Exhibit 10.40



DEED OF TRUST AND SECURITY AGREEMENT



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DEED OF TRUST AND SECURITY AGREEMENT



TABLE OF CONTENTS



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|    |  |                                                                    |  | PAGE
|1.  |  | Payment of Indebtedness                                            |  | 8   
|2.  |  | Covenants of Title                                                 |  | 8   
|3.  |  | Usury                                                              |  | 9   
|4.  |  | Impositions                                                        |  | 9   
|5.  |  | Tax Deposits                                                       |  | 10  
|6.  |  | Change in Taxes                                                    |  | 13  
|7.  |  | Insurance                                                          |  | 13  
|8.  |  | Insurance/Condemnation Proceeds                                    |  | 15  
|9.  |  | Restoration Following Fire and Other Casualty or Condemnation      |  | 17  
|10. |  | Disposition of Condemnation or Insurance Proceeds                  |  | 22  
|11. |  | Fire and Other Casualty; Self-Help                                 |  | 23  
|12. |  | Rent Insurance Proceeds                                            |  | 24  
|13. |  | Repair; Alterations; Waste; Environmental                          |  | 24  
|14. |  | Environmental Indemnification                                      |  | 25  
|15. |  | Independence of Security                                           |  | 26  
|16. |  | No Other Liens                                                     |  | 26  
|17. |  | Management                                                         |  | 27  
|18. |  | Intentionally Deleted.                                             |  | 28  
|19. |  | Sidewalks, Municipal Charges                                       |  | 28  
|20. |  | Assignment of Rents and Leases/Future Leases/Obligations of Lessor |  | 28  
|21. |  | Leases; Foreclosure                                                |  | 28  
|22. |  | Operating Agreement/Easement Agreements                            |  | 29  
|23. |  | Events of Default                                                  |  | 29  
|24. |  | Remedies Upon Default                                              |  | 31  
|25. |  | Receiver                                                           |  | 36  
|26. |  | Foreclosure of Personalty                                          |  | 37  
|27. |  | Prepayment Premiums                                                |  | 37  
|28. |  | Acceleration Interest                                              |  | 38  
|29. |  | Late Charge                                                        |  | 38  
|30. |  | Waiver of Statutory Rights.                                        |  | 39  
|31. |  | Security Interest                                                  |  | 39  
|32. |  | Right of Entry                                                     |  | 40  
|33. |  | Estoppel Certificate                                               |  | 41  
|34. |  | Annual Statements                                                  |  | 41  
|35. |  | Rights Cumulative                                                  |  | 43  
|36. |  | Subrogation                                                        |  | 43  
|37. |  | No Waiver                                                          |  | 43  
|38. |  | Deed of Trust Extension                                            |  | 43  
|39. |  | Indemnification                                                    |  | 43  
|40. |  | Nonrecourse                                                        |  | 44  
|41. |  | Attorneys Fees                                                    |  | 46  
|42. |  | Administrative Fees                                                |  | 46  
|43. |  | Trustees Costs and Expenses; Governmental Charges                 |  | 47  
|44. |  | Protection of Security; Costs and Expenses                         |  | 47  
|45. |  | Notices                                                            |  | 48  
|46. |  | Release                                                            |  | 49  
|47. |  | Applicable Law                                                     |  | 49  
|48. |  | Tenancy at Will                                                    |  | 49  





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|49. |  | Substitution of Trustee         |  | 49
|50. |  | Indemnification of Trustee      |  | 50
|51. |  | Other                           |  | 50
|52. |  | Invalidity                      |  | 50
|53. |  | Captions                        |  | 50
|54. |  | Modifications                   |  | 50
|55. |  | Bind and Inure                  |  | 51
|56. |  | Replacement of Note             |  | 51
|57. |  | Time of the Essence             |  | 51
|58. |  | Business Day                    |  | 51
|59. |  | Rights and Remedies of Sureties |  | 51



EXHIBIT A - Legal Description





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AFTER RECORDING, RETURN TO:



Janis H. Loegering, Esq.

Locke Liddell &
Sapp LLP

2200 Ross Avenue, Suite 2200

Dallas, Texas
75201-6776



DEED OF TRUST AND SECURITY AGREEMENT



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|STATE OF TEXAS   |  | §
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|COUNTY OF DALLAS |  | §



THIS DEED OF TRUST AND
SECURITY AGREEMENT (this Deed of Trust) is made as of the 9th day of September, 2004 by HH DFW HOTEL ASSOCIATES, L.P.,a Delaware limited partnership and having its principal place of business at c/o Highland Hospitality
Corporation, 8405 Greensboro Drive, Suite 500, McLean, Virginia 22102 (Borrower) and HHC TRS OP LLC, a Delaware limited liability company, having its principal place of business at c/o Hospitality Corporation, 8405
Greensboro Drive, Suite 500, McLean, Virginia 22102 (Operating Tenant and, together with Borrower, collectively referred to herein as Grantor), to JANIS H. LOEGERING, TRUSTEE, subject to substitution as
provided in Section 49 (herein referred to as Trustee), in favor of CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a Connecticut corporation, having its principal place of business at c/o CIGNA Realty Investors, 280
Trumbull Street, Hartford, Connecticut 06103, Attention: Debt Asset Management, H-11G (hereinafter referred to as Beneficiary).



W I T N E S S E T H:



THAT, to secure (i) payment to Beneficiary of the principal indebtedness of
Thirty-Eight Million and No/100 Dollars ($38,000,000.00), together with interest thereon (the Loan), as evidenced by that certain Promissory Note of even date herewith in the original principal amount of Thirty-Eight Million and
No/100 Dollars ($38,000,000.00) from Borrower, payable to Beneficiary (the Note), and any renewals, extensions or modifications thereof (including, without limitation, any modification increasing the Interest Rate (defined in the
Note), the principal amount, the monthly payments or extending the maturity date) with the final payment of the entire outstanding balance of the Note being due and payable on October 1, 2011, in and by which Note the Grantor promises to pay the
said principal indebtedness and interest at the





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rate and in installments as provided in the Note, (ii) the performance of the covenants herein contained and the payment
of any monies expended by Beneficiary in connection therewith, (iii) the payment of all obligations and the performance of all covenants of Grantor under any other loan documents, agreements or instruments between Grantor and Beneficiary given in
connection with or related to this Deed of Trust or the Note and (iv) any and all additional advances made by Beneficiary to protect or preserve the Security (hereinafter defined) or the security interest created hereby on the Security, or for
taxes, assessments, or insurance premiums as hereinafter provided or for performance of any of Grantors obligations hereunder or for any other purpose provided herein (whether or not the original Grantor remains the owner of the Security at
the time of such advances) (all of the aforesaid indebtedness and obligations being herein called the Indebtedness, and all of the documents, agreements and instruments now or hereafter evidencing or securing the repayment of, or
otherwise pertaining to, the Indebtedness being herein collectively called the Loan Documents), Grantor does hereby mortgage, grant, bargain, sell, assign, pledge, transfer, and convey unto Trustee and to Trustees successors
and assigns, in trust, with power of sale and right of entry and possession forever, all of the following described land, improvements real and personal property, rents and leases, and all of its estate, right, title and interest therein and thereto
(hereinafter collectively called the Security):



The real property described in Exhibit A attached hereto and made a part hereof, situated, lying and being in the City of Irving, County of Dallas and State of Texas (the Land);



TOGETHER with all buildings and other improvements now or hereafter located
on the Land or any part thereof including but not limited to, all extensions, betterments, renewals, renovations, substitutes and replacements of, and all additions and appurtenances to the Security (the Improvements);



TOGETHER with all of the right, title and interest, if any, of Grantor in
and to the land lying in the bed of any street, road, highway or avenue in front of or adjoining the Land to the center lines thereof;



TOGETHER with (to the extent assignable) all of the right, title and interest, if any, that Grantor may have in the right to use, in connection with the
operation of the Security, the name DFW Marriott and any other name similar thereto, and any other licenses, trademarks, service marks or trade names, and good will associated therewith, used in connection with the Security;





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TOGETHER with all easements now or hereafter located on or appurtenant to the Land and/or Improvements or
under or above the same or any part thereof, rights-of-way, licenses, permits, approvals, and privileges, belonging or in any way appertaining to the Land and/or Improvements including without limitation (i) any drainage ponds or other like drainage
areas not located on the Land which may be required for water run-off, (ii) any easements necessary to obtain access from the Land to such drainage areas, or to any other location to which Grantor has a right to drain water or sewage, (iii) any land
required to be maintained as undeveloped land by the zoning rules and regulations applicable to the Real Property, and (iv) any easements and agreements which are or may be established to allow inter alia, parking (whether on-site or
off-site), satisfactory ingress to, egress from and operation of the Real Property, and any other easement agreement or covenant or benefit as to land use (collectively, the Easement Agreements);



TOGETHER with any and all awards heretofore made and hereafter to be made by
any municipal or other governmental authorities to the present and all subsequent owners of the Security for the taking of all or any portion of the Security by power of eminent domain, including, without limitation, awards for damage to the
remainder of the Security and any awards for any change or changes of grade of streets affecting the Security, which said awards are hereby assigned to Beneficiary, and Beneficiary, at its option, is hereby authorized, directed and empowered to
collect and receive the proceeds of any such awards from the authorities making the same and to give proper receipts and acquittances therefore, and, subject to the terms hereof, to apply the same toward the payment of the Indebtedness,
notwithstanding the fact that such amount may not then be due and payable; and Grantor hereby covenants and agrees to and with Beneficiary, upon request by Beneficiary, to make, execute and deliver, at Grantors expense, any and all assignments
and other instruments sufficient for the purpose of assigning the aforesaid awards to or for the benefit of Beneficiary, free, clear and discharged of any and all encumbrances of any kind or nature whatsoever (all of the foregoing Land,
Improvements, rights, easements, rights-of-way, licenses, privileges, and awards, collectively, the Real Property);





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TOGETHER with all proceeds, insurance or otherwise, paid for the damage done to any of the Security and
all proceeds of the conversion, voluntarily or involuntarily, of any of the Security into cash or liquidated claims;



TOGETHER with all fixtures, machinery, equipment, furniture, goods, and every other article of personal property, tangible and intangible, now or
hereafter attached to or used in connection with the Real Property, or placed on any part thereof and whether or not attached thereto, appertaining or adapted to the use, management, operation or improvement of the Real Property, insofar as the same
and any reversionary right thereto may now or hereafter be owned or acquired by Grantor, including, but without limitation all goods, supplies, equipment, appliances, implements, furniture, furnishings, fixtures, machinery, inventory and
construction materials and all personal property used in the operation of a hotel on the Real Property, including, without limiting the generality of the foregoing, all hotel furniture, furnishings and equipment, heating, lighting, plumbing,
ventilating, refrigerating, incinerating, elevator, escalator, air conditioning and communication plants or systems with appurtenant fixtures; vacuum cleaning systems; call systems; sprinkler systems and other fire prevention and extinguishing
apparatus and materials; all telephone, computer and other electronic equipment and appurtenances thereto, including any software owned by Grantor and necessary for the operation of the Security (except to the extent the transfer thereof would cause
a material breach of any licensing agreement in connection therewith) but expressly excluding software that is owned by or licensed to the Manager under the Management Agreement (as such terms are defined below); and all other machinery, pipes,
poles, appliances, equipment, wiring, fittings, panels and fixtures; and any proceeds therefrom, any replacements thereof or additions or accessions thereto; curtains, draperies, hangings, televisions, radios, phonographs and stereo equipment,
pianos, organs, paintings, pictures, frames, sculptures, mirrors, lamps, bric-a-brac, vases, ornaments, carpets, rugs, beds, springs, mattresses, bedding, pillows, blankets, comforters, spreads, bed linens, vanities, secretaries, bureaus,
chiffonniers, chests, love seats, benches, night stands, costumers, smoking stands, sand jars, statuary, china, glassware, table linens, towels, bath mats, shower curtains, hollowware, flatware, cutlery, cooking, baking, and other kitchen utensils
and apparatus, crockery, kettles, pots, pans, pails, toasters, mixers, trays, racks, electric irons and apparatus, bathroom furniture and furnishings, hamperettes, cash registers, typewriters, typewriter stands, adding machines, calculators,
comptometers, multilith machines, addressographs, graphotypes, time stamps, time recorders, posting machines,





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bookkeeping machines, checking machines, payroll machines, computer reservation systems, accounting and other computer
software, and other office and accounting equipment, drills, presses, planers, saws, and other tools, scales, uniforms, and all other tangible personal property used or to be used or placed or to be placed in the rooms, halls, lounges, offices,
lobbies, lavatories, basements, cellars, vaults and other portions of said Real Property or any building or buildings hereafter constructed or erected thereon, whether herein enumerated or not, and whether or not contained in any such building, and
which are used or useful in the operation and maintenance thereof, or in the business conducted therein, including the operation of any restaurants on the Real Property by or on behalf of Grantor, including but not limited to all restaurant
furnishings and equipment, foodstuffs, and beverages, including (to the extent assignable or transferable) wine and other alcoholic beverages owned by Grantor, and all replacements and substitutions for all personal property from time to time be
located, placed, installed or used in or upon, or procured for use, or useful in connection with the operation of the whole, or any useful part of, the Real Property (the foregoing items of furniture, furnishings, fixtures and equipment collectively
are referred to as FF&E); provided, however, FF&E shall not include any of the foregoing items which are owned by parties other than Grantor including, but not limited to, any tenants of the Real Property or the operator
under any management agreement; and all building materials, supplies and other property delivered to the Real Property for incorporation into the Improvements thereon, all of which, to the extent permitted by law, are declared to be a part of the
realty and covered by the lien hereof, but said lien shall not cover any fixture, machinery, equipment or article of personal property which is owned by a tenant, provided said fixture, machinery, equipment or article of personal property is not
permanently affixed to the realty and may be removed without material damage thereto and is not a replacement of any item which shall have been subject to the lien hereof, but said lien shall include any other fixture, machinery, equipment or
article of personal property so incorporated into the Improvements so as to constitute realty under applicable law, whether or not owned by the Grantor;



TOGETHER with all of Grantors books of account and records relating to the Security, including, without limitation, all information stored on
computers and software to the extent relating thereto;



TOGETHER with all (i) contracts, agreements, assignable permits and licenses, including occupancy permits, business licenses and liquor licenses, warranties and





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representations relating to or governing the use, occupancy, operation, management, hotel group, name or chain
affiliation and/or guest reservation system, repair or service of the Real Property, (ii) all agreements with credit card issuers, sponsors or administrators, (iii) all rights to payment for the rental of guest rooms, banquet rooms, retail premises
and other facilities on the Real Property, (iv) all rights to payment from any credit/charge card organization or entity such as or similar to, and including, without limitation, the organizations or entities which sponsor and administer the
American Express Card, the Discovery Card, the Visa Card, the Carte Blanche Card, the Diners Club card and the MasterCard; and (v) all leases, occupancy agreements, registration and concession agreements, and commitments to provide rooms or
facilities in the future to the extent that they are not solely interests in real estate, including all amendments, modifications and supplements to any of the foregoing;



TOGETHER with all cars, trucks, trailers, construction and earth moving equipment and other vehicles owned by Grantor
covered by a certificate of title law of any state used in the operation of the Real Property and all tires and other appurtenances to any of the foregoing;



TOGETHER with all contracts for sale and leases in the nature of sales of the Real Property, or any portion thereof, now and hereafter entered into and
all right, title and interest of Grantor thereunder, including, without limitation, cash or securities deposited thereunder to secure performance by the lessees or contract purchasers; all letter of credit rights; all proceeds and revenues arising
from or out of the Real Property or any part thereof including, without limitation, room revenues, banquet revenues and cancellation payments relating to the use and enjoyment of the Real Property; all sanitary sewer, drainage, water and utility
service agreements benefiting the Real Property or any part thereof, together with all accounts, accounts receivable, credit card receipts, contract rights, reserve accounts required to be established hereunder or under any management agreement
affecting the Real Property; inventory, operating supplies, general intangibles, documents, instruments and chattel paper and proceeds of any of the foregoing arising from or in connection with the Real Property, including all books and records in
connection with the operations of the Real Property; and all rights of Grantor under any leases, covenants, agreements, restrictions or declarations recorded with respect to, or as an appurtenance to, the Real Property or any part thereof (all of
the tangible and intangible personal property described in this and the previous five paragraphs collectively, the Personal Property);





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TOGETHER with all of Grantors right, title and interest of in, to and under that certain Lease
Agreement dated as of substantially even date herewith (the Operating Lease), by and between Borrower and Operating Tenant;



TOGETHER with all of Grantors right, title and interest as lessee in, to and under any equipment or personal property leases (the
Personalty Leases) for the lease of any furniture, equipment and/or other personal property used by Grantor in the operation of the Improvements or otherwise located on the Real Property (the Leased Personalty).



TOGETHER with all of Grantors right, title and interest
of in, to and under that certain Amended and Restated Management Agreement dated December 29, 2001, by and between Marriott Hotel Services, Inc., a Delaware corporation (Manager) and Host Marriott, L.P., as assigned to and assumed
by Operating Tenant by that certain Assignment and Assumption dated as of May 10, 2004 (the Management Agreement);



TOGETHER with all of the right, title and interest of Grantor in and to all and singular the tenements, hereditaments and appurtenances belonging to or in
any way pertaining to the Security; all the estate, right, title and claim whatsoever of Grantor, either in law or in equity, in and to the Security; and any and all other, further or additional title, estate, interest or right which may at any time
be acquired by Grantor in or to the Security, and if Grantor shall at any time acquire any further estate or interest in or to the Security, the lien of this Deed of Trust shall attach, extend to, cover and be a lien upon such further estate or
interest automatically without further instrument or instruments, and Grantor, upon request of Beneficiary, shall execute such instrument or instruments as shall reasonably be requested by Beneficiary to confirm such lien;



TO HAVE AND TO HOLD the Security, and each and every part thereof, unto the
Beneficiary and its successors and assigns, for the purposes and uses herein set forth.



UPON THE TERMS AND SUBJECT TO THE CONDITIONS which are hereinafter set forth;



PROVIDED, HOWEVER, that if Grantor pays or causes to be fully and irrevocably paid to Beneficiary all sums secured by this Deed of Trust on the dates and
in the manner provided in the Note and in this Deed of Trust, and observes and performs all of the terms, conditions and obligations contained in this Deed of Trust and the Note, then the estate, right, title and





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interest of the Beneficiary in and to the Security shall cease, and upon proof being given to the satisfaction of the
Beneficiary that the Indebtedness has been paid or satisfied according to the terms of the Note, and that all of Grantors obligations under this Deed of Trust have been fully satisfied, and upon payment of all fees, costs, charges and
liabilities chargeable to or incurred by the Beneficiary pursuant to the Note or otherwise provided for in this Deed of Trust, the Beneficiary shall, on receipt of a written request therefore from Grantor, and at Grantors sole expense, (a)
release and discharge the lien of this Deed of Trust, (b) cause this Deed of Trust to be canceled and marked satisfied of record, (c) deliver to Grantor the original Note and (d) transfer and deliver to Grantor, without warranty, any
security which is then subject to the lien of this Deed of Trust and is in Beneficiarys possession.



AND, Grantor hereby further covenants, agrees and warrants as follows:



1. Payment of Indebtedness. Grantor will pay the principal indebtedness and interest thereon in accordance with the
provisions of the Note and all prepayment fees, late charges and fees required thereunder, and all extensions, renewals, modifications, amendments and replacements thereof, and will keep and perform all the covenants, promises and agreements, and
pay all sums provided in (i) the Note or any other promissory note or notes at any time hereafter issued to evidence the Indebtedness, (ii) this Deed of Trust and (iii) any and all other Loan Documents, all in the manner herein or therein set forth.
If, at any time in the future transfers shall occur such that Grantor shall become more than one party, then each of the entities constituting a Grantor shall be fully liable for such payment and performance, and such liability shall be joint and
several, subject to all of the terms and provisions of Section 40 of this Deed of Trust.



2. Covenants of Title. Borrower has good and indefeasible fee simple title to the entire Land, has absolute unencumbered title to the Improvements,
the Personal Property (other than the Leased Personalty) and the Personalty Leases, and has good right and full power to sell, mortgage and convey the same; the Security is free and clear of easements, restrictions, liens, leases and encumbrances,
except those easements, restrictions, liens, leases and encumbrances listed on Schedule B of the policy or policies of title insurance delivered to Beneficiary as of the recordation of this Deed of Trust (the Permitted
Encumbrances), to which this Deed of Trust is expressly subject, or which may hereafter be created in accordance with the terms hereof; and Borrower will warrant and defend title to the Security against all claims





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and demands whatsoever except the Permitted Encumbrances. Beneficiary shall have the right, at its option and at such
time or times as it, in its sole discretion, shall deem necessary, to take whatever action it may deem necessary to defend or uphold the lien of this Deed of Trust or otherwise enforce any of the rights of Beneficiary hereunder or any obligation
secured hereby, including without limitation, the right to institute appropriate legal proceedings for such purposes.



3. Usury. All agreements between Grantor and Beneficiary, whether now existing or hereafter arising and whether written or oral, are hereby limited
so that in no contingency, whether by reason of acceleration of the maturity of the Note or otherwise, shall the interest contracted for, charged or received by Beneficiary exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, interest would otherwise be payable to Beneficiary in excess of the maximum lawful amount, the interest payable to Beneficiary shall be reduced to the maximum amount permitted under applicable law; and if from any
circumstance Beneficiary shall ever receive anything of value deemed interest by applicable law in excess of the maximum lawful amount, an amount equal to any excessive interest shall be applied to the reduction of the principal of the Note and not
to the payment of interest, or if such excessive interest exceeds the unpaid balance of principal of the Note such excess shall be promptly refunded to Grantor. All amounts paid or agreed to be paid to Beneficiary for the use, forbearance, or
detention of the Indebtedness, whether designated as interest herein or judicially or otherwise interpreted or deemed to be interest, shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full
period until payment in full of the principal (including the period of any renewal or extension of the Note) so that the interest on the Note for such full period shall not exceed the maximum amount permitted by applicable law. The terms
maximum amount permissible under applicable law, the maximum lawful amount, and similar terms refer to the law in effect on the date of the first disbursement of the Note; provided that if it subsequently becomes lawful to
charge more interest on the Note, then such terms shall refer to the maximum interest which may from time to time be lawfully charged. This paragraph shall control all agreements with respect to the Loan between Grantor and Beneficiary.



4. Impositions. Grantor shall pay, or cause to be paid pursuant to
the Management Agreement (or any Replacement Agreement, as defined below), not later than thirty (30) days before the last day on which the same may be paid without penalty or interest, all real estate





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taxes and payments due in lieu of real estate taxes (collectively, the Real Estate Taxes) (unless
there shall be in full force and effect a Tax Escrow Agreement [defined in Section 5 hereinbelow] with respect to which Grantor shall have performed its obligations), and any municipal sewer rents, municipal water charges, municipal electric
and all other municipal and governmental assessments, rates, charges, or impositions which are secured by liens on the Real Property (including the Real Estate Taxes, collectively hereinafter referred to as Impositions) which now
or hereafter are imposed by law upon the Security, whether relating directly to the Security or to property adjoining or abutting the Security. If any Imposition is not paid within the time hereinabove specified, Beneficiary shall have the right to
pay the same, together with any penalty and interest thereon, and the amount or amounts so paid or advanced shall forthwith be payable by Grantor to Beneficiary and shall be secured by the lien of this Deed of Trust; but Grantor may in good faith
contest, at Grantors sole cost and expense, by proper legal proceedings, the validity or amount of any Imposition, on the condition that Grantor first shall deposit with or provide evidence to Beneficiary that Manager has escrowed an amount
sufficient to pay such contested Imposition, as security for the payment of such contested item, an amount equal to the contested item plus all penalties and interest which would be payable if Grantor is ultimately required to pay such contested
item, and on the further condition that no amount so contested may remain unpaid for such length of time as shall permit the Security, or the lien thereon created by the item being contested, to be sold for the nonpayment thereof, or as shall permit
an action, either of foreclosure or otherwise, to be commenced by the holder of any such lien. Grantor will not claim any credit on, or make any deduction from the Indebtedness by reason of the payment of, any Imposition.



Grantor hereby assigns to Beneficiary all rights of Grantor now or hereafter
arising in and to the refund of any Imposition and any interest thereon. If following receipt of any such refund by Beneficiary there exists no Event of Default hereunder, then Beneficiary shall pay over the same to Grantor promptly; if there exists
an Event of Default hereunder, Beneficiary may apply said refund in reduction of the Indebtedness in whatever order Beneficiary may elect.



5. Tax Deposits. Grantor and Beneficiary have entered into a certain Real Estate Tax Escrow and Security Agreement of even date herewith (the
Tax Escrow Agreement), the terms of which provide for the escrow and payments of money with respect to Real Estate Taxes imposed on the Real Property under certain circumstances as described therein.





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Notwithstanding the provisions of Section 4 hereof, Grantor covenants to perform its obligations under the Tax
Escrow Agreement and Beneficiary has agreed that Grantor may perform its obligations under this Deed of Trust with respect to the Real Estate Taxes in accordance with the Tax Escrow Agreement. During any period that Grantor shall be in default under
the Tax Escrow Agreement, or the Tax Escrow Agreement shall be terminated for any reason, or in the event that the Tax Escrow Agreement becomes ineffective or otherwise unenforceable, then the balance of the terms and conditions of this Section
5 shall be applicable and control with respect to the payment of Real Estate Taxes imposed on the Real Property.



On receipt of the Activation Notice (as defined in the Tax Escrow Agreement), Grantor shall thereafter deposit with Beneficiary, or with an escrow agent
selected by Beneficiary, commencing on the Activation Date (as defined in the Tax Escrow Agreement) and on the first day of each calendar month thereafter (each of which dates is hereinafter called the monthly tax deposit date)
until the payment in full of the Indebtedness, a sum equal to one-twelfth (1/12) of the Real Estate Taxes to be levied, charged, assessed or imposed upon or for the Security within one (1) year after said monthly tax deposit date. If on any monthly
tax deposit date the amount of Real Estate Taxes to be levied, charged, assessed or imposed within the ensuing one year period shall not be fixed, such amount for the purpose of computing the deposit to be made by Grantor hereunder, shall be
reasonably estimated by Beneficiary based upon prior payments of Real Estate Taxes imposed on the Real Property, with appropriate adjustment when such amount is fixed.



The sums deposited by Grantor under this Section 5 shall be held in an interest bearing account with interest being
retained by Beneficiary and free of trust except to the extent, if any, that applicable law shall otherwise require and applied in payment of the Real Estate Taxes when due. Grantor or Manager on behalf of Grantor shall give thirty (30) days
prior written notice to Beneficiary in each instance when an Imposition is due, specifying the Imposition to be paid and the amount thereof, the place of payment and the last day on which the same may be paid in order to be within the time limit
specified in Section 4 hereof entitled Impositions.



Notwithstanding the foregoing provision, so long as Grantor holds title to and controls the Security, Impositions are paid in full when due and there has occurred no Event of Default, or any state of facts which, with
the passage of time or giving of notice, or both, would constitute an Event of Default under the Loan Documents, the interest earned by such escrows, less reasonable escrow costs, will be paid to Grantor on each real estate tax payment date.





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If for any reason the sums on deposit with Beneficiary as escrow agent under this Section shall not be
sufficient to pay any Real Estate Taxes within the time specified in Section 4 hereof, then Grantor shall, on the earlier of (A) three (3) Business Days prior to the date the payment of such Impositions becomes delinquent or (B) within ten
(10) Business Days after notice by Beneficiary, deposit sufficient sums so that Beneficiary may pay such Real Estate Taxes in full, together with any penalty and interest thereon. Beneficiary may change its estimate of Real Estate Taxes for any
period, on the basis of a change in an assessment or tax rate or on the basis of a prior miscalculation, in which event Grantor shall deposit with Beneficiary as escrow agent within ten (10) Business Days after demand the amount of any excess of the
deposits which would theretofore have been payable under the revised estimate over the sums actually deposited.



If any Real Estate Taxes shall be levied, charged, assessed or imposed upon or for the Security, or any portion thereof, and if such Real Estate Taxes
shall also be a levy, charge, assessment or imposition upon or for any other premises not covered by the lien of this Deed of Trust, then the computation of the amounts to be deposited under this Section 5 shall be based upon the entire
amount of such Real Estate Taxes and Grantor shall not have the right to apportion any deposit with respect to such Real Estate Taxes.



Upon an assignment of this Deed of Trust, Beneficiary shall have the right to arrange to transfer all amounts deposited and still in its possession to the
assignee and Beneficiary shall thereupon be completely released from all liability with respect to such deposit and Grantor or owner of the Security shall look solely to the assignee or transferee in reference thereto.



Upon the payment in full by Grantor of the entire Indebtedness, any sums then
held by Beneficiary under this Section 5 shall be promptly refunded to Grantor.



All amounts deposited shall be held by Beneficiary as additional security for the sums secured by this Deed of Trust, and Grantor hereby grants to Beneficiary a security interest in such sums, and upon the occurrence
of an Event of Default hereunder Beneficiary may, in its sole and absolute discretion, apply said amounts to the payment of the Indebtedness in whatever order Beneficiary may elect.





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Immediately upon receipt of such by Grantor, Grantor shall deliver to Beneficiary copies of all notices,
demands, claims, bills, and receipts in relation to the Impositions.



6. Change in Taxes. In the event any tax shall be due or become due and payable to the United States of America, the State of Texas or any political subdivision thereof with respect to the execution and delivery or recordation of
this Deed of Trust or any other Loan Document or the interest of Beneficiary in the Security except for taxes in the nature of income or franchise taxes, Grantor shall pay such tax at the time and in the manner required by applicable law and Grantor
shall hold Beneficiary harmless and shall indemnify Beneficiary against any liability of any nature whatsoever as a result of the imposition of any such tax. In the event of the enactment, after the date of this instrument, of any law changing in
any way the present law as to the taxation of notes or debts secured by mortgages, for Federal, State, or local purposes (except for changes in income or franchise taxes), or the manner of collection of any Impositions, so as to affect this Deed of
Trust or the Note secured hereby, then Grantor shall upon demand make such payments to Beneficiary and take such other steps, as may be necessary in Beneficiarys reasonable judgment, to place Beneficiary in the same financial position as it
was prior to any such enactment, failing which, or if the Grantor is not permitted by law to make such payments, the Indebtedness shall, at the option of Beneficiary, immediately become due and payable at par.



7. Insurance. Borrower (to the extent of Grantors obligations
set forth in this Section 7) and Operating Tenant (to the extent of its obligations under the Operating Lease) shall at all times until the Indebtedness shall be paid in full, keep the Security insured against loss or damage in an amount
sufficient to prevent Beneficiary or Grantor from becoming a co-insurer under the terms of the applicable policies, but in any event in an amount not less than 100% of the then full replacement cost of the Improvements (exclusive of the cost of
excavations, foundations and footings below the lowest basement floor) without deduction for physical depreciation (which replacement cost shall be reset once a year at Beneficiarys option in accordance with then customary insurance
underwriting standards used by reasonable and prudent mortgage lenders for a property of comparable size, mass, construction, type, location, and use) under policies of All Risk Replacement Cost Insurance (including nuclear explosion, if available),
and otherwise upon the following terms and conditions:



(a) Grantor shall further provide the following insurance in such amounts as shall be reasonably approved by Beneficiary: flood insurance (if the Security is situated in an area that is considered a flood risk area by the federal government
agency thereof); boiler and machinery insurance; earthquake insurance; rent loss insurance in an amount sufficient to cover the total of all rents (including any expenses payable by tenants) accruing from the Security for a one year period;
commercial general liability insurance in a minimum amount of One Million Dollars ($1,000,000), and excess or umbrella liability of at least Ten Million Dollars ($10,000,000); such other appropriate insurance as Beneficiary may require from time to
time.





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(b) Such insurance shall contain no exclusion for acts of terrorism and shall include:
(i) coverage for acts of domestic and international terrorism, (ii) coverage whether or not a specific act is certified under the Terrorism Risk Insurance Act of 2002 as an act of terrorism by the U.S. Secretary of the Treasury, and (iii) coverage
amounts, deductibles and limits/sublimits acceptable to Beneficiary in its sole discretion.



(c) During any period of restoration, Grantor shall provide a policy or policies of builders all risk insurance in an
amount not less than the full insurable value of the Security.



(d) Grantor will assign and deliver to Beneficiary an original certificate of the policy or policies of all insurance required to be provided hereunder and provide copies of the policy or policies described therein to
Beneficiary unless Grantor participates in Managers insurance program, in which event Grantor shall provide a copy of the description of coverages provided by Manager to Grantor. Each policy of insurance provided by Grantor shall (i) be issued
by a company or companies approved by Beneficiary and rated not less than a Bests rating of A-/X, (ii) name Beneficiary as an additional insured or loss payee, as the case may be, (iii) provide that all proceeds shall be payable to
Beneficiary, (iv) provide that it may not be cancelled or modified except upon thirty (30) days prior written notice to Beneficiary, (v) provide that no act or thing done by Grantor shall invalidate the policy as against Beneficiary, (vi) be
endorsed with standard noncontributory mortgagee clauses in favor of and in form acceptable to





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Beneficiary, and (vii) otherwise be in such form as shall be reasonably acceptable to Beneficiary, so
that at all times until the payment in full of the Indebtedness, Beneficiary shall have and hold the said policy and policies as further collateral for the payment of all Indebtedness.



(e) If Grantor shall fail to obtain any such policy or policies required by Beneficiary, or shall fail to
deliver an original certificate evidencing the same to Beneficiary, then Beneficiary may obtain such insurance and pay the premium or premiums therefore, in which event Grantor shall, on demand of Beneficiary, repay such premium or premiums to
Beneficiary and such repayment shall be secured by the lien of this Deed of Trust. If Grantor fails to maintain the level of insurance required under this Deed of Trust, then Grantor shall indemnify Beneficiary to the extent that a casualty occurs
and insurance proceeds would have been available had such insurance been maintained.



(f) Grantor shall promptly provide to Beneficiary copies of any and all notices (including notice of non renewal), claims, and demands
which Grantor receives from insurers of the Security.



(g) Effective from and after any Event of Default, Grantor hereby assigns to Beneficiary all rights of Grantor in and to any unearned premiums on any insurance policy required to be furnished by Grantor.



Anything in this Section 7 to the contrary notwithstanding, as long as (i) Manager is
managing the Real Property and Grantor participates in Managers insurance programs, (ii) there then exists no default under the Management Agreement or Event of Default hereunder, (iii) Manager is making all required insurance payments as and
when due pursuant to the Management Agreement, and (iv) Grantor provides to Beneficiary acceptable evidence that such insurance is, at all times, in full force and effect as regards the Real Property, then Beneficiary acknowledges and agrees that
the insurance requirements set forth in the Management Agreement shall govern and control over any inconsistent provisions set forth in the provisions of this Section 7.



8. Insurance/Condemnation Proceeds. Grantor hereby assigns to Beneficiary all insurance proceeds or Condemnation
(defined in Section 9 below) awards which Grantor may be entitled to receive for loss or damage to, or a taking of, the Security. In the event of loss or





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damage to, or a taking of, the Security, the proceeds of said insurance or Condemnation award shall be payable to
Beneficiary alone and Grantor hereby authorizes and directs any affected insurance company or government agency to make payment of the insurance proceeds or Condemnation awards directly to Beneficiary. In the event that any such insurance proceeds
or Condemnation awards are paid directly to Grantor, Grantor shall make such proceeds or awards available to Beneficiary within five (5) Business Days of Grantors receipt thereof. No such loss or damage shall itself reduce the Indebtedness
unless Beneficiary elects to apply the proceeds and such proceeds are actually applied to the Indebtedness as provided in Section 10 below. Prior to an Event of Default, Grantor and Beneficiary shall jointly and reasonably agree on the prompt
adjustment and compromise of such loss, to collect and receive such proceeds or awards and to endorse any check in payment thereof. During an Event of Default, or in the event of a loss or damage to, or a taking of, the security in excess of
$1,500,000, Beneficiary is authorized to adjust and compromise such loss without the consent of Grantor, to collect and receive such proceeds or awards in the name of Beneficiary and Grantor and to endorse Grantors name upon any check in
payment thereof. Furthermore, if an insurance claim is no greater than $250,000 (a Minor Claim), Beneficiary agrees that insurance proceeds may be made available directly to the Grantor provided that no Event of Default is then in
existence and so long as Grantor promptly commences and diligently pursues to completion any required restoration Work utilizing such insurance proceeds. Subject to the provisions of Sections 9, 10 and 11 hereof, such proceeds
or awards shall be applied first toward reimbursement of all costs and expenses of Beneficiary in collecting said proceeds or awards, then toward payment of the Indebtedness or any portion thereof, whether or not then due and payable, in whatever
order Beneficiary may elect, or Beneficiary may, at its option, make said insurance proceeds or Condemnation awards available to Grantor in whole or in part toward restoration of the Security for which such insurance proceeds or Condemnation awards
shall have been paid.



In the event of foreclosure of this Deed
of Trust or other transfer of title to the Security and extinguishment, in whole or in part, of the Indebtedness, all right, title, and interest of Grantor in and to any insurance policy, or premiums or payments in satisfaction of claims or any
other rights thereunder then in force, shall pass to the purchaser or grantee notwithstanding the amount of any bid at such foreclosure sale. Nothing contained herein shall prevent the accrual of interest as provided in the Note on any portion of
the principal balance due under the Note until such time as the insurance proceeds or Condemnation awards are actually received and applied to reduce the principal balance outstanding.





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9. Restoration Following Fire and Other Casualty or Condemnation. In the event of damage to the
Security by reason of fire or other hazard or casualty, Grantor shall give prompt written notice thereof to Beneficiary, and, so long as Beneficiary provides its consent that any insurance proceeds can be made available as provided in Section
10 hereof, shall proceed with reasonable diligence to perform repair, replacement and/or rebuilding work (hereinafter referred to as the Work) to restore the Security to its condition prior to such damage in full compliance
with all legal requirements; provided, however, in the event that Beneficiary does not provide its consent that any insurance proceeds can be made available, nothing contained herein shall prevent Grantor from using other funds to perform the Work
in Grantors sole discretion. In the event of a taking by power of eminent domain or conveyance in lieu thereof (a Condemnation), if restoration is feasible as reasonably determined by Beneficiary, then Grantor shall proceed
with reasonable diligence to perform such restoration (also referred to herein as the Work). Before commencing the Work, Grantor shall comply with the following requirements:



(a) With respect to any Work reasonably expected to exceed
One Million Five Hundred Thousand Dollars ($1,500,000) in cost (Major Work), Grantor shall furnish to Beneficiary complete plans and specifications for the Work, for Beneficiarys approval, which approval shall not be
unreasonably withheld. Said plans and specifications shall bear the signed approval thereof by an architect reasonably satisfactory to Beneficiary and shall be accompanied by the architects signed estimate, bearing the architects seal,
of the entire cost of completing the Work, and shall provide that upon completion of the Work, the Security shall be at least equal in value and general utility to its value and general utility prior to the damage or Condemnation.



(b) Grantor shall furnish to Beneficiary certified copies of
all permits and approvals required by law in connection with the commencement and conduct of the Work.



(c) With respect to any Major Work, Grantor shall furnish to Beneficiary, prior to the commencement of the Work, a surety bond for or
guaranty of timely completion of and payment for the Work, which bond or guaranty shall be in form reasonably satisfactory to Beneficiary and shall be signed by a surety or sureties, or guarantor or





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guarantors, as the case may be, who are reasonably acceptable to Beneficiary, and in an amount not less
than the architects estimate of the entire cost of completing the Work, less the amount of insurance proceeds or Condemnation award, if any, then held by Beneficiary and which Beneficiary shall have elected or shall be required to apply toward
restoration of the Security as provided in Section 10 hereof.



Grantor shall not commence any of the Work until Grantor shall have complied with the above requirements, and thereafter Grantor shall perform the Work diligently and in good faith in accordance with the plans and specifications referred to
in subsection (a) above.



If, as provided in Section 10
hereof, Beneficiary shall have elected or is required to apply any insurance proceeds or Condemnation awards toward repair or restoration of the Security, then so long as the Work is being diligently performed by Grantor in accordance with the
provisions of this Deed of Trust, Beneficiary shall disburse such insurance proceeds or Condemnation awards to Grantor from time to time during the course of the Work in accordance with the following provisions:



A. The Work shall be in the charge of an experienced
construction manager reasonably satisfactory to Beneficiary with the consultation of an architect or engineer if the scope of the work so requires (provided, the project property manager shall be acceptable so long as it does not constitute Major
Work);



B. Each request for payment shall not
be made more often than at thirty (30) day intervals, on ten (10) Business Days (as defined in Section 58 hereinbelow) prior notice to Beneficiary, and shall be accompanied by a certificate reasonably satisfactory to Beneficiary, of the
architect or engineer, dated not more than ten (10) days prior to the application for withdrawal of funds, stating:



| | (i) | that all of the Work for which payment is being requested is in place and has been completed in compliance with the approved plans and specifications and all applicable legal
requirements;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | that the sum then requested to be withdrawn has been paid by Grantor and/or is justly due to contractors, subcontractors, materialmen, engineers, architects or other persons (whose
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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names and addresses shall be stated) who have rendered or furnished certain services or materials for
the Work and giving a brief description of such services and materials and the principal subdivisions or categories thereof and the respective amounts so paid or due to each of said persons in respect thereof and stating the progress of the Work up
to the date of said certificate;



| | (iii) | that the sum requested to be withdrawn, plus all sums previously withdrawn, does not exceed the cost of the Work insofar as actually accomplished up to the date of such certificate;
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | that the remainder of the moneys held by Beneficiary will be sufficient to pay in full for the completion of the Work; and
| | ---- | --------------------------------------------------------------------------------------------------------------------------



| | (v) | that no part of the cost of the services and materials described in the foregoing paragraph (ii) of this Clause B has been or is being made the basis of the withdrawal of any funds
in any previous or then pending application.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Grantor shall also provide Beneficiary with respect to any Major Work such other evidence as Beneficiary shall reasonably require that: (1) all of the Work for which payment is being requested is in place and has been
completed in substantial compliance with all applicable legal requirements; (2) that the sum then requested to be withdrawn, plus all sums previously withdrawn, does not exceed the cost of the Work insofar as actually accomplished up to the date of
such certificate; (3) that the remainder of the moneys held by Beneficiary will be sufficient to pay in full for the completion of the Work; (4) that the Work is anticipated to be completed consistent with all requirements, including applicable
zoning provisions, pertinent to preserve any and all rights, including, without limitation, with respect to any non-conforming use; and (5) that, except for the amounts, if any, specified in the foregoing paragraph (ii) of this Clause B to be due
for services or materials, there is no outstanding indebtedness known, after due inquiry, which is then due and payable for work, labor, services or materials in connection with the Work which, if unpaid, might become the basis of a vendors,
mechanics, laborers or materialmens statutory or other similar lien upon the Security or any part thereof.





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C. Grantor shall deliver to Beneficiary reasonably satisfactory evidence that the
Security and every part thereof, and all materials and all property described in the certificate furnished pursuant to the foregoing Clause B, are free and clear of all mortgages, liens, charges or encumbrances, except (a) encumbrances, if any,
securing indebtedness due to persons (whose names and addresses and the several amounts due them shall be stated) specified in said certificate furnished pursuant to the foregoing Clause B, which encumbrances will be discharged upon disbursement of
the funds then being requested, and (b) this Deed of Trust. Beneficiary shall accept as satisfactory evidence under this Clause C a certificate of a title insurance company acceptable to Beneficiary or an endorsement to Beneficiarys existing
loan title policy insuring the lien of this Deed of Trust, dated as of the date of the making of the disbursement, confirming the foregoing.



D. If the Work affects the foundation, or changes in the footprint of the Improvements, Grantor shall deliver to Beneficiary a survey of
the Security dated as of a date within ten (10) days prior to the making of the advance (or revised to a date within ten days prior to the advance) showing no encroachments other than those, if any, acceptable to Beneficiary.



E. There exists no Event of Default, or any state of facts
existing which, with the passage of time or the giving of notice, or both, would constitute an Event of Default.



Beneficiary at its option may waive any of the foregoing requirements.



Upon compliance by Grantor with the foregoing Clauses A, B, C, D, and E (except for such requirements, if any, as
Beneficiary at its option may have waived), Grantor shall, to the extent of the insurance proceeds or Condemnation awards, if any, which Beneficiary shall have elected or shall be required to apply to restoration of the Security, pay or cause to be
paid to the persons named in the certificate furnished pursuant to the foregoing Clause B, the respective amounts stated in said certificate to be due them, less ten percent (10%) retainage (Retainage), and Beneficiary shall pay
to Grantor the amounts stated in said certificate to have been paid by Grantor, less Retainage.



If upon completion of the Work there shall be insurance proceeds or Condemnation awards held by Beneficiary over and above the amounts withdrawn pursuant
to





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the foregoing provisions, plus Retainage, then Beneficiary, at Beneficiarys option, may either retain such proceeds
or awards and apply the same in reduction of the Indebtedness in whatever order Beneficiary may elect (without payment of any prepayment fee or premium with respect to such insurance proceeds or Condemnation awards), or Beneficiary may pay over such
proceeds or awards to Grantor.



Upon completion of the Work, in
addition to the requirements of the foregoing Clauses A, B, C, D, and E, Grantor shall promptly deliver to Beneficiary:



| | (1) | With respect to Major Work, a written certificate of the construction manager, architect or engineer that the Work has been fully completed in a good and workmanlike manner in
accordance with the approved plans and specifications and with respect to any other Work, a certificate from Grantor or its property manager to the same effect;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | A written report and policy of a title insurance company reasonably acceptable to Beneficiary insuring the Security against mechanics and materialmens liens;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | A certificate by Grantor reasonably satisfactory to Beneficiary in form and substance, listing all costs and expenses in connection with the completion of the Work and the amount
paid by Grantor with respect to the Work; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (4) | A temporary certificate of occupancy, if required for occupancy of any of the Improvements affected by the Work and all other applicable certificates, licenses, consents and
approvals issued by governmental agencies or authorities with respect to the Security and by the appropriate Board of Fire Underwriters or other similar bodies acting in and for the locality in which the Security is situated, provided that within
thirty (30) days after completion of the Work, Grantor shall obtain and deliver to Beneficiary a permanent certificate of occupancy for the Security, if a certificate of occupancy is required for any of the Improvements affected by the Work.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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Upon receipt of the foregoing items, Beneficiary shall pay any Retainage held by Beneficiary to or for
the benefit of Grantor.



10. Disposition of Condemnation or
Insurance Proceeds. Except in the case of a Minor Claim, Beneficiary, in its absolute discretion, may decide whether and to what extent, if any, proceeds of insurance or Condemnation awards will be made available to Grantor for repair or
restoration of the Security, but Grantor shall effect such repair or restoration as provided above whether or not Beneficiary agrees that any available insurance proceeds and Condemnation awards may be made available for restoration. Notwithstanding
the foregoing, Beneficiary shall make insurance proceeds or Condemnation awards available to Grantor for repair or restoration provided the following conditions are satisfied:



(a) Not more than thirty percent (30%) of the Real Property is damaged, and, in the case of a Condemnation,
the portion remaining after the taking is still economically viable in the reasonable opinion of Beneficiary;



(b) There has been no monetary Event of Default in the prior twelve (12) months and there does not then exist an Event of Default or a
state of facts which, with the passage of time or the giving of notice, or both, would constitute an Event of Default hereunder or under any other Loan Document;



(c) Grantor can demonstrate to Beneficiarys reasonable satisfaction that Grantor has the financial
ability to make all scheduled payments when due under the Loan Documents during reconstruction, whether from the proceeds of rent insurance, operation of the Improvements, Grantors own funds or otherwise;



(d) Such damage or destruction occurs prior to the last two
(2) Loan Years (as such term is defined in the Note);



(e) The funds are released under escrow/construction funding arrangements specified in Section 9 hereof;



(f) The repairs and restoration will restore the Improvements to substantially the size, design and utility as existed immediately prior
to the casualty or Condemnation; and





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(g) Grantor can demonstrate to Beneficiarys reasonable satisfaction that Grantor
has the financial ability to complete the repair and restoration, whether from the proceeds of insurance, Grantors own funds, or otherwise.



Provided that there then exists no Event of Default, any application of insurance or Condemnation proceeds required by Beneficiary shall be at par without
payment of any prepayment fee or premium. If Beneficiary has the right under this Deed of Trust and elects not to make the proceeds available for the Work, then such proceeds shall be applied to reduce the Indebtedness in whatever order Beneficiary
may elect. Any principal reduction resulting from an early involuntary prepayment as a result of a Condemnation proceeding or insurance settlement will cause a re-calculation of debt service payments based upon the reduced Loan balance, the
remaining amortization schedule and the Interest Rate.



11.
Fire and Other Casualty; Self-Help. If within one hundred twenty (120) days after the occurrence of any damage to the Security or the condemnation of any portion of the Security, Grantor shall not have submitted to Beneficiary and received
Beneficiarys approval of plans and specifications for any Major Work or shall not have obtained approval of such plans and specifications from all governmental authorities whose approval is required for such Work, or if Grantor shall fail to
promptly commence such Work, or if thereafter Grantor fails to perform the Work diligently or is delinquent in the payment to mechanics, materialmen or others of the costs incurred in connection with the Work, or, if Grantor shall fail to complete
the Work promptly, then, in addition to all other rights herein set forth, Beneficiary may give written notice thereof to Grantor and if such failure is not cured within ten (10) Business Days of such written notice, then Beneficiary, or any
lawfully appointed receiver of the Security, may at its respective option, perform or cause the Work to be performed, and may take such other steps as it deems advisable to perform or cause to be performed the Work, and may enter upon the Security
for any of the foregoing purposes, and Grantor hereby waives, for Grantor and all others holding under Grantor, any claim against Beneficiary or such receiver arising out of anything done by Beneficiary or such receiver pursuant to this Section
11, and Beneficiary may apply insurance and/or Condemnation proceeds (without the need to fulfill the requirements of Section 9 hereof) to reimburse Beneficiary, and/or such receiver for all amounts expended or incurred by them,
respectively, in connection with the performance of the Work, and any excess costs shall be paid by Grantor to Beneficiary upon demand, with interest at the Default Rate (hereinafter defined), and such payment shall be secured by the lien of this
Deed of Trust.





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12. Rent Insurance Proceeds. If Grantor shall promptly commence and diligently perform the Work in
accordance with the requirements of Section 11 hereinabove and there shall be no Event of Default under the Loan Documents, then Beneficiary shall each month pay to Grantor out of the rent insurance proceeds held by Beneficiary a sum equal to
that amount, if any, of the rent insurance proceeds paid by the insurer which is allocable to the Rental Loss (as defined below) for the preceding month and any earlier period of time. Beneficiary, at its option, may waive any of the foregoing
conditions to the payment of rent insurance proceeds. If Grantor does not fulfill the foregoing conditions entitling Grantor to monthly disbursements of rent insurance proceeds, then such rent insurance proceeds may be applied by Beneficiary, at
Beneficiarys option, to the payment of the Indebtedness in whatever order Beneficiary may elect. As used in this Section 12, Rental Loss shall mean loss of base rent, minimum rent, percentage rent, additional rent and
all other sums that tenants may owe to Grantor as landlord under leases of the Improvements or Land.



13. Repair; Alterations; Waste; Environmental. Grantor shall keep all of the Security in good and substantial repair subject to normal wear and
tear, and expressly agrees that it will neither permit nor commit any waste upon the Security, nor do any other act or suffer or permit any act to be done, whereby the Security will become less valuable or the lien hereof may be impaired and shall
comply in all material respects with all zoning laws (including, without limitation, preservation of any rights as to any non-conforming use), building codes, subdivision laws, environmental laws, and other laws, ordinances, rules and regulations
made or promulgated by any government or municipality, or by any agency thereof or by any other lawful authority, which are now or may hereafter become applicable to the Security; provided that nothing herein shall preclude Grantor from contesting
any matter in good faith through appropriate legal means diligently pursued so long as Grantor shall repair or restore any building now or hereafter under construction on the Security and complete the same within a reasonable period of time. Grantor
agrees not to initiate or acquiesce in any zoning variance or reclassification, without Beneficiarys prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed so long as it does not impair the value of the
Security. Grantor shall not construct any additional building or buildings or make any other improvements on the Land, nor alter, remove or demolish any building or other Improvements on the Land, without the prior written consent of Beneficiary.





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Grantor shall comply with the Americans with Disabilities Act of 1990, as amended, including, without
limitation, any regulations, rulings and orders promulgated pursuant thereto in connection with any Work, any repair to the Security or any tenant improvements to be performed by Grantor and shall comply with and implement the recommendations with
respect to accessible shower rooms contained in that certain Property Condition Assessment, dated November 7, 2003 prepared by Jones, Hill, McFarland & Ellis.



If Grantor fails to observe any of the provisions of this Section, or suffers or permits any Event of Default to exist under
this Section, Beneficiary or a lawfully appointed receiver of the Security at its option, from time to time, may perform, or cause to be performed, any and all repairs and such other work as it deems necessary to bring the Security into compliance
with the provisions of this Section and may enter upon the Security for any of the foregoing purposes, and Grantor hereby waives any claim against Beneficiary and/or such receiver, arising out of such entry or out of any other act carried out
pursuant to this Section. Grantor shall upon notice repay to Beneficiary and such receiver, with interest at the Default Rate, all amounts expended or incurred by them, respectively, in connection with any action taken pursuant to this Section, and
such repayment shall be secured by the lien of this Deed of Trust.



Grantor represents and warrants that there are currently at least the number of paved and designated parking spaces (including adequate, properly-sized, delineated and assigned handicap parking spaces) available on of the Real Property as
are shown on the survey delivered to Beneficiary. Grantor covenants and agrees that throughout the Term (as defined in Section 1 of the Note) it shall continue to make available, sufficient parking spaces on the Real Property to comply with all
leases, all applicable government regulations and the Easement Agreements.



14. Environmental Indemnification. Reference is made to that certain Environmental Indemnification Agreement of even date herewith executed by Grantor and Highland Hospitality, L.P. (collectively, the
Indemnitors) (the Environmental Indemnification Agreement), and by this reference is incorporated herein in its entirety and made a part hereof. This Deed of Trust also secures the performance of all obligations
due to Beneficiary by Indemnitors under the Environmental Indemnification Agreement. A release of this Deed of Trust shall not be construed as or be deemed to constitute a termination of the Environmental Indemnification Agreement, which instead
shall continue in existence and terminate by its own terms.





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15. Independence of Security. Grantor shall not by act or omission permit any building or other
improvement on any premises not subject to the lien of this Deed of Trust to rely on the Security or any part thereof or any interest therein to fulfill any municipal or governmental requirement, and Grantor hereby assigns to Beneficiary any and all
rights to give consent for all or any portion of the Security or any interest therein to be so used. Similarly, no part of the Security shall rely on any premises not subject to the lien of this Deed of Trust or any interest therein to fulfill any
governmental or municipal requirement. Grantor shall not by act or omission impair the integrity of the Real Property as one or more complete subdivided parcels of land bearing the same zoning classification, and as one or more complete tax parcels
separate and apart from all other premises. Any act or omission by Grantor, which would result in a violation of any of the provisions of this Section, shall be void.



16. No Other Liens. Grantor shall not consent, agree to, or permit any mortgage lien, or security interest upon or
affecting the Security or any part thereof except (a) as granted or permitted in this Deed of Trust and any other lien or security interest granted to Beneficiary and (b) under any Personalty Leases (to the extent they are deemed to constitute
financing agreements), subject to Grantors right to contest involuntary liens as hereinafter provided.



Grantor will promptly pay and discharge any and all amounts which are now or hereafter become liens against the Security whether or not superior to the
lien hereof or to any assignment of rents and leases given to Beneficiary; provided, however, in the case of an involuntary lien Grantor may contest in good faith contest, at Grantors sole cost and expense, by proper legal proceedings, the
validity or amount of any involuntary lien, on the condition that if such involuntary lien exceeds $100,000, Grantor first shall deposit with Beneficiary, as security for the payment of such contested item, an amount equal to the contested item plus
all penalties and interest which would be payable if Grantor is ultimately required to pay such contested item, and on the further condition that no amount so contested may remain unpaid for such length of time as shall permit the Security, or the
lien thereon created by the item being contested, to be sold for the nonpayment thereof, or as shall permit an action, either of foreclosure or otherwise, to be commenced by the holder of any such lien. Grantor will not claim any credit on, or make
any deduction from the Indebtedness by reason of the payment of, any lien.





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The covenants of this Section shall survive any foreclosure and sale of the Security and any conveyance
thereof by deed in lieu of foreclosure with respect to any such liens in existence as of the date of transfer of title.



17. Management.



(a) During the term of the Loan, Grantor shall at all times retain a professional management company satisfactory to Beneficiary to
operate and manage the Security pursuant to a management agreement reasonably satisfactory to Beneficiary. If the Management Agreement is terminated for any reason during the term of the Loan, Beneficiary will have the right to declare the entire
indebtedness immediately due and payable unless Grantor enters into a replacement management agreement (the Replacement Agreement) on terms and conditions reasonably acceptable to Beneficiary with a substitute manager reasonably
acceptable to Beneficiary within 30 days following termination of the Management Agreement. As a condition to Beneficiarys approval of any replacement manager, the manager shall consent to an assignment of management agreement substantially
similar in form and substance as to the Assignment of Management Agreement, Subordination, Non-Disturbance and Attornment Agreement and Consent of Manager (the Assignment of Management Agreement) dated of even date herewith by and
among Grantor, Manager and Beneficiary. Pursuant to the Assignment of Management Agreement, the rights of Manager, as manager, under the Management Agreement are expressly made subordinate to Beneficiarys rights under this Deed of Trust and
the other Loan Documents, all as more particularly set forth in the Assignment of Management Agreement.



(b) Grantor shall furnish to Beneficiary, within five (5) Business Days after receipt thereof, or after the mailing or service thereof by
Grantor, as the case may be, a copy of each notice of default Grantor gives to, or receives from any person, based upon the occurrence, or alleged occurrence, of any default or defaults in the performance of any covenant, condition, promise or
obligation under the Management Agreement.





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18. Ground Lease. Grantor hereby represents and warrants to Beneficiary that there exist no ground
leases relating to or executed in connection with the Security other than the Operating Lease.



19. Sidewalks, Municipal Charges. Grantor will promptly pay and discharge any and all license fees and similar charges, with penalties and interest thereon, which may be imposed by the municipality in which the
Security is situated, for the use of vaults, chutes, areas and other space beyond the lot line and under or abutting the public sidewalks in front of or adjoining the Security, and Grantor will promptly cure any violation of law and comply with any
order of such municipality respecting the repair, replacement or condition of the sidewalk or curb in front of or adjoining the Security, and in default thereof Beneficiary may, upon five (5) Business Days notice to Grantor, pay any and all
such license fees or similar charges, with penalties and interest thereon, and the charges of the municipality for such repair or replacement, and any amount so paid or advanced by Beneficiary and all costs and expenses incurred in connection
therewith (including, without limitation, Attorneys Fees (defined in Section 41 hereinbelow)), with interest thereon at the Default Rate, shall be a demand obligation of Grantor to Beneficiary, and, to the extent permitted by law, shall
be added to the Indebtedness and shall be secured by the lien of this Deed of Trust.



20. Assignment of Rents and Leases/Future Leases/Obligations of Lessor. The terms and provisions of that certain Assignment of Rents and Leases executed by Grantor in favor of Beneficiary of even date herewith
(the Assignment of Rents and Leases) are incorporated herein by reference and made a part hereof as if fully set forth herein.



21. Leases; Foreclosure. Any proceedings or other steps taken by Beneficiary to foreclose this Deed of Trust, or otherwise to protect the interests
of Beneficiary hereunder, shall not operate to terminate the rights of any present or future tenant of space in the Improvements, notwithstanding that said rights may be subject and subordinate to the lien of this Deed of Trust, unless Beneficiary
specifically elects otherwise in the case of any particular tenant. The failure to make any such tenant a defendant in any such foreclosure proceeding and to foreclose such tenants rights will not be asserted by Grantor or any other defendant
in such foreclosure proceeding as a defense to any proceeding instituted by Beneficiary to foreclose this Deed of Trust or otherwise protect the interests of Beneficiary hereunder.





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22. Operating Agreement/Easement Agreements. Grantor hereby represents and warrants to Beneficiary
that there exist no agreements affecting the development or operation of the Security, other than the Leases, the Management Agreement, service contracts and Personalty Leases entered into in the ordinary course of the operation of the Security and
the covenants and restrictions included in the Permitted Encumbrances. Grantor shall, at Grantors cost and expense, promptly and fully perform each and every covenant, condition, promise and obligation of the owner of the Security under the
Easement Agreements and shall make all payments therein and thereby required to be made by the owner of the Security. Grantor shall not cancel, transfer, amend in any material respect, or assign the Easement Agreements without the prior written
consent of Beneficiary, and Grantor shall not consent to the cancellation, transfer, amendment in any material respect, or assignment of the Easement Agreements by any other party thereto, without the prior written consent of Beneficiary.



23. Events of Default. Each of the following shall
constitute an Event of Default hereunder and shall entitle the Beneficiary to exercise its remedies hereunder and under any of the other Loan Documents or as otherwise provided by law:



(a) Any payment of any installment of principal or interest
under the Note is not received by Beneficiary by 5:00 p.m. (Hartford, Connecticut time) within five (5) Business Days following the date when such payment was due or any escrow payment under the Tax Escrow Agreement or Section 5 hereof is not
received by escrow holder or Beneficiary, as applicable by 5:00 p.m. (Hartford, Connecticut time) within five (5) Business Days following the monthly tax deposit date;



(b) Failure of Grantor in the observance or performance of any other monetary or non-monetary covenant,
promise or agreement provided in this Deed of Trust or in any other Loan Document (a failure to perform), for thirty (30) days after the giving of notice by Beneficiary to Grantor specifying the nature of the failure to perform;
provided, however, that if the nature of such failure to perform is such that the same is not susceptible of cure within such thirty (30) day period, such failure to perform shall not be deemed an Event of Default so long Grantor shall within such
period commence to cure such failure to perform and thereafter diligently prosecute the cure to completion, but in no event more than one hundred twenty (120) days in the aggregate from the date of the original notice of failure to perform.
Notwithstanding anything contained herein to





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the contrary, the notice and cure period provided under this clause (b) shall not be applicable to and
shall not be in addition to any specific notice and cure or performance period provided under any other provision of this Deed of Trust, and the specific notice and cure or performance period provided for in such provision shall control, and a
failure by Grantor to cure a default under such provision within the applicable cure period shall be an Event of Default under this Deed of Trust;



(c) Any representation, warranty, or statement of Grantor contained herein or in any of the Loan Documents, including without limitation
the Environmental Indemnification Agreement, or in any writing delivered to Beneficiary on or before the execution and delivery of the Loan Documents, proves to be untrue in any material respect as of the date when made;



(d) Grantor or the general partner of Grantor shall (i) have
an order for relief entered in a proceeding under Title 11, United States Code, whether such order shall result from a voluntary or involuntary petition, (ii) seek or consent to the appointment of a receiver or trustee for itself or for any of the
Security, (iii) file a petition or initiate a proceeding under the bankruptcy, insolvency, receivership, or similar laws of the United States, any state or any other jurisdiction, (iv) make a general assignment for the benefit of creditors, or (v)
be unable to pay its debts as they mature;



(e) A court shall enter an order, judgment or decree appointing, without the consent of Grantor, a receiver or trustee for it or for any of the Security or approving a petition filed against Grantor which seeks relief under the bankruptcy
or other similar laws of the United States, any state or any other jurisdiction, and such order, judgment or decree shall remain in force, undischarged or unstayed, sixty (60) days after it is entered;



(f) Without the prior written consent of Beneficiary, except
with respect to Permitted Transfers (as hereinafter defined), (i) the Security or any portion thereof or interest therein shall be mortgaged, encumbered, sold, assigned or otherwise transferred by Grantor or by operation of law (excluding
condemnation and worn-out or obsolete Personal Property that is replaced with Personal Property substantially similar thereto in quality and quantity), (ii) if Grantor is a partnership, joint venture, limited liability company, syndicate or other
group, all or any portion of the interest of any





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partner or member thereof is pledged or otherwise encumbered or is sold or otherwise transferred, or
(iii) any interest in any entity that owns or Controls Grantor is pledged or otherwise encumbered or is sold or otherwise transferred. As used herein, Controls shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. The term Person means with respect to this Deed of Trust any natural person,
general partnership, limited partnership, limited liability company, trust, estate, association, corporation, custodian, nominee or any other individual or entity in its own or any representative capacity. As used herein Permitted
Transfers means the pledge or transfer of (1) any limited partnership interests or units in Highland Hospitality, L.P. and (2) the membership interests in the general partner of Grantor, provided, that after such any such pledge or
transfer, Highland Hospitality, L.P., Highland Hospitality Corporation or their Affiliates continue to own not less than fifty-one percent (51%) of (A) the partnership interests or units in Highland Hospitality, L.P. and (B) the membership interests
in the general partner of Grantor, as applicable.



24.
Remedies Upon Default. Immediately upon the occurrence of any Event of Default, Beneficiary shall have the option, in addition to and not in lieu of or substitution for all other rights and remedies provided in this Deed of Trust or any other
Loan Document or provided by law or in equity, and is hereby authorized and empowered by Grantor, to do any or all of the following:



(a) Declare without notice the entire unpaid amount of the Indebtedness immediately due and payable and, at Beneficiarys option, (i)
to bring suit therefore, or (ii) to bring suit for any delinquent payment of or upon the Indebtedness, or (iii) to take any and all steps and institute any and all other proceedings at law or in equity that Beneficiary deems necessary to enforce
payment of the Indebtedness and performance of other obligations secured hereunder and to protect the lien of this Deed of Trust.



(b) Beneficiary may require the Trustee to sell all or part of the Security, at public auction, to the highest bidder, for cash, at the
county court house of the county in Texas in which the Security or any part thereof is situated or if the Security is located in more than one county such sale may be made at the courthouse in any county in which the Security is situated. The sale
shall take place at such area of the courthouse as





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shall be properly designated from time to time by the commissioners court (or, if not so designated by
the commissioners court, at the courthouse door) of the specified county, between the hours of 10:00 oclock a.m. and 4:00 oclock p.m. (the commencement of such sale to occur within three (3) hours following the time designated in the
notice of sale as the earliest time at which such sale shall occur, if required by applicable law) on the first Tuesday of any month, after giving notice of the time, place and terms of said sale (including the earliest time at which such sale shall
occur) and of the property to be sold, in the manner hereinafter described. Notice of a sale of all or part of the Security by the Trustee shall be given by posting written notice thereof at the courthouse door (or other area in the courthouse as
may be designated for such public notices) of the county in which the sale is to be made, and by filing a copy of the notice in the office of the county clerk of the county in which the sale is to be made at least twenty-one (21) days preceding the
date of the sale, and if the property to be sold is in more than one county, a notice shall be posted at the courthouse door and filed with the county clerk of each county in which the property to be sold is situated. In addition, Beneficiary shall,
at least twenty-one (21) days preceding the date of sale, serve written notice of the proposed sale by certified mail on Grantor and each debtor obligated to pay the debt secured hereby according to the records of Beneficiary. Service of such notice
shall be completed upon deposit of the notice, enclosed in a postpaid wrapper, properly addressed to Grantor and such debtor at the most recent address as shown by the records of Beneficiary, in a post office or official depository under the care
and custody of the United States Postal Service. The affidavit of any person having knowledge of the facts to the effect that such service was completed shall be prima facie evidence of the fact of service. Any notice that is required or permitted
to be given to Grantor may be addressed to Grantor at Grantors address as stated above. Any notice that is to be given by certified mail to any other debtor may, if no address for such other debtor is shown by the records of Beneficiary, be
addressed to such other debtor at the address of Grantor as is shown by the records of Beneficiary. Notwithstanding the foregoing provisions of this paragraph, notice of such sale given in accordance with the requirements of the applicable laws of
the State of Texas in effect at the time of such sale shall constitute sufficient notice of such sale. Trustee may sell all or any portion of the Security, together or in lots or parcels, and may execute and deliver to the purchaser or purchasers of
such property, good and sufficient deeds of conveyance of fee simple





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title with covenants of general warranty made on behalf of Grantor, subject to the Permitted
Encumbrances. In no event shall Trustee be required to exhibit, present or display at any such sale, any of the personalty described herein to be sold at such sale. Trustee making such sale shall receive the proceeds thereof and shall apply the same
as follows: (i) first, he shall pay the reasonable expenses of Trustee; (ii) second, he shall pay, so far as may be possible, the Indebtedness, discharging first that portion of the Indebtedness arising under the covenants or agreements herein
contained and not evidenced by the Note; (iii) third, he shall pay the residue, if any, to the persons legally entitled thereto. Payment of the purchase price to Trustee shall satisfy the obligation of the purchaser at such sale therefor, and such
purchaser shall not be responsible for the application thereof. The sale or sales by Trustee of less than the whole of the Security shall not exhaust the power of sale herein granted, and Trustee is specifically empowered to make successive sale or
sales under such power until the whole of the Security shall be sold; and if the proceeds of such sale or sales of less than the whole of the Security shall be less than the aggregate of the Indebtedness and the expenses thereof, this Deed of Trust
and the lien, security interest and assignment hereof shall remain in full force and effect as to the unsold portion of the Security just as though no sale or sales had been made; provided, however, that Grantor shall never have any right to require
the sale or sales of less than the whole of the Security, but Beneficiary shall have the right, at its sole election, to request Trustee to sell less than the whole of the Security. If default is made hereunder, the holder of the Indebtedness or any
part thereof on which the payment is delinquent shall have the option to proceed with foreclosure in satisfaction of such item either through judicial proceedings or by directing Trustee to proceed as if under a full foreclosure, conducting the sale
as herein provided without declaring the entire Indebtedness due, and if sale is made because of default of an installment, or a part of an installment, such sale may be made subject to the unmatured part of the Indebtedness; and it is agreed that
such sale, if so made, shall not in any manner affect the unmatured part of the Indebtedness, but as to such unmatured part, this Deed of Trust shall remain in full force and effect as though no sale had been made under the provisions of this
paragraph. Several sales may be made hereunder without exhausting the right of sale for any unmatured part of the Indebtedness. At any such sale (1) Grantor hereby agrees, in its behalf and in behalf of its heirs, executors, administrators,
successors, personal representatives and assigns, that any and all





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recitals made in any deed of conveyance given by Trustee with respect to the identity of Beneficiary, the
occurrence or existence of any default, the acceleration of the maturity of any of the Indebtedness, the request to sell, the notice of sale, the giving of notice to all debtors legally entitled thereto, the time, place, terms, and manner of sale,
and receipt, distribution and application of the money realized therefrom, or the due and proper appointment of a substitute Trustee, and, without being limited by the foregoing, with respect to any other act or thing having been duly done by
Beneficiary or by Trustee hereunder, shall be taken by all courts of law and equity as prima facie evidence that the statements or recitals state facts and are without further question to be so accepted, and Grantor hereby ratifies and confirms
every act that Trustee or any substitute Trustee hereunder may lawfully do in the premises by virtue hereof; (2) the purchaser may disaffirm any easement granted, or rental, lease or other contract made in violation of any provision of this Deed of
Trust, and may take immediate possession of the Security free from, and despite the terms of, such grant of easement and rental or lease contract; and, (3) Beneficiary may bid and become the purchaser of all or any part of the Security at any
trustees or foreclosure sale hereunder, and the amount of Beneficiarys successful bid may be credited on the Indebtedness.



(c) Proceed against the Personal Property in accordance with Beneficiarys rights and remedies with respect to the Personal Property,
including the right to sell the Personal Property either together with the Real Property or separately and without regard to the remainder of the Security in accordance with Beneficiarys rights and remedies provided by the Uniform Commercial
Code as enacted in the State of Texas as well as other rights and remedies available at law or in equity.



(d) Cause to be brought down to date a title examination and tax histories of the Security, procure title insurance or title reports or,
if necessary, procure new abstracts and tax histories.



(e) Procure an updated or entirely new environmental audit of the Security including building, soil, ground water and subsurface investigations; have the Improvements inspected by an engineer or other qualified inspector and procure a
building inspection report; procure an MAI or other appraisal of the Security or any portion thereof; enter upon the Security at any time and from time to time to accomplish





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the foregoing and to show the Security to potential purchasers and potential bidders at foreclosure sale;
make available to potential purchasers and potential bidders all information obtained pursuant to the foregoing and any other information in the possession of Beneficiary regarding the Security.



(f) Either by itself or by its agent to be appointed by it
for that purpose or by a receiver appointed by a court of competent jurisdiction, as a matter of strict right, without notice and without regard to the adequacy or value of any security for the Indebtedness or the solvency of any party bound for its
payment, take possession of and operate the Security, Grantor hereby waiving any right Grantor might have to object to or oppose any such possession, and, whether or not Beneficiary has taken possession of the Security, to collect and apply the
Rents, including those past due and unpaid, after payment of all necessary charges and expenses, in reduction of the Indebtedness. The receiver shall have all of the rights and powers permitted under the laws of the State of Texas. Except for damage
caused by Beneficiarys gross negligence or willful misconduct, Grantor hereby waives any claim Grantor may have against Beneficiary for mismanagement of the Security during Beneficiarys operation of the Security under this subparagraph
or as mortgagee in actual possession under applicable statutes.



(g) Beneficiary may, at its option without waiving any Event of Default, pay, perform or observe the same, and all payments made or costs or expenses incurred by Beneficiary in connection therewith shall be secured
hereby and shall be, without demand, immediately repaid by Grantor to Beneficiary with interest thereon at the Default Rate hereunder. Beneficiary shall be the sole judge of the necessity for any such actions and of the amounts to be paid.
Beneficiary is hereby empowered to enter and to authorize others to enter upon the Security or any part thereof for the purpose of performing or observing any such defaulted term, covenant or condition without hereby becoming liable to Grantor or
any person in possession holding under Grantor.



(h) Apply against the Indebtedness in such order, as Beneficiary shall determine any funds held for the benefit of Grantor in escrow by Beneficiary or by any third-party escrow agent under any of the Loan Documents, including, without
limitation, any funds held under the escrow established pursuant to Section 5 of this Deed of Trust.





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(i) Upon any foreclosure sale, Beneficiary may bid for and purchase the Security and
shall be entitled to apply all or any part of the Indebtedness as a credit to the purchase price. In the event of any sale of the Security by foreclosure, through judicial proceedings, by advertisement, by power of sale, or otherwise, the proceeds
of any such sale which are applied in accordance with this Deed of Trust shall be applied in the following order to: (i) all expenses incurred for the collection of the Indebtedness and the foreclosure of this Deed of Trust, including reasonable
compensation to Trustee and Beneficiary, their agents and attorneys; (ii) all sums expended or incurred by Beneficiary and/or Trustee directly or indirectly in carrying out the terms, covenants and agreements of the Note or notes evidencing the
Indebtedness, of this Deed of Trust and any other Loan Documents, together with interest thereon as therein provided; (iii) all late payment charges, prepayment fees, advances and other amounts due under any of the Loan Documents; (iv) all accrued
and unpaid interest upon the Indebtedness; (v) the unpaid principal amount of the Indebtedness; and (vi) the surplus, if any, to the person or persons legally entitled thereto.



In the event of any acceleration of the Indebtedness pursuant to the first paragraph of this Section, Grantor shall pay to Beneficiary
together with the principal indebtedness and interest thereon an amount equal to the prepayment fee provided for in the Note and such fee shall be included as part of the Indebtedness.



Failure to exercise any option to accelerate in the event of a default or other circumstance permitting the exercise of such option, shall
not constitute a waiver of the default or of the right to exercise such option at a later time, or a waiver of the right to exercise such option in the event of any other default or circumstance specified above.



25. Receiver. If an Event of Default shall have occurred, Beneficiary,
to the maximum extent permitted by law, shall be entitled, as a matter of right, to the appointment of a receiver of the Security, without notice or demand, and without regard to the adequacy of the security for the Indebtedness or the solvency of
Grantor. Grantor hereby irrevocably consents to such appointment and waives notice of any application therefor. Any such receiver or receivers shall have all the usual powers and duties of receivers in like or similar cases and all the powers and
duties of Beneficiary in case of entry and shall continue as such and exercise all such powers until the date of confirmation of sale of the Security, unless such receivership is





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sooner terminated. If an Event of Default shall have occurred, Beneficiary shall also be entitled to become a mortgagee
in possession with all the powers, rights and remedies that a duly appointed receiver would have.



26. Foreclosure of Personalty. Upon the happening of any and every such Event of Default, should Beneficiary elect to cause any of the Security to
be disposed of as personal property because the same is personal property under the applicable laws of the State of Texas, Beneficiary may dispose of all or any part thereof in any manner now or hereafter permitted by the Uniform Commercial Code of
the State of Texas or in accordance with any other remedy provided in law or in equity. Any such disposition may be conducted by an employee or agent of Beneficiary. Both Grantor and Beneficiary shall be eligible to purchase any part or all of such
property at such disposition. Any such disposition may be either public or private as Beneficiary may so elect, in its sole discretion, subject to the provisions of the Uniform Commercial Code of the State of Texas. Beneficiary shall have all of the
rights and remedies of a secured party under the Uniform Commercial Code of the State of Texas. Expenses of retaking, holding, preparing for sale, selling or the like shall include Beneficiarys Attorneys Fees and legal expenses, and upon
the occurrence of any Event of Default, Grantor, upon demand of Beneficiary, shall assemble such personal property and make it available to Beneficiary at a place which is deemed to be reasonably convenient to both Beneficiary and Grantor.
Beneficiary shall give Grantor at least five (5) days prior written notice (or a longer period if then required in accordance with the laws of the State of Texas) of the time and place of any public sale or other disposition of such property
or of the time at or after which any private sale or any other intended disposition is to be made, and if such notice is sent to Grantor, as the same is provided for the mailing of notices herein, it shall constitute reasonable notice to Grantor.



27. Prepayment Premiums. Immediately upon the first
insertion of any advertisement or notice of any such sale, there shall become due and owing by Grantor all expenses incident to such advertisement or notice, all court costs and all expenses incident to any foreclosure proceedings brought under this
Deed of Trust or otherwise in connection with such sale, plus interest thereon at the Default Rate, and no party shall be required to receive only the aggregate Indebtedness then secured hereby unless it is accompanied by a tender of payment of such
expenses, costs, and interest. In partial consideration for Beneficiary agreeing to make the Loan to Grantor, Grantor agrees that upon the occurrence of an Event of Default and acceleration of the Indebtedness secured hereby, any tender of payment
by or on behalf of





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Grantor of the amount necessary to satisfy all of such Indebtedness made at any time before or at any foreclosure sale
shall constitute an evasion of the payment terms of the Note and hereunder, and shall be deemed to be a voluntary prepayment, and such payment, to the extent permitted by law, shall be accompanied by the prepayment fee, or the default prepayment fee
(as appropriate), as provided in the Note, and Beneficiary shall not be obligated to accept any such tender of payment unless such tender of payment includes such prepayment fee, or such default prepayment fee (as applicable).



28. Acceleration Interest. In addition to any late payment charge
which may be due under the Note, Grantor shall pay interest on all sums due hereunder at a rate (the Default Rate) equal to the lesser of (i) the Interest Rate plus three percent (3%) per annum, or (ii) the maximum rate permitted
by law, from and after the first to occur of the following events: (A) Beneficiary sends notice to Grantor that it elects to cause the acceleration of the Indebtedness; (B) a petition under Title 11, United States Code, shall be filed by or against
Grantor or if Grantor shall seek or consent to the appointment of a receiver or trustee for itself or for any of the Security, file a petition seeking relief under the bankruptcy or other similar laws of the United States, any state or any other
jurisdiction, make a general assignment for the benefit of creditors, or be unable to pay its debts as they become due; (C) a court shall enter an order, judgment or decree appointing, with or without the consent of Grantor, a receiver or trustee
for it or for any of the Security or approving a petition filed against Grantor which seeks relief under the bankruptcy or other similar laws of the United States, any state or any other jurisdiction, and any such order, judgment or decree shall
remain in force, undischarged or unstayed, sixty (60) days after it is entered; or (D) if all sums due hereunder are not paid on the Maturity Date (as defined in the Note).



29. Late Charge. In the event any sums of principal, interest and applicable escrow amounts due under the Note, this
Deed of Trust or any other Loan Document, are not paid by Grantor when due, without regard to any cure or grace period, Grantor shall pay to Beneficiary for the month during which such payment is not made when due and for each month or fraction
thereof that such sum remains unpaid, a late charge equal to the lesser of three percent (3%) of such installment or the maximum amount allowed by law, as the reasonable estimate by Beneficiary and Grantor of a fair average compensation for the loss
that may be sustained by Beneficiary due to the failure of Grantor to make timely payments, and such amount shall be secured hereby, provided that such late charge shall not apply to the payment of the entire





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outstanding Indebtedness due on the Maturity Date. Such late charge shall be paid without prejudice to the right of
Beneficiary to collect any other amounts provided to be paid or to declare an Event of Default under this Deed of Trust or any other Loan Document.



30. Waiver of Statutory Rights.



(a) Grantor agrees, to the fullest extent permitted by law, that in an Event of Default on the part of Grantor hereunder, neither Grantor
nor anyone claiming through or under Grantor will set up, claim, or seek to take advantage of any moratorium, reinstatement, forbearance, appraisement, valuation, stay, extension or exemption laws now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this Deed of Trust, or the sale of the Security, or the delivery of possession thereof immediately after such sale to the purchaser at such sale, and Grantor, for itself and all who may at any time claim
through or under it, hereby waives to the fullest extent that it may lawfully do so, the benefit of all such laws, and any and all rights to have the assets subject to the security interest of this Deed of Trust marshaled upon any foreclosure or
sale under the power granted herein and agrees that Beneficiary or any court having jurisdiction to foreclose such lien may sell the Security in part or in its entirety.



(b) TO THE EXTENT NOT PROHIBITED BY LAW, GRANTOR AND BENEFICIARY HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS DEED OF TRUST OR ANY OTHER LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (ORAL OR WRITTEN) OR ACTIONS OF GRANTOR OR BENEFICIARY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BENEFICIARY MAKING THE LOAN SECURED HEREBY.



31. Security Interest. This Deed of Trust shall, as to any equipment and other Personal Property covered hereby, be deemed to constitute a security
agreement, and Grantor, as debtor, hereby grants to Beneficiary, as secured party, a security interest therein pursuant to the Uniform Commercial Code of the State of Texas. Grantor agrees, upon request of Beneficiary, to furnish an inventory of
Personal Property (including the FF&E) owned by Grantor and subject to this Deed of Trust and, upon request by Beneficiary, to execute any supplements





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to this Deed of Trust, any separate security agreement, any financing statements and any continuation statements in order
to include specifically said inventory of Personal Property or otherwise to perfect the security interest granted hereby. Upon any Event of Default, Beneficiary shall have all of the rights and remedies provided in said Code or otherwise provided by
law or by this Deed of Trust, including but not limited to the right to require Grantor to assemble such Personal Property and make it available to Beneficiary at a place to be designated by Beneficiary which is reasonably convenient to both
parties, the right to take possession of the Personal Property with or without demand and with or without process of law and the right to sell and dispose of the same and distribute the proceeds according to law. The parties hereto agree that any
requirement of reasonable notice shall be met if Beneficiary sends such notice to Grantor at least ten (10) days prior to the date of sale, disposition or other event giving rise to the required notice, and that the proceeds of any disposition of
any such Personal Property may be applied by Beneficiary first to the reasonable expenses in connection therewith, including reasonable Attorneys Fees and legal expenses incurred, and then to payment of the Indebtedness. With respect to the
Personal Property that has become so attached to the Real Property that an interest therein arises under the real property law of the State of Texas, this Deed of Trust shall also constitute a financing statement and a fixture filing under the Texas
Uniform Commercial Code. Grantor is the record owner of the Real Property and the addresses of Grantor and Beneficiary are as set forth on the first page of this Deed of Trust. Grantor represents and warrants that it is a registered
organization organized under the laws of the State of Delaware Grantor covenants that it will not alter such registration without the prior written consent of Beneficiary. Grantor further represents and warrants that its name is exactly as set
forth in the signature page of this Deed of Trust. Grantor also covenants that its name shall not be altered without the prior written consent of Beneficiary. Grantor hereby acknowledges and agrees that this Deed of Trust is an authenticated record,
and authorizes the filing of financing statements by Beneficiary without the execution thereof by Grantor.



32. Right of Entry. Beneficiary and Beneficiarys representatives may at all times during normal business hours and with reasonable notice to
Grantor and Manager enter upon the Security and inspect the same, or cause it to be inspected by agents, employees or independent contractors of Beneficiary, and show the same to others, but Beneficiary shall not be obligated to make any such entry
or inspection.





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33. Estoppel Certificate. Grantor, within fifteen (15) days after written request from
Beneficiary, will furnish a signed statement in writing, duly acknowledged, of the amount then due or outstanding hereunder and whether or not any offsets or defenses exist against the Indebtedness, and if so, specifying such offsets and defenses.
Upon request by Beneficiary, Grantor shall exercise any right it may have to request an estoppel certificate from any or all of the tenants on the Security within ten (10) days following Beneficiarys request.



34. Annual Statements. Grantor will furnish Beneficiary with the
following financial statements and information, all of which reports will be in hard copy and electronic format:



(a) within forty-five (45) days after the end of each calendar quarter, an unaudited balance sheet and a statement of revenues and
expenses for such quarter and year-to-date;



(b) within ninety (90) days after the end of each calendar year, (a) a reviewed balance sheet and (b) a statement of revenues and expenses for the Real Property and Grantor, certified as true and correct by the chief financial officer of
the general partner of Grantor;



(c) Within
one hundred twenty (120) days after the end of each calendar year, annual capital expenditure summaries for the Real Property; and



(d) Such other financial information as Beneficiary may reasonably request in writing.



In addition to the regularly scheduled reports required above, Grantor agrees
to provide Beneficiary within five (5) Business Days after a written request therefor, a balance sheet and year-to-date operating statements for the Real Property certified by the chief financial officer of the general partner of Grantor. Grantor
also agrees to reasonably cooperate with Beneficiary and Beneficiarys loan servicer in providing information and access to the Real Property in connection with the annual inspection of the Real Property, or such other inspections as
Beneficiary may reasonably require.



Notwithstanding the
provisions of subsections (a) and (b) above, Beneficiary agrees that subsection (b) above shall be waived by Beneficiary, provided that Beneficiary shall retain the right, in its sole discretion and any time and from time to reinstate the
requirements of subsection (b) by written notice to Grantor, effective upon receipt by Grantor of such notice.





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Grantor acknowledges that Beneficiary may sell, transfer or assign the Loan, or any interest therein
(whether by sale of the entire Loan, the issuance of participation certificates in private unrated transactions, or in connection with a securitization of the Loan individually or as part of a pool of loans in a public or private rated transaction,
or otherwise). In connection therewith, Grantor agrees that Beneficiary shall be entitled to disclose, as Beneficiary may deem necessary or desirable, to any and all investors, purchasers, transferees, servicers, participants, investors, rating
agencies or organizations maintaining databases on the underwriting and performance of commercial mortgage loans, all documents and information which Beneficiary has or may hereafter acquire relating to the Loan, whether furnished by Grantor or any
guarantor or indemnitor.



If Grantor omits to prepare and
deliver promptly any report required by this Section, and such failure continues for thirty (30) days after written notice thereof, Beneficiary may elect, in addition to exercising any remedy for an Event of Default as provided for in this Deed of
Trust, to make an audit of all books and records of Grantor and its beneficial owners (but excluding Highland Hospitality Corporation), including their bank accounts, which in any way pertain to the Security, and to prepare the statement or
statements which Grantor failed to procure and deliver. Such audit shall be made and such statements shall be prepared by an independent certified public accountant to be selected by Beneficiary. Grantor shall pay all expenses of the audit and other
services, which expenses shall be secured hereby as part of the Indebtedness and shall be immediately due and payable with interest thereon at the Default Rate.



Beneficiary shall afford any information received pursuant to this Section 34 the same degree of confidentiality that Beneficiary affords
similar information proprietary to Beneficiary; provided, however, that Beneficiary does not in any way warrant or represent that such information received from Grantor will remain confidential, and, provided further, that Beneficiary shall have the
unconditional right to disclose, as necessary, any such information in the event Beneficiary sells, transfers, conveys, or assigns this Deed of Trust or any portion of the Indebtedness.





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35. Rights Cumulative. Each right and remedy of Beneficiary under this Deed of Trust, the Note and
the other Loan Documents, shall be in addition to every other right and remedy of Beneficiary and such rights and remedies may be enforced separately, successively and in any combination and order.



36. Subrogation. To the extent that proceeds of the Indebtedness are
used to pay any outstanding lien, charge or encumbrance affecting the Security, and such proceeds have been advanced by Beneficiary at Grantors request, Beneficiary shall be subrogated to all rights, interest and liens owned or held by any
owner or holder of such outstanding liens, charges and encumbrances, irrespective of whether such liens, charges or encumbrances are released of record; provided, however, that the terms and provisions hereof shall govern the rights and remedies of
Beneficiary and shall supersede the terms, provisions, rights, and remedies under the lien or liens to which Beneficiary is subrogated hereunder.



37. No Waiver. Any failure by Beneficiary to insist upon the strict performance by Grantor of any of the terms and provisions hereof shall not be
deemed to be a waiver of any of the terms and provisions hereof, and Beneficiary, notwithstanding any such failure, shall have the right thereafter to insist upon the strict performance by Grantor of any and all of the terms and provisions hereof to
be performed by Grantor.



38. Deed of Trust Extension.
The lien hereof shall remain in full force and effect during any postponement or extension of the time of payment of the Indebtedness, or of any part thereof, and any number of extensions or modifications hereof, or any additional notes taken by
Beneficiary, shall not affect the lien hereof or the liability of Grantor or of any subsequent obligor to pay the Indebtedness unless and until such lien or liability be expressly released in writing by Beneficiary.



39. Indemnification. Grantor shall indemnify and hold Beneficiary
harmless from and against all obligations, liabilities, losses, costs, expenses, fines, penalties or damages (including Attorneys Fees) which Beneficiary may incur by reason of this Deed of Trust or with regard to the Security prior to such
time as Beneficiary takes actual physical possession of and manages and operates the Real Property after an Event of Default, except for such claims that are caused by the gross negligence or willful misconduct of Beneficiary or the escrow holder
under any escrow agreements. Grantor shall defend Beneficiary against any claim or litigation involving Beneficiary for the same, and should Beneficiary incur such obligation, liability, loss,





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cost, expense, fine, penalty or damage, then Grantor shall reimburse Beneficiary upon demand. Any amount payable to
Beneficiary under this provision shall be secured hereby and, if not paid within five (5) days following demand therefor, shall bear interest at the Default Rate.



40. Nonrecourse. Except as provided in this Section 40 and in Section 16 of the Note, notwithstanding anything
else to the contrary contained herein or in any of the other Loan Documents, no judgment for the repayment of the indebtedness evidenced by the Note or in any action to foreclose this Deed of Trust or to collect any amount payable under the Note or
the other Loan Documents or for the performance or discharge of any covenants, obligations or undertakings of Grantor will be satisfied out of the personal assets of Grantor or of any holders of beneficial interest in Grantor. Beneficiarys
sole recourse for such judgment(s) shall be against the Real Property and other collateral as provided pursuant to this Deed of Trust and any of the other Loan Documents. The foregoing limitation on liability shall not apply, and Grantor shall be
personally liable, for all damages and losses incurred by Beneficiary and any equitable relief as a court may award for the following acts or omissions, to the extent described:



|      |  |                                                                                                                                                                                                                                                                                                            |  |                                                                                                                                                                                                                
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  | Act or Omission                                                                                                                                                                                                                                                                                            |  | Liability                                                                                                                                                                                                      
|(i)   |  | Grantor misapplies any Condemnation (defined in Section 9 of this Deed of Trust) awards or insurance proceeds attributable to the Real Property,                                                                                                                                                           |  | To the extent of such misapplication;                                                                                                                                                                          
|      |  |                                                                                                                                                                                                                                                                                                           
|(ii)  |  | Grantor misapplies any security deposits or reserves attributable to the Real Property,                                                                                                                                                                                                                    |  | To the extent of such misapplication;                                                                                                                                                                          
|      |  |                                                                                                                                                                                                                                                                                                           
|(iii) |  | Grantor collects rents in advance in violation of any covenant under the Loan Documents,                                                                                                                                                                                                                   |  | To the extent of such rents collected in advance;                                                                                                                                                              
|      |  |                                                                                                                                                                                                                                                                                                           
|(iv)  |  | Grantor commits any fraud, misrepresentation or waste,                                                                                                                                                                                                                                                     |  | To the extent of any remedies available at law or in equity;                                                                                                                                                   
|      |  |                                                                                                                                                                                                                                                                                                           
|(v)   |  | Gross revenues from the Real Property are sufficient to pay any portion of the indebtedness, operating and maintenance expenses, insurance premiums deposits into a reserve or escrow account, or
other sums required by the Loan Documents, and Grantor fails to make such payments or deposits when due, |  | To the extent of any funds diverted from such payments or expenses (during the twelve (12) months prior to Beneficiarys notice of acceleration through the date Beneficiary takes title to
the Real Property);





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|       |  |                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  | Act or Omission                                                                                                                                                                                                                                                          |  | Liability                                                                                                                                                                                                                                                                                                                                                                                                                      
|(vi)   |  | Grantor enters into any separate guarantee and/orindemnification agreement(s) and/or master lease(s) in favorof Beneficiary, in addition to the EnvironmentalIndemnification
Agreement, which Grantor has concurrentlyentered into,                                      |  | As provided in such guarantee, indemnification or masterlease;                                                                                                                                                                                                                                                                                                                                                                 
|       |  |                                                                                                                                                                                                                                                                         
|(vii)  |  | Grantor fails to pay Real Estate Taxes and other Impositions which are a lien against the Real Property during the period of Grantors ownership,                                                                                                                        |  | To the extent of any unpaid Real Estate Taxes and other Impositions, and any additional interest, penalties or other charges assessed as a result of such non-payment; provided, however, to the
extent Grantor makes escrow deposits for Real Estate Taxes under the Tax Escrow Agreement or Section 5 hereof, Grantor shall have no liability for nonpayment of such Real Estate Taxes, to the extent of such escrowed funds;
|       |  |                                                                                                                                                                                                                                                                         
|(viii) |  | Grantor fails to maintain the levels, coverages and maximum deductibles of insurance required under the Loan Documents, to the extent that a casualty or liability occurs or arises and
insurance proceeds would have been available had such insurance been maintained, |  | In the amount of the loss incurred as the result of such uninsured casualty or uninsured liability.                                                                                                                                                                                                                                                                                                                            



The provisions of this
Section 40 will not affect other remedies available to Beneficiary or Beneficiarys rights in the Real Property. There shall be no limitation, in any event, of Grantors personal liability under, nor on the exercise of any of
Beneficiarys rights under, the Environmental Indemnification Agreement, except as may be expressly set forth therein. Nothing contained in this Section 40 shall be deemed to prejudice the rights of Beneficiary to proceed against any
entity or person whatsoever, including Grantor, with respect to the enforcement of any guarantees, leases, master leases, or similar rights of payment hereafter executed.





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41. Attorneys Fees. Any reference to Attorney Fees,
Attorneys Fees, or Attorneys Fees in this document includes but is not limited to both the reasonable fees, charges and costs incurred by Beneficiary or Trustee through Beneficiarys or
Trustees retention of outside legal counsel and the allocable reasonable fees, costs and charges for services rendered by Beneficiarys in-house counsel. Any reference to Attorney Fees, Attorneys Fees, or
Attorneys Fees shall also include but not be limited to those reasonable attorneys or legal fees, costs and charges incurred by Beneficiary or Trustee in the collection of any Indebtedness, the enforcement of any obligations
hereunder, the protection of the Security, the foreclosure of this Deed of Trust, the sale of the Security, the defense of actions arising hereunder and the collection, protection or setoff of any claim the Beneficiary may have in a proceeding under
Title 11, United States Code. Attorneys Fees provided for hereunder shall accrue whether or not Beneficiary has provided notice of default or of an intention to exercise its remedies for such default.



42. Administrative Fees. Beneficiary shall have the right to charge
reasonable administrative fees during the Term of the Note as Beneficiary may determine, its reasonable discretion, in connection with any servicing requests made by Grantor requiring Beneficiarys evaluation, preparation and processing of any
such requests not to exceed $5,000.00 in any one matter. Administrative fees shall not be charged for routine servicing matters contemplated by the Loan Documents including, without limitation: processing payments; processing insurance and UCC
continuation documentation; processing escrow draws; review of tenant leases, subordination non-disturbance and attornment agreements and tenant estoppels on standard forms approved by Beneficiary without material modifications. Such administrative
fees shall apply to requests for matters not permitted or contemplated by the Loan Documents, including, without limitation requests for transfers or assignments, requests for partial releases; requests for review of new easements and loan
modifications and to requests, which while contemplated by the Loan Documents, because of the nature of the request, will require significantly more time than an institutional lender, acting reasonably, would contemplate for such request (including
without limitation, requests for the approval of tenant leases, tenant estoppels and tenant subordination, non-disturbance and attornment agreements which contain material differences from Beneficiarys standard forms). Beneficiary shall also
be entitled to





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reimbursement for professional fees it incurs for such administration, including without limitation, those of architects,
engineers and Attorneys Fees, provided that Beneficiary shall be entitled to reimbursement of Attorneys Fees for either in-house counsel or outside counsel, but not both.



43. Trustees Costs and Expenses; Governmental Charges. Grantor shall pay all costs, fees and expenses of
Trustee, its agents and counsel in connection with the performance of its duties hereunder, including without limitation the cost of any trustees sale guaranty or other title insurance coverage ordered in connection with any foreclosure
proceedings hereunder, and shall pay all taxes (except federal and state income taxes) or other governmental charges or impositions imposed by any governmental authority on Trustee or Beneficiary by reason of their interest in the Loan Documents.



44. Protection of Security; Costs and Expenses. Grantor
shall appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary, and shall pay all costs and expenses, including without limitation cost of evidence of title and reasonable
Attorneys Fees, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this Deed of Trust or to enforce or establish any other rights or remedies of Beneficiary
hereunder. If Grantor fails to perform any of the covenants or agreements contained in this Deed of Trust within any applicable notice and cure periods provided for in this Deed of Trust, or if any action or proceeding is commenced which affects
Beneficiarys interest in the Security or any part thereof, including, but not limited to, eminent domain, code enforcement, or proceedings of any nature whatsoever under any federal or state law, whether now existing or hereafter enacted or
amended, relating to bankruptcy, insolvency, arrangement, reorganization or other form of debtor relief, or to a decedent, then after compliance with the applicable notice and cure provisions provided for in this Deed of Trust, Beneficiary may, but
without obligation to do so and without further notice to or demand upon Grantor and without releasing Grantor from any obligation hereunder, make such appearances, disburse such sums and take such action as Beneficiary deems necessary or
appropriate to protect Beneficiarys interest, including, but not limited to, disbursement of reasonable Attorneys Fees, entry upon the Security to make repairs or take other action to protect the security hereof, and payment, purchase,
contest or compromise of any encumbrance, charge or lien which in the judgment of Beneficiary appears to be prior or superior hereto. Grantor further agrees to pay all reasonable expenses of Beneficiary and Trustee (including without limitation
Attorneys Fees and disbursements)





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(i) incident to the protection of the rights of Beneficiary hereunder, or (ii) incident to the enforcement or collection
of payment of the Indebtedness, whether by judicial or non-judicial proceedings, or in connection with any bankruptcy, insolvency, arrangement, reorganization or other debtor relief proceeding of Grantor, or otherwise, or (iii) in connection with
any title insurance coverage ordered in connection with any foreclosure proceedings hereunder. Grantor also agrees to pay all taxes (except federal and state income taxes) and other governmental charges or impositions imposed by any governmental
authority on Beneficiary by reason of their interest in the Loan Documents. Any amounts disbursed by Beneficiary pursuant to this Section 44 shall be additional indebtedness of Grantor secured by the Loan Documents as of the date of
disbursement and shall bear interest at the Default Rate. All such amounts shall be payable by Grantor immediately without demand. Nothing contained in this Section shall be construed to require Beneficiary to incur any expense, make any appearance,
or take any other action.



45. Notices. Any notice,
demand, request, statement or consent made hereunder shall be in writing, signed by the party giving such notice, request, demand, statement, or consent, and shall be deemed to have been properly given when either delivered personally, delivered to
a reputable overnight delivery service providing a receipt or deposited in the United States mail, postage prepaid and registered or certified return receipt requested, at the address set forth below, or at such other address within the continental
United States of America as may have theretofore have been designed in writing. The effective date of any notice given as aforesaid shall be the date of personal service, one (1) Business Day after delivery to such overnight delivery service, or
three (3) Business Days after being deposited in the United States Mail, whichever is applicable. For purposes hereof, the addresses are as follows:



|                   |  |                                           
|------------------ |  | ------------------------------------------
|If to Beneficiary: |  | Connecticut General Life Insurance Company
|                   |  | c/o CIGNA Realty Investors                
|                   |  | 280 Trumbull Street                       
|                   |  | Hartford, Connecticut 06103               
|                   |  | Attn: Debt Asset Management, H-11G        
|                   | 
|with a copy to:    |  | CIGNA Realty Investors                    
|                   |  | 280 Trumbull Street                       
|                   |  | Hartford, Connecticut 06103               
|                   |  | Attn: Real Estate Law, H-16C              





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|                         |  |                                     
|------------------------ |  | ------------------------------------
|If to Grantor:           |  | HH DFW Hotel Associates, L.P.       
|                         |  | c/o Highland Hospitality Corporation
|                         |  | 8405 Greensboro Drive, Suite 500    
|                         |  | McLean, Virginia 22102              
|                         |  | Attention: General Counsel          
|                         | 
|with a courtesy copy to: |  | Highland Hospitality Corporation    
|                         |  | 8405 Greensboro Drive, Suite 500    
|                         |  | McLean, Virginia 22102              
|                         |  | Attention: Chief Financial Officer  



Notwithstanding the foregoing
agreement to provide a courtesy copy to Grantors counsel, such copy shall be a courtesy copy only, and failure to provide such courtesy copy shall have absolutely no effect or entitle Grantor to any remedy whatsoever. Any notice duly given to
Grantor as provided above shall be effective whether or not the courtesy copy was given to Grantors counsel.



46. Release. Upon the satisfaction in full of the Indebtedness, Beneficiary shall promptly release of record the Security from the lien hereof and
shall surrender this Deed of Trust and the Assignment of Rents and Leases and all notes evidencing indebtedness secured by this Deed of Trust to Grantor. Grantor shall pay all costs of recordation.



47. Applicable Law. The provisions hereof shall be construed in
accordance with the laws of the State of Texas, without giving effect to any principles of conflicts of laws.



48. Tenancy at Will. In the event of a trustees sale hereunder, if at the time of such sale Grantor occupies the portion of the Security so
sold or any part thereof, Grantor shall immediately become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day to day, terminable at the will of either tenant or landlord, at a rental per day based upon the value of
the portion of the Security so occupied, such rental to be due and payable daily to the purchaser. An action of forcible detainer shall lie if the tenant holds over after a demand in writing for possession of such Security.



49. Substitution of Trustee. Beneficiary may remove Trustee at any
time or from time to time for any reason (with or without cause) and appoint a successor trustee, and upon such appointment, all powers, rights, duties and authority of Trustee, as aforesaid, shall thereupon become vested in such successor. Such
substitute trustee shall be appointed by written instrument, which appointment may be executed by any authorized agent of Beneficiary or in any other manner permitted by applicable law.





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50. Indemnification of Trustee. Except for gross negligence or willful misconduct, Trustee shall
not be liable for any act or omission or error of judgment. Trustee may rely on any document believed by him in good faith to be genuine. All money received by Trustee shall, until used or applied as herein provided, be held in trust, but need not
be segregated (except to the extent required by law), and Trustee shall not be liable for interest thereon. Grantor hereby indemnifies Trustee against all liability and expenses, which he may incur in the performance of his duties hereunder.



51. Other. If more than one party is named as Trustee
herein, any one party may perform any obligations or duties of the Trustee herein without the joinder of any other party named herein. Beneficiary may exercise any and all other rights, remedies and recourse granted under the Loan Documents now or
hereafter existing in equity or at law for the protection and preservation of the Security.



52. Invalidity. If any provision of this Deed of Trust shall be held invalid or unenforceable, the same shall not affect in any respect whatsoever the validity of the remainder of this Deed of Trust, except
that if such provision relates to the payment of principal or interest, then the Beneficiary may, at its option, declare the Indebtedness due and payable upon one hundred (120) days prior written notice to Grantor and, provided there exists no Event
of Default hereunder, without prepayment fee.



53.
Captions. The captions in this instrument are inserted only as a matter of convenience and for reference, and are not and shall not be deemed to be any part hereof.



54. Modifications. This Deed of Trust may not be changed or terminated except in writing signed by both parties. The
provisions of this Deed of Trust shall extend and be applicable to all renewals, amendments, extensions, consolidations, and modifications of the other Loan Documents, and any and all references herein to the Loan Documents shall be deemed to
include any such renewals, amendments, extensions, consolidations or modifications thereof.





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55. Bind and Inure. The provisions of this Deed of Trust shall be binding on the Grantor and its
heirs, successors and assigns, and any subsequent owners of the Security. The covenants of Grantor herein shall run with the land, and this Deed of Trust and all of the covenants herein contained shall inure to the benefit of the Beneficiary, its
successors and assigns.



56. Replacement of Note. Upon
receipt of evidence reasonably satisfactory to Grantor of the loss, theft, destruction or mutilation of the Note, and in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to Grantor or,
in the case of any such mutilation, upon surrender and cancellation of the Note, Grantor will execute and deliver, in lieu thereof, a replacement Note, identical in form and substance to the Note and dated as of the date of the Note and upon such
execution and delivery all references in this Deed of Trust to the Note shall be deemed to refer to such replacement Note.



57. Time of the Essence. Time is of the essence with respect to each and every covenant, agreement and obligation of Grantor under this Deed of
Trust, the Note and any of the other Loan Documents.



58.
Business Day. The terms Business Day and Business Days as used in this Deed of Trust shall mean any calendar day other than a Saturday, a Sunday or a federal holiday on which the U.S. Postal
Services offices are closed for business in one or more of McLean, Virginia or Hartford, Connecticut.



59. Rights and Remedies of Sureties. Grantor waives any right or remedy, which Grantor may have or be able to assert pursuant to Chapter 34 of the
Business and Commerce Code of the State of Texas pertaining to the rights and remedies of sureties.



60. Authority of Beneficiary. As Operating Tenant is not a maker of the Note, Operating Tenant hereby authorizes Beneficiary to perform any of the
following acts at any time and from time to time, all without notice to Operating Tenant and without affecting Beneficiarys rights or Operating Tenants obligations under this Deed of Trust: (i) alter any terms of the Loan Documents,
including renewing, compromising, extending or accelerating, or otherwise changing the time for payment of, or increasing or decreasing the rate of interest under, the Note, (ii) take and hold security for the Loan Documents, accept additional or
substituted security for the Loan Documents, and subordinate, exchange, enforce, waive, release,





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compromise, fail to perfect, sell or otherwise dispose of any such security, (iii) apply any security now or later held
for the Loan Documents in any order that Beneficiary in its sole discretion may choose, and direct the order and manner of any sale of all or any part of it and bid at any such sale, (iv) release any obligor under the Note or any of the other Loan
Documents, including without limitation Borrower (each an Obligor) of its liability under any Loan Document, and/or (v) substitute, add or release any one or more guarantors or endorsers of the Loan Documents.



61. Waivers of Operating Tenant. Operating Tenant absolutely,
unconditionally, knowingly, and expressly waives:



(a) notice of acceptance hereof; (2) notice of any loans or other financial accommodations made or extended under this Deed of Trust and the Loan Documents to which it is a party or the creation or existence of any Indebtedness; (3) notice
of the amount of the Indebtedness, subject, however, to the Operating Tenants right to make inquiry of the Beneficiary to ascertain the amount of the Indebtedness at any reasonable time; (4) notice of any adverse change in the financial
condition of any Obligor or of any other fact that might increase Operating Tenants risk hereunder; (5) notice of presentment for payment, demand, protest, and notice thereof as to any instruments among the Loan Documents to which the
Operating Tenant is a party; (6) notice of any Event of Default; and (7) all other notices (except if such notice is specifically required to be given to Operating Tenant hereunder or under the Loan Documents to which the Operating Tenant is a
party) and demands to which Operating Tenant might otherwise be entitled.



(b) its right to require the Beneficiary to institute suit against, or to exhaust any rights and remedies which the Beneficiary has or may have against, any Obligor or any third party, or against any collateral for
the Indebtedness provided by any Obligor or any third party. Operating Tenant further waives any defense arising by reason of any disability or other defense (other than the defense that the Indebtedness shall have been fully and finally performed
and indefeasibly paid) of any Obligor or by reason of the cessation from any cause whatsoever of the liability of any Obligor in respect thereof.



(c) (1) any rights to assert against Beneficiary any defense (legal or equitable), set-off, counterclaim, or claim which the Operating
Tenant may now or at any





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time hereafter have against any Obligor or any other party liable to the Beneficiary; (2) any defense,
set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Indebtedness or any security therefor; (3) any defense the
Operating Tenant has to performance hereunder arising by reason of: the impairment or suspension of the Beneficiarys rights or remedies against any Obligor; the alteration by the Beneficiary of the Indebtedness; any discharge of any
Obligors obligations to the Beneficiary by operation of law as a result of the Beneficiarys intervention or omission; or the acceptance by the Beneficiary of anything in partial satisfaction of the Indebtedness; and (4) the benefit of
any statute of limitations affecting Grantors liability hereunder or the enforcement thereof, and any act which shall defer or delay the operation of any statute of limitations applicable to the Indebtedness shall similarly operate to defer or
delay the operation of such statute of limitations applicable to Grantors liability hereunder.



Notwithstanding anything to the contrary in this Deed of Trust, except with respect to the obligations of Grantor set forth in Sections 4 (Impositions), 7 (Insurance), 40 (Nonrecourse), and this Section 61
(Waivers), for all purposes Operating Tenant shall not have any responsibility to perform or provide any obligation, covenant, representation or warranty under this Deed of Trust, except and only to the extent Beneficiary has accelerated the
obligations secured by the Deed of Trust and Beneficiary reasonably determines that Operating Tenants performance of an such an excluded obligation or covenant is required in order for Beneficiary to realize upon all or any portion of the
Security. Operating Tenants obligations under Section 40 shall be limited to acts or omissions which arise in connection with Operating Tenants duties under the Operating Lease. So long as no Event of Default shall have occurred and be
continuing, nothing contained in this Section shall be construed so as to negatively affect Highland Hospitality Corporations continued qualification as a real estate investment trust under the Internal Revenue Code.



62. Obligors Financial Condition. Operating Tenant assumes full
responsibility for keeping informed of Obligors financial condition and business operations and all other circumstances affecting Obligors ability to pay and perform its obligations to Beneficiary, and agrees that Beneficiary shall have
no duty to disclose to Operating Tenant any information which Beneficiary may receive about Obligors financial condition, business operations or any other circumstances bearing on Obligors ability to perform.



[SIGNATURES APPEAR ON THE NEXT PAGE]





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IN WITNESS WHEREOF, the Grantor has duly executed this Deed of Trust as a sealed instrument on the day
and year first above written.



GRANTOR:HH DFW HOTEL ASSOCIATES, L.P., a Delaware limited partnershipBy:

HHC Texas GP LLC (fka Sugar Land GP LLC), a Delaware limited liability company, its general partnerBy:

/s/ Tracy M.J. ColdenName:

Tracy M.J. ColdenTitle:

Vice PresidentOPERATING TENANT:HHC TRS OP LLC, a Delaware limited liability companyBy:

/s/ Tracy M.J. ColdenName:

Tracy M.J. ColdenTitle:

Vice President




|                        |  |  
|----------------------- |  | -
|STATE OF    Maryland    |  | §
|                        |  | §
|COUNTY OF    Montgomery |  | §



This instrument was
acknowledged before me on September 8, 2004, by Tracy M.J. Colden, Vice President of HHC Texas GP LLC (fka Sugar Land GP LLC), a Delaware limited liability company, general partner of HH DFW HOTEL ASSOCIATES, L.P., a Delaware limited
partnership, on behalf of said limited liability company and limited partnership.



|                       |  |                                                    
|---------------------- |  | ---------------------------------------------------
|( S E A L )            |  | /s/ Sharon A. Rowe                                 
|                       |  | Notary Public in and for the above County and State
|                       | 
|My Commission Expires: |  | Print Name of Notary:                              
|                       | 
|10/02/04               |  | Sharon A. Rowe                                     





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|                     |  |  
|-------------------- |  | -
|STATE OF Maryland    |  | §
|                     |  | §
|COUNTY OF Montgomery |  | §



This instrument was
acknowledged before me on September 8, 2004, by Tracy M.J. Colden, Vice President of HHC TRS OP LLC, a Delaware limited liability company, on behalf of said limited liability company.



|                       |  |                                                    
|---------------------- |  | ---------------------------------------------------
|( S E A L )            |  | /s/ Sharon A. Rowe                                 
|                       |  | Notary Public in and for the above County and State
|                       | 
|My Commission Expires: |  | Print Name of Notary:                              
|                       | 
|10/02/04               |  | Sharon A. Rowe                                     





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EXHIBIT A

TO

DEED OF TRUST AND SECURITY AGREEMENT



Legal Description



Being a tract of land situated in the Jefferson Tilley Survey, Abstract No. 1474, and being
all of Lot 1, Block H of D.F.W. Freeport, revised First and Second Installment, an addition to the City of Irving according to the revised plat recorded in Volume 80009, Page 2532, Map Records, Dallas County, Texas, and being more particularly
described as follows:



BEGINNING at a 5/8-inch iron rod with GSES, INC.,
RPLS 4804 cap found at the most southerly point on a corner clip at the intersection of the southwest line of Royal Lane (a 100 foot R.O.W.) and the southeast line of Freeport Parkway (a 100 foot R.O.W.);



THENCE, along the southwest line of said Royal Lane the following:



South 35 degrees 40 minutes 50 seconds East, a distance of 786.15 feet to a 5/8-inch iron
rod with GSES, INC., RPLS 4804 cap found for corner being the point of curvature to the left;



Along said curve to the left, having a central angle of 29 degrees 41 minutes 03 seconds, a radius of 780.00 feet, and an arc length of 404.12 feet to a 1/2-inch iron rod found for corner situated in the north line of
Gentry Road (a 40 foot R.O.W.);



THENCE, North 89 degrees 49 minutes 30 seconds
West, departing said Royal Lane and along the north line of said Gentry Road, a distance of 591.37 feet to a 1/2-inch iron rod found for corner situated in the northeast line of State Highway No. 114 (a variable width R.O.W.);



THENCE, along the northeast line of State Highway 114 the following;



North 73 degrees 05 minutes 57 seconds West, a distance of 134.40 feet to a 5/8-inch iron rod
with GSES, INC., RPLS 4804 cap found for corner;



North 59 degrees
52 minutes 40 seconds West, a distance of 470.70 feet to a 5/8-inch iron rod with GSES, INC., RPLS 4804 cap found for corner;



North 28 degrees 15 minutes 22 seconds West, a distance of 113.10 feet to a 5/8-inch iron rod with GSES, INC., RPLS 4804 cap found for corner;



North 00 degrees 14 minutes 00 seconds East, a distance of 46.44 feet to a 5/8-inch iron rod
with GSES, INC., RPLS 4804 cap found for corner situated in the southeast line of said Freeport Parkway;



THENCE, along the southeast line of said Freeport Parkway the following:



North 30 degrees 03 minutes 00 seconds East, a distance of 174.49 feet to a 5/8-inch iron rod with GSES, INC., RPLS 4804 cap found for corner, being the point
of curvature to the right;





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Along said curve to the right, having a central angle of 24 degrees 16 minutes 10 seconds, a radius 974.67 feet, and an
arc length of 412.85 feet to a 5/8-inch iron rod with GSES, INC., RPLS 4804 cap found for corner;



North 54 degrees 19 minutes 10 seconds East, a distance of 32.32 feet to a 5/8-inch iron rod with GSES, INC., RPLS 4804 cap found for corner;



South 80 degrees 40 minutes 50 seconds East, a distance of 25.00 feet to the POINT OF BEGINNING and containing 11.5787 acres or 504,367
square feet of land, more or less.



The property described and shown hereon is
the same property described in LandAmerica Title Insurance Company title commitment no. 121101614 dated August 27, 2004.