
however, Borrower’s liability pursuant to Section 15.1(c)(ix) and (x) shall be
limited to the Release Price attributable to the applicable Individual Property.

 

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

 

(e)           Notwithstanding anything to the contrary in this Section 15.1,
(i) Borrower and Guarantor shall have no liability under this Section 15.1 to
the extent such liability solely arises (1) as a result of any exercise of
remedies, foreclosure, deed-in-lieu of foreclosure or assignment-in-lieu of
foreclosure by Lender, Mortgage Lender or Senior Mezzanine Lender, (2) as a
result of an act or omission of Lender or a third-party purchaser or any
Affiliate or subsidiary of any of the foregoing (including Mortgage Borrower and
Senior Mezzanine Borrower) following Lender or such third-party taking title to
the Collateral pursuant to a foreclosure, assignment-in-lieu of foreclosure or
otherwise with respect to the Collateral, (3) as a result of an act or omission
of Senior Mezzanine Lender or a third-party purchaser or any Affiliate or
subsidiary of any of the foregoing (including Borrower and Mortgage Borrower)
following Senior Mezzanine Lender or such third-party purchaser or any Affiliate
or subsidiary of any of the foregoing taking title to the Collateral (as defined
in the Senior Mezzanine Loan Agreement) pursuant to a foreclosure or an
assignment-in-lieu of foreclosure or otherwise with respect to the Collateral
(as defined in the Senior Mezzanine Loan Agreement), or (4) as a result of an
act or an omission of the Mortgage Lender or a third party purchaser or any
Affiliate thereof following  a foreclosure, deed-in-lieu of foreclosure or
otherwise with respect to the Properties; unless in each case, such act or
omission was caused by Borrower, Guarantor or any of their respective Affiliates
(but only prior to such

 

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Exculpated Party becoming an Affiliate of Lender, Mortgage Lender or Senior
Mezzanine Lender or any purchaser at any foreclosure of the Loan, the Mortgage
Loan or the Senior Mezzanine Loan) or such acts or omissions are the proximate
result of acts, events, conditions, or circumstances that existed prior to the
date of such foreclosure, deed in lieu of foreclosure or assignment in lieu of
foreclosure, whether or not discovered prior or subsequent to the date of such
foreclosure, deed in lieu of foreclosure or assignment in lieu of foreclosure,
provided, however, Borrower and Guarantor will bear the burden of proof to show
that an event triggering liability of Borrower or Guarantor under this
Section 15.1 first occurred after such foreclosure, deed in lieu of foreclosure
or assignment in lieu of foreclosure, was not the proximate result of events
that first occurred prior to such foreclosure, deed in lieu of foreclosure or
assignment in lieu of foreclosure and was not caused by any Exculpated Party
(but only prior to such Exculpated Party becoming an Affiliate of Lender,
Mortgage Lender or Senior Mezzanine Lender or any purchaser at any foreclosure
of the Loan, the Mortgage Loan or the Senior Mezzanine Loan) or their respective
Affiliates; (ii) Borrower and Guarantor shall have no liability under
Section 15.1(b) to the extent such liability solely arises after (A) Lender or a
third-party has taken title to the Collateral pursuant to a foreclosure,
assignment-in-lieu of foreclosure or otherwise; (B) Senior Mezzanine Lender or a
third party has taken title to the Collateral (as determined in the Senior
Mezzanine Loan Agreement) pursuant to a foreclosure, assignment-in-lieu of
foreclosure or otherwise, or (C) Mortgage Lender or a third party has taken
title to the Properties pursuant to a foreclosure, deed-in-lieu of foreclosure
or otherwise; and (iii) no Operating Lessee shall have any liability under this
Section 15.1, the Guaranty, or the Environmental Indemnity, except to the extent
that such liability arises as a result of any act or omission of such Operating
Lessee (but only prior to such Operating Lessee becoming an Affiliate of Lender,
Mortgage Lender or Senior Mezzanine Lender or any purchaser at any foreclosure
of the Loan, the Mortgage Loan or the Senior Mezzanine Loan), provided, however,
such Operating Lessee will bear the burden of proof to show that an event
triggering liability of Operating Lessee under this Section 15.1 was not caused
by Operating Lessee (but only prior to such Operating Lessee becoming an
Affiliate of Lender, Mortgage Lender or Senior Mezzanine Lender or any purchaser
at any foreclosure of the Loan, the Mortgage Loan or the Senior Mezzanine Loan).

 

ARTICLE 16
NOTICES

 

Section 16.1         Notices

 

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

 

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If to Lender:

 

Morgan Stanley Mortgage Capital Holdings LLC
1585 Broadway

 

 

New York, NY 10036
Attention: George Kok
Facsimile No.  (212) 507-4859

 

 

 

And:

 

Barclays Bank PLC
745 Seventh Avenue
New York, New York 10019
Attention: Sabrina Khabie, Esq.

 

 

 

And:

 

Bank of America, N.A.
c/o Capital Markets Servicing Group
900 West Trade Street, Suite 650
Mail Code: NC1-026-06-01
Charlotte, North Carolina 28255
Attention: Servicing Manager
Facsimile No.  (704) 317-4501

 

 

 

With a copy to:

 

Alston & Bird LLP
90 Park Avenue
New York, NY 10016
Attn: Meryl P. Diamond Esq.
Facsimile No. (212) 922-3947

 

 

 

If to Borrower:

 

c/o Ashford Hospitality Trust
14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254
Attention: Christopher A. Peckham
Facsimile No.: (972) 490-9605

 

 

 

With a copy to:

 

Jackson Walker LLP
2323 Ross Avenue, Suite 600
Dallas, Texas 75201
Attention: Cynthia Nelson, Esq.
Facsimile No.: (214) 661-6819

 

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

 

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ARTICLE 17
FURTHER ASSURANCES

 

Section 17.1         Replacement Documents

 

Upon receipt of an affidavit of an officer of Lender as to the loss, theft,
destruction or mutilation of the Note or any other Loan Document which is not of
public record:  (i) with respect to any Loan Document other than the Note,
Borrower will issue, in lieu thereof, a replacement of such other Loan Document,
dated the date of such lost, stolen, destroyed or mutilated Loan Document in the
same principal amount thereof and otherwise of like tenor and (ii) with respect
to the Note, (a) Borrower will execute a reaffirmation of the Debt as evidenced
by such Note acknowledging that Lender has informed Borrower that the Note was
lost, stolen destroyed or mutilated and that such Debt continues to be an
obligation and liability of Borrower as set forth in the Note, a copy of which
shall be attached to such reaffirmation and (b) if requested by Lender, Borrower
will execute a replacement note and Lender or Lender’s custodian (at Lender’s
option) shall provide to Borrower Lender’s (or Lender’s custodian’s) then
standard form of lost note affidavit (without indemnification), which such form
shall be reasonably acceptable to Borrower.

 

Section 17.2         Execution of Pledge Agreements

 

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

 

Section 17.3         Further Acts, etc.

 

Borrower will, at the cost of Borrower, and without expense to Lender, do,
execute, acknowledge and deliver all and every further acts, assignments,
security agreements, pledges, control agreements, notices of assignments,
transfers and assurances as Lender shall, from time to time, reasonably require,
for the better assuring, conveying, assigning, transferring, and confirming unto
Lender the property and rights hereby granted, bargained, sold, conveyed,
confirmed, pledged, assigned, warranted and transferred or intended now or
hereafter so to be, or which Borrower may be or may hereafter become bound to
convey or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Agreement and the Pledge Agreements, or for
complying with all Legal Requirements.  Borrower, on demand, will execute and
deliver, and in the event it shall fail to so execute and deliver, hereby
authorizes Lender to execute in the name of Borrower or without the signature of
Borrower to the extent Lender may lawfully do so, one or more financing
statements and financing statement amendments to evidence more effectively,
perfect and maintain the priority of the security interest of Lender in the
Collateral.  Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Lender at

 

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law and in equity, including without limitation, such rights and remedies
available to Lender pursuant to this Section 17.3.

 

Section 17.4         Changes in Tax, Debt, Credit and Documentary Stamp Laws

 

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

 

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

 

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

 

Section 17.5         Expenses

 

Borrower covenants and agrees to pay or, if Borrower fails to pay, to reimburse,
Lender (including, following a Securitization, the securitization trust, any
servicer, trust advisor, trustee or certificate administrator) upon receipt of
written notice from Lender for all reasonable out-of-pocket costs and expenses
(including reasonable, actual attorneys’ fees and disbursements and all actual
disbursements of internal counsel) reasonably incurred by Lender in accordance
with this Agreement (all of which shall be deemed part of the Debt) in
connection with (a) the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents and the consummation of the transactions
contemplated hereby and thereby and all the costs of furnishing all opinions by
counsel for Borrower (including without limitation any opinions requested by
Lender as to any legal matters arising under this Agreement or the other Loan
Documents with respect to the Properties, the Collateral or the Senior Mezzanine
Collateral); (b) Lender’s customary surveillance and actions to monitor
Borrower’s ongoing performance of and compliance with Borrower’s respective
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including, without limitation, confirming compliance with environmental and
insurance requirements; (c) following a request by Borrower, Lender’s ongoing
performance and compliance with all agreements and conditions contained in this
Agreement and the other Loan Documents on its part to be performed or complied
with after the Closing Date; (d) any prepayment, release of any Individual
Property, the Collateral, the Senior Mezzanine Collateral, or assumption or

 

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modification of the Loan; (e) unless otherwise expressly provided herein, the
negotiation, preparation, execution, delivery and administration of any
consents, amendments, waivers or other modifications to this Agreement and the
other Loan Documents and any other documents or matters requested by Borrower or
Lender; (f) unless otherwise expressly provided herein, securing Borrower’s
compliance with any requests made pursuant to the provisions of this Agreement;
(g) without duplication of costs and expenses incurred pursuant to clause
(a) above, the filing and recording fees and expenses, title insurance and
reasonable fees and expenses of counsel for providing to Lender all required
legal opinions, and other similar expenses incurred in creating and perfecting
the Lien in favor of Lender pursuant to this Agreement and the other Loan
Documents; (h) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, this Agreement,
the other Loan Documents, the Properties, the Collateral, the Senior Mezzanine
Collateral or any other security given for the Loan; (i) any breach of the Loan
Documents by Borrower, Guarantor or any Affiliate of any of the foregoing;
(j) the preservation or protection of the Collateral (including, without
limitation, taxes and insurance, property inspections and appraisals, legal fees
and litigation expenses) following or resulting from an Event of Default under
the Loan Documents; and (k) enforcing any obligations of or collecting any
payments due from Borrower under this Agreement, the other Loan Documents or
with respect to the Properties, the Collateral, the Senior Mezzanine Collateral
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work out” or of
any insolvency or bankruptcy proceedings; provided, however, that Borrower shall
not be liable for the payment of any such costs and expenses to the extent the
same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender.

 

In the event that Borrower takes any action or requests any consent or approval
of Lender  (including, following a Securitization, the securitization trust, any
servicer, trust advisor, trustee or certificate administrator) under the
provisions of this Agreement or any other Loan Document and the taking of such
action by Borrower or the giving of such consent or approval by Lender is or may
be conditioned upon the receipt of a Rating Agency Confirmation, or, in
accordance with the terms of the transaction documents relating to a
Securitization, a Rating Agency Confirmation is required in order for such
action to be taken by Borrower or the consent of Lender to be given, or,
following or resulting from a default by Borrower or the Loan becoming a
specially serviced loan, a Rating Agency Confirmation is otherwise required in
connection with the servicing of the Loan or the administration of the
securitization trust, Borrower shall provide any indemnities required and,
unless otherwise expressly provided herein, pay all of the out-of-pocket costs
and expenses of Lender, Lender’s servicer and each Rating Agency in connection
therewith (including reasonable attorneys’ fees and expenses), and, if
applicable, shall pay any fees imposed by any Rating Agency as a condition to
the delivery of such confirmation.

 

Section 17.6         Cost of Enforcement

 

In the event (a) that the Pledge Agreement is foreclosed in whole or in part,
(b) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower, Mortgage Borrower, Senior Mezzanine Borrower or any of its
constituent Persons or an assignment by Borrower, Mortgage Borrower, Senior
Mezzanine Borrower or any of its constituent Persons for the benefit of its
creditors, or (c) Lender exercises any of its other remedies under this
Agreement or any of the other Loan Documents, Borrower shall be chargeable with
and

 

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agrees to pay all costs of collection and defense, including reasonable
attorneys’ fees and costs, incurred by Lender or Borrower in connection
therewith and in connection with any appellate proceeding or post judgment
action involved therein, together with all required service or use taxes, all of
which shall be deemed part of the Debt.  In addition, Borrower shall be
responsible for any fees and expenses of Lender or any securitization trust,
servicer, special servicer, trust advisor, trustee, certificate administrator
and any third-party fees and expenses, including, without limitation, attorneys’
fees and disbursements, incurred or arising as a result of or following a
request by Borrower, an Event of Default, a failure to pay sums when due as and
when required under the Loan Documents, the Loan being transferred to a special
servicer and while the Loan is a specially serviced loan, including, without
limitation, (a) interest on advances made by the servicer, special servicer,
trustee or certificate administrator; (b) special servicer fees, workout fees,
liquidation fees, as well as other compensation payable to the special servicer
as a result of any Individual Property becoming a foreclosed property;
(c) indemnification obligations to any such persons and any of their respective
directors, officers, members, managers, partners, employees, agents, Affiliates
or other “controlling persons” within the meaning of the Securities Act of 1933;
and (d) taxes payable from the assets of the securitization trust and tax
related expenses, but only to the extent Borrower is otherwise required to pay
the same under the Loan Documents or by law.  Notwithstanding the foregoing, all
of such costs and expenses set forth in clauses (a) through (d) of the preceding
sentence shall exclude (i) the regular monthly fee due to the servicer, the
trustee and the certificate administrator, (ii) those costs and expenses which
are identified pursuant to the servicing agreement with respect to such
securitization trust as expenses to be borne by the servicer, special servicer,
trust advisor, trustee or certificate administrator without reimbursement as an
advance or otherwise from the securitization trust (including without limitation
such person’s ordinary overhead expenses and the expenses of such person
associated with maintaining a fidelity bond or errors and omissions insurance
with respect to itself, preparing annual compliance statements with respect to
its own performance and preparing and filing and maintaining ordinary tax
information reports and returns for the securitization trust) and (iii) those
costs and expenses incurred as a result of the gross negligence or willful
misconduct of the servicer, special servicer, trustee or certificate
administrator.

 

Section 17.7         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 default under the Mortgage Loan Documents or
if Mortgage Lender asserts that Mortgage Borrower has defaulted in the
performance or observance of any term, covenant or condition of the Mortgage
Loan Documents (whether or not the same shall have continued beyond any
applicable notice or grace periods, whether or not Mortgage Lender shall have
delivered proper notice to Mortgage Borrower, and without regard to any other
defenses or offset rights Mortgage Borrower may have against Mortgage Lender),
Borrower hereby expressly agrees that Lender shall have the immediate right,
without notice to or demand on Borrower, Mortgage Borrower or Senior Mezzanine
Borrower, but shall be under no obligation: (i) to pay all or any part of the
Mortgage Loan, and any other sums, that are then due and payable and to perform
any act or take any action on behalf of Mortgage Borrower, as may be
appropriate, to cause all of the terms, covenants and conditions of the Mortgage
Loan Documents on the part of Mortgage Borrower 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

 

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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 costs and
expenses 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 the Pledge Agreements and shall be
due and payable to Lender within two Business Days following demand therefor.

 

(b)           Subject to the rights of tenants, Borrower hereby grants, and
shall cause Senior Mezzanine Borrower to cause Mortgage Borrower to grant,
Lender and any Person designated by Lender the right to enter upon any
Individual Property at any time for the purpose of carrying out the rights
granted to Lender under this Section 17.7.  Borrower shall not, and shall not
cause or permit Mortgage Borrower or any other Person to impede, interfere with,
hinder or delay, any effort or action on the part of Lender to cure any default
or asserted default under the Mortgage Loan, or to otherwise protect or preserve
Lender’s interests in the Loan and the Collateral, including the Properties, in
accordance with the provisions of this Agreement and the other Loan Documents.

 

(c)           Borrower hereby indemnifies Lender from and against all
out-of-pocket 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.  Lender shall have
no obligation to Borrower, Mortgage Borrower or any other party to make any such
payment or performance.  Borrower shall not impede, interfere with, hinder or
delay, and shall cause Senior Mezzanine Borrower to cause Mortgage Borrower to
not impede, interfere with, hinder or delay, any effort or action on the part of
Lender to cure any default or asserted default under the Mortgage Loan, or to
otherwise protect or preserve Lender’s interests in the Loan and the Collateral
following a default or asserted default under the Mortgage Loan.

 

(d)           If Lender shall receive a copy of any notice of default under the
Mortgage Loan Documents sent by Mortgage Lender to Mortgage 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.

 

(e)           Any default under the Mortgage Loan which is cured by Lender,
after any applicable grace, notice or cure period under the Mortgage Loan
Documents, shall constitute an immediate Event of Default under this Agreement
without any notice, grace or cure period otherwise applicable under this
Agreement.

 

(f)            In the event that Lender makes any payment in respect of the
Mortgage Loan, Lender shall be subrogated to all of the rights of Mortgage
Lender under the Mortgage Loan

 

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Documents against the Properties and Mortgage Borrower in addition to all other
rights Lender may have under the Loan Documents or applicable law.

 

Section 17.8         Discussions with Mortgage Lender

 

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 Properties, the Mortgage
Loan, the Loan or any other matter directly with Mortgage Lender or Mortgage
Lender’s consultants, agents or representatives without notice to or permission
from Borrower or any other Loan Party, nor shall Lender have any obligation to
disclose such discussions or the contents thereof with Borrower or any other
Loan Party.

 

Section 17.9         Independent Approval Rights

 

If any action, proposed action or other decision is consented to or approved by
Mortgage Lender or Senior Mezzanine Lender, such consent or approval shall not
be binding or controlling on Lender.  Borrower hereby acknowledges and agrees
that (i) the risks of Mortgage Lender in making the Mortgage Loan and the risks
of the Senior Mezzanine Lender in making the Senior Mezzanine Loan are different
from the risks of Lender in making the Loan, (ii) in determining whether to
grant, deny, withhold or condition any requested consent or approval Mortgage
Lender, Senior Mezzanine Lender and Lender may reasonably reach different
conclusions, and (iii) Lender has an absolute independent right to grant, deny,
withhold or condition any requested consent or approval based on its own point
of view.  Further, the denial by Lender of a requested consent or approval shall
not create any liability or other obligation of Lender if the denial of such
consent or approval results directly or indirectly in a default under the
Mortgage Loan or the Senior Mezzanine Loan, and Borrower hereby waives any claim
of liability against Lender arising from any such denial.

 

Section 17.10       Senior Mezzanine 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 default under the Senior Mezzanine Loan
Documents or if Senior Mezzanine Lender asserts that Senior Mezzanine Borrower
has defaulted in the performance or observance of any term, covenant or
condition of the Senior Mezzanine Loan Documents (whether or not the same shall
have continued beyond any applicable notice or grace periods, whether or not
Senior Mezzanine Lender shall have delivered proper notice to Senior Mezzanine
Borrower, and without regard to any other defenses or offset rights Senior
Mezzanine Borrower may have against Senior Mezzanine Lender), Borrower hereby
expressly agrees that Lender shall have the immediate right, without notice to
or demand on Borrower or Senior Mezzanine Borrower, but shall be under no
obligation: (i) to pay all or any part of the Senior Mezzanine Loan, and any
other sums, that are then due and payable and to perform any act or take any
action on behalf of Senior Mezzanine Borrower, as may be appropriate, to cause
all of the terms, covenants and conditions of the Senior Mezzanine Loan
Documents on the part of Senior Mezzanine Borrower 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

 

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no obligation to complete any cure or attempted cure undertaken or commenced by
Lender.  All sums so paid and the costs and expenses 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 the Pledge Agreements and shall be due and payable to Lender within
two Business Days following demand therefor.

 

(b)           Borrower shall not, and shall not cause or permit Senior Mezzanine
Borrower or any other Person to impede, interfere with, hinder or delay, any
effort or action on the part of Lender to cure any default or asserted default
under the Senior Mezzanine Loan, or to otherwise protect or preserve Lender’s
interests in the Loan and the Collateral, including the Senior Mezzanine
Collateral and the Properties, in accordance with the provisions of this
Agreement and the other Loan Documents.

 

(c)           Borrower hereby indemnifies Lender from and against all
out-of-pocket 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.  Lender shall have
no obligation to Borrower, Senior Mezzanine Borrower or any other party to make
any such payment or performance.  Borrower shall not impede, interfere with,
hinder or delay, and shall cause Senior Mezzanine Borrower to not impede,
interfere with, hinder or delay, any effort or action on the part of Lender to
cure any default or asserted default under the Senior Mezzanine Loan, or to
otherwise protect or preserve Lender’s interests in the Loan and the Collateral
following a default or asserted default under the Senior Mezzanine Loan.

 

(d)           If Lender shall receive a copy of any notice of default under the
Senior Mezzanine Loan Documents sent by Senior Mezzanine Lender to Senior
Mezzanine 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.

 

(e)           Any default under the Senior Mezzanine Loan which is cured by
Lender, after any applicable grace, notice or cure period under the Senior
Mezzanine Loan Documents, shall constitute an immediate Event of Default under
this Agreement without any notice, grace or cure period otherwise applicable
under this Agreement.

 

(f)            In the event that Lender makes any payment in respect of the
Senior Mezzanine Loan, Lender shall be subrogated to all of the rights of Senior
Mezzanine Lender under the Senior Mezzanine Loan Documents against the Senior
Mezzanine Collateral and Senior Mezzanine Borrower in addition to all other
rights Lender may have under the Loan Documents or applicable law.

 

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ARTICLE 18
WAIVERS

 

Section 18.1         Remedies Cumulative; Waivers

 

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

 

Section 18.2         Modification, Waiver in Writing

 

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

 

Section 18.3         Delay Not a Waiver

 

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

 

Section 18.4         Trial by Jury

 

BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH.  THIS

 

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WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER
AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.  EACH OF
LENDER AND BORROWER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER AND LENDER.

 

Section 18.5         Waiver of Notice

 

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

 

Section 18.6         Remedies of Borrower

 

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

 

Section 18.7         Waiver of Marshalling of Assets

 

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

 

Section 18.8         Waiver of Statute of Limitations

 

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

 

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Section 18.9         Waiver of Counterclaim

 

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

 

ARTICLE 19
GOVERNING LAW

 

Section 19.1         Governing Law

 

(a)           THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE
OBLIGATIONS ARISING HEREUNDER AND THEREUNDER 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 (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS
AND SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE
IN WHICH ANY INDIVIDUAL PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE
FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN
DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER.  TO THE
FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE
AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW.

 

(b)           ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT
LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW
YORK, COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER
HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.  BORROWER DOES HEREBY DESIGNATE
AND APPOINT:

 

Corporation Service Company

1180 Avenue of the Americas, Suite 210

New York, New York 10036

 

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AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,
(II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE
SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND
(III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES
TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.

 

Section 19.2         Severability

 

Wherever possible, each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable Legal Requirements, but if
any provision of this Agreement shall be prohibited by or invalid under
applicable Legal Requirements, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

 

Section 19.3         Preferences

 

To the extent Borrower makes a payment or payments to Lender, which payment or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any Creditors Rights Laws, state or federal
law, common law or equitable cause, then, to the extent of such payment or
proceeds received, the obligations hereunder or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.

 

ARTICLE 20
MISCELLANEOUS

 

Section 20.1         Survival

 

This Agreement and all covenants, agreements, representations and warranties
made herein and in the certificates delivered pursuant hereto shall survive the
making by Lender of the Loan and the execution and delivery to Lender of the
Note, and shall continue in full force and effect so long as all or any of the
Debt is outstanding and unpaid unless a longer period is expressly set forth
herein or in the other Loan Documents.  Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
legal representatives, successors and assigns of such party.  All covenants,
promises and agreements in this Agreement, by or on behalf

 

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of Borrower, shall inure to the benefit of the legal representatives, successors
and assigns of Lender.

 

Section 20.2         Lender’s Discretion

 

Whenever pursuant to this Agreement, Lender exercises any right given to it to
approve or disapprove, or any arrangement or term is to be satisfactory to
Lender, the decision of Lender to approve or disapprove or to decide whether
arrangements or terms are satisfactory or not satisfactory shall (except as is
otherwise specifically herein provided) be in the sole discretion of Lender and
shall be final and conclusive.

 

Section 20.3         Headings

 

The Article and/or Section headings and the Table of Contents in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

 

Section 20.4         Schedules Incorporated

 

The Schedules annexed hereto are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.

 

Section 20.5         Offsets, Counterclaims and Defenses

 

Any assignee of Lender’s interest in and to this Agreement, the Note and the
other Loan Documents shall take the same free and clear of all offsets,
counterclaims or defenses which are unrelated to such documents which Borrower
may otherwise have against any assignor of such documents, and no such unrelated
counterclaim or defense shall be interposed or asserted by Borrower in any
action or proceeding brought by any such assignee upon such documents and any
such right to interpose or assert any such unrelated offset, counterclaim or
defense in any such action or proceeding is hereby expressly waived by Borrower.

 

Section 20.6         No Joint Venture or Partnership; No Third Party
Beneficiaries

 

(a)           Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender.  Nothing herein or therein is intended to create a joint venture,
partnership, tenancy in common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Collateral other than that of
beneficiary or lender.

 

(b)           This Agreement and the other Loan Documents are solely for the
benefit of Lender and Borrower and nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon anyone other than Lender and
Borrower any right to insist upon or to enforce the performance or observance of
any of the obligations contained herein or therein.  All conditions to the
obligations of Lender to make the Loan hereunder are imposed solely and
exclusively for the benefit of Lender and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make the Loan in the absence of
strict compliance with any or all thereof and no other Person

 

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shall under any circumstances be deemed to be a beneficiary of such conditions,
any or all of which may be freely waived in whole or in part by Lender if, in
Lender’s sole discretion, Lender deems it advisable or desirable to do so.

 

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

 

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

 

(e)           By accepting or approving anything required to be observed,
performed or fulfilled or to be given to Lender pursuant to this Agreement, the
Pledge Agreements, the Note or the other Loan Documents, including, without
limitation, any officer’s certificate, balance sheet, statement of profit and
loss or other financial statement, survey, appraisal, or insurance policy,
Lender shall not be deemed to have warranted, consented to, or affirmed the
sufficiency, the legality or effectiveness of same, and such acceptance or
approval thereof shall not constitute any warranty or affirmation with respect
thereto by Lender.

 

(f)            Borrower recognizes and acknowledges that in accepting this
Agreement, the Note, the Pledge Agreements and the other Loan Documents, Lender
is expressly and primarily relying on the truth and accuracy of the
representations and warranties set forth in Article 4 of this Agreement without
any obligation to investigate the Properties or the Collateral and
notwithstanding any investigation of the Properties or the Collateral by Lender;
that such reliance existed on the part of Lender prior to the date hereof, that
the warranties and representations are a material inducement to Lender in making
the Loan; and that Lender would not be willing to make the Loan and accept this
Agreement, the Note, the Pledge Agreements and the other Loan Documents in the
absence of the warranties and representations as set forth in Article 4 of this
Agreement.

 

Section 20.7         Publicity

 

All news releases, publicity or advertising by Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan,
Lender, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC,
Morgan Stanley Bank, N.A., Morgan Stanley Mortgage Capital Holdings, LLC or any
of their respective Affiliates shall be subject to the prior written approval of
Lender, not to be unreasonably withheld.  Lender shall be permitted to make any
news releases, publicity or advertising by Lender or its Affiliates through any
media intended to reach the general public which refers to the Loan, the
Properties, the Collateral, Borrower and their respective Affiliates without the
approval of Borrower or any such Persons.  Borrower also agrees that Lender may
share any information pertaining to the Loan with Bank of America Corporation,
including its bank subsidiaries, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Barclays Bank PLC, Morgan Stanley Bank, N.A., Morgan Stanley
Mortgage Capital Holdings,

 

150

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LLC and any Affiliates of the foregoing, in connection with the sale or transfer
of the Loan or any Participations and/or Securities created.

 

Section 20.8         Conflict; Construction of Documents; Reliance

 

In the event of any conflict between the provisions of this Agreement and any of
the other Loan Documents, the provisions of this Agreement shall control.  The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same.  Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or Affiliate of Lender.  Lender shall not be subject to any
limitation whatsoever in the exercise of any rights or remedies available to it
under any of the Loan Documents or any other agreements or instruments which
govern the Loan by virtue of the ownership by it or any parent, subsidiary or
Affiliate of Lender of any equity interest any of them may acquire in Borrower,
and Borrower hereby irrevocably waives the right to raise any defense or take
any action on the basis of the foregoing with respect to Lender’s exercise of
any such rights or remedies.  Borrower acknowledges that Lender engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of Borrower or its Affiliates.

 

Section 20.9         Duplicate Originals; Counterparts

 

This Agreement and each of the other Loan Documents may be executed in any
number of duplicate originals, and each duplicate original shall be deemed to be
an original.  This Agreement and each of the other Loan Documents (and each
duplicate original) also may be executed in any number of counterparts, each of
which shall be deemed an original and all of which together constitute a fully
executed agreement even though all signatures do not appear on the same
document.

 

Section 20.10       Joint and Several Liability

 

If Borrower consists of more than one Person or entity, the obligations and
liabilities of each such Person hereunder are joint and several.

 

Section 20.11       Entire Agreement

 

This Agreement and the other Loan Documents contain the entire agreement of the
parties hereto and thereto in respect of the transactions contemplated hereby
and thereby, and all prior agreements among or between such parties, whether
oral or written between Borrower and Lender are superseded by the terms of this
Agreement and the other Loan Documents.

 

Section 20.12       Intentionally Omitted

 

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Section 20.13       Acknowledgement and Consent to Bail-In of EEA Financial
Institutions

 

(a)           Notwithstanding anything to the contrary in any Loan Document or
in any other agreement, arrangement or understanding among the respective
parties thereto, each party hereto acknowledges that any liability of any EEA
Financial Institution arising under any Loan Document, to the extent such
liability is unsecured, may be subject to the write-down and conversion powers
of an EEA Resolution Authority and agrees and consents to, and acknowledges and
agrees to be bound by:

 

(i)            the application of any Write-Down and Conversion Powers by an EEA
Resolution Authority to any such liabilities arising hereunder which may be
payable to it by any party hereto that is an EEA Financial Institution; and

 

(ii)           the effects of any Bail-in Action on any such liability,
including, if applicable:

 

(1)                                 a reduction in full or in part or
cancellation of any such liability;

 

(2)                                 a conversion of all, or a portion of, such
liability into shares or other instruments of ownership in such EEA Financial
Institution, its parent undertaking, or a bridge institution that may be issued
to it or otherwise conferred on it, and that such shares or other instruments of
ownership will be accepted by it in lieu of any rights with respect to any such
liability under this Agreement or any other Loan Document; or

 

(3)                                 the variation of the terms of such liability
in connection with the exercise of the write-down and conversion powers of any
EEA Resolution Authority.

 

(b)           As used in this Section 20.13 the following terms have the
following meanings ascribed thereto:  (i) “Bail-In Action” means the exercise of
any Write-Down and Conversion Powers by the applicable EEA Resolution Authority
in respect of any liability of an EEA Financial Institution; (ii) “Bail-In
Legislation” means, with respect to any EEA Member Country implementing
Article 55 of Directive 2014/59/EU of the European Parliament and of the Council
of the European Union, the implementing law for such EEA Member Country from
time to time which is described in the EU Bail-In Legislation Schedule;
(iii) “EEA Financial Institution” means (x) any credit institution or investment
firm established in any EEA Member Country which is subject to the supervision
of an EEA Resolution Authority; (y) any entity established in an EEA Member
Country which is a parent of an institution described in clause (x) of this
definition, or (z) any financial institution established in an EEA Member
Country which is a subsidiary of an institution described in clauses (x) or
(y) of this definition and is subject to consolidated supervision with its
parent; (iv) “EEA Member Country” means any of the member states of the European
Union, Iceland, Liechtenstein, and Norway; (v) “EEA Resolution Authority” means
any public administrative authority or any person entrusted with public
administrative authority of any EEA Member Country (including any delegee)
having responsibility for the resolution of any EEA Financial Institution;
(vi) “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule
published by the Loan Market Association (or any successor person), as in effect
from time to time; and (vii) “Write-Down and Conversion Powers” means, with
respect to any EEA

 

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Resolution Authority, the write-down and conversion powers of such EEA
Resolution Authority from time to time under the Bail-In Legislation for the
applicable EEA Member Country, which write-down and conversion powers are
described in the EU Bail-In Legislation Schedule.

 

Section 20.14       Certain Additional Rights of Lender (VCOC)Notwithstanding
anything to the contrary which may be contained in this Agreement, Lender shall
have:

 

(i)            the right to routinely consult with and advise Borrower’s and
Ashford Keys Junior Operating Lessee’s management regarding the significant
business activities and business and financial developments of Borrower and
Ashford Keys Junior Operating Lessee, provided, however, that such consultations
shall not include discussions of environmental compliance programs or disposal
of hazardous substances.  Consultation meetings should occur on a regular basis
(no less frequently than quarterly) with Lender having the right to call special
meetings at any reasonable times;

 

(ii)           the right, in accordance with the terms of this Agreement, to
examine the books and records of Borrower and Ashford Keys Junior Operating
Lessee at any time upon reasonable notice;

 

(iii)          the right, in accordance with the terms of this Agreement, to
receive monthly, quarterly and year-end financial reports, including balance
sheets, statements of income, shareholder’s equity and cash flow, a management
report and schedules of outstanding indebtedness;

 

(iv)          the right, without restricting any other right of Lender under
this Agreement (including any similar right), to restrict, upon the occurrence
of a material Event of Default, Borrower’s and Ashford Keys Junior Operating
Lessee’s payments of management consulting, director or similar fees to
affiliates of Borrower (or their personnel);

 

(v)           the right, without restricting any other rights of Lender under
this Agreement (including any similar right), to approve any acquisition by
Borrower and Ashford Keys Junior Operating Lessee of any other significant
property (other than personal property required for the day to day operation of
the Property);

 

(vi)          the right, without restricting any other rights of Lender under
this Agreement (including any similar right), in the event of certain material
Events of Default, to vote the owners’ interests in Borrower and Ashford Keys
Junior Operating Lessee pursuant to irrevocable proxies granted, at the request
of Lender in advance for this purpose; and

 

(vii)         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 and Ashford Keys Junior Operating Lessee held by their
members, and the right to restrict the transfer of interests in such members,
except for any Transfer that is specifically permitted pursuant to Article 7
hereof.

 

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The rights described above may be exercised by any entity which owns and
controls, directly or indirectly, substantially all of the interests in Lender.

 

[NO FURTHER TEXT ON THIS PAGE]

 

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

 

 

 

BORROWER:

 

 

 

 

 

ASHFORD JUNIOR C LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

/s/ Christopher Peckham

 

 

Name: Christopher Peckham

 

 

Title: Vice President

 

--------------------------------------------------------------------------------

 

 

LENDER:

 

 

 

 

 

BANK OF AMERICA, N.A., a national

 

banking association

 

 

 

 

 

By:

/s/ Jessica Fritts

 

 

Name: Jessica Fritts

 

 

Title: Vice President

 

--------------------------------------------------------------------------------

 

 

BARCLAYS BANK PLC, a public company registered in England and Wales

 

 

 

 

 

By:

/s/ Sabrina Khabie

 

 

Name: Sabrina Khabie

 

 

Title: Authorized Signatory

 

--------------------------------------------------------------------------------

 

 

MORGAN STANLEY MORTGAGE CAPITAL HOLDINGS LLC, a New York limited liability
company

 

 

 

 

 

By:

/s/ Kristin Sansone

 

 

Name: Kristin Sansone

 

 

Title: Authorized Signatory

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

Borrower Equity Ownership Structure

 

(attached hereto)

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

Intentionally Omitted

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

Forms of U.S. Tax Compliance Certificates

 

(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is hereby made to the Junior Mezzanine Loan Agreement dated as of
June 13, 2018 (as amended, restated, replaced, supplemented or otherwise
modified from time to time, the “Agreement”), between Bank of America, N.A.,
Barclays Bank PLC, and Morgan Stanley Mortgage Capital Holdings LLC,
collectively, as Lender, and [              ], as Borrower.

 

Pursuant to the provisions of Section 2.7(e) of the Agreement, the undersigned
hereby certifies that (i) it is the sole record and beneficial owner of the Loan
(as well as any Note evidencing such Loan) in respect of which it is providing
this certificate, (ii) it is not a bank within the meaning of
Section 881(c)(3)(A) of the Internal Revenue Code, (iii) it is not a ten percent
shareholder of Borrower within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code and (iv) it is not a controlled foreign corporation
related to Borrower as described in Section 881(c)(3)(C) of the Internal Revenue
Code.

 

The undersigned has furnished Borrower with a certificate of its non-U.S. Person
status on IRS Form W-8BEN.  By executing this certificate, the undersigned
agrees that (1) if the information provided on this certificate changes, the
undersigned shall promptly so inform Borrower, and (2) the undersigned shall
have at all times furnished Borrower with a properly completed and currently
effective certificate in either the calendar year in which each payment is to be
made to the undersigned, or in either of the two calendar years preceding such
payments.

 

Unless otherwise defined herein, terms defined in the Agreement and used herein
shall have the meanings given to them in the Agreement.

 

 

[NAME OF LENDER]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

Date:

                   , 20[  ]

 

C-1

--------------------------------------------------------------------------------

 

(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is hereby made to the Junior Mezzanine Loan Agreement dated as of
June 13, 2018 (as amended, restated, replaced, supplemented or otherwise
modified from time to time, the “Agreement”), between Bank of America, N.A.,
Barclays Bank PLC, and Morgan Stanley Mortgage Capital Holdings LLC,
collectively, as Lender, and [              ], as Borrower.

 

Pursuant to the provisions of Section 2.7(e) of the Agreement, the undersigned
hereby certifies that (i) it is the sole record and beneficial owner of the
Participation in respect of which it is providing this certificate, (ii) it is
not a bank within the meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, (iii) it is not a ten percent shareholder of Borrower within the meaning
of Section 871(h)(3)(B) of the Internal Revenue Code, and (iv) it is not a
controlled foreign corporation related to Borrower as described in
Section 881(c)(3)(C) of the Internal Revenue Code.

 

The undersigned has furnished its participating Lender with a certificate of its
non-U.S. Person status on IRS Form W-8BEN.  By executing this certificate, the
undersigned agrees that (1) if the information provided on this certificate
changes, the undersigned shall promptly so inform such Lender in writing, and
(2) the undersigned shall have at all times furnished such Lender with a
properly completed and currently effective certificate in either the calendar
year in which each payment is to be made to the undersigned, or in either of the
two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Agreement and used herein
shall have the meanings given to them in the Agreement.

 

 

[NAME OF PARTICIPANT]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Date:

                   , 20[  ]

 

C-2

--------------------------------------------------------------------------------

 

(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax
Purposes)

 

Reference is hereby made to the Junior Mezzanine Loan Agreement dated as of
June 13, 2018 (as amended, restated, replaced, supplemented or otherwise
modified from time to time, the “Agreement”), between Bank of America, N.A.,
Barclays Bank PLC, and Morgan Stanley Mortgage Capital Holdings LLC,
collectively, as Lender, and [              ], as Borrower.

 

Pursuant to the provisions of Section 2.7(e) of the Agreement, the undersigned
hereby certifies that (i) it is the sole record owner of the Participation in
respect of which it is providing this certificate, (ii) its direct or indirect
partners/members are the sole beneficial owners of such Participation,
(iii) with respect such Participation, neither the undersigned nor any of its
direct or indirect partners/members is a bank extending credit pursuant to a
loan agreement entered into in the ordinary course of its trade or business
within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code,
(iv) none of its direct or indirect partners/members is a ten percent
shareholder of Borrower within the meaning of Section 871(h)(3)(B) of the
Internal Revenue Code and (v) none of its direct or indirect partners/members is
a controlled foreign corporation related to Borrower as described in
Section 881(c)(3)(C) of the Internal Revenue Code.

 

The undersigned has furnished its participating Lender with IRS Form W-8IMY
accompanied by one of the following forms from each of its partners/members that
is claiming the portfolio interest exemption:  (i) an IRS Form W-8BEN or (ii) an
IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such
partner’s/member’s beneficial owners that is claiming the portfolio interest
exemption.  By executing this certificate, the undersigned agrees that (1) if
the information provided on this certificate changes, the undersigned shall
promptly so inform such Lender and (2) the undersigned shall have at all times
furnished such Lender with a properly completed and currently effective
certificate in either the calendar year in which each payment is to be made to
the undersigned, or in either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Agreement and used herein
shall have the meanings given to them in the Agreement.

 

 

[NAME OF PARTICIPANT]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Date:

                   , 20[  ]

 

C-3

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(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

 

Reference is hereby made to the Junior Mezzanine Loan Agreement dated as of
June 13, 2018 (as amended, restated, replaced, supplemented or otherwise
modified from time to time, the “Agreement”), between Bank of America, N.A.,
Barclays Bank PLC, and Morgan Stanley Mortgage Capital Holdings LLC,
collectively, as Lender, and [              ], as Borrower.

 

Pursuant to the provisions of Section 2.7(e) of the Agreement, the undersigned
hereby certifies that (i) it is the sole record owner of the Loan (as well as
any Note evidencing such Loan) in respect of which it is providing this
certificate, (ii) its direct or indirect partners/members are the sole
beneficial owners of such Loan (as well as any Note evidencing such Loan),
(iii) with respect to the extension of credit pursuant to this Agreement or any
other Loan Document, neither the undersigned nor any of its direct or indirect
partners/members is a bank extending credit pursuant to a loan agreement entered
into in the ordinary course of its trade or business within the meaning of
Section 881(c)(3)(A) of the Internal Revenue Code, (iv) none of its direct or
indirect partners/members is a ten percent shareholder of Borrower within the
meaning of Section 871(h)(3)(B) of the Internal Revenue Code and (v) none of its
direct or indirect partners/members is a controlled foreign corporation related
to Borrower as described in Section 881(c)(3)(C) of the Internal Revenue Code.

 

The undersigned has furnished Borrower with IRS Form W-8IMY accompanied by one
of the following forms from each of its partners/members that is claiming the
portfolio interest exemption:  (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY
accompanied by an IRS Form W-8BEN from each of such partner’s/member’s
beneficial owners that is claiming the portfolio interest exemption.  By
executing this certificate, the undersigned agrees that (1) if the information
provided on this certificate changes, the undersigned shall promptly so inform
Borrower, and (2) the undersigned shall have at all times furnished Borrower
with a properly completed and currently effective certificate in either the
calendar year in which each payment is to be made to the undersigned, or in
either of the two calendar years preceding such payments.

 

Unless otherwise defined herein, terms defined in the Agreement and used herein
shall have the meanings given to them in the Agreement.

 

 

[NAME OF LENDER]

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Date:

                   , 20[  ]

 

C-4

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EXHIBIT D

 

Intentionally Omitted.

 

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EXHIBIT E

 

PIP Completion Guaranty

 

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PIP COMPLETION GUARANTY AGREEMENT

 

THIS PIP COMPLETION GUARANTY AGREEMENT (the “Agreement”), dated as of
              , 20    is made by [                  ], a [                  ],
with a mailing address at [                       ] (“Guarantor”), to and for
the benefit of [                              ] (together with its successors
and/or assigns, “Lender”).  Capitalized terms not otherwise defined herein shall
have the meaning ascribed in the Loan Agreement (as defined below).

 

RECITALS

 

A.            Pursuant to that certain [Promissory Note], dated as of
[                     ], 201 , made by [                  ] (together with its
successors and permitted assigns, “Borrower”), and payable to the order of
Lender in the original principal amount of  [                  ] Dollars
($[              ]) (as the same may be amended, restated, replaced,
supplemented, or otherwise modified from time to time, the “Note”), Borrower has
become indebted, and may from time to time be further indebted, to Lender with
respect to a loan (“Loan”) made pursuant to that certain [Loan Agreement], of
even date herewith between Borrower and Lender (as the same may be amended,
restated, replaced, supplemented, or otherwise modified from time to time, the
“Loan Agreement”), which Loan is secured by the lien and security interest of
those certain pledge and security agreements, dated as of the date hereof, made
by Borrower for the benefit of Lender (collectively, as the same may hereafter
be amended, restated, renewed, supplemented, replaced, extended or otherwise
modified from time to time, the “Security Instrument”), and further evidenced,
secured or governed by other instruments and documents executed in connection
with the Loan (together with the Note, the Loan Agreement and the Security
Instrument, collectively, the “Loan Documents”);

 

B.            [               ] (“Operating Lessee” and together with Mortgage
Borrower, collectively the “Borrower Parties” and individually a “Borrower
Party”), leases and operates the Property pursuant to that certain Lease
Agreement dated as of [             ] (as amended, the “Operating Lease”), by
and between Mortgage Borrower and Operating Lessee.

 

C.            Operating Lessee and [               ] ([“Franchisor”][“Manager”])
are parties to that certain [Franchise Agreement] [Management Agreement] dated
on or about the date hereof (together with all exhibits thereto, the [“Franchise
Agreement”] [“Management Agreement”]) relating to that certain real property
located at [                 ] (the “Property”).

 

D.            Pursuant to the [Franchise Agreement] [Management Agreement] and
that certain Property Improvement Plan attached hereto as Exhibit A and
incorporated herein by this reference (as the same may be amended or modified,
the “Property Improvement Plan”), Operating Lessee is obligated to renovate,
up-grade and remodel the Property and perform other related obligations as more
particularly set forth therein (collectively, the “PIP Work”).

 

E.            Lender requires that Guarantor execute this Agreement to guarantee
the performance and completion of the PIP Work.

 

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AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor hereby covenants and agrees for the benefit of Lender,
as follows:

 

1.             Completion Guaranty.

 

(a)           Guarantor hereby unconditionally and irrevocably guarantees to
Lender the full performance and completion of the PIP Work on or before the
Outside Date (as defined in the Loan Agreement), including, without limitation,
that the PIP Work be constructed, performed and completed in accordance with the
terms and conditions of the Property Improvement Plan, [Franchise Agreement]
[Management Agreement], the Loan Agreement, the Security Instrument and the
other Loan Documents, free and clear from all defects and liens and in
compliance with all applicable laws (collectively, the “Guaranteed
Obligations”).

 

(b)           If any of the obligations of Borrower or the Borrower Parties with
respect to the performance and completion of the PIP Work are not complied with,
in any respect whatsoever, and without the necessity of any notice from Lender
to Guarantor, Guarantor agrees to (i) assume all responsibility for the
performance and completion of the PIP Work and, at Guarantor’s own cost and
expense, cause the PIP Work to be fully performed and completed in accordance
with the terms and conditions of the Property Improvement Plan, [Franchise
Agreement] [Management Agreement], the Loan Agreement, the Security Instrument,
the other Loan Documents, and this Agreement, and in compliance with all
applicable laws; (ii) pay all bills incurred by Borrower or any Borrower Party
in connection with the performance and completion of the PIP Work, including
without limitation, all permitting fees, licensing fees, amounts payable under
any general construction contract and all subcontracts, and amounts payable to
all architects, engineers and other consultants engaged in connection with the
construction, performance and completion of the PIP Work; (iii) cure any default
or Event of Default under [Franchise Agreement] [Management Agreement], the Loan
Agreement, the Security Instrument and the other Loan Documents relating to the
PIP Work including, without limitation, causing any liens, claims or
encumbrances relating to the PIP Work to be removed and thereafter keeping the
Property free and clear from all liens and encumbrances that may be filed or
asserted against the Property for furnishing materials and/or performing work or
labor thereon relating to the PIP Work; and (iv) indemnify and hold Lender
harmless from any and all loss, cost, liability or expense that Lender may
suffer by any reason of any such non-compliance relating to the PIP Work; and
(v) fully furnish the Property with all furniture, fixtures and equipment
necessary for the completion of the PIP Work in accordance with the terms and
conditions of the Property Improvement Plan and the Franchise Agreement.)

 

(c)           Guarantor’s liability hereunder is direct and unconditional and
may be enforced without requiring Lender first to resort to any other right,
remedy or security. This Agreement is, and shall be as to Guarantor continuing,
and shall not terminate unless and until the Guaranteed Obligations have been
fulfilled or the Loan shall have been paid in full or otherwise discharged,
whichever shall first occur.

 

2.             Indemnity. Guarantor agrees to indemnify and hold Lender harmless
from any and all loss, cost, liability or expense in any way suffered, incurred
or paid by Lender as a result of, or in any

 

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way arising from, either Borrower Party’s failure to perform and complete the
PIP Work or Borrower’s failure to cause either Borrower Parties to perform and
complete the PIP Work, including all costs and expenses of collection (including
reasonable attorney’s fees and disbursements) incurred by Lender to enforce this
Agreement.

 

3.             Reinstatement of Obligations. If at any time all or any part of
any payment made by Guarantor or received by Lender from Guarantor under or with
respect to this Agreement is or must be rescinded or returned for any reason
whatsoever (including, but not limited to, the insolvency, bankruptcy or
reorganization of Guarantor, Borrower or any Borrower Party), then the
obligations of Guarantor hereunder shall, to the extent of the payment rescinded
or returned, be deemed to have continued in existence, notwithstanding such
previous payment made by Guarantor, or receipt of payment by Lender, and the
obligations of Guarantor hereunder shall continue to be effective or be
reinstated, as the case may be, as to such payment, all as though such previous
payment by Guarantor had never been made.

 

4.             Waivers by Guarantor. To the extent permitted by law, Guarantor
hereby waives and agrees not to assert or take advantage of:

 

(a)           Any right to require Lender to proceed against Borrower or any
Borrower Party or any other person or to proceed against or exhaust any security
held by Lender at any time or to pursue any other remedy in Lender’s power or
under any other agreement before proceeding against Guarantor hereunder;

 

(b)           Any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any other person or persons or the failure of
Lender to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any other person or persons;

 

(c)           Demand, presentment for payment, notice of nonpayment, protest,
notice of protest and all other notices of any kind, or the lack of any thereof,
including, without limiting the generality of the foregoing, notice of the
existence, creation or incurring of any new or additional indebtedness or
obligation or of any action or non-action on the part of Borrower or any
Borrower Party, Lender, any endorser or creditor of Borrower or any Borrower
Party or of Guarantor or on the part of any other person whomsoever under this
or any other instrument in connection with any obligation or evidence of
indebtedness held by Lender;

 

(d)           Any defense based upon an election of remedies by Lender;

 

(e)           Any right or claim of right to cause a marshalling of the assets
of Guarantor;

 

(f)            Any principle or provision of law, statutory or otherwise, which
is or might be in conflict with the terms and provisions of this Agreement;

 

(g)           Any duty on the part of Lender to disclose to Guarantor any facts
Lender may now or hereafter know about Borrower or the Borrower Parties or the
Collateral or the Property, regardless of whether Lender has reason to believe
that any such facts materially increase the risk beyond that which Guarantor
intends to assume or has reason to believe that such facts are unknown to
Guarantor or has a reasonable opportunity to communicate such facts to
Guarantor, it being understood and agreed that Guarantor is fully responsible
for being and keeping informed of the

 

E - 4

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financial condition of the Borrower, the Borrower Parties, of the condition of
the Property and of any and all circumstances bearing on the risk that liability
may be incurred by Guarantor hereunder;

 

(h)           Any lack of notice of disposition or of manner of disposition of
any collateral for the Loan;

 

(i)            Any invalidity, irregularity or unenforceability, in whole or in
part, of any one or more of the Loan Documents;

 

(j)            Any lack of commercial reasonableness in dealing with the
collateral for the Loan;

 

(k)           Any deficiencies in the collateral for the Loan or any deficiency
in the ability of Lender to collect or to obtain performance from any persons or
entities now or hereafter liable for the payment and performance of any
obligation hereby guaranteed or indemnified against;

 

(l)            An assertion or claim that the automatic stay provided by 11
U.S.C. §362 (arising upon the voluntary or involuntary bankruptcy proceeding of
Borrower or a Borrower Party) or any other stay provided under any other debtor
relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, shall operate or be interpreted to stay, interdict, condition,
reduce or inhibit the ability of Lender to enforce any of its rights, whether
now or hereafter required, which Lender may have against Guarantor or the
collateral for the Loan;

 

(m)          Any modifications of the Loan Documents or any obligation of
Borrower relating to the Loan by operation of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended, or any other
debtor relief law (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, or otherwise; and

 

(n)           Any action, occurrence, event or matter consented to by Guarantor
under Section 5(g) hereof, under any other provision hereof, or otherwise.

 

5.             General Provisions.

 

(a)           Fully Recourse. All of the terms and provisions of this Agreement
are recourse obligations of Guarantor and not restricted by any limitation on
personal liability.

 

(b)           Unsecured Obligations. Guarantor hereby acknowledges that the
obligations of Guarantor under this Agreement are not secured by the lien of the
Security Instrument or the other Loan Documents, it being the intent of Lender
to create separate obligations of Guarantor hereunder which can be enforced
against Guarantor without regard to the existence of the Security Instrument or
the other Loan Documents or the liens or security interests created therein.

 

(c)           Survival. This Agreement shall be deemed to be continuing in
nature and shall remain in full force and effect and shall survive the exercise
of any remedy by Lender under the Loan Agreement, the Security Instrument or any
of the other Loan Documents, including, without limitation, any foreclosure or
deed in lieu thereof.

 

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(d)           No Subrogation; No Recourse Against Lender. Any indebtedness of
Borrower to Guarantor now or hereafter existing (including, but not limited to,
any rights to subrogation Guarantor may have as a result of any payment by
Guarantor under this Agreement ), together with any interest thereon, shall be,
and such indebtedness is, hereby, deferred, postponed and subordinated to the
prior payment in full of the Loan. Further, Guarantor shall not have any right
of recourse against Lender by reason of any action Lender may take or omit to
take under the provisions of this Agreement or under the provisions of any of
the Loan Documents.

 

(e)           Financial Statements. Guarantor hereby agrees to furnish to Lender
promptly upon demand by Lender current and dated financial statements detailing
the assets and liabilities of Guarantor certified by Guarantor, in form and
substance reasonably acceptable to Lender. Guarantor hereby warrants and
represents unto Lender that any and all balance sheets, net worth statements and
other financial data which have heretofore been given or may hereafter be given
to Lender with respect to Guarantor did or will at the time of such delivery
fairly and accurately present the financial condition of Guarantor.

 

(f)            Rights Cumulative; Payments. Lender’s rights under this Agreement
shall be in addition to all rights of Lender under the Note, the Loan Agreement,
the Security Instrument and the other Loan Documents. Further, payments made by
Guarantor under this Agreement (or any other indemnitor under separate
agreement) shall not reduce in any respect Borrower’s obligations and
liabilities under the Note, the Loan Agreement, the Security Instrument and the
other Loan Documents.

 

(g)           No Limitation on Liability. Guarantor hereby consents and agrees
that Lender may at any time and from time to time without further consent from
Guarantor do any of the following events, and the liability of Guarantor under
this Agreement shall be unconditional and absolute and shall in no way be
impaired or limited by any of the following events, whether occurring with or
without notice to Guarantor or with or without consideration: (i) any extensions
of time for performance required by any of the Loan Documents or extension or
renewal of the Note; (ii) any sale, assignment or foreclosure of the Note, the
Loan Agreement, the Security Instrument or any of the other Loan Documents or
any sale or transfer of the Property; (iii) any change in the composition of
Borrower or either Borrower Party, including, without limitation, the withdrawal
or removal of Guarantor from any current or future position of ownership,
management or control of Borrower or either Borrower Party; (iv) the accuracy or
inaccuracy of the representations and warranties made by Guarantor herein or by
Borrower in any of the Loan Documents; (v) the release of Borrower or of any
other person or entity from performance or observance of any of the agreements,
covenants, terms or conditions contained in any of the Loan Documents by
operation of law, Lender’s voluntary act or otherwise; (vi) the release or
substitution in whole or in part of any security for the Loan; (vii) Lender’s
failure to record the Security Instrument or to file any financing statement (or
Lender’s improper recording or filing thereof) or to otherwise perfect, protect,
secure or insure any lien or security interest given as security for the Loan;
(viii) the modification of the terms of any one or more of the Loan Documents;
or (ix) the taking or failure to take any action of any type whatsoever. No such
action which Lender shall take or fail to take in connection with the Loan
Documents or any collateral for the Loan, nor any course of dealing with
Borrower or any other person, shall limit, impair or release Guarantor’s
obligations hereunder, affect this Agreement in any way or afford Guarantor any
recourse against Lender.

 

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Nothing contained in this Section shall be construed to require Lender to take
or refrain from taking any action referred to herein.

 

(h)           Entire Agreement; Amendment; Severability. This Agreement contains
the entire agreement between the parties respecting the matters herein set forth
and supersedes all prior agreements, whether written or oral, between the
parties respecting such matters. Any amendments or modifications hereto, in
order to be effective, shall be in writing and executed by the parties hereto. A
determination that any provision of this Agreement is unenforceable or invalid
shall not affect the enforceability or validity of any other provision, and any
determination that the application of any provision of this Agreement to any
person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to any other
persons or circumstances.

 

(i)            Governing Law; Binding Effect; Waiver of Acceptance. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE APPLICABILITY OF ANY OF SUCH
LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL LAW, IN WHICH CASE SUCH
FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING. This Agreement shall bind
Guarantor and its heirs, personal representatives, successors and assigns and
shall inure to the benefit of Lender and the officers, directors, shareholders,
agents and employees of Lender and their respective heirs, successors and
assigns. Notwithstanding the foregoing, Guarantor shall not assign any of its
rights or obligations under this Agreement without the prior written consent of
Lender, which consent may be withheld by Lender in its sole discretion.
Guarantor hereby waives any acceptance of this Agreement by Lender, and this
Agreement shall immediately be binding upon Guarantor.

 

(j)            Notices. All notices, demands, requests or other communications
to be sent by one party to another hereunder or required by law shall be given
and become effective as provided in the Security Instrument, provided that the
address of Guarantor shall be as follows:

 

Guarantor:

[                         ]

[                         ]

[                         ]

 

with a copy to:

[                         ]

[                         ]

[                         ]

 

(k)           No Waiver; Time of Essence; Business Day. The failure of any party
hereto to enforce any right or remedy hereunder, or to promptly enforce any such
right or remedy, shall not constitute a waiver thereof nor give rise to any
estoppel against such party nor excuse any of the parties hereto from their
respective obligations hereunder. Any waiver of such right or remedy must be in
writing and signed by the party to be bound. This Agreement is subject to
enforcement at law or in equity, including actions for damages or specific
performance. Time is of the essence hereof. The term “business day” as used
herein shall mean a weekday, Monday through Friday, except a legal

 

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holiday or a day on which banking institutions in New York, New York are
authorized by law to be closed.

 

(l)            Captions for Convenience. The captions and headings of the
sections and paragraphs of this Agreement are for convenience of reference only
and shall not be construed in interpreting the provisions hereof.

 

(m)          Attorneys’ Fees. In the event it is necessary for Lender to retain
the services of an attorney or any other consultants in order to enforce this
Agreement, or any portion thereof, Guarantor agrees to pay to Lender any and all
reasonable costs and expenses, including, without limitation, attorneys’ fees,
incurred by Lender as a result thereof.

 

(n)           Reliance. Guarantor intentionally and unconditionally enters into
the covenants and agreements as set forth above and understands that, in
reliance upon and in consideration of such covenants and agreements, specific
monetary and other obligations have been, are being and shall be entered into
which would not be made or entered into but for such reliance.

 

(o)           SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

 

(1) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR GUARANTOR ARISING OUT
OF OR RELATING TO THIS GUARANTY MAY AT LENDER’S OPTION BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO
SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND GUARANTOR WAIVES ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND GUARANTOR HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING.  GUARANTOR DOES HEREBY DESIGNATE AND APPOINT:

 

[Corporation Service Company

1180 Avenue of the Americas Suite 210

New York, New York 10036]

 

AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO GUARANTOR IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON GUARANTOR IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  GUARANTOR (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,
(II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE
SHALL BE DESIGNATED AS THE PERSON AND

 

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ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A
SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW YORK, NEW
YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

 

(2) GUARANTOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
WAIVES, RELINQUISHES AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS
AGREEMENT OR ANY CONDUCT, ACT OR OMISSION OF LENDER OR GUARANTOR, OR ANY OF
THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR
ANY OTHER PERSONS AFFILIATED WITH LENDER OR GUARANTOR, IN EACH OR THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

 

(p)           Additional Waivers by Guarantor.

 

(1)           Guarantor covenants and agrees that, upon the commencement of a
voluntary or involuntary bankruptcy proceeding by or against Borrower or a
Borrower Party, Guarantor shall not seek or cause a Borrower or Borrower Party
or any other person or entity to seek a supplemental stay or other relief,
whether injunctive or otherwise, pursuant to 11 U.S.C. §105 or any other
provision of the Bankruptcy Reform Act of 1978, as amended, or any other debtor
relief law, (whether statutory, common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, which may be or become
applicable, to stay, interdict, condition, reduce or inhibit the ability of
Lender to enforce any rights of Lender against Guarantor or the collateral for
the Loan by virtue of this Agreement or otherwise.

 

(2)           Guarantor covenants and agrees that it shall not solicit or aid
the solicitation of the filing of any petition against Borrower or a Borrower
Party, whether acting on its own behalf or on behalf of any other party,
including, without limitation: (i) providing information regarding the identity
of creditors or the nature of creditors’ claims to any third party unless
compelled to do so by order of a court of competent jurisdiction or by
regulation promulgated by a governmental agency; or (ii) paying the legal fees
or expenses of any creditor of or interest holder in Borrower or a Borrower
Party with respect to any matter whatsoever.

 

(q)           Joint and Several Liability. If Guarantor consists of more than
one person or entity, the obligations and liabilities of each such person
hereunder are, joint and several.

 

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EXHIBIT F

 

Condominium Proxy

 

IRREVOCABLE PROXY

 

THIS IRREVOCABLE PROXY (this “Proxy”), effective as of [MONTH] [  ], 20[  ], by
and between [BORROWER], a [STATE] [TYPE OF ENTITY] (“Borrower”), and [LENDER], a
[STATE] [TYPE OF ENTITY] (“Lender”).

 

WHEREAS, Borrower and Lender have entered into that certain Loan Agreement dated
as of [           ], 2018 (as may be amended, modified, renewed or restated from
time to time, the “Loan Agreement”), whereby Lender agreed to make a loan to
Borrower, together with the parties listed on Exhibit A attached hereto (the
“Loan”), in the maximum principal amount of [              ] DOLLARS
($[           ]). The Loan is evidenced by the Note (as defined in the Loan
Agreement) and will be secured by, among other things, the [Mortgage/Security
Instrument] (as defined in the Loan Agreement) which grants Lender a first lien
on the property encumbered thereby (the “Property
).  Capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Loan Agreement;

 

WHEREAS, the Property is subject to that certain [            ] dated
[                 ] (as amended, the “Declaration”); and

 

WHEREAS Lender made the Loan on condition, inter alia,  that Borrower grant to
Lender an irrevocable proxy to vote and otherwise act as a [Unit Owner] (as
defined in the Declaration) (in stating the position as if it were the owner of
the Unit) with respect to Borrower’s ownership of the [Unit] (as defined in the
Declaration) owned by Borrower or for which Borrower controls the voting rights
(collectively, the “Borrower Units”) (such votes or other acts are each referred
to as a “Vote”) upon the occurrence and during the continuance of an “Event of
Default” as defined in the Loan Agreement;

 

NOW, THEREFORE, Borrower and Lender agree as follows:

 

1.              Irrevocable Proxy.

 

a)             Borrower irrevocably appoints Lender, its successors and assigns,
as its true and lawful attorney and proxy with full power of substitution for
and in their name, to Vote with respect to the Unit at all annual, special, and
other meetings of the unit owners of the Condominium (or by written consent in
lieu thereof) and at any other time Borrower is required to Vote.

 

b)             Borrower understands and agrees that the appointment and proxy
granted to Lender by Section 1(a) of this Proxy is irrevocable and

 

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coupled with an interest and, except as otherwise provided in Section 2 of this
Proxy, shall not terminate by operation of law, whether by dissolution,
bankruptcy, or the occurrence of any other event.

 

9.

 

c)              Borrower and Lender further understand and agree that this Proxy
relates to all voting rights whether limited, fixed, or contingent with respect
to the ownership of the Unit.

 

2.     Term.  This Proxy shall terminate upon repayment in full of the Loan, all
interest due thereon and all other amounts owed by Borrower to Lender under the
Note, the Loan Agreement, the [Mortgage/Security Instrument], and other Loan
Documents (each as defined in the Loan Agreement) at the time of such repaying
of the Loan.

 

3.     Lender’s Obligation.  Lender agrees to exercise its rights under this
Proxy only upon the occurrence and during the continuance of an Event of
Default.

 

4.     Benefit and Burden.  This Proxy shall inure to the benefit of, and shall
be binding upon, Borrower and Lender and their respective successors and
assigns.

 

5.     Modifications.  This Proxy or any of its provisions may be modified,
waived, discharged, or terminated only by an instrument in writing executed by
Borrower and Lender.

 

6.     Waiver.  The failure of Borrower or Lender, or any of the foregoing
parties collectively or otherwise, to comply, or insist upon compliance, with
any provision of this Proxy at any time shall not be deemed (i) to affect the
validity or enforceability of this Proxy, (ii) to be a waiver of any other
provisions of this Proxy at that time, or (iii) to be a waiver of that provision
or any other provisions of this Proxy at any other time.

 

7.     Liability of Lender.  Lender shall not be liable by reason of any act or
omission to act performed or omitted by it in connection with any of the rights
specified in Section 1(a) of this Proxy, except for Lender’s gross negligence or
willful misconduct.

 

8.     Proxy Binding upon Transferees.  If, at any time or from time to time,
title to the Borrower Units is transferred by Borrower with Lender’s consent (in
its sole discretion), the transferee shall take title thereto pursuant to all
provisions, conditions, and covenants of this Proxy, and, as a condition
precedent to such transfer, the transferee shall agree (for, and on behalf of,
himself, herself, or itself; his, her, or its legal and personal
representatives; and his, her or its transferees and assigns) in writing to be
bound by all provisions of this Proxy as a party to this Proxy.

 

2

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9.     Lender’s Right to Vote.  This Proxy is irrevocable and coupled with an
interest, however, Lender’s right to Vote with respect to Borrower’s ownership
of the Unit shall only be exercisable upon the occurrence and during the
continuance of an Event of Default.

 

10.  Governing Law.  This Proxy shall be deemed to be governed, construed,
applied and enforced in accordance with the laws of the state in which the Unit
is located and the applicable laws of the United States of America.

 

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3

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IN WITNESS WHEREOF, Borrower and Lender have executed this Proxy on the day and
year first above written.

 

 

BORROWER:

 

 

 

 

 

[                           ],

 

a [                           ]

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

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LENDER:

 

 

 

[                           ],

 

a [                           ]

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

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STATE OF                                                   )
                                                                                    ss.
COUNTY OF                                              )

 

On the [  ] day of [        ], 20[  ], before me, the undersigned, personally
appeared                     , personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.

 

 

 

 

Signature and Office of Individual taking Acknowledgement

 

 

STATE OF                                                   )
                                                                                    ss.
COUNTY OF                                              )

 

On the [  ] day of [MONTH], 20[  ], before me, the undersigned, personally
appeared                     , personally known to me or proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.

 

 

 

 

Signature and Office of Individual taking Acknowledgement

 

 

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