exv10w27



 






Exhibit 10.27




EXECUTION COPY




REVOLVING CREDIT LOAN AND SECURITY AGREEMENT




among




ASHFORD FINANCE SUBSIDIARY II LP,

as Borrower,




The Several Lenders

from Time to Time Parties Hereto,




and




UBS REAL ESTATE INVESTMENTS INC.,

as the Administrative Agent




Dated December 23, 2005




 









 





Table of Contents




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 1.	 	DEFINITIONS
	 	 	1	 
	 	 	 
	 	 	 	 
	SECTION 2.	 	AMOUNT AND TERMS OF REVOLVING CREDIT
	 	 	29	 
	 	 	 
	 	 	 	 
	COMMITMENTS	 	 	29	 
	 	 	 
	 	 	 	 
	2.1.	 	Revolving Credit Commitments
	 	 	29	 
	2.2.	 	Notes
	 	 	30	 
	2.3.	 	Advance Amounts
	 	 	30	 
	2.4.	 	Procedure for Borrowing
	 	 	30	 
	2.5.	 	Termination of Revolving Credit Commitments
	 	 	32	 
	2.6.	 	Maturity
	 	 	33	 
	2.7.	 	Fees
	 	 	33	 
	2.8.	 	Adjustment to Maximum Credit
	 	 	33	 
	 	 	 
	 	 	 	 
	SECTION 3.	 	GENERAL PROVISIONS APPLICABLE TO LOANS
	 	 	33	 
	 	 	 
	 	 	 	 
	3.1.	 	Interest Rates and Payment Dates
	 	 	33	 
	3.2.	 	Optional Prepayments
	 	 	34	 
	3.3.	 	Mandatory Prepayments
	 	 	35	 
	3.4.	 	Prepayment Amounts
	 	 	38	 
	3.5.	 	Computation of Interest and Fees
	 	 	38	 
	3.6.	 	Pro Rata Treatment and Payments
	 	 	39	 
	3.7.	 	Illegality
	 	 	40	 
	3.8.	 	Inability to Determine Interest Rate
	 	 	40	 
	3.9.	 	Legal Requirements
	 	 	40	 
	3.10.	 	Taxes
	 	 	42	 
	3.11.	 	Indemnity
	 	 	44	 
	3.12.	 	Lending Offices; Change of Lending Office
	 	 	44	 
	3.13.	 	Cash Management
	 	 	45	 
	 	 	 
	 	 	 	 
	SECTION 4.	 	COLLATERAL SECURITY
	 	 	47	 
	 	 	 
	 	 	 	 
	4.1.	 	Collateral; Security Interest
	 	 	47	 
	4.2.	 	Security Agreement; Financing Statements
	 	 	48	 
	4.3.	 	Administrative Agent’s Appointment as Attorney-in-Fact
	 	 	49	 
	4.4.	 	Performance by Administrative Agent of Borrower’s Obligations
	 	 	50	 
	4.5.	 	Limitation on Duties Regarding Preservation of Collateral
	 	 	50	 
	4.6.	 	Powers Coupled with an Interest
	 	 	50	 
	4.7.	 	Release of Security Interest
	 	 	51	 
	4.8.	 	Substitution of Assets
	 	 	53	 






i









 





Table of Contents
(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 5.	 	REPRESENTATIONS AND WARRANTIES
	 	 	54	 
	 	 	 
	 	 	 	 
	5.1.	 	Financial Information; Fiscal Year
	 	 	54	 
	5.2.	 	Legal Name
	 	 	55	 
	5.3.	 	Organizational Identification Number
	 	 	55	 
	5.4.	 	Chief Executive Office; Jurisdiction of Organization
	 	 	55	 
	5.5.	 	Location of Books and Records
	 	 	55	 
	5.6.	 	Existence; Compliance with Law
	 	 	55	 
	5.7.	 	Proceedings
	 	 	55	 
	5.8.	 	No Conflicts
	 	 	55	 
	5.9.	 	Litigation
	 	 	55	 
	5.10.	 	Agreements
	 	 	56	 
	5.11.	 	Consents
	 	 	56	 
	5.12.	 	Title
	 	 	56	 
	5.13.	 	Taxes
	 	 	56	 
	5.14.	 	Federal Regulations
	 	 	57	 
	5.15.	 	ERISA
	 	 	57	 
	5.16.	 	Compliance
	 	 	57	 
	5.17.	 	Investment Company Act; Other Regulations
	 	 	57	 
	5.18.	 	Enforceability
	 	 	57	 
	5.19.	 	Insurance
	 	 	57	 
	5.20.	 	Use of Property
	 	 	58	 
	5.21.	 	Filing and Recording Taxes
	 	 	58	 
	5.22.	 	[Intentionally Omitted]
	 	 	58	 
	5.23.	 	Organizational Structure
	 	 	58	 
	5.24.	 	Guarantor Assets
	 	 	58	 
	5.25.	 	Accounts
	 	 	58	 
	5.26.	 	No Other Financing
	 	 	59	 
	5.27.	 	Full and Accurate Disclosure
	 	 	59	 
	5.28.	 	Other Obligations and Liabilities
	 	 	59	 
	5.29.	 	Solvency
	 	 	59	 
	5.30.	 	Single Purpose
	 	 	60	 
	5.31.	 	Pledged Assets
	 	 	62	 
	5.32.	 	Ashford REIT Financial Status
	 	 	64	 
	 	 	 
	 	 	 	 
	SECTION 6.	 	CONDITIONS PRECEDENT
	 	 	64	 
	 	 	 
	 	 	 	 
	6.1.	 	Conditions to Agreement and Initial Loan
	 	 	64	 
	6.2.	 	Conditions to Each Loan
	 	 	67	 
	 	 	 
	 	 	 	 
	SECTION 7.	 	AFFIRMATIVE COVENANTS
	 	 	74	 
	 	 	 
	 	 	 	 
	7.1.	 	Existence; Compliance with Legal Requirements
	 	 	74	 






ii









 





Table of Contents
(continued)





	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	7.2.	 	Taxes and Other Claims
	 	 	75	 
	7.3.	 	Perform Loan Documents, Pledged Asset Documents
	 	 	75	 
	7.4.	 	[Intentionally Omitted]
	 	 	75	 
	7.5.	 	Further Assurances
	 	 	75	 
	7.6.	 	Cooperate in Legal Proceedings
	 	 	75	 
	7.7.	 	Financial Reporting
	 	 	76	 
	7.8.	 	Business and Operations
	 	 	77	 
	7.9.	 	Preservation of Pledged Assets
	 	 	77	 
	7.10.	 	Title to the Collateral
	 	 	78	 
	7.11.	 	Costs of Enforcement
	 	 	78	 
	7.12.	 	Estoppel Statement
	 	 	78	 
	7.13.	 	Use of Proceeds
	 	 	79	 
	7.14.	 	Maintenance of Properties
	 	 	79	 
	7.15.	 	Delivery of Notices
	 	 	79	 
	7.16.	 	After Acquired Property
	 	 	81	 
	7.17.	 	[Intentionally Omitted]
	 	 	81	 
	7.18.	 	Delivery of Documents Regarding Ownership
	 	 	81	 
	7.19.	 	Attorneys’ Fees and Expenses
	 	 	81	 
	7.20.	 	Insurance
	 	 	82	 
	7.21.	 	Collateral Files; Custodian
	 	 	83	 
	7.22.	 	Collateral Records
	 	 	83	 
	7.23.	 	Collateral File; Pledged Asset Schedule
	 	 	83	 
	7.24.	 	Records
	 	 	84	 
	7.25.	 	Delivery of Servicing Report
	 	 	84	 
	7.26.	 	Borrowing Base Deficiency
	 	 	84	 
	7.27.	 	Patriot Act
	 	 	84	 
	7.28.	 	[Intentionally Omitted]
	 	 	85	 
	7.29.	 	Future Funding Obligations
	 	 	85	 
	7.30.	 	True and Correct Information
	 	 	86	 
	7.31.	 	Environmental Laws
	 	 	86	 
	 	 	 
	 	 	 	 
	SECTION 8.	 	NEGATIVE COVENANTS
	 	 	86	 
	 	 	 
	 	 	 	 
	8.1.	 	Financial Condition Covenants
	 	 	86	 
	8.2.	 	Limitation on Indebtedness
	 	 	87	 
	8.3.	 	Limitation on Liens
	 	 	87	 
	8.4.	 	Transfers of Interests
	 	 	87	 
	8.5.	 	Limitation on Fundamental Changes
	 	 	88	 
	8.6.	 	Changes in Locations, Name, etc
	 	 	88	 
	8.7.	 	Limitation on Transactions with Affiliates
	 	 	88	 
	8.8.	 	Limitation on Changes in Fiscal Year
	 	 	88	 
	8.9.	 	Limitation on Negative Pledge Clauses
	 	 	88	 
	8.10.	 	Limitation on Lines of Business
	 	 	89	 






iii









 






Table of Contents
(continued)





	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	8.11.	 	ERISA
	 	 	89	 
	8.12.	 	Debt Cancellation
	 	 	89	 
	8.13.	 	Zoning
	 	 	89	 
	8.14.	 	No Joint Assessment
	 	 	89	 
	8.15.	 	Governing Documents
	 	 	89	 
	8.16.	 	Special Purpose
	 	 	89	 
	8.17.	 	Compliance with Restrictive Covenants, Etc
	 	 	89	 
	8.18.	 	Embargoed Person
	 	 	90	 
	8.19.	 	Certain Actions Relating to Pledged Assets
	 	 	90	 
	8.20.	 	Accounting Policies
	 	 	91	 
	8.21.	 	Lienable Work
	 	 	91	 
	8.22.	 	Conversion
	 	 	91	 
	 	 	 
	 	 	 	 
	SECTION 9.	 	DUE DILIGENCE
	 	 	91	 
	 	 	 
	 	 	 	 
	SECTION 10.	 	EVENTS OF DEFAULT
	 	 	92	 
	 	 	 
	 	 	 	 
	10.1.	 	Events of Default
	 	 	92	 
	10.2.	 	UCC Remedies
	 	 	96	 
	10.3.	 	Possession
	 	 	97	 
	10.4.	 	Collections
	 	 	97	 
	10.5.	 	Liquidation
	 	 	97	 
	10.6.	 	Private Sale
	 	 	98	 
	10.7.	 	Costs
	 	 	98	 
	10.8.	 	Remedies Cumulative; Waiver
	 	 	98	 
	10.9.	 	Non-judicial Remedies
	 	 	99	 
	10.10.	 	Appointment of Receiver
	 	 	99	 
	 	 	 
	 	 	 	 
	SECTION 11.	 	THE ADMINISTRATIVE AGENT
	 	 	99	 
	 	 	 
	 	 	 	 
	11.1.	 	Appointment of Administrative Agent
	 	 	99	 
	11.2.	 	Delegation of Duties
	 	 	99	 
	11.3.	 	Exculpatory Provisions
	 	 	99	 
	11.4.	 	Reliance by Administrative Agent
	 	 	100	 
	11.5.	 	Notice of Default
	 	 	100	 
	11.6.	 	Non-Reliance on Administrative Agent and Other Lenders
	 	 	100	 
	11.7.	 	Indemnification
	 	 	101	 
	11.8.	 	Administrative Agent in its Individual Capacity
	 	 	101	 
	11.9.	 	Successor Administrative Agent
	 	 	101	 
	11.10.	 	Certain Collateral Matters
	 	 	102	 






iv









 





Table of Contents
(continued)





	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	SECTION 12.	 	INDEMNIFICATION
	 	 	103	 
	 	 	 
	 	 	 	 
	SECTION 13.	 	MISCELLANEOUS
	 	 	104	 
	 	 	 
	 	 	 	 
	13.1.	 	Amendments and Waivers
	 	 	104	 
	13.2.	 	Notices
	 	 	105	 
	13.3.	 	No Waiver; Cumulative Remedies
	 	 	106	 
	13.4.	 	Survival of Representations and Warranties
	 	 	107	 
	13.5.	 	Payment of Expenses and Taxes
	 	 	107	 
	13.6.	 	Successors and Assigns; Participations and Assignments
	 	 	107	 
	13.7.	 	Adjustments; Set-off
	 	 	109	 
	13.8.	 	Brokers and Financial Advisors
	 	 	110	 
	13.9.	 	Servicing
	 	 	110	 
	13.10.	 	Preferences
	 	 	111	 
	13.11.	 	Prior Agreements
	 	 	111	 
	13.12.	 	Counterparts
	 	 	111	 
	13.13.	 	Severability
	 	 	111	 
	13.14.	 	Integration
	 	 	111	 
	13.15.	 	Governing Law
	 	 	111	 
	13.16.	 	Acknowledgements
	 	 	113	 
	13.17.	 	Waivers of Jury Trial
	 	 	113	 
	13.18.	 	Discretion
	 	 	113	 
	[NO FURTHER TEXT ON THIS PAGE]	 	 	115	 







V









 








	 	 	 
	Schedules:	 	 
	Schedule 1:

	 	Lenders, Commitments and Applicable Lending Offices
	Schedule 2:

	 	Advance Rates and Applicable Spreads
	Schedule 3:

	 	Collateral File Requirements
	Schedule 4:

	 	UCC Filing Jurisdictions
	Schedule 5:

	 	Organizational Structures
	Schedule 6:

	 	Form of Opinion






	 	 	 
	Exhibits:	 	 
	Exhibit A:

	 	Form of Request for Borrowing
	Exhibit B:

	 	Form of Note
	Exhibit C-1:

	 	Form of Assignment of Mortgage
	Exhibit C-2:

	 	Form of Collateral Assignment of Mortgage
	Exhibit D-1:

	 	Form of Assignment of Assignment of Leases and Rents
	Exhibit D-2:

	 	Form of Collateral Assignment of Assignment of Leases and Rents
	Exhibit E:

	 	Form of Collateral Assignment of Participation Interest
	Exhibit F:

	 	Form of Collateral Assignment of Pledge
	Exhibit G:

	 	Form of Borrowing Base Certificate
	Exhibit H:

	 	Form of Custodial Delivery Letter
	Exhibit I:

	 	Form of Trust Receipt
	Exhibit J:

	 	Form of Pledged Asset Schedule
	Exhibit K:

	 	Form of Assignment and Acceptance
	Exhibit L:

	 	Form of Payment Direction Letter
	Exhibit M:

	 	Asset-Level Representations and Warranties







vi









 








REVOLVING CREDIT LOAN AND SECURITY AGREEMENT




     THIS REVOLVING CREDIT LOAN AND SECURITY AGREEMENT, dated as of December 23, 2005 (as amended,
supplemented or otherwise modified from time to time, this “Agreement”), is among ASHFORD FINANCE
SUBSIDIARY II LP, a Delaware limited partnership (“Borrower”), UBS REAL ESTATE INVESTMENTS INC., a
Delaware corporation (in its individual capacity and not as the Administrative Agent, “UBS”), the
other lenders who, from time to time, are parties hereto in accordance with the terms of this
Agreement (UBS, collectively with such other lenders, the “Lenders”), and UBS REAL ESTATE
INVESTMENTS INC., a Delaware corporation, and any successors appointed pursuant to this Agreement,
as administrative agent for the Lenders hereunder (the “Administrative Agent”).



RECITALS




     WHEREAS, Borrower has requested that the Lenders from time to time make revolving credit loans
to Borrower in an aggregate principal amount at any one time outstanding not to exceed the Maximum
Credit (as defined below), the proceeds of which would be used to finance the origination,
acquisition or carrying of Eligible Assets (as defined below) and to pay fees and expenses incurred
in connection herewith and therewith. The Lenders are willing to make such credit available to
Borrower, but only on the terms, and subject to the conditions, set forth in this Agreement.



     NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and
agreements herein contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Lenders, Administrative Agent and Borrower hereby agree as
follows:



     SECTION 1. DEFINITIONS




     1.1 Defined Terms. As used in this Agreement, the following terms shall have the
following meanings:



     “Act” shall mean the Delaware Limited Liability Company Act.



     “Additional Assets” means any Pledged Assets with respect to which Borrower shall have entered
into Security Documents as provided in Section 3.3(a) in order to cure a Market Deficiency.



     “Adjusted Maximum Credit” shall have the meaning set forth in Section 2.8.



     “Adjusted Revolving Credit Commitment Percentage” shall mean, with respect to any Lender at
any time in respect of any Loan, (a) if no Lender Default shall have occurred and be continuing at
the time of the making of such Loan, such Lender’s Revolving Credit Commitment Percentage, and (b)
if a Lender Default shall have occurred and be continuing at the time of the making of such Loan,
(i) in respect of each Lender that is a Defaulting Lender, zero, and (ii) in respect of each Lender
which is not a Defaulting Lender, the percentage determined by dividing



1









 







such Lender’s Revolving Credit Commitment at such time by the sum of the Revolving Credit
Commitments of all Lenders that are not Defaulting Lenders; provided that the Adjusted
Revolving Credit Commitment Percentage of UBS shall be equal to the sum of (x) the amount
determined in accordance with clause (ii) above and (y) the excess of the Maximum Credit
over the aggregate Adjusted Revolving Credit Commitment Percentages of the other Lenders.



     “Administrative Agent” shall have the meaning set forth in the introductory paragraph hereto.



     “Advance Rate” shall mean, with respect to each Loan, one of the advance rates specified under
the heading “Advance Rate” on Schedule 2 attached hereto for Pledged Assets of the Asset
Type pledged as security for such Loan hereunder, as selected by Borrower in the applicable Request
for Borrowing.



     “Affiliate” shall mean, when used with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by, or under common control with, such Person.
Control 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 and “controlling” and “controlled” shall have meanings
correlative thereto.



     “Aggregate Base Case Market Value” shall mean the sum of the Base Case Market Values of all
Pledged Assets.



     “Aggregate Market Value” shall mean the sum of the Market Values of all Pledged Assets as of
any Market Determination Date.



     “Agreement” shall mean this Revolving Credit Loan and Security Agreement, as amended,
supplemented or otherwise modified from time to time.



     “Applicable Lending Office” shall mean, for each Lender, the lending office of such Lender
designated on Schedule 1 hereto (or any other lending office from time to time notified to
the Administrative Agent by such Lender) as the office at which its Loans are to be made and
maintained.



     “Applicable Spread” shall mean, with respect to each Loan, the interest rate spread specified
under the heading “Applicable Spread” on Schedule 2 attached hereto for Pledged Assets of
the Asset Type pledged as security for such Loan hereunder corresponding to the Advance Rate
applicable to such Loan, as the same may be adjusted from time to time in accordance with
Section 3.3(a)(iii) and (iv) hereof.



     “Appraisal” shall mean, with respect to any Underlying Property, an appraisal of such
Underlying Property in its then “as is” condition (taking into account any reserves established for
the purposes of funding any construction or improvements at such Underlying Property that are
expressly contemplated by the applicable Pledged Asset Documents to the extent determined by the
appraiser conducting such appraisal), prepared not more than thirty (30) days (or such longer
period as shall be acceptable to the Administrative Agent) prior to submission to the
Administrative Agent by a member of the American Institute of Real Estate Appraisers, which



2









 







appraisal (a) shall meet the minimum appraisal standards for national banks promulgated by the
Comptroller of the Currency pursuant to Title XI of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989, as amended (FIRREA), and (b) otherwise shall be in both form and
substance satisfactory to the Administrative Agent in its sole and absolute discretion and
addressed to the Administrative Agent, and its successors and assigns.



     “Appraised Value” shall mean the fair market value of an Underlying Property, as determined
pursuant to an Appraisal.



     “Approved Fund” shall mean, with respect to any Lender, any entity (whether a corporation,
partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise
investing in commercial loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by such Lender or an Affiliate or Subsidiary of such
Lender; provided that, with respect to UBS, as a Lender hereunder, an “Approved Fund” shall
include (x) any fund advised by UBS Real Estate Investments, Inc. or an Affiliate of UBS Real
Estate Investments, Inc., or (y) any other Person as long as, in the case of this clause (y) only,
UBS Real Estate Investments, Inc., an Affiliate of UBS Real Estate Investments, Inc., or a fund
advised by UBS Real Estate Investments, Inc. or an Affiliate of UBS Real Estate Investments, Inc.
either (1) “controls” (as such term is used in the definition of Affiliate) such Person or (2) is
empowered to conduct all day to day management relating to such Person’s rights, obligations and
interests hereunder and, subject to obtaining the consent of such Person, has the right to
participate in all day to day affairs relating to the administration of such rights, obligations
and interests.



     “Ashford OP” shall mean Ashford Hospitality Limited Partnership, a Delaware limited
partnership.



     “Ashford REIT” shall mean Ashford Hospitality Trust, Inc., a Maryland corporation.



     “Asset Type” shall mean, with respect to any Pledged Asset, whether such Pledged Asset is a
Mortgage Loan, Mezzanine Loan or Junior Interest for purposes of this Agreement.



     “Asset Value” shall mean, as of any date of determination with respect to any Pledged Asset,
the lesser of (x) the outstanding principal amount of such Pledged Asset and (y) the Base Case
Market Value for such Pledged Asset.



     “Assignee” shall have the meaning set forth in Section 13.6(c).



     “Assignment and Acceptance” shall have the meaning set forth in Section 13.6(c).



     “Assignment of Mortgage” shall mean, with respect to any Mortgage securing any Mortgage Loan,
an assignment of the Mortgage, substantially in the form of Exhibit C-1 attached hereto,
notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related real property is located to reflect the assignment of the
Mortgage, subject to the terms, covenants and provisions of this Agreement.



     “Assignment of Assignment of Leases” shall mean, with respect to each Pledged Asset that is a
Mortgage Loan, an assignment, substantially in the form of Exhibit D-1 attached hereto,



3









 







assigning to the assignee identified therein all of the assignor’s interest in and to each
Assignment of Leases executed by the applicable Underlying Borrower in connection with such
Mortgage Loan, as the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.



     “Assignment of Leases” shall mean, with respect to each Mortgaged Property, a first priority
Assignment of Leases and Rents from the Underlying Borrower, as assignor, to Borrower, as assignee,
assigning to Borrower, all of the Underlying Borrower’s interest in and to the Leases and the Rents
of such Mortgaged Property as security for the applicable Mortgage Loan, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to time.



     “Bankruptcy Action” shall mean, with respect to any Person, (a) such Person filing a voluntary
petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency law; (b)
the filing of an involuntary petition against such Person under the Bankruptcy Code or any other
federal or state bankruptcy or insolvency law, or soliciting or causing to be solicited petitioning
creditors for any involuntary petition against such Person, if such petition is not dismissed
within sixty (60) days from the date of the filing of such involuntary petition (or, in the case of
any Underlying Borrower or Underlying Property, within such period of time as may be set forth in
the Pledged Asset Documents or other applicable loan documents for such Underlying Borrower or
Underlying Property as required to expire prior to the occurrence, with respect to such Underlying
Borrower or Underlying Property, of an event of default on account of the filing of such petition);
(c) such Person filing an answer consenting to or otherwise acquiescing in or joining in any
involuntary petition filed against it under the Bankruptcy Code or any other federal or state
bankruptcy or insolvency law, or soliciting or causing to be solicited petitioning creditors for
any involuntary petition from any Person; (d) such Person seeking, consenting to or joining in an
application for the appointment of a custodian, receiver, trustee, or examiner for such Person, any
Pledged Asset, any Underlying Borrower or any portion of any Underlying Collateral or Underlying
Property; (e) such Person making an assignment for the benefit of creditors, or admitting, in
writing or in any legal proceeding, its insolvency or inability to pay its debts as they become
due; or (f) such Person taking any action in furtherance of any of the foregoing.



     “Bankruptcy Code” shall mean 11 U.S.C. § 101 et seq., as the same may be amended from time to
time.



     “Base Case DSCR” shall mean, with respect to any Pledged Asset, the DSCR for such Pledged
Asset as of the Borrowing Date on which such Pledged Asset is added to the Collateral hereunder, as
determined by Administrative Agent in its sole and absolute discretion using its standard
underwriting criteria as of such Borrowing Date for assets of the same Asset Type as such Pledged
Asset.



     “Base Case Market Value” shall have the meaning set forth in the definition of “Market Value”
below.



     “Base Rate” shall mean the rate per annum equal to one and one-quarter percent (1.25%) in
excess of the then applicable Treasury Rate.



4









 





     “Base Rate Loan” shall mean any Loan the rate of interest applicable to which is based upon
the Base Rate.



     “Borrower” shall have the meaning set forth in the introductory paragraph hereto.



     “Borrower Operating Account” shall have the meaning set forth in Section 3.13(a).



     “Borrowing Base” shall mean, as of any date of determination, an aggregate amount for all
Pledged Assets equal to the sum of (x) the Market Value for each Pledged Asset as of such date of
determination multiplied by (y) the Advance Rate for such Pledged Asset.



     “Borrowing Base Certificate” shall mean a certificate, substantially in the form of
Exhibit G attached hereto, with appropriate insertions, showing the Borrowing Base as of
the date set forth therein, and executed on behalf of Borrower by a duly authorized representative
of Borrower. Each Borrowing Base Certificate shall include a statement that each of the
representations and warranties made by Borrower and Guarantors in or pursuant to the Loan Documents
to which they are respectively a party (other than those that expressly relate to a specified date)
are true and correct in all material respects on and as of the date of such certificate as if made
on and as of the date thereof, except as set forth on a schedule to such Borrowing Base
Certificate, which exceptions must be acceptable to the Administrative Agent in its sole
discretion.



     “Borrowing Base Deficiency” shall mean, as of any date of determination, the amount by which
the Outstanding Principal Balance exceeds the Borrowing Base.



     “Borrowing Date” shall mean any Business Day specified in a Request for Borrowing pursuant to
Section 2.4 as a date on which Borrower requests Lenders to make a Loan hereunder.



     “Business Day” shall mean a day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to close, and, if such day relates to
a borrowing of, a payment or prepayment of principal of or interest on, or an Interest Period for,
a Loan or a notice by Borrower with respect to any such borrowing, payment, prepayment or Interest
Period, which is also a day on which dealings in Dollar deposits are carried out in the London
interbank market.



     “Capital Expenditures” shall mean, with respect to any Person, all expenditures (by the
expenditure of cash or the incurrence of Indebtedness) by such Person during any measuring period
for any fixed assets or improvements or for replacements, substitutions or additions thereto that
have a useful life of more than one year and that are required to be capitalized under GAAP.



     “Capital Lease” shall mean, with respect to any Person, any lease of any property (whether
real, personal or mixed) by such Person as lessee that, in accordance with GAAP, would be required
to be classified and accounted for as a capital lease on a balance sheet of such Person.



5









 





     “Capital Lease Obligation” shall mean, with respect to any Capital Lease of any Person, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP, would appear on a
balance sheet of such lessee in respect of such Capital Lease.



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



     “Cash Retention Event” shall have the meaning set forth in Section 3.13(b).



     “Cash Retention Event Cure” shall have the meaning set forth in Section 3.13(b).



     “Cash Retention Notice” shall mean a notice delivered from Administrative Agent to Clearing
Bank upon the occurrence of a Cash Retention Event, in the form required by the Clearing Account
Agreement.



     “Cash Retention Termination Notice” shall mean a notice delivered from Administrative Agent to
Clearing Bank upon the occurrence of a Cash Retention Event Cure, in the form required by the
Clearing Account Agreement.



     “Casualty” shall mean the occurrence of any casualty, damage or injury, by fire or otherwise,
to any Underlying Property or any part thereof.



     “Change in Control” shall mean:




     (a) any transaction or event as a result of which




     (i) Ashford OP ceases to own, beneficially or of record, directly or
indirectly, (A) 100% of the issued and outstanding limited partner interests in
Borrower, (B) 100% of membership interests in the general partner of Borrower, or
(C) 100% of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of managers of Borrower or the general
partner of Borrower;




     (ii) General Partner or Ashford REIT (or an entity directly or indirectly 100%
owned by Ashford REIT) (A) ceases to act as general partner of Ashford OP or (B)
ceases to own 100% of the general partner interests in Ashford OP;




     (iii) unless Ashford REIT is the direct general partner of Ashford OP, Ashford
REIT (or one or more entities directly or indirectly owned 100% by Ashford REIT)
ceases to own (A) 100% of the issued and outstanding membership interests in General
Partner or (B) 100% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of managers of General
Partner; or




     (iv) General Partner (or an entity directly or indirectly owned 100% by Ashford
REIT) and Ashford OP Limited Partner LLC (or an entity directly or



6









 






indirectly owned 100% by Ashford REIT) collectively cease to own, in the
aggregate, more than 50% of the issued and outstanding partnership interests in
Ashford OP, excluding partnership interests that are convertible into shares of
capital stock of Ashford REIT.




     (b) the sale, transfer, or other disposition of all or substantially all of Borrower’s,
Ashford OP’s, Ashford REIT’s or General Partner’s assets (excluding any such action taken in
connection with any securitization transaction) other than to an Affiliate of Borrower,
Ashford OP, Ashford REIT or General Partner as the case may be; or




     (c) the occurrence of a change in the composition of the governing body of Ashford REIT
such that a majority of the members of any such governing body (i) were not members of such
governing body on the date of this Agreement and (ii) were not (A) nominated for election or
elected to such governing body with the affirmative vote of a majority of the members who
were either members of such governing body on the date of this Agreement or whose nomination
or election was previously so approved or (B) nominated to such governing body with the
affirmative vote of a nominating committee, the majority of the members of which were (x)
members of such governing body on the date of this Agreement, (y) members whose nomination
was previously so approved by such a nominating committee and/or (z) members whose
nomination or election was previously approved in accordance with the immediately preceding
clause (A).



     “Change in Law” shall have the meaning set forth in Section 3.7.



     “Clearing Account” shall have the meaning set forth in Section 3.13(a).



     “Clearing Account Agreement” shall mean that certain Clearing Account Agreement dated the date
hereof, made by and among Borrower, Administrative Agent and Clearing Bank.



     “Clearing Bank” shall have the meaning set forth in Section 3.13(a).



     “Closing Date” shall mean December 23, 2005, being the date on which this Agreement has been
executed and delivered by the parties hereto.



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



     “Collateral” shall have the meaning set forth in Section 4.1.



     “Collateral Assignment of Assignment of Leases” shall mean, with respect to each Pledged Asset
that is a Mortgage Loan, a collateral assignment from Borrower, as assignor, to the Administrative
Agent, as assignee, assigning to the Administrative Agent for the ratable benefit of the Lenders
all of Borrower’s interest in and to each Assignment of Leases executed by the applicable
Underlying Borrower in favor of Borrower, substantially in the form of Exhibit D-2 attached
hereto, as the same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.



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     “Collateral Assignment of Mortgage” shall mean, with respect to any Mortgage securing any
Mortgage Loan, a collateral assignment of the Mortgage, substantially in the form of Exhibit
C-2 attached hereto, sufficient under the laws of the jurisdiction wherein the related real
property is located to reflect the collateral assignment and pledge of the Mortgage, subject to the
terms, covenants and provisions of this Agreement.



     “Collateral Assignment of Participation Interest” shall mean, with respect to any Pledged
Asset that is a Junior Interest, a Collateral Assignment and Pledge, substantially in the form of
Exhibit E attached hereto, from Borrower, as assignor, to the Administrative Agent, as
assignee, assigning to the Administrative Agent for the ratable benefit of the Lenders, all of
Borrower’s right, title and interest in, to and under the applicable participation agreement and/or
other Pledged Asset Documents in respect of such Pledged Asset.



     “Collateral Assignment of Pledge” shall mean, with respect to any Pledged Asset that is a
Mezzanine Loan, a collateral assignment from Borrower, as assignor, to the Administrative Agent, as
assignee, assigning to the Administrative Agent for the ratable benefit of the Lenders Borrower’s
interest in and to the applicable Mezzanine Pledge Agreement, substantially in the form of
Exhibit F attached hereto, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.



     “Collateral File” shall mean, with respect to each Pledged Asset, the documents specified as
the “Collateral File” in Schedule 3 annexed hereto, together with any additional documents
and information required to be delivered to Administrative Agent, the Lenders or the Custodian
pursuant to this Agreement or the Custodial Agreement with respect to any Pledged Asset.



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



     “Contractual Obligation” shall mean, as to any Person, any provision of any security issued by
such Person or of any agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.



     “Conveyance” shall have the meaning set forth in Section 8.4.



     “Costs” shall have the meaning set forth in Section 7.29.



     “Credit Exposure” shall mean, as to any Lender (other than a Defaulting Lender) at any time,
its Revolving Credit Commitment (or, if the Revolving Credit Commitments shall have expired or been
terminated, the aggregate unpaid principal amount of its Loans).



     “Credit Exposure Percentage” shall mean, as to any Lender at any time, the fraction (expressed
as a percentage), the numerator of which is the Credit Exposure of such Lender at such time and the
denominator of which is the aggregate Credit Exposures of all of the Lenders (other than Defaulting
Lenders) at such time.



8









 





     “Credit Increase Request” shall have the meaning set forth in Section 2.8.



     “Custodial Agreement” shall mean that certain custodial agreement, dated as of the date
hereof, by and among Borrower, Administrative Agent and Custodian, as the same shall be amended,
modified or supplemented and in effect from time to time.



     “Custodial Delivery Letter” shall mean the form executed by Borrower in order to deliver the
Pledged Asset Schedule, Collateral File and related Pledged Assets to the Custodian pursuant to
Section 2.4(g), a form of which is attached hereto as Exhibit H.



     “Custodian” shall mean LaSalle Bank, National Association and its successors in interest, as
custodian under the Custodial Agreement, and any successor Custodian under the Custodial Agreement
acceptable to Administrative Agent in its sole discretion; provided that in no event shall
the Custodian be an Affiliate of Borrower.



     “Debt Service” shall mean, with respect to any Pledged Asset as of any particular period of
time, (i) scheduled principal (other than scheduled principal payments at maturity) and interest
payments under the applicable Pledged Asset Documents and (ii) scheduled principal (other than
scheduled principal payments at maturity) and interest payments under any other Indebtedness for
borrowed money of the applicable Underlying Borrower.



     “Debt Service Coverage Ratio” or “DSCR” shall mean, with respect to any Pledged Asset, the
ratio, determined by the Administrative Agent in its sole and absolute discretion, that (a)
Underwritten Net Cash Flow for the Underlying Property with respect to such Pledged Asset for the
period of twelve (12) months (or such shorter period of time as such Pledged Asset shall have
existed, adjusted to reflect expected results over a twelve-month period with appropriate
adjustments for seasonality) immediately preceding the date of calculation, bears to (b) the Debt
Service with respect to such Pledged Asset that was due for such twelve (12) calendar month period
(or such shorter period of time, if applicable, annualized).



     “Default” shall mean any of the events specified in Section 10.1, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other condition, has been
satisfied.



     “Defaulted Asset” shall mean any Pledged Asset (a) that is thirty (30) days or more Delinquent
(other than as described in clause (d) below) in the payment of debt service or (b) as to
which a Bankruptcy Action shall have occurred with respect to the Underlying Borrower or (c) as to
which a default shall have occurred under the applicable Pledged Asset Documents and such default
continues beyond the applicable notice and/or cure or grace period, if any, provided for in such
loan documents or (d) as to which payment in full of all amounts due in respect of any indebtedness
constituting that Pledged Asset shall not have been received within thirty (30) days following the
stated maturity date thereof, as indicated in the Pledged Asset Schedule for such Pledged Asset or
(e) as to which Borrower shall, at any time following the Borrowing Date thereof, fail to comply
with any Future Funding Obligation under any Pledged Asset Document.



     “Defaulted Loan Prepayment Amount” shall have the meaning set forth in Section 3.3(c).



9









 





     “Default Rate” shall have the meaning set forth in Section 3.1(b).



     “Defaulting Lender” shall mean any Lender with respect to which a Lender Default has occurred
and is continuing.



     “Delinquent” shall mean, with respect to any Pledged Asset, if any scheduled monthly,
quarterly or other periodic payment of principal, interest and/or other material amounts in respect
of such Pledged Asset is not made by the close of business on the day on which such scheduled
payment is required to be paid. A Pledged Asset shall be “30 days or more Delinquent” if any such
scheduled payment has not been received by the close of business on the corresponding day of the
month following the month in which such scheduled payment was required to be paid.



     “Deposit Account” shall have the meaning set forth in Section 3.13.



     “Deposit Bank” shall mean Wells Fargo Bank, N.A. and any successor Eligible Institution
thereto.



     “Determination Date” shall have the meaning set forth in the definition of “LIBOR Base Rate”.



     “Dollars” and “$” shall mean dollars in lawful currency of the United States of America.



     “EBITDA” shall mean, for Ashford REIT and its consolidated Subsidiaries for any fiscal period,
an amount equal to the sum of (i) Net Income for such period, plus (ii) to the extent
deducted in determining Net Income for such period, (A) Interest Expense of Ashford REIT and its
consolidated Subsidiaries, (B) income tax expense determined on a consolidated basis and in
accordance with GAAP, (C) depreciation and amortization determined on a consolidated basis and in
accordance with GAAP, (D) non-cash charges determined on a consolidated basis and in accordance
with GAAP, and (E) any non-recurring charges acceptable to the Administrative Agent, in each case
for such period.



     “Eligible Account” shall mean a separate and identifiable account from all other funds held by
the holding institution that is either (i) an account or accounts maintained with a federal or
state-chartered depository institution or trust company which complies with the definition of
Eligible Institution or (ii) a segregated trust account or accounts maintained with a federal or
state chartered depository institution or trust company acting in its fiduciary capacity which, in
the case of a state chartered depository institution or trust company is subject to regulations
substantially similar to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus
of at least $50,000,000.00 and subject to supervision or examination by federal and state
authorities. An Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.



     “Eligible Asset” shall mean any Mortgage Loan, Mezzanine Loan or Junior Interest, or other
interest or asset acceptable to the Administrative Agent in its sole discretion, as the case may
be, originated or acquired by Borrower, for which, as of any date of determination, unless
otherwise approved by the Administrative Agent, each of the following is true:




     (a) such asset is owned 100% by Borrower;



10









 






     (b) such asset satisfies Administrative Agent’s basic underwriting requirements,
including, without limitation, those relating to environmental and zoning matters;




     (c) the Underlying Property for such asset is a hotel property located in the United
States of America and “flagged” with a brand acceptable to Lender, with appropriate comfort
letters from the applicable franchisor (and collateral assignments by Borrower of its rights
therein); provided that independently flagged hotel properties may be designated as
Eligible Assets in Lender’s sole discretion, depending upon Lender’s underwriting analysis
thereof;




     (d) such asset is not and has never been more than thirty (30) days Delinquent in the
payment of debt service and no default shall have occurred and be continuing beyond any
applicable notice and/or cure or grace period under the applicable loan documents for such
asset;




     (e) such asset is a “closed” loan, with the applicable Pledged Asset Documents executed
by, and funds disbursed to, the Underlying Borrower prior to or concurrently with the
advance of the related Loan under this Agreement;




     (f) the LTV (and LTC if the Underlying Property has been acquired within the preceding
24 months) of such asset does not exceed 85%;




     (g) when added to the Pledged Assets, such asset will not cause more than fifteen
percent (15%) of the principal balance of the Loans outstanding hereunder to be comprised of
Loans on account of Pledged Assets that relate to seasonal or beach properties and, in any
case, seasonality reserves acceptable to Administrative Agent in its sole and absolute
discretion shall have been established for such asset;




     (h) the Underlying Borrower for such asset is not an Affiliate of Borrower;




     (i) in each instance, such asset has been approved by Administrative Agent in its sole
and absolute discretion; and




     (j) the Base Case DSCR for such asset is not less than 1.0 to 1.0;


provided, that notwithstanding a proposed Eligible Asset’s failure to conform to the
criteria set forth above, Administrative Agent may, in its sole discretion, designate in writing
any such non-compliant asset an Eligible Asset (including, without limitation, assets that are not
one of the Asset Types expressly contemplated by this Agreement), subject to such terms and
conditions as Administrative Agent and Borrower shall agree, including, without limitation, an
adjusted Advance Rate and/or an adjusted Applicable Spread for such asset.




     “Eligible Institution” shall mean a depository institution insured by the Federal Deposit
Insurance Corporation the short term unsecured debt obligations or commercial paper of which are
rated at least A-1 by Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, P-1
by Moody’s Investors Service, Inc., and F-1+ by Fitch, Inc. in the case of accounts in which funds
are held for thirty (30) days or less or, in the case of accounts in which funds are held for more
than thirty (30) days, the long term unsecured debt obligations of which



11









 







are rated at least “A” by Fitch, Inc., “A” by Standard & Poor’s Ratings Group, a division of
The McGraw-Hill Companies, and “A2” by Moody’s Investors Service, Inc.



     “Eligible Transferee” shall mean (a) a Lender or an Affiliate or Approved Fund of a Lender,
(b) a real estate investment trust, bank, saving and loan association, investment bank, insurance
company, trust company, commercial credit corporation, pension plan, pension fund or pension
advisory firm, mutual fund, government entity or plan, investment company or money management firm,
or an institution substantially similar to any of the foregoing entities, in each case organized
under the laws of the United States or any State thereof, having total assets in excess of
$600,000,000.00 and net worth in excess of $250,000,000 and being regularly engaged in the business
of making or owning commercial real estate loans, or (c) an Affiliate or Subsidiary of any entity
described in the preceding clause (b).



     “Embargoed Person” shall have the meaning set forth in Section 8.18.



     “Environmental Laws” shall mean any and all applicable foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of
any Governmental Authority or other Legal Requirements (including common law) regulating, relating
to or imposing liability or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.



     “Equity Pledge Agreement” shall mean that certain Pledge and Security Agreement, to be
executed and delivered pursuant to Section 6.01(b) by Ashford OP in favor of the
Administrative Agent for the ratable benefit of the Lenders, pursuant to which Ashford OP will
grant a first priority security interest in one hundred percent (100%) of the limited partner
interests in Borrower and 100% of the limited liability company interests in the general partner of
Borrower, as the same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.



     “Equity Securities” shall mean any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all equivalent equity
ownership interests in a Person which is not a corporation, including, without limitation, any and
all member or other equivalent interests in any limited liability company, and any and all warrants
or options to purchase any of the foregoing.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time
to time.



     “ERISA Affiliate” shall mean any trade or business which is a member of the same controlled
group (within the meaning of Section 414(b) of the Code) as Ashford REIT.



     “Eurocurrency Liabilities” shall have the meaning set forth in Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from time to time.



     “Event of Default” shall mean any of the events specified in Section 10.1 hereof;
provided that any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.



12









 





     “Exceptions Report” shall mean an Exceptions Report from the Custodian identifying any
exceptions to the deliveries required to be included in any Collateral File.



     “Excess Cash Flow” shall have the meaning set forth in Section 3.13 hereof.



     “Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the Borrower hereunder,
(a) income or franchise taxes imposed on (or measured by) its net assets, receipts or income by the
United States of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which a Lender is located, (c) in
the case of a Foreign Lender, any withholding tax that (i) is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a
new lending office) or (ii) is attributable to such Foreign Lender’s failure to comply with Section
3.10(e) hereof and (d) any Taxes arising after the date hereof solely as a result of or
attributable to a Lender, the Administrative Agent or the Issuing Bank changing its designated
lending office after the date such Lender, the Administrative Agent or the Issuing Bank become a
party hereto.



     “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Administrative Agent from three (3)
federal funds brokers of recognized standing selected by it.



     “Filings” shall have the meaning set forth in Section 4.2.



     “Fixed Charges” shall mean, with respect to Ashford REIT and its consolidated Subsidiaries for
any fiscal period, (a) the aggregate of all Interest Expense paid or accrued during such period,
plus (b) scheduled payments of principal with respect to Indebtedness for borrowed money
during such period, excluding balloon payments due on maturity of any Indebtedness which is secured
by real property collateral (or direct or indirect ownership interests in the owner of such real
property collateral) with no physical, operating, financial performance or valuation
characteristics which could impair in any respect the ability of the owner of such collateral to
refinance such Indebtedness in full on or prior to the maturity thereof at customary market terms,
conditions and underwriting criteria.



     “Fixed Charge Coverage Ratio” shall mean, with respect to Ashford REIT and its consolidated
Subsidiaries for any fiscal period, the ratio of EBITDA minus Capital Expenditures during
such period to Fixed Charges.



     “Foreign Lender” means any Lender (or any lending office designated by any Lender) that is
organized under the laws of a jurisdiction other than that in which Borrower is located. For
purposes of this definition, the United States of America, each State thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.



13









 





     “Future Funding Obligation” shall mean, with respect to any Pledged Asset, any mandatory
agreement, commitment, covenant or obligation of Borrower or any of its predecessors-in-interest to
advance funds for any purpose on or subsequent to the Borrowing Date of the Loan secured by such
Pledged Asset, whether in connection with any unfunded portion of or future advance regarding, any
loan or other invested amount of such Pledged Asset.



     “GAAP” shall mean generally accepted accounting principles in the United States of America in
effect from time to time.



     “General Partner” shall mean Ashford OP General Partner LLC.



     “Governing Documents” shall mean, as to any Person, its articles or certificate of
incorporation and by-laws, its partnership agreement, its certificate of formation and operating
agreement, its limited liability company agreement and/or the other organizational or governing
documents of such Person.



     “Governmental Authority” shall mean any nation or government, any state or other political
subdivision, agency or instrumentality thereof, and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government and any court or
arbitrator having jurisdiction over Borrower, any Guarantor, any of their respective Subsidiaries
or Affiliates or any of their respective properties.



     “Guarantee” shall mean, as to any Person, any obligation of such Person directly or indirectly
guaranteeing any Indebtedness of any other Person or in any manner providing for the payment of any
Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness against
loss (whether by virtue of partnership agreements, by agreement to keep well, to purchase assets,
goods, securities or services, or to take or pay or otherwise); provided that the term
“Guarantee” shall not include endorsements for collection or deposit in the ordinary course of
business. The amount of any Guarantee of a Person shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such Guarantee is made
or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof
as determined by such Person in good faith. The terms “Guarantee” and “Guaranteed” used as verbs
shall have correlative meanings.



     “Guarantor” shall refer to either Ashford OP or Ashford REIT and “Guarantors” shall refer
collectively to Ashford OP and Ashford REIT.



     “Hedging Transactions” shall mean, with respect to any Person, any short sale of U.S. Treasury
Securities or mortgage related securities, futures contract (including eurodollar futures) or
options contract or any interest rate swap, cap or collar agreement or similar arrangements
providing for protection against fluctuations in interest rates or the exchange of nominal interest
obligations, either generally or under specific contingencies to hedge the return on a financial
asset (including any Pledged Asset), and which is entered into by such Person or any of its
predecessors in interest, with one or more counterparties with a credit rating from a nationally
recognized rating agency of not less than AA- or its equivalent.



     “Income” shall mean, with respect to any Pledged Asset at any time, the sum of (x) any
principal paid by or on behalf of the Underlying Borrower and all interest, dividends,



14









 







distributions or other receipts and fees of every kind and nature payable to Borrower or its
designee, directly or indirectly, arising from or relating to its ownership of such Pledged Asset,
including, without limitation, all Pledged Asset Prepayments (or any portion thereof) or any
payments in respect of related Hedging Transactions and any interests or earnings on any of the
foregoing received by or payable to Borrower and (y) all net sale proceeds of a sale of such
Pledged Asset.



     “Indebtedness” shall mean, for any Person, without duplication: (a) all indebtedness of such
Person for borrowed money, for amounts drawn under a letter of credit, or for the deferred purchase
price of property for which such Person or its assets is liable (excluding current accounts payable
in the ordinary course of business and not outstanding for more than ninety (90) days and excluding
accrued Real Estate Taxes that are paid prior to the delinquency thereof), (b) all contingent
liabilities of such Person under letters of credit, (c) all obligations under leases that
constitute capital leases for which such Person is liable, (d) all obligations of such Person under
interest rate swaps, caps, floors, collars and other interest hedge agreements, in each case for
which such Person is liable or its assets are liable, whether such Person (or its assets) is (are)
liable contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person otherwise assures a creditor against loss, and (e) all Guarantees granted
by such Person, directly or indirectly, in respect of any of the foregoing.



     “Interest Coverage Ratio” shall mean, with respect to Ashford REIT and its consolidated
Subsidiaries for any fiscal period, the ratio of EBITDA to Interest Expense paid or accrued during
such fiscal period.



     “Interest Expense” shall mean, with respect to Ashford REIT and its consolidated Subsidiaries
for any fiscal period, cash interest expense of Ashford REIT and such consolidated Subsidiaries
determined on a consolidated basis and in accordance with GAAP for the relevant period ended on
such date, including, interest expense with respect to any Indebtedness for borrowed money of
Ashford REIT and its consolidated Subsidiaries and interest expense for the relevant period that
has been capitalized on the consolidated balance sheet of Ashford REIT and its consolidated
Subsidiaries.



     “Interest Period” shall mean, with respect to any Loan, each period commencing on the eleventh
(11th) day of each calendar month and ending on the tenth (10th) day of the following calendar
month, provided that (a) in the event that the Borrowing Date with respect to a Loan is a
day prior to the tenth (10th) day of a calendar month, the initial Interest Period with respect to
such Loan shall commence on such Borrowing Date and end on the tenth (10th) day of such calendar
month and (b) in the event that the Borrowing Date with respect to a Loan is a calendar day on or
after the tenth (10th) day of a calendar month, the initial Interest Period with respect to such
Loan shall commence on such Borrowing Date and end on the tenth (10th) day of the calendar month
thereafter, and provided, further, that any Interest Period that would otherwise
extend beyond the Revolving Credit Termination Date shall end on the Revolving Credit Termination
Date.



     “Junior Interest” shall mean (a) a participation interest in a performing commercial real
estate loan secured by an Underlying Property that is junior to another participation interest or



15









 







other interest in the related whole loan or (b) a “B note” in an “A/B structure” in such
performing commercial real estate loan.



     “Junior Interest Note” shall mean the original executed promissory note evidencing any Junior
Interest (as described in clause (b) of the definition thereof).



     “Junior Participation Interest Certificate” shall mean the original certificate or other
instrument evidencing any Junior Interest (as described in clause (a) of the definition thereof).



     “knowledge” shall mean, as to any Person for all purposes of this Agreement and the other Loan
Documents, the actual knowledge of such Person, after due inquiry and, with respect to any
representation or warranty regarding any Eligible Asset, based on the due diligence customarily
performed in the origination (or acquisition, as the case may be) of comparable Eligible Assets by
prudent commercial lenders in the applicable geographic area and with respect to properties
comparable to the related Underlying Property, as of the date of origination (or acquisition, as
the case may be) of such Eligible Asset.



     “Lease” shall mean any lease, sublease or subsublease, letting, license, concession or other
agreement (whether written or oral and whether now or hereafter in effect) pursuant to which any
Person is granted a possessory interest in, or a right to use or occupy, all or any portion of any
space in an Underlying Property, and every modification, amendment or other agreement relating to
such lease, sublease, subsublease or other agreement entered into in connection with such lease,
sublease, subsublease or other agreement and every guarantee of the performance and observance of
the covenants, conditions and agreements to be performed and observed by the other party thereto.



     “Legal Requirements” shall mean, as to any Person, the Governing Documents of such Person and
all federal, state, county, municipal and other governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting
such Person or any Collateral or Underlying Property and all permits, licenses and authorizations
and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances
contained in any instruments, either of record or known to such Person, at any time in force
affecting any Collateral or any Underlying Property or any part thereof.



     “Lenders” shall have the meaning set forth in the introductory paragraph hereto.



     “Lender Default” shall mean, as to any Lender, (a) the failure of such Lender to make
available its share of any borrowing as required under Section 3 hereof, (b) the
notification by such Lender to the Administrative Agent or Borrower that it does not intend to
comply with its obligations under this Agreement, or (c) such Lender’s becoming subject to any
insolvency, reorganization or similar action or proceeding, including by the takeover of such
Lender by any regulatory agency.



     “LIBOR” shall mean, with respect to each day during each Interest Period pertaining to a Loan,
a rate per annum determined for such day in accordance with the following formula:


LIBOR Base Rate



 





1.00 – LIBOR Reserve Percentage




16









 








     “LIBOR Base Rate” shall mean, with respect to each day during each Interest Period pertaining
to a Loan, the rate per annum (rounded upwards, if necessary, to the nearest one-thousandth
(1/1000th) of one percent (1%)) reported for such Interest Period at 11:00 a.m. London
time on the date that is two (2) London Business Days prior to the tenth (10th) day of the calendar
month in which such Interest Period commences (such date, the “Determination Date”), on Dow Jones
Telerate Service Page 3750 (British Bankers Association Settlement Rate) as the non-reserve
adjusted London Interbank Offered Rate for U.S. dollar deposits having a thirty (30) day term and
in an amount of $1,000,000.00 or more (or on such other page as may replace said Page 3750 on that
service or such other service or services as may be nominated by the British Bankers Association
for the purpose of displaying such rate, all as determined by the Administrative Agent in its sole
but good faith discretion). In the event that (a) more than one such rate is provided, the average
of such rates shall apply, or (b) no such rate is published, then the LIBOR Base Rate shall be
determined from such comparable financial reporting company as the Administrative Agent in its sole
but good faith discretion shall determine.



     “LIBOR Loan” shall mean any Loan the rate of interest applicable to which is based upon LIBOR.



     “LIBOR Reserve Percentage” shall mean, for any Interest Period for all of the Loans comprising
part of the same borrowing, the reserve percentage applicable on each Determination Date with
respect to such Interest Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor thereto) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in New York, New York with
respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with
respect to any other category of liabilities that includes deposits by reference to which the
interest rate on Loans is determined) having a term comparable to such Interest Period.



     “LIBOR Reserve Requirements” shall mean, for any day as applied to a LIBOR Loan, the aggregate
(without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in
effect on such day (including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of such Board) maintained by a member bank of such System.



     “Lien” shall mean any mortgage, lien, pledge, charge, security interest or similar
encumbrance.



     “Loans” shall have the meaning set forth in Section 2.1.



     “Loan Documents” shall mean, collectively, this Agreement, the Notes, the Security Documents,
the Clearing Account Agreement, the Cash Management Agreement, the OP Guaranty of Payment, the REIT
Guaranty of Payment and any other documents, agreements and instruments now or hereafter
evidencing, securing or delivered to the Administrative Agent in



17









 







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



     “Loan to Cost Ratio” or “LTC” shall mean, with respect to any Pledged Asset as of any date of
determination, the ratio, expressed as a percentage, of (i) the sum of (x) the actual outstanding
principal amount of such Pledged Asset as of such date plus (y) the actual outstanding principal
amount of all other Indebtedness for borrowed money of the applicable Underlying Borrower and, in
the case of any Mezzanine Loan, the owner of the Underlying Property, to (ii) the aggregate
purchase price paid by such Underlying Borrower (or, in the case of any Mezzanine Loan, the owner
of the Underlying Property) for the applicable Underlying Property and the aggregate closing costs
incurred by such Underlying Borrower and owner in connection therewith.



     “Loan to Value Ratio” or “LTV” shall mean, with respect to any Pledged Asset as of any date of
determination, the ratio, expressed as a percentage, of (i) the sum of (x) the actual outstanding
principal amount of such Pledged Asset as of such date plus (y) the actual outstanding principal
amount of all other Indebtedness for borrowed money of the applicable Underlying Borrower and, in
the case of any Mezzanine Loan, the owner of the Underlying Property, to (ii) the aggregate
Appraised Value of the applicable Underlying Property.



     “London Business Day” shall mean any Business Day on which commercial banks are open for
international business (including dealings in dollar deposits) in London, England.



     “Market Capitalization” shall mean, as of any date of determination, an amount equal to the
sum of (a) the product of (x) the aggregate number of issued and outstanding shares of each class
of publicly-traded equity securities of Ashford REIT (inclusive of the limited partnership
interests of Ashford OP, calculated on an as-converted basis, as though such partnership interests
had been converted into equity securities of Ashford REIT) multiplied by (y) the average closing
sales price of each such class of such equity securities on the New York Stock Exchange for the
twenty (20) trading day period immediately preceding such date of determination, plus (b) the
product of (x) the aggregate number of issued and outstanding shares of convertible preferred stock
of Ashford REIT for which the conversion price is less than or equal to the average closing sales
price of the common stock of Ashford REIT on the New York Stock Exchange for the twenty (20)
trading day period immediately preceding such date of determination, multiplied by (y) the average
closing sales price of the common stock of Ashford REIT on the New York Stock Exchange for the
twenty (20) trading day period immediately preceding such date of determination.



     “Market Deficiency,” “Market Deficiency Notice” and “Market Deficiency Threshold,” shall have
the meanings set forth in Section 3.3(a).



     “Market Determination Date” shall have the meaning set forth in Section 3.3(a).



     “Market Value Surplus” and “Market Surplus Notice” shall have the meanings set forth in
Section 3.3(a)(iv).



     “Market Value” shall mean, with respect to any Pledged Asset, (x) on the Borrowing Date on
which such Pledged Asset is added to the Borrowing Base, the market value for such



18









 







Pledged Asset as determined by Administrative Agent in its sole and absolute discretion using
its standard underwriting criteria in effect as of such Borrowing Date for assets of the same Asset
Type as such Pledged Asset, including utilizing the Base Case DSCR for such Pledged Asset (the
“Base Case Market Value”), and (y) as of any date thereafter, the market value for such Pledged
Asset as determined by Administrative Agent in good faith and in a manner consistent with Lender’s
calculation of the Base Case Market Value of such Pledged Asset but utilizing the DSCR of such
Pledged Asset as of such date of determination (the “Updated DSCR” with respect thereto). The
provisions of the foregoing clause (y) shall not preclude Administrative Agent, in determining
Market Value on any Market Determination Date, from applying any customary and reasonable market
factors or underwriting criteria that are part of Administrative Agent’s standard underwriting
criteria as of the applicable Borrowing Date for assets of the same Asset Type that were not
applied in determining the Base Case Market Value of such Pledged Asset but become applicable to a
Pledged Asset subsequent to the Borrowing Date on which such Pledged Asset was added to the
Borrowing Base as a result of changes in circumstances relating to or affecting such Pledged Asset.
In calculating the Updated DSCR for any Pledged Asset, Lender shall utilize the applicable
interest rate under the related Pledged Asset Document in effect as of the date of determination of
either (1) the Base Case DSCR for such Pledged Asset or (2) such Updated DSCR, whichever is
greater. Borrower acknowledges that the Market Value of a Pledged Asset may be reduced to zero by
Administrative Agent if:



     (a) Administrative Agent no longer has a perfected security interest in such Pledged Asset, or



     (b) such Pledged Asset has been released from the possession of the Custodian under the
Custodial Agreement.



     In addition, the Market Value of a Pledged Asset that becomes a Defaulted Asset may be reduced
to zero by Administrative Agent as provided in Section 3.3(b) and Section 5.31 of
this Agreement.



     “Material Adverse Effect” shall mean a material adverse effect on (a) the business,
operations, property (including, without limitation, any Pledged Asset, any other Collateral, any
Underlying Property or any Underlying Collateral) or condition (financial or otherwise) of
Borrower, Guarantors and their respective Subsidiaries or Affiliates taken as a whole, (b) the
ability of Borrower or any Guarantor to perform its obligations under any of the Loan Documents to
which it is a party (including, without limitation, the timely payment of principal of or interest
on the Loans or other amounts payable in connection herewith), or (c) the validity or
enforceability of this or any of the other Loan Documents.



     “Maximum Credit” shall mean One Hundred Million and No/100 Dollars ($100,000,000.00), subject
to adjustment as provide in Section 2.8 hereof. The Maximum Credit is only the maximum
amount that may be outstanding from time to time hereunder, it being understood and agreed by the
parties hereto that the actual amount that Borrower may borrow from the Lenders hereunder at any
given time may not exceed the Borrowing Base, which may be an amount less than the Maximum Credit.



19









 





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



     “Mezzanine Loan” shall mean a performing mezzanine loan secured, directly or indirectly, by
pledges of all the Equity Securities of the Person that owns an Underlying Property.



     “Mezzanine Pledge Agreement” shall mean, with respect to each Pledged Asset that is a
Mezzanine Loan, a pledge and security agreement granting to Borrower a first priority security
interest (whether directly or indirectly) in all Equity Securities of the Person that owns the
applicable Underlying Property.



     “Mezzanine Note” shall mean a promissory note or other evidence of a Mezzanine Loan secured by
a Mezzanine Pledge Agreement.



     “Mortgage” shall mean a mortgage, deed of trust, deed to secure debt or other instrument,
creating a valid and enforceable first lien on or a first priority ownership interest in an estate
in fee simple or ground leasehold interest in the applicable Mortgaged Property and the
improvements thereon, and security over the assets of the relevant Underlying Borrower or charger,
securing a Mortgage Loan or similar evidence of indebtedness.



     “Mortgage Loan” shall mean a debt obligation secured by a Mortgage on an Underlying Property.



     “Mortgage Note” shall mean the promissory note evidencing a Mortgage Loan secured by a
Mortgage.



     “Mortgaged Property” shall mean the real property (including all improvements, buildings,
fixtures, building equipment and personal property thereon and all additions, alterations and
replacements made at any time with respect to the foregoing) and/or all other collateral securing
repayment of a Mortgage Loan, which such property shall be a hotel property located in the United
States of America.



     “Net Income” shall mean, for Ashford REIT and its consolidated Subsidiaries for any period,
the net income (or loss) of Ashford REIT and its consolidated Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, but excluding therefrom (to the extent
otherwise included therein)(i) any extraordinary gains or losses, (ii) any gains or losses
attributable to write-ups or write-downs of assets, (iii) any equity interest of Ashford REIT or
any of its Subsidiaries in the unremitted earnings of any Person that is not a Subsidiary of
Ashford REIT, and (iv) any income (or loss) of any Person accrued prior to the date it becomes a
Subsidiary or is merged into or consolidated with Ashford REIT or a Subsidiary of Ashford REIT on
the date that such Person’s assets are acquired by Ashford REIT or such Subsidiary.



     “Note” shall have the meaning set forth in Section 2.2.



20









 





     “Notice” shall have the meaning set forth in Section 13.2.



     “Officer’s Certificate” shall mean a certificate delivered to the Administrative Agent by
Borrower, Ashford OP or Ashford REIT that is signed by an authorized senior officer of Borrower,
Ashford OP or Ashford REIT. No officer of Borrower, Ashford OP or Ashford REIT shall have any
personal liability on account of its execution or delivery of an Officer’s Certificate or any other
certificate or instrument pursuant to this Agreement or the other Loan Documents



     “OP Guaranty of Payment” shall mean that certain Guaranty of Payment dated as of the date
hereof, from Ashford OP in favor of the Administrative Agent for the ratable benefit of the
Lenders, as the same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.



     “Other Taxes” shall have the meaning set forth in Section 3.10(b).



     “Outstanding Principal Balance” shall mean, as of any date, the aggregate outstanding
principal balance of all Loans then outstanding hereunder.



     “Participants” shall have the meaning set forth in Section 13.6(b).



     “Patriot Act” shall mean, collectively, all laws relating to terrorism or money laundering,
including Executive Order No. 13224 on Terrorist Financing (effective September 24, 2001) and the
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001 (Public Law 107 56).



     “Payment Date” shall mean the eleventh (11th) day of each calendar month, unless such date is
not a Business Day, in which case the Payment Date shall be the next succeeding Business Day. If
any Loans are advanced as of the date hereof, the first Payment Date will be January 11, 2006.



     “Permitted Encumbrances” shall mean, collectively, (i) the Liens and security interests
created by the Loan Documents, (ii) all Liens, encumbrances and other matters set forth in or
permitted under the Pledged Asset Documents or disclosed in the relevant Collateral File for any
Pledged Assets, including without limitation, the rights and interests (whether arising under an
intercreditor agreement, co-lender agreement, trust and servicing agreement or otherwise) of (A) in
the case of any Mortgage Loan, any mezzanine lender holding a mezzanine loan which is secured
directly or indirectly by Equity Interests in the Underlying Borrower, (B) in the case of any
Mezzanine Loan, any mortgage lender holding the mortgage loan which encumbers the Underlying
Property that relates to such Mezzanine Loan or (C) in the case of any Junior Interest, the holder
of any senior interest in the loan underlying such Junior Interest, and the rights and interests of
any servicer of such underlying loan, (iii) Liens, if any, for Real Estate Taxes imposed by any
Governmental Authority not yet delinquent, (iv) Liens of mechanics and materialmen for sums that
are not overdue or that are being contested diligently and in good faith in accordance with the
provisions of the applicable Pledged Asset Documents, (v) pledges and deposits made in the ordinary
course of business in compliance with workers’ compensation, unemployment insurance and other
social security laws or regulations or letters of credit or guarantees issued in respect thereof,
(vi) deposits to secure the performances of bids, trade contracts, leases, statutory obligations,
surety and appeal bonds, performance bonds and other



21









 







obligations of a like nature, in each case in the ordinary course of business or letters of
credit or guarantees issued in respect thereof, (vii) covenants, conditions, restrictions,
easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any monetary obligations and
do not materially detract from the value of the affected Pledged Asset or interfere with the
ordinary conduct of business at any applicable Underlying Property, and (viii) such other title and
survey exceptions as the Administrative Agent has approved or may approve in writing in the
Administrative Agent’s sole discretion.



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



     “Pledged Assets” shall mean any Eligible Assets as to which the Administrative Agent has been
granted and holds a valid, perfected Lien for the ratable benefit of the Lenders, together with
each additional Eligible Asset hereafter encumbered by any Security Document from and after the
date such additional Eligible Asset is so encumbered, all as more particularly described in the
granting clauses of the applicable Security Document, as amended, supplemented or otherwise
modified from time to time.



     “Pledged Asset Documents” shall mean, with respect to any Pledged Asset, the agreements,
documents, instruments, information and other items constituting the Collateral File for such
Pledged Asset.



     “Pledged Asset Schedule” shall mean with respect to any borrowing hereunder as of any
Borrowing Date, a schedule in the form of Exhibit J attached hereto describing any Eligible
Assets to be pledged and assigned to Administrative Agent for the ratable benefit of the Lenders
and added to the Collateral on such Borrowing Date. The Pledged Asset Schedule shall be attached
to each Trust Receipt and Custodial Delivery Letter.



     “Pledged Asset Prepayment” shall have the meaning set forth in Section 3.3(c).



     “Prohibited Person” shall mean any Person:




     (a) listed in the Annex to, or who is otherwise subject to the provisions of, the
Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating
to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (the “Executive Order”);




     (b) that is owned or controlled by, or acting for or on behalf of, any person or entity
that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive
Order;




     (c) with whom the Administrative Agent is prohibited from dealing or otherwise engaging
in any transaction by any terrorism or money laundering law, including the Executive Order;



22









 






     (d) who commits, threatens or conspires to commit or supports “terrorism” as defined in
the Executive Order;




     (e) that is named as a “specially designated national and blocked person” on the most
current list published by the U.S. Treasury Department Office of Foreign Assets Control at
its official website, http://www.treas.gov.ofac/t11sdn.pdf or at any replacement website or
other replacement official publication of such list; or




     (f) who is an Affiliate of a Person listed above.



     “Real Estate Taxes” shall mean all real estate and personal property taxes, assessments, water
rates or sewer rents, now or hereafter levied or assessed or imposed against any Underlying
Property or part thereof, together with all interest and penalties thereon.



     “Records” shall mean all instruments, agreements and other books, records, and reports and
data generated by other media for the storage of information maintained by or on behalf of
Borrower, or any other Person with respect to a Pledged Asset. Records shall include, without
limitation, all Pledged Asset Documents, the Collateral Files, the credit files related to the
Pledged Asset and any and all other instruments necessary to document or service such Pledged Asset
or any transfer or conveyance thereof.



     “Referrer” shall have the meaning set forth in Section 13.8.



     “Register” shall have the meaning set forth in Section 13.6(d).



     “REIT Guaranty of Payment” shall mean that certain Guaranty of Payment dated as of the date
hereof, from Ashford REIT in favor of the Administrative Agent for the ratable benefit of the
Lenders, as the same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.



     “Rents” shall mean all rents (including, without limitation, percentage rents), rent
equivalents, moneys payable as damages (including payments by reason of the rejection of a Lease in
a Bankruptcy Action) or in lieu of rent or rent equivalents, royalties (including all oil and gas
or other mineral royalties and bonuses), income, receivables, receipts, revenues, deposits
(including security, utility and other deposits), accounts, cash, issues, profits, charges for
services rendered, and other payments and consideration of whatever form or nature received by or
paid to or for the account of or benefit of an Underlying Borrower from any and all sources arising
from or attributable to the applicable Underlying Property and the improvements thereon, including,
without limitation, all revenues from telephone services, laundry, vending, television, and all
hotel receipts, revenues and credit card receipts collected from guest rooms, restaurants, bars,
meeting rooms, banquet rooms and recreational facilities, and all receivables, customer
obligations, installment payment obligations and other obligations now existing or hereafter
arising or created out of the sale, lease, sublease, license, concession or other grant of the
right of the use and occupancy of the Underlying Property or rendering of services by the
Underlying Borrower, any property manager for the Underlying Property, or any of their respective
agents or employees, and proceeds, if any, from business interruption or other loss of income
insurance.



     “Request for Borrowing” shall have the meaning set forth in Section 2.4(b).



23









 





     “Required Lenders” shall mean, at any time, Lenders (not including Defaulting Lenders) the
Credit Exposure Percentages of which aggregate greater than fifty percent (50%).



     “Revolving Credit Commitment” shall mean, as to any Lender, the obligation of such Lender to
make Loans to Borrower pursuant to Section 2.1 in an aggregate principal and/or face amount
at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on
Schedule 1 under the caption “Revolving Credit Commitment” or in an Assignment and
Acceptance, as such amount may be (i) reduced from time to time in accordance with the provisions
of this Agreement; (ii) increased from time to time in accordance with the definition of “Adjusted
Revolving Credit Commitment Percentage” or (iii) increased in accordance with Section 2.8.
“Revolving Credit Commitments” shall refer collectively to all of the Revolving Credit Commitments
of all of the Lenders.



     “Revolving Credit Commitment Percentage” shall mean, as to any Lender at any time, the
percentage which such Lender’s Revolving Credit Commitment then constitutes of the aggregate
Revolving Credit Commitments (or, at any time after the Revolving Credit Commitments shall have
expired or terminated, the percentage which the aggregate principal amount of such Lender’s Loans
then outstanding constitutes of the aggregate principal amount of the Loans then outstanding).



     “Revolving Credit Commitment Period” shall mean the period from and including the Closing Date
to but not including the Revolving Credit Termination Date or such earlier date on which the
Revolving Credit Commitments shall terminate as provided herein.



     “Revolving Credit Termination Date” shall mean the earlier of (a) December 23, 2008 and (b)
such other date on which the Revolving Credit Commitments terminate and final payment of the
outstanding principal balance of the Note becomes due and payable as provided herein or in any of
the other Loan Documents, whether by declaration of acceleration or otherwise.



     “Secured Obligations” shall have the meaning set forth in Section 4.1.



     “Security Documents” shall mean, collectively, (a) this Agreement, (b) the Equity Pledge
Agreement, (c)(i) in respect of any Pledged Asset that is a Mortgage Loan, an allonge assigning the
related Mortgage Note in blank, an Assignment of Mortgage in blank, an Assignment of Assignment of
Leases in blank, a Collateral Assignment of Mortgage and a Collateral Assignment of Leases, (ii)
with respect to any Pledged Asset that is a Mezzanine Loan, an allonge assigning the related
Mezzanine Note in blank and a Collateral Assignment of Pledge, and (iii) with respect to any
Pledged Asset that is a Junior Interest, an allonge assigning any participation certificate or note
evidencing such Junior Interest in blank and a Collateral Assignment of Participation Interest or
any other document or instrument evidencing such Junior Interest and (d) all other security
documents hereafter delivered to the Administrative Agent granting a Lien on any asset or assets of
any Person to secure any of the Secured Obligations, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.



     “Servicer” shall have the meaning set forth in Section 13.9.



24









 





     “Servicing Agreement” shall have the meaning set forth in Section 13.9.



     “Servicing Fees” shall have the meaning set forth in Section 13.9.



     “Servicing Report” shall mean a remittance report on a monthly basis, or more frequently as
reasonably requested by Administrative Agent, containing servicing information, including, without
limitation, those fields reasonably requested by Administrative Agent from time to time, on a
loan-by-loan basis and in the aggregate, with respect to the Pledged Assets serviced by Borrower or
any applicable servicer of the Pledged Assets for the month (or any portion thereof) prior to the
date of delivery.



     “Special Member” shall have the meaning set forth in Section 5.30(p).



     “Subordinated Debt” shall mean Indebtedness of Ashford REIT and its consolidated Subsidiaries
(i) which is unsecured, (ii) no part of the principal of such Indebtedness is required to be paid
(whether by way of mandatory sinking fund, mandatory redemption, mandatory prepayment or otherwise)
prior to the date which is one year following the Revolving Credit Termination Date and (iii) the
payment of the principal of and interest on such Indebtedness and other obligations of Borrower in
respect of such Indebtedness are subordinated to the prior payment in full of the principal of and
interest (including post-petition obligations) on the Loans and all other obligations and
liabilities of Borrower to Lenders hereunder on terms and conditions approved in writing by
Administrative Agent and all other terms and conditions of which are satisfactory in form and
substance to Administrative Agent.



     “Subsidiary” shall mean, with respect to any Person, any corporation, partnership or other
entity of which at least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.



     “Substitute Asset” shall have the meaning set forth in Section 4.8.



     “Substituted Asset” shall have the meaning set forth in Section 4.8.



     “Sweep Event” shall have the meaning set forth in Section 3.13(b).



     “Sweep Notice” shall mean a notice delivered from Administrative Agent to Clearing Bank upon
the occurrence of a Sweep Event, in the form required by the Clearing Account Agreement.



     “Tangible Net Worth” shall mean, for Ashford REIT (a) the sum of (i) Ashford REIT’s
stockholder’s equity and (ii) Subordinated Debt, minus (b) the sum of (x) any indebtedness owed to
Ashford REIT by affiliates and (y) all intangible assets including goodwill, patents, trade names,
trademarks, copyrights, franchises, any organizational expenses, deferred expenses,



25









 







prepaid assets, receivables from shareholders, affiliates or employees, and any other asset as
shown as an intangible asset on Ashford REIT’s balance sheet on a consolidated basis as determined
at a particular date in accordance with GAAP.



     “Taxes” shall have the meaning set forth in Section 3.9(a).



     “Treasury Note” shall have the meaning set forth in the definition of “Treasury Rate” set
forth below.



     “Treasury Rate” shall mean, with respect to any Interest Period, the rate per annum reported,
with respect to such Interest Period, at 11:00 a.m. New York time on the date that is two (2)
Business Days prior to the tenth (10th) day of the calendar month in which such Interest Period
commences, equal to the then current yield to maturity, on an annual equivalent bond basis
(recalculated to a three hundred sixty (360) day year basis), of a U.S. Treasury bill, note or bond
selected by the Administrative Agent (a “Treasury Note”) that is then actively trading in the
secondary market and maturing one year following the date of such determination; provided
that if such a Treasury Note is not then outstanding, the Treasury Rate shall be the per annum rate
as of each applicable determination date, equal to the current yield to maturity, on an annual
equivalent bond basis (recalculated to a three hundred sixty (360) day year basis), of a Treasury
Note that the Administrative Agent shall, in each case in its sole and absolute discretion,
determine as being appropriate to determine the Treasury Rate. If two or more issues of such
Treasury Notes mature on the same day, then Administrative Agent shall in its reasonable discretion
select one such issue for purposes of determining the Treasury Rate.



     “Trust Receipt” shall mean a trust receipt, substantially in the form attached hereto as
Exhibit I, issued by Custodian to Administrative Agent, for the ratable benefit of the
Lenders, confirming the Custodian’s possession of certain Collateral Files which are held by
Custodian for the benefit of Administrative Agent and the Lenders (or, until such time as such
complete Collateral Files can be delivered to the Custodian, are held on behalf of the Custodian
pursuant to a bailment arrangement with counsel or other third party acceptable to Administrative
Agent in its sole and absolute discretion).



     “UBS” shall have the meaning set forth in the introductory paragraph hereto.



     “Underlying Borrower” shall mean (a) in the case of any Pledged Asset that is a Mortgage Loan
or a Mezzanine Loan, the obligor under a note or credit agreement, (b) in the case of a Mortgage
Loan, the grantor of the related Mortgage, and (c) in the case of a Junior Interest the obligor
under the note, loan agreement or credit agreement evidencing the loan in which such Junior
Interest is granted.



     “Underlying Collateral” shall mean (a) in the case of a Mortgage Loan, the Mortgaged Property
securing such Mortgage Loan pursuant to the Mortgage executed and delivered in connection
therewith, (b) in the case of a Mezzanine Loan, the Equity Securities that are pledged as
collateral security for such Mezzanine Loan and (c) in the case of a Junior Interest, the Mortgaged
Property securing the commercial real estate loan in which such Junior Interest represents a junior
participation (if the Junior Interest is of the type described in clause (a) of the



26









 







definition thereof), or the Mortgaged Property securing such Junior Interest (if the Junior
Interest is of the type described in clause (b) of the definition thereof).



     “Underlying Property” shall mean (a) in the case of a Mortgage Loan, the Mortgaged Property
securing such Mortgage Loan pursuant to the Mortgage executed and delivered in connection
therewith, (b) in the case of a Mezzanine Loan, the real property that is held by the Person the
Equity Securities of which are pledged as collateral security for such Mezzanine Loan and (c) in
the case of a Junior Interest, the Mortgaged Property securing the commercial real estate loan in
which such Junior Interest represents a junior participation (if the Junior Interest is of the type
described in clause (a) of the definition thereof), or the Mortgaged Property securing such Junior
Interest (if the Junior Interest is of the type described in clause (b) of the definition thereof).



     “Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York.



     “Underwriting Package” shall mean, with respect to each Eligible Asset, any material internal
document and valuation analysis prepared by Borrower or any of its Affiliates, or by or on behalf
of the originator of such Eligible Asset, if such originator is not Borrower or any of its
Affiliates (to the extent such analysis has been delivered to Borrower or any of its Affiliates),
for its evaluation, valuation and investment committee approval of such Eligible Asset, which shall
include copies of each of the following:



     (i) historical and prospective operating statements, capital expenditures and budgets,
including a minimum of three (3) years of property level financial statements, to the
extent available, and current financial statements of the Underlying Borrower and any other
obligor with respect to the Eligible Asset, including a statement as to the net worth of
the Underlying Borrower and any related sponsor, if available;




     (ii) a schedule of results of operations for the Underlying Property for the trailing
twelve (12) months immediately preceding the Borrowing Date requested with respect to such
Eligible Asset;




     (iii) a calculation of DSCR for such Underlying Property using a methodology for
calculating DSCR that is consistent with the terms and conditions of this Agreement;




     (iv) an Appraisal of the Underlying Property conducted not more than six months prior
to the date on which the related Eligible Asset is pledged as additional Collateral
hereunder;




     (v) a narrative description of the Underlying Property, the Underlying Borrower, the
Eligible Asset and the material provisions of the applicable Pledged Asset Documents, which
shall include, to the extent available, information with respect to (1) the year that the
improvements at the Underlying Property were constructed, (2) the scope of any planned
improvements, renovations or construction, (3) a description of the hotel facilities
located at the Underlying Property, including information with respect to traditional real
estate parameters, such as location, access, visibility and the like, the number of rooms
at the hotel, food and beverage services and any other retail or other



27









 






services provided at the facility, a map of the facility and the Underlying Property,
and photographs of the facility, if available;




     (vi) to the extent available, any engineering study regarding the hotel or any other
improvements at the Underlying Property;




     (vii) to the extent available, any product improvement plans of any applicable
franchisor and any related franchise license agreement and standstill agreement;




     (viii) any applicable management agreement and a description of any management
company;




     (ix) to the extent available, a summary of existing and projected competition for the
Underlying Property and Borrower’s internal market analysis and analysis of the principal
competitors of the Underlying Property;




     (x) to the extent available, a comparative “benchmark” analysis of the Underlying
Property that compares the operating statements of the Underlying Property to those of
selected comparable properties;




     (xi) to the extent available, the marketing program and business plan for the
Underlying Property;




     (xii) Borrower’s operating model and projections for the Underlying Property,
including, to the extent available, a DSCR sensitivity analysis that addresses the impact
of revenue per average room (RevPAR) and interest rate fluctuations on debt service
capability; and




     (xiii) such further documents or information as Administrative Agent may reasonably
request.



     “Underwritten Net Cash Flow” shall mean, for any Pledged Asset for any period, the
underwritten net cash flow of the Underlying Property with respect to such Pledged Asset (inclusive
of any payments received from hedge providers in accordance with the terms of the applicable
Pledged Asset Documents) determined by Administrative Agent in its sole and absolute discretion in
accordance with Administrative Agent’s underwriting standards for assets of the same Asset Type as
such Pledged Asset as in effect as of the Borrowing Date on which such Pledged Asset is added to
the Collateral hereunder.



     “Updated DSCR” shall have the meaning set forth in the definition of “Market Value”.



     “Updated Underwriting Package” shall mean, with respect to any Pledged Asset, copies of each
of the following:




     (i) current financial statements of the Underlying Borrower and any other obligor with
respect to the Pledged Asset, including a statement as to the net worth of the Underlying
Borrower and any related sponsor, if available;



28









 






     (ii) to the extent available to Borrower or any of its Affiliates or required to be
delivered to Borrower or any of its Affiliates by the Underlying Borrower pursuant to the
applicable Pledged Asset Documents, a schedule of results of operations for the Underlying
Property for the trailing twelve (12) month period covering the most recent twelve (12)
full calendar months for which the Underlying Borrower has reported (or was obligated to
report) to Borrower or any of its Affiliates pursuant to the applicable Pledged Asset
Documents;




     (iii) a calculation of DSCR for such Underlying Property using a methodology for
calculating DSCR that is consistent with the terms and conditions of this Agreement;




     (iv) to the extent available, a comparative “benchmark” analysis of the Underlying
Property that compares the operating statements of the Underlying Property to those of
selected comparable properties; and




     (v) Borrower’s operating model and current projections for the Underlying Property,
including, to the extent available, a DSCR sensitivity analysis that addresses the impact
of revenue per average room (RevPAR) and interest rate fluctuations on debt service
capability.



     “Unused Fee” shall have the meaning set forth in Section 2.7.



     1.2. Other Definitional Provisions.



          (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in any Note or any certificate or other document made or delivered
pursuant hereto.




          (b) As used herein and in any Note, and any certificate or other document made or delivered
pursuant hereto, accounting terms relating to Borrower and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent not
defined, shall have the respective meanings given to them under GAAP.




          (c) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.




          (d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.




     SECTION 2. AMOUNT AND TERMS OF REVOLVING CREDIT
COMMITMENTS



     2.1. Revolving Credit Commitments. Subject to the terms and conditions hereof, each
Lender severally agrees to make revolving credit loans (each a “Loan” and, collectively, the
“Loans”) to Borrower from time to time during the Revolving Credit Commitment Period in an
aggregate principal amount at any one time outstanding not to exceed the amount of such



29









 




Lender’s Revolving Credit Commitment then in effect. During the Revolving Credit Commitment
Period, Borrower may use the Revolving Credit Commitments by borrowing, prepaying the Loans in
whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. The
total amount of all of the Revolving Credit Commitments of all of the Lenders in the aggregate
shall be equal to the Maximum Credit available under this Agreement, as the same may be adjusted
pursuant to Section 2.8 hereof; provided that the actual total aggregate amount
that Borrower may borrow from the Lenders hereunder at any given time may not exceed the Borrowing
Base, which may be an amount less than the Maximum Credit.




     2.2. Notes. The Loans made by each Lender shall be evidenced by a promissory note of
Borrower, substantially in the form of Exhibit B attached hereto with appropriate
insertions as to payee, date and principal amount (each, a “Note”), payable to the order of such
Lender and evidencing the obligation of Borrower to pay the aggregate unpaid principal amount of
all Loans made by such Lender. Each Lender is hereby authorized to record the date and amount of
each Loan made by such Lender and the date and amount of each payment or prepayment of principal
thereof, on the schedule annexed to and constituting a part of its Note, and any such recordation
shall constitute prima facie evidence of the accuracy of the information so recorded. Each Note
shall (i) be dated the Closing Date or such later date as the Lender’s interest therein shall
arise, (ii) be stated to mature on the Revolving Credit Termination Date, and (iii) bear interest
on the unpaid principal amount thereof from time to time outstanding at the applicable interest
rate per annum determined as provided in Article 3. Interest on each Note shall be payable
on the dates specified in Section 3.1(d).



     2.3. Advance Amounts. Funds shall be advanced with respect to each Pledged Asset in
an amount equal to the Asset Value of such Pledged Asset multiplied by the applicable Advance Rate;
provided that, notwithstanding any other provisions of this Agreement, in no event shall
Lender advance more than 80% of the Asset Value of any Pledged Asset.



     2.4. Procedure for Borrowing.



          (a) Borrower may borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day in an aggregate principal amount not exceeding the Borrowing
Base then in effect; provided that (x) Borrower may not borrow, and Lenders shall not be
required to lend, more than two (2) times during any calendar quarter, (y) in no event shall any
Loan hereunder be funded on any Business Day that is less than thirty (30) Business Days after the
Borrowing Date of the immediately preceding Loan hereunder, and (z) in no event shall the original
principal amount of any Loan secured by any single Pledged Asset exceed Twenty Million and No/100
Dollars ($20,000,000.00).




          (b) In connection with each borrowing, Borrower shall deliver to the Administrative Agent a
written request for borrowing, substantially in the form of Exhibit A attached hereto (a
“Request for Borrowing”), specifying (i) the amount to be borrowed (which shall not be less than
One Million and No/100 Dollars ($1,000,000.00)), (ii) the requested Advance Rate with respect to
such Loan, (iii) the Applicable Spread with respect to such Loan corresponding to such Advance Rate
on Schedule 2, and (iv) the requested Borrowing Date, and attaching (x) a Borrowing Base
Certificate dated as of the date of such Request for Borrowing, (y) a Pledged Asset Schedule
describing any Eligible Assets that, in connection with such Loan,

30









 








are proposed to be added to the Collateral as additional security for the Secured Obligations,
and (z) true and correct copies of the documents comprising a substantially complete Collateral
File for each Eligible Asset that is proposed to be added to the Collateral in connection with such
Loan. Each Request for Borrowing must be received by the Administrative Agent prior to 11:00 a.m.,
New York time, at least five (5) Business Days prior to the requested Borrowing Date;
provided that, if any Eligible Assets are proposed to added to the Collateral in connection
with such borrowing, the foregoing five (5) Business Day period shall be extended by the number of
Business Days required for the Administrative Agent to complete its review of such Eligible Assets
as provided in Section 2.4(d) below; and provided, further that, if the
requested Borrowing Date is the date hereof, a Request for Borrowing must be received by the
Administrative Agent prior to 11:00 a.m., New York time, on the date hereof.




          (c) Administrative Agent shall, on behalf of the Lenders, have the right, in its sole and
absolute discretion and for any reason or no reason, to accept or deny any proposed Eligible Asset
for inclusion in the Borrowing Base. Borrower hereby acknowledges and agrees that, notwithstanding
the Revolving Credit Commitments hereunder, Administrative Agent is under no obligation or
commitment to accept any particular Eligible Asset as additional security for the Secured
Obligations. Following receipt of a Pledged Asset Schedule, a complete Underwriting Package and
true and correct copies of the documents comprising a substantially complete Collateral File for
each proposed Eligible Asset, Administrative Agent shall have the right to review each Eligible
Asset proposed to be including in the Borrowing Base and conduct its own due diligence
investigation of such Eligible Asset in a manner determined by Administrative Agent in its sole and
absolute discretion. Borrower shall pay, at or prior to such time as any Eligible Asset is
accepted as additional Collateral hereunder or upon request, all due diligence out-of-pocket costs
and expenses, including reasonable legal fees and fees and expenses of the Servicer, incurred by
Administrative Agent in connection with Administrative Agent’s due diligence of such Eligible Asset
hereunder.




          (d) Administrative Agent agrees that it shall notify Borrower of its approval or disapproval
of each proposed Eligible Asset within ten (10) Business Days after its receipt of a complete
Underwriting Package and true and correct copies of the documents comprising a substantially
complete Collateral File for each proposed Eligible Asset and any supplemental requests (requested
orally or in writing) relating to such proposed Eligible Asset; provided that, if Borrower
proposes adding more than one (1) but not more than five (5) Eligible Assets to the Collateral
hereunder at any one time, the Administrative Agent shall notify Borrower of its approval or
disapproval of each of such proposed Eligible Asset within twenty (20) Business Days after its
receipt of a complete Underwriting Package and true and correct copies of the documents comprising
a substantially complete Collateral File for each such proposed Eligible Asset and any supplemental
requests (requested orally or in writing) relating to such proposed Eligible Assets;
provided, further, that, if Borrower proposes adding more than five (5) Eligible
Assets to the Collateral hereunder at any one time, the Administrative Agent shall have such
additional reasonable period of time to review such Eligible Assets as the parties shall then
agree. Unless Administrative Agent notifies Borrower of its approval of any proposed Eligible
Asset within the applicable time period provided herein, Administrative Agent, on behalf of the
Lenders, shall be deemed not to have approved such proposed Eligible Asset.




31









 








          (e) Upon completion of its review of any proposed Eligible Assets, Administrative Agent shall,
consistent with this Agreement, notify Borrower of the terms for the Loan that will be secured by
such Eligible Assets, including the applicable Advance Rate, the Applicable Spread, the Borrowing
Date for such Loan, the Base Case Market Value and the Base Case DSCR of each such Eligible Asset
and any additional terms or conditions of the Loan that are not inconsistent with the terms and
conditions of this Agreement. After a proposed Eligible Asset has been approved by the
Administrative Agent for inclusion in the Borrowing Base hereunder, such Eligible Asset shall,
subject to satisfaction of the conditions set forth in Section 6.2 of this Agreement, be pledged as
additional Collateral hereunder and thereafter shall be deemed a Pledged Asset for all purposes of
this Agreement. Subject to the provisions of Sections 3.3(a)(iii) and (iv), there
shall be only one Advance Rate and one Applicable Spread for all Loans advanced with respect to
each Pledged Asset hereunder, it being understood and agreed that, if as the result of an increase
in the Borrowing Base hereunder, Borrower submits a Request for Borrowing without adding additional
Pledged Assets to the Collateral hereunder, any Loan advanced pursuant to such Request for
Borrowing shall be allocated among the Pledged Assets based upon the fixed Advance Rate and
Applicable Spread for each Pledged Asset. The Administrative Agent shall promptly notify each
Lender of the terms and conditions of each Loan, determined in a manner consistent with this
Agreement. Provided that the terms and conditions of Section 6.2 hereof have been
satisfied, each Lender will make the amount of its Revolving Credit Commitment Percentage of each
borrowing available to the Administrative Agent for the account of Borrower at the office of the
Administrative Agent specified in Section 13.2 prior to 3:00 p.m., New York time, on the
Borrowing Date requested by Borrower in funds immediately available to the Administrative Agent.
Such borrowing will then be made available to Borrower by the Administrative Agent crediting the
account of Borrower on the books of such office with the aggregate of the amounts made available to
the Administrative Agent by the Lenders and in like funds as received by the Administrative Agent.




          (f) On the applicable Borrowing Date, Borrower shall release to the Custodian no later than
11:00 a.m., New York time, on such Borrowing Date, the Collateral File pertaining to each Eligible
Asset to be added to the Collateral as additional security for the Secured Obligations, all in
accordance with the Custodial Agreement, together with a Custodial Delivery Letter and a Pledged
Asset Schedule. Pursuant to the Custodial Agreement, Custodian shall deliver to Administrative
Agent and Borrower a Pledged Asset Schedule and an Exception Report with respect to the Eligible
Assets which Borrower has requested be included in the Borrowing Base on such Borrowing Date, and
no later than 5:00 p.m., New York time, on each Borrowing Date, Custodian shall deliver to
Administrative Agent a Trust Receipt in respect of all such Eligible Assets pledged as additional
security for the Secured Obligations on such Borrowing Date.




     2.5. Termination of Revolving Credit Commitments. Borrower shall have the right, upon
not less than five (5) Business Days’ prior written notice to the Administrative Agent, to
terminate the Revolving Credit Commitments in full or in part; provided that, in the case
of any termination of the Revolving Credit Commitments in full, concurrently therewith, all Loans
are repaid in full, together with an amount equal to the accrued but unpaid Unused Fee applicable
to the portion of the year in which such Loans are repaid; and provided, further,
that in the case of any termination of the Revolving Credit Commitments in part, after giving
effect to such partial termination and any prepayment of the Loans in accordance with Section
3.2 or Section 3.3 in



32









 







connection therewith, the Outstanding Principal Balance shall not exceed the lesser of the
Borrowing Base or the Revolving Credit Commitments, as so reduced. In the event the Revolving
Credit Commitments are terminated in full in accordance with the terms hereof, thereafter, all
references herein and in any of the other Loan Documents to the “Revolving Credit Termination Date”
shall be deemed to refer to said date of termination of the Revolving Credit Commitments.



     2.6. Maturity. Borrower shall pay to the Administrative Agent for the ratable benefit
of the Lenders on the Revolving Credit Termination Date the entire Outstanding Principal Balance,
all accrued and unpaid interest and all other amounts due hereunder and under the other Loan
Documents.



     2.7. Fees. Borrower agrees to pay to the Administrative Agent in arrears a quarterly
fee (the “Unused Fee”), payable on the first Business Day of each January, April, July, and
October, in an amount equal to the product of (i) 0.0375% (i.e., 0.000375) and (ii) the difference
between the Maximum Credit or the Adjusted Maximum Credit, as applicable from time to time during
the preceding calendar quarter, and the average Outstanding Principal Balance from time to time
during such quarter, determined, in each instance, based upon the number of days during such
quarter that such Maximum Credit or Adjusted Maximum Credit, as the case may be, and such average
Outstanding Principal Balance were outstanding.



     2.8. Adjustment to Maximum Credit. Borrower may, at any time prior to the Revolving
Credit Termination Date, request that the Maximum Credit be increased from One Hundred Million and
No/100 Dollars ($100,000,000.00) to One Hundred Fifty Million and No/100 Dollars ($150,000,000.00)
(the “Adjusted Maximum Credit”) by delivering to Administrative Agent a written request for such
increase (a “Credit Increase Request”). Upon receipt by Administrative Agent of a Credit Increase
Request, the Maximum Credit shall be increased to the Adjusted Maximum Credit provided that each of
the following conditions shall have been satisfied: (A) no Default or Event of Default shall have
occurred and be continuing under any of the Loan Documents, (B) no Borrowing Base Deficiency shall
have occurred and be continuing, (C) no Market Deficiency shall have occurred and be continuing
with respect to any Pledged Assets, (D) each of the conditions set forth in Sections
6.2(a), (c), (d), (e), (h)(ii), (h)(iv), (k),
(l), (m) and (p) shall have been satisfied or waived (provided that any
legal opinions to be delivered shall be substantially the same as the opinions that were delivered
in connection with the initial Loans as relevant to such increase), (E) Administrative Agent shall
have obtained all necessary internal investment committee and credit approvals for the Adjusted
Maximum Credit, which such approval may be granted or withheld in Administrative Agent’s sole and
absolute discretion, and (F) Administrative Agent shall have received payment from Borrower of all
reasonable costs and expenses, including reasonable attorneys fees and expenses, incurred by
Administrative Agent in connection with entering into such increase.



     SECTION 3. GENERAL PROVISIONS APPLICABLE TO LOANS



     3.1. Interest Rates and Payment Dates.



          (a) Subject to the further provisions of this Agreement, including, without limitation,
Sections 3.1(b), 3.6 and 3.7, each Loan shall bear interest for each day
during the




33









 







Interest Period with respect thereto at a rate per annum equal to LIBOR determined for such
Interest Period plus the Applicable Spread.




          (b) During the continuance of any Event of Default, Borrower shall pay interest on any
principal of any Loan outstanding at a rate per annum which is the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section 3 plus five percent
(5.0%) (the “Default Rate”).




          (c) If any principal (other than the payment due on the Maturity Date), or interest due under
the Loan Documents is not paid by Borrower on the date on which it is due (or if the principal
payment due on the Maturity Date or any other sum is not paid within five (5) days after the date
on which it is due), Borrower shall pay to the Administrative Agent upon demand an amount equal to
the lesser of five percent (5%) of such unpaid sum or the maximum amount permitted by applicable
law in order to defray the expense incurred by the Administrative Agent in handling and processing
such delinquent payment and to compensate the Administrative Agent for the loss of the use of such
delinquent payment. Any such amount shall be secured by the Security Documents and the other Loan
Documents.




          (d) Interest shall be payable in arrears on each Payment Date and on the Revolving Credit
Termination Date; provided that the Administrative Agent may, in its sole discretion,
require accrued interest to be paid simultaneously with any prepayment of principal made by
Borrower on account of any of the Loans outstanding; and provided, further, that
interest accruing pursuant to Section 3.1(b) shall accrue daily and shall be payable from
time to time on demand.




     3.2. Optional Prepayments.



          (a) Borrower may at any time and from time to time (including, without limitation, to cure any
Borrowing Base Deficiency) prepay the Loans, in whole or in part, without premium or penalty, upon
irrevocable written notice (an “Optional Prepayment Notice”) to the Administrative Agent given no
less than three (3) Business Days prior to the date of such prepayment, specifying the date and
amount of prepayment (it being understood that failure to provide the Administrative Agent with
notice of a prepayment no less than three (3) Business Days prior to the next occurring
Determination Date may result in liability on the part of Borrower pursuant to Section 3.11
hereof). Upon receipt of any such notice, the Administrative Agent shall promptly notify each
Lender thereof. If any such notice is given, Borrower may deliver written notice of the rescission
thereof at any time up to the proposed date of prepayment identified in such notice of prepayment,
but if no such notice of rescission is delivered, the amount specified in such notice shall be due
and payable on the date specified therein, together with any amounts payable pursuant to
Section 3.11. Partial prepayments pursuant to this Section 3.2 shall be in an
aggregate principal amount of $1,000,000.00 or a whole multiple thereof.




          (b) Subject to Section 4.7(c), in connection with any prepayment pursuant to
Section 3.2(a), the Lien of the Security Documents shall be released with respect to any
Pledged Asset forming part of the Collateral, as designated by Borrower in the related Optional

34









 








Prepayment Notice, so long as no Borrowing Base Deficiency would occur after giving effect to
such proposed release and prepayment.




     3.3. Mandatory Prepayments.



          (a) Borrowing Base Deficiency.





          (i) The Market Value of all Pledged Assets will be determined by Administrative Agent
(A) on a date not later than fifteen (15) days following the end of any calendar quarter,
(B) promptly following the date that any Pledged Asset becomes a Defaulted Asset, (C)
promptly following a request for the release of a Pledged Asset from the Collateral securing
the Secured Obligations pursuant to Section 4.7(c) hereof or the substitution of a
Substitute Asset for a Substituted Asset pursuant to Section 4.8 hereof, (D) in
connection with any Pledged Asset Prepayment pursuant to Section 3.3(c) hereof, (E)
upon the occurrence of any deemed approval of Administrative Agent under Section
8.19(b), and (F) as of each Borrowing Date hereunder (each a “Market Determination
Date”). Borrower shall deliver to Administrative Agent, at least five (5) Business Days
prior to each Market Determination Date (or, in the case of a Market Determination Date
described in clause (E), three (3) Business Days prior to such Market Determination Date),
an Updated Underwriting Package for each Pledged Asset for which an Updated Underwriting
Package has not been delivered to the Administrative Agent within thirty (30) days prior to
such Market Determination Date. If, on any Market Determination Date, (x) a Borrowing Base
Deficiency exists, (y) the Aggregate Market Value is less than the Aggregate Base Case
Market Value (a “Market Deficiency”), and (z) the amount of such Market Deficiency is more
than fifteen percent (15%) of the Aggregate Base Case Market Value (the “Market Deficiency
Threshold”), then Lender shall provide written notice of such Market Deficiency to Borrower
(such notice, a “Market Deficiency Notice”) and Borrower shall, no later than the fifth
(5th) Business Day immediately following the date of delivery of the related
Market Deficiency Notice, prepay the Outstanding Principal Balance by an amount (the
“Borrowing Base Deficiency Cure Amount”) sufficient to cure the Borrowing Base Deficiency.




          (ii) With the prior written consent of the Administrative Agent, which such consent may
be granted or withheld in Administrative Agent’s sole discretion, Borrower may, in lieu of
prepaying the Outstanding Principal Balance as provided in Section 3.3(a)(i), enter
into a Security Document in favor of the Administrative Agent for the ratable benefit of the
Lenders with respect to one or more additional Eligible Assets (provided that all of the
conditions precedent set forth in Section 6.2 hereof are satisfied) having a
combined Market Value sufficient (together with the Market Value of all other Additional
Assets theretofore encumbered pursuant to this Section 3.3(a)(ii)), when multiplied
by the applicable Advance Rate for each such Additional Asset, to cure the Borrowing Base
Deficiency.




          (iii) To the extent that, on any Market Determination Date, the Market Value of any
Pledged Asset as to which Lenders shall have advanced sixty percent (60%) of its Base Case
Market Value on the Borrowing Date therefor is less than its Base Case Market Value,
Borrower shall have the right to elect to pay interest hereunder with



35









 






respect to all Pledged Assets of that Asset Type which were advanced at that Advance
Rate at a rate based upon the Applicable Spread determined as if Lender had advanced seventy
percent (70%) of the Base Case Market Value thereof, in which case the Borrowing Base shall
be deemed increased as a result of such increase in the Advance Rate, and the Borrowing Base
Cure Amount at such time shall be reduced to an amount equal to that which would be required
to cure the Borrowing Base Deficiency after giving effect to the increased Borrowing Base
resulting from Borrower’s election under this Section 3.3(a)(iii). If, after giving
effect to Borrower’s election under this Section 3.3(a)(iii), the Borrowing Base
exceeds the Outstanding Principal Balance, Borrower may submit a Request for Borrowing with
respect to such excess amount. If Borrower shall elect to pay interest at an increased
rate with respect to all Pledged Assets of a particular Asset Type and Advance Rate as
provided in this Section 3.3(a)(iii), the Applicable Spread for all such Pledged
Assets shall be increased, effective as of the date of the applicable Market Deficiency
Notice, to the Applicable Spread on Schedule 2 hereto effective for such increased
Advance Rate.




          (iv) In addition, so long as (A) no Market Deficiency shall then have occurred and be
continuing with respect to any Pledged Assets and (B) no Event of Default, no monetary
Default and no other Default as to which Administrative Agent shall have delivered a notice
of default to Borrower hereunder shall have occurred and be continuing, if on any Market
Determination Date the total of the Market Values for all Pledged Assets of a particular
Asset Type and Advance Rate is greater than the total of all Base Case Market Values of all
Pledged Assets of that Asset Type and Advance Rate such that, in the aggregate, the Advance
Rate for such Pledged Assets has effectively decreased to the next lowest Advance Rate set
forth in Schedule 2 hereto, and the amount of such excess Market Value is more than
ten percent (10%) of the Base Case Market Value of all Pledged Assets of that Asset Type and
Advance Rate (a “Market Value Surplus”) and the same has been true for two or more
consecutive preceding quarters, then Borrower may request in writing (a “Market Surplus
Notice”) that the Applicable Spread for all Pledged Assets of that Asset Type and Advance
Rate (and as to which such Market Value Surplus shall exist) be decreased, and such rate
shall be decreased effective as of the date of the applicable Market Surplus Notice, to the
Applicable Spread on Schedule 2 hereto effective for such decreased Advance Rate.
Nothing in this Section 3.3(a)(iv) shall be deemed to preclude or limit the
application of any other provision of this Section 3.3(a) at any time after the
delivery of a Market Surplus Notice.




          (v) Any Market Deficiency Notice delivered pursuant to this Section 3.3(a)
shall be given in accordance with Section 13.2 hereof. The failure of
Administrative Agent, on any one or more occasions, to exercise its rights hereunder, shall
not change or alter the terms and conditions to which this Agreement is subject or limit the
right of Administrative Agent to do so at a later date; provided that the
determination of whether a Borrowing Base Deficiency exists or whether a Market Deficiency
exists which is in excess of the applicable Market Deficiency Threshold shall be based on
the then-current circumstances and Aggregate Market Value. Borrower, Administrative Agent
and Lenders each agree that a failure or delay by Administrative Agent to exercise its
rights hereunder shall not limit or waive Administrative Agent’s



36









 






rights, on behalf of itself or Lenders, under this Agreement or otherwise existing by
law, or in any way create additional rights for Borrower.




          (vi) For all purposes of this Agreement, if any Additional Asset is to be added to the
Collateral pursuant to Section 3.3(a)(ii) hereof, Borrower shall satisfy the
conditions set forth in Section 6.2 for each such Additional Asset and, upon satisfaction of
such conditions and the acceptance by Administrative Agent, in its sole discretion, of such
Additional Assets as additional Collateral hereunder, such Additional Assets shall become
“Pledged Assets” for all purposes of this Agreement. The Administrative Agent shall, at
the time such Additional Assets become Pledged Assets hereunder, determine the Base Case
DSCR, the Base Case Market Value and the Asset Value for each such Additional Asset.



          (b) Defaulted Asset.





          (i) If any Pledged Asset becomes a Defaulted Asset as a result of a Bankruptcy Action
with respect to the Underlying Borrower or the owner of the related Underlying Property, the
Market Value of such Defaulted Asset shall immediately be deemed reduced to zero for
purposes of Section 3.3(a) and Borrower shall, not later than the Business Day
immediately following the earliest to occur of: (A) Borrower’s senior management learning or
having any notice thereof or (B) Lender’s delivering notice thereof to Borrower, prepay the
Outstanding Principal Balance in an amount equal to the lesser of (i) the product of (x) the
Asset Value of the Defaulted Asset multiplied by (y) the Advance Rate then in effect for
such Defaulted Asset and (ii) such amount as may be necessary to avoid a Borrowing Base
Deficiency after giving effect to such reduction of the Market Value of such Pledged Asset
(such amount, the “Defaulted Loan Prepayment Amount”) and, upon such payment, such Defaulted
Asset shall be removed from the Collateral and the Lien of the Security Documents relating
to such Defaulted Asset shall be released as provided in Section 4.7(c)(i).




          (ii) Subject to the provisions of Section 3.3(a), with respect to any other
Defaulted Asset not described in Section 3.3(b)(i), (A) if the event of default
under the Pledged Asset Documents with respect to such Defaulted Asset that gave rise to the
Pledged Asset becoming a Defaulted Asset has not been cured within thirty (30) days after
such Pledged Asset became a Defaulted Asset (or such earlier time as may be requested by
Borrower), then the Market Value of such Pledged Asset shall thereafter be deemed to be zero
for purposes of the provisions of Section 3.3(a), and (B) if such event of default
has not been cured within ninety (90) days after such Pledged Asset became a Defaulted
Asset, then Borrower shall prepay the Outstanding Principal Balance in an amount equal to
the Defaulted Loan Prepayment Amount within one Business Day thereafter and such Defaulted
Asset shall be removed from the Collateral and the Lien of the Security Documents relating
to such Defaulted Asset shall be released as provided in Section 4.7(c)(i).



          (c) Prepayments of Pledged Asset. In the event that Borrower or Servicer receives any
prepayment of all or any portion of the outstanding principal balance of any Pledged Asset pursuant
to the terms and conditions of the applicable Pledged Asset Documents




37









 







(a “Pledged Asset Prepayment”), then, no later than the Business Day immediately following the
date on which such Pledged Asset Prepayment is received, Borrower shall prepay the Outstanding
Principal Balance by an amount equal the lesser of (i) an amount equal to (x) such Pledged Asset
Prepayment multiplied by (y) the Advance Rate then in effect for such Pledged Asset and (ii) such
amount as may be necessary to avoid a Borrowing Base Deficiency after giving effect to such
prepayment.




          (d) Funds Held in Cash Collateral Account. Notwithstanding anything to the contrary
contained in this Section 3.3, in the event Borrower would incur costs pursuant to
Section 3.11 as a result of any payment due pursuant to this Section 3.3, Borrower,
at its option, may deposit the amount of such payment, together with interest thereon through the
applicable Interest Period, with the Administrative Agent in a cash collateral account (or in the
Deposit Account) until the end of the applicable Interest Period.




     3.4. Prepayment Amounts. In the event that Borrower makes any prepayment of all or
any portion of the Outstanding Principal Balance as provided in Section 3.2 or Section
3.3, such payment shall include all accrued and unpaid interest on such prepaid principal
amount at the applicable interest rate, any other amounts due and payable with respect thereto, and
all out-of-pocket fees and expenses (including, without limitation, reasonable legal fees) incurred
by Administrative Agent and up to one Lender hereunder in connection with such prepayment or the
release of any Lien on any portion of the Collateral in connection therewith and any amounts
payable pursuant to Section 3.11. Mandatory or optional prepayments pursuant to
Section 3.2 or Section 3.3 shall not result in any permanent reduction in any
Lender’s Revolving Credit Commitment.



     3.5. Computation of Interest and Fees.



          (a) Subject to Section 2.7, fees and interest shall be calculated on the basis of a
360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable
notify Borrower and the Lenders of each determination of LIBOR. Any change in the interest rate on
a Loan resulting from a change in the LIBOR Reserve Requirements shall become effective as of the
opening of business on the day on which such change becomes effective. The Administrative Agent
shall as soon as practicable notify Borrower and the Lenders of the effective date and the amount
of each such change in interest rate.




          (b) Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on Borrower and the Lenders in the
absence of manifest error. The Administrative Agent shall, at the request of Borrower, deliver to
Borrower a statement showing the quotations used by the Administrative Agent in determining any
interest rate pursuant to Section 3.1(a) or (b) hereof.




          (c) This Agreement and the other Loan Documents are subject to the express condition that at
no time shall Borrower be required to pay interest on the principal balance of the Loans at a rate
which could subject the Lenders to either civil or criminal liability as a result of being in
excess of the Maximum Legal Rate. If by the terms of this Agreement or any other Loan Document,
Borrower is at any time required or obligated to pay interest on the Loans at a rate in excess of
the Maximum Legal Rate, then the rate or rates at which all or any portion of

38









 








the Loans bear interest hereunder shall be deemed to be immediately reduced to the Maximum
Legal Rate and all previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due hereunder. All sums
paid or agreed to be paid to the Lenders for the use, forbearance, or detention of the sums due
under the Loans, shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full stated term of the Loans until payment in full so that the
rate or amount of interest on account of the Loans does not exceed the Maximum Legal Rate from time
to time in effect and applicable to the Loans for so long as the Loans are outstanding.




     3.6. Pro Rata Treatment and Payments.



          (a) Each borrowing by Borrower from the Lenders hereunder, each payment by Borrower on account
of any Fee hereunder and any reduction of the Revolving Credit Commitments of the Lenders shall be
made pro rata according to the respective Revolving Credit Commitment Percentages of the Lenders
or, following a Lender Default, according to the respective Adjusted Revolving Credit Commitment
Percentages of the Lenders other than the Defaulting Lenders. Each payment (including each
prepayment) by Borrower on account of principal of and interest on the Loans shall be made pro rata
according to the respective outstanding principal amounts of the Loans then held by the Lenders.
All payments (including prepayments) to be made by Borrower hereunder, whether on account of
principal, interest, Fees or otherwise, shall be made without set-off or counterclaim and shall be
made prior to 1:00 p.m., New York time, on the due date thereof to the Administrative Agent, for
the account of the Lenders, at the Administrative Agent’s office specified in Section 13.2,
in Dollars and in immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder
becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended
to the next succeeding Business Day unless the result of such extension would be to extend such
payment into another calendar month, in which event such payment shall be made on the immediately
preceding Business Day.




          (b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to
a borrowing that such Lender will not make the amount that would constitute its Revolving Credit
Commitment Percentage of such borrowing available to the Administrative Agent, the Administrative
Agent may assume that such Lender is making such amount available to the Administrative Agent, and
the Administrative Agent may, in reliance upon such assumption, make available to Borrower a
corresponding amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately available to the
Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section shall be conclusive in the absence of manifest
error. If such Lender’s Revolving Credit Commitment Percentage of such borrowing is not made
available to the Administrative Agent by such Lender within three (3) Business Days of such
Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum applicable to such Loans hereunder, on demand, from
Borrower.




39









 








          (c) Notwithstanding the foregoing, nothing contained in this Section 3.6 shall relieve
any Defaulting Lender from its obligation to make available its ratable portion of any Loan in
accordance with the terms hereof.




     3.7. Illegality. Notwithstanding any other provision herein, if after the date of
this Agreement the adoption of or any change in any Legal Requirements or in the interpretation or
application thereof by any Governmental Authority charged with the administration or interpretation
thereof or any judgment, order or directive of any competent court, tribunal or authority (a
“Change in Law”) shall make it unlawful for any Lender to make or maintain Loans, the rate of
interest applicable to which is based upon LIBOR as contemplated by this Agreement, then, upon
written notice to Borrower and the Administrative Agent, so long as such illegality shall exist,
(a) the commitment of such Lender hereunder to make or continue such Loans at such rate of interest
shall forthwith be cancelled, (b) such Lender’s Loans then outstanding, if any, shall be converted
automatically to Base Rate Loans, on the last day of the then current Interest Period with respect
to such Loans or within such earlier period as required by law, and (c) any request for borrowings
shall, as to such Lender only, be deemed a request for a Base Rate Loan. If any such conversion
occurs on a day which is not the last day of the then current Interest Period with respect thereto,
Borrower shall pay to such Lender such amounts, if any, as may be required pursuant to Section
3.11.



     3.8. Inability to Determine Interest Rate. If prior to the first day of any Interest
Period:



          (a) the Administrative Agent shall have determined (which determination shall be conclusive
and binding upon Borrower, absent manifest error) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for ascertaining LIBOR for such
Interest Period, or




          (b) the Administrative Agent shall have received notice from the Required Lenders that LIBOR
determined or to be determined for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (as conclusively certified by such Lenders, absent manifest error) of making
or maintaining their affected Loans during such Interest Period,



then the Administrative Agent shall give telecopy or telephonic notice thereof to Borrower and the
Lenders as soon as practicable thereafter. If such notice is so given, then until the
Administrative Agent notifies Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist (which notice shall be delivered when such circumstances no longer exist),
(i) any LIBOR Loans requested to be made on the first day of such Interest Period shall be made as
Base Rate Loans, (ii) any Loans that were to have been continued on the first day of such Interest
Period, shall be continued as Base Rate Loans, and (iii) any outstanding LIBOR Loans shall be
converted, on the first day of such Interest Period, to Base Rate Loans.




     3.9. Legal Requirements.



          (a) If a Change in Law after the Closing Date or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank or other Governmental
Authority made subsequent to the Closing Date:




40









 









          (i) shall impose, modify or hold applicable any reserve (but excluding the LIBOR
Reserve Percentage taken into account in calculating LIBOR), special deposit, compulsory
loan or similar requirement against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit by, or any other acquisition
of funds by, any office of such Lender which is not otherwise included in the determination
of LIBOR hereunder; or




          (ii) shall impose on such Lender any other condition (other than concerning Taxes,
which is addressed in Section 3.10);


and the result of any of the foregoing is to increase the cost to such Lender, by an amount which
such Lender deems to be material, of making, participating in, continuing or maintaining any Loan
or to reduce any amount due or owing hereunder in respect thereof, then, in any such case, Borrower
shall pay such Lender such additional amount or amounts as will compensate such Lender for such
increased cost or reduced amount receivable pursuant to and in accordance with the terms of
Section 3.9(c).




          (b) If any Lender shall have determined that any Change in Law after the Closing Date
applicable to such Lender (other than with respect to any amendment made to the Lender’s
certificate of incorporation and by-laws or other organizational or governing documents) regarding
capital adequacy or compliance by such Lender or any entity controlling such Lender with any
request or directive regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the Closing Date shall have the effect of reducing the
rate of return on such Lender’s or such entity’s capital as a consequence of its obligations
hereunder to a level below that which such Lender or such entity could have achieved but for such
adoption, change or compliance (taking into consideration such Lender’s or such entity’s policies
with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time
to time, Borrower shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction pursuant to and in accordance with the terms of Section
3.9(c).




          (c) If any Lender becomes entitled to claim any additional amounts pursuant to this
Section 3.9, it shall promptly deliver to Borrower (with a copy to the Administrative
Agent) a certificate of such Lender specifying the event by reason of which it has become so
entitled and setting forth in reasonable detail the calculation thereof. A certificate as to any
additional amounts payable pursuant to this Section submitted by such Lender to Borrower (with a
copy to the Administrative Agent) shall be conclusive in the absence of manifest error. Borrower
shall pay such Lender the amount due on any such certificate within ten (10) days after receipt
thereof. The agreements in this Section shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.




          (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section
shall not constitute a waiver of such Lender’s right to demand such compensation; provided
that Borrower shall not be required to compensate a Lender pursuant to this Section for any
increased costs or reductions incurred more than one hundred eighty (180) days prior to the date on
which such Lender notifies Borrower of the Change in Law or other event giving rise to such
increased costs or reductions and of such Lender’s intention to claim

41









 








compensation therefor; and provided further that, if the Change in Law giving
rise to such increased costs or reductions is retroactive, then the 180-day period referred to
above shall be extended to include the period of retroactive effect thereof.




          (e) Notwithstanding anything to the contrary contained in this Section 3.9, Borrower
shall only be liable for such increased expense (or reduction in any amount owing hereunder or in
the rate of return) attributable to the transactions under this Agreement (i) to the extent that
events giving rise to such increase (or reduction) affect similarly situated banks or financial
institutions generally and are not applicable to such Lender or its lending office primarily by
reason of such Lender’s or its lending office’s particular conduct or condition or (ii) if such
increase (or reduction) is incurred by the lending office of a Lender, then only to the extent that
such increase (or reduction) would have been incurred had Lender held the Loans directly rather
than through such lending office.




     3.10. Taxes.



          (a) Any and all payments by or for the account of Borrower hereunder, or in respect of the
Notes or any other Loan Document, shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding Excluded Taxes (all such taxes, levies,
imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or
under the Notes, other than Excluded Taxes, being hereinafter referred to as “Taxes”). If Borrower
shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable
hereunder or under any Note or other Loan Documents to any Lender, (i) the sum payable by Borrower
shall be increased as may be necessary so that after Borrower and such Lender, as the case may be,
have made all required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section 3.9) such Lender receives an
amount equal to the sum it would have received had no such deductions or withholdings been made,
(ii) Borrower shall make all such deductions or withholdings, and (iii) Borrower shall pay the full
amount deducted or withheld to the relevant taxation authority or other authority in accordance
with applicable law.




          (b) In addition, Borrower shall pay to the relevant taxing authority in accordance with
applicable law, and indemnify and hold the Administrative Agent and Lenders harmless from, any
present or future stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under the Notes or other Loan Documents or from the
execution, delivery or registration of, performance under, or otherwise with respect to, this
Agreement, the Notes or any other Loan Document (hereinafter referred to as “Other Taxes”).




          (c) Borrower shall indemnify each Lender and the Administrative Agent for and hold them
harmless against the full amount of Taxes and Other Taxes, and for the full amount of Taxes and
Other Taxes of any kind imposed by any jurisdiction on amounts payable under this Section
3.9, imposed on or paid by such Lender or the Administrative Agent (as the case may be) and any
liability (including penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within thirty (30)

42









 








days from the date such Lender or the Administrative Agent (as the case may be) makes written
demand therefor.




          (d) Within thirty (30) days after the date of any payment of Taxes, Borrower shall furnish to
the Administrative Agent, at its address referred to in Section 13.2, the original or a
certified copy of a receipt evidencing such payment.




          (e) If a Lender is a U.S. Person, such Lender shall deliver to Borrower, upon request, U.S.
Internal Revenue Service Form W-9 (or any successor form) establishing that it is exempt from
backup withholding tax and other withholding tax (unless it establishes to the reasonable
satisfaction of Borrower that it is otherwise exempt from backup withholding tax or other
withholding tax in a manner that is sufficient under applicable Legal Requirements to enable
Borrower to avoid any withholding obligation with respect thereto). If a Lender is not a U.S.
Person, such Lender shall deliver to Borrower, upon request, either (i) U.S. Internal Revenue
Service Form W-8BEN (or any successor form) which indicates a 0% rate of tax or (ii) U.S. Internal
Revenue Service Form W-8ECI (or any successor form) establishing that it is exempt from backup
withholding tax and other withholding tax). Lenders further undertake to deliver to Borrower, as
applicable, additional U.S. Internal Revenue Service Forms W-9 (or any successor form), W-8BEN (or
any successor form) or W-8ECI (or any successor form) or other manner of certification that is
approved by the applicable Governmental Authority, as the case may be, (A) on or before the date
that any such form expires or becomes obsolete, (B) after the occurrence of any event requiring a
change in the most recent form previously delivered by it to Borrower, and (C) such extensions or
renewals thereof as may reasonably be requested by Borrower, certifying that the applicable Lender
is still entitled to receive payments hereunder without deduction or withholding of any Taxes.
However, in the event of any Change in Law occurs after the date of this Agreement and after the
date a Lender (or Assignee) has become a party to this Agreement, but prior to the date on which
any delivery pursuant to the preceding sentence would otherwise be required which renders such form
inapplicable, or which would prevent such Lender from duly completing and delivering any such form,
or establishing that it is exempt from backup withholding tax and other withholding tax in the
manner described above, such Lender shall not be obligated to deliver such forms but shall,
promptly following such Change in Law, but in any event prior to the time the next payment
hereunder is due following such Change in Law, advise Borrower in writing whether it is capable of
receiving payments without any deduction or withholding of Taxes. In the event of such Change in
Law, Borrower shall have the obligation to make such Lender whole and to “gross-up” under
Section 3.10(a), despite the failure by such Lender to deliver such forms.




          (f) If the Administrative Agent or any Lender receives a refund in respect of Taxes paid by
Borrower, it shall promptly pay such refund, together with any other amounts paid by Borrower
pursuant to Section 3.10(a) in connection with such refunded Taxes, to Borrower;
provided, however, that Borrower agrees to promptly return such refund to the
Administrative Agent or such Lender if it receives notice from the Administrative Agent or such
Lender that it is required to repay such refund to the relevant Governmental Authority. Nothing
contained herein shall be construed to require any Lender or the Administrative Agent to seek any
refund and the Administrative Agent and Lenders shall have no obligation to Borrower to do so.




43









 








          (g) Nothing contained in this Section 3.10 shall require any Lender or the
Administrative Agent to make available any of its tax returns or any other information that it
deems to be confidential or proprietary. Nothing herein contained shall interfere with the rights
of each Lender to arrange its tax affairs in whatever manner it thinks fit and, in particular, each
Lender shall be under no obligation to claim credit, relief, remission or repayment from or against
its corporate profits or similar tax liability in respect of the amount of such deduction or
withholding in priority to any other claims, reliefs, credits or deductions available to it or to
disclose any information relating to its tax affairs.




          (h) If any Lender becomes entitled to claim any amounts pursuant to this Section, it shall
promptly notify Borrower (with a copy to the Administrative Agent) of the event by reason of which
it has become so entitled. A certificate as to any additional amounts payable pursuant to this
Section submitted by such Lender to Borrower (with a copy to the Administrative Agent) shall be
conclusive in the absence of manifest error. The agreements in this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.




     3.11. Indemnity. Borrower agrees to indemnify each Lender and to hold each Lender
harmless from any actual loss or expense which such Lender may sustain or incur as a consequence of
(a) default by Borrower in making a borrowing of Loans after Borrower has given a notice requesting
the same in accordance with the provisions of this Agreement, (b) default by Borrower in making any
prepayment after Borrower has given a notice thereof in accordance with the provisions of this
Agreement, or (c) the making of a prepayment of Loans on a day which is not the last day of an
Interest Period with respect thereto. Such indemnification may include an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or
not so borrowed, for the period from the date of such prepayment or of such failure to borrow to
the last day of such Interest Period (or, in the case of a failure to borrow, the Interest Period
that would have commenced on the date of such failure), in each case at the applicable rate of
interest for such Loans provided for herein exclusive of the Applicable Spread that would have
applied to such Loan, over (ii) the amount of interest (as reasonably determined by the
Administrative Agent) which would have accrued to the Lenders on such amount by placing such amount
on deposit for a comparable period with leading banks in the interbank eurodollar market. This
covenant shall survive the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder. If any Lender becomes entitled to claim any amounts pursuant to this
Section, it shall promptly notify Borrower (with a copy to the Administrative Agent) of the event
by reason of which it has become so entitled and explaining the calculation of such amount. A
certificate as to any additional amounts payable pursuant to this Section submitted by such Lender
to Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of
manifest error. Borrower shall pay such Lender the amount due on any such certificate within ten
(10) days after receipt thereof.



     3.12. Lending Offices; Change of Lending Office.



          (a) Loans made by any Lender shall be made and maintained at such Lender’s Applicable Lending
Office.





44









 






          (b) Each Lender agrees that if it makes any demand for payment under Section 3.9 or
Section 3.10, or if any adoption or change of the type described in Section 3.7
shall occur with respect to it, or if Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to the Section
3.10, it will use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous to it, as
determined in its sole discretion) to designate a different lending office (provided such Lender
has more than one lending office) if the making of such a designation would reduce or obviate the
need for Borrower to make payments under Section 3.9 or Section 3.10, or would
eliminate or reduce the effect of any adoption or change described in Section 3.7.
Borrower acknowledges that, as of the date hereof, UBS has only one lending office and, therefore,
cannot designate a different lending office as contemplated by this Section



          (c) If any Lender requests compensation under Section 3.9 or Section 3.10 or
if Borrower is required to pay any additional amount to any Lender or to pay any amount on account
of withholding with respect to any Lender pursuant to Section 3.10, then Borrower may, at
its sole expense and effort, upon joint notice to such Lender and Administrative Agent, require
such Lender to assign and delegate, without recourse other than a representation to the effect that
such Lender owns the portion of the Loan it has funded, all its interests, rights and Loans under
this Agreement to an assignee that shall assume such Loans (which assignee may be another Lender,
if a Lender accepts such assignment); provided that (i) Borrower shall have received the
prior written consent of Administrative Agent, which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the outstanding principal
balance of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and
fees) or Borrower (in the case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 3.9 or payments required to be made
or amounts required to be withheld pursuant to Section 3.10, such assignment will result in
a reduction in such compensation, payments or amounts.



          3.13. Cash Management.



          (a) Borrower shall cause all Income (other than amounts deposited in escrow or reserve
accounts pursuant to the applicable Pledged Asset Documents) in respect of the Pledged Assets
payable to Borrower or its designee to be transmitted, by wire transfer or the automated
clearinghouse system, directly by each Underlying Borrower (or, if applicable, any servicer with
respect to such Pledged Asset or, if applicable for any Mezzanine Loan, the servicer, deposit bank
or other agent administering the relevant cash management account for the related mortgage loan)
into a trust account (the “Clearing Account”) established and maintained by Borrower at a national
bank selected by Borrower and reasonably approved by Administrative Agent (the “Clearing Bank”) as
more fully described in the Clearing Account Agreement. Funds deposited into the Clearing Account
shall be swept by the Clearing Bank on the last Business Day of each week into an operating account
established and maintained by Borrower at the Clearing Bank in which the Administrative Agent and
the Lenders shall have no security interest (the “Borrower Operating Account”), unless
Administrative Agent shall deliver either a Cash Retention Notice or a Sweep Notice to the Clearing
Bank as provided in this Section 3.13 and the Clearing Account Agreement.



45









 





          (b) Administrative Agent may, at its option, upon the occurrence of a Cash Retention Event,
deliver a Cash Retention Notice to the Clearing Bank. A “Cash Retention Event” shall be deemed to
have occurred immediately upon the delivery by Administrative Agent to Borrower of a Market
Deficiency Notice. Upon the occurrence of a Cash Retention Event Cure, Administrative Agent shall
deliver a Cash Retention Termination Notice to the Clearing Bank. A “Cash Retention Event Cure”
shall be deemed to have occurred if, as of any date of determination, a Sweep Event has not
occurred and the circumstances giving rise to a Cash Retention Event have been cured by Borrower as
provided in Section 3.3 of this Agreement. Upon the occurrence of a Sweep Event,
Administrative Agent may, at its option, deliver a Sweep Notice to the Clearing Bank. A “Sweep
Event” shall be deemed to have occurred upon the occurrence of an Event of Default under this
Agreement.



          (c) Upon receipt of a Cash Retention Notice, the Clearing Bank shall cease making transfers of
funds on deposit in the Clearing Account to the Borrower Operating Account and shall freeze all
assets contained in the Clearing Account in the manner and within the timeframes specified in the
Clearing Account Agreement. From and after the receipt by the Clearing Bank of a Cash Retention
Notice, the Clearing Bank shall hold all funds on deposit in the Clearing Account until such time
as the Clearing Bank shall receive either a Cash Retention Termination Notice or a Sweep Notice;
provided that, if, during such period, any interest, principal or other amount shall become
due and payable hereunder or under any other Loan Document, whether on a Payment Date or otherwise,
the Administrative Agent shall direct the Clearing Bank (at the request of Borrower) to transfer
all or any portion of any available funds then on deposit in the Clearing Account (up to an amount
equal to the amount then due under the Loan Documents) to the Deposit Account for application by
the Administrative Agent toward the payment of such amounts then due. Upon receipt of a Cash
Retention Termination Notice, the Clearing Bank shall resume transferring all available funds on
deposit in the Clearing Account, if any, to the Borrower Operating Account as contemplated by the
Clearing Account Agreement.



          (d) Upon receipt of a Sweep Notice, the Clearing Bank shall cease making transfers of funds on
deposit in the Clearing Account to the Borrower Operating Account and shall freeze all assets
contained in the Clearing Account in the manner and within the timeframes specified in the Clearing
Account Agreement. Thereafter, the Clearing Bank shall sweep all available funds in the Clearing
Account on each Business Day into a single Eligible Account at the Deposit Bank controlled by
Administrative Agent (the “Deposit Account”), which such funds shall be applied and disbursed in
accordance with this Agreement and the Cash Management Agreement. Funds in the Deposit Account
shall be invested in Permitted Investments, as more particularly set forth in the Cash Management
Agreement. Lender may also establish subaccounts of the Deposit Account which shall at all times
be Eligible Accounts and may be ledger or book entry accounts and not actual accounts (such
subaccounts are referred to herein as “Accounts”). The Clearing Account, the Deposit
Account and all other Accounts will be under the sole control and dominion of Lender, and neither
Borrower nor any Guarantor or any of their respective Affiliates shall have any right of withdrawal
therefrom. Borrower shall pay for all expenses of opening and maintaining all of the above
accounts.



          (e) The Deposit Account shall be entitled “UBS Real Estate Investments, Inc., as
Administrative Agent, pursuant to Revolving Credit Loan and Security Agreement dated as of December
23, 2005, on behalf of the Lenders named therein – Deposit Account.” Borrower



46









 







hereby (i) grants to the Administrative Agent, on behalf of the Lenders, a first priority
security interest in the Deposit Account and all deposits at any time contained therein and the
proceeds thereof, and (ii) will take all actions necessary to maintain in favor of Administrative
Agent a perfected first priority security interest in the Deposit Account, including, without
limitation, executing and filing UCC-1 Financing Statements and continuations thereof. Borrower
will not in any way alter or modify the Deposit Account and will notify Administrative Agent of the
account number thereof. Administrative Agent and Servicer shall have the sole right to make
withdrawals from the Deposit Account and all costs and expenses for establishing and maintaining
the Deposit Account shall be paid by Borrower.



          (f) The terms, covenants and conditions of the Cash Management Agreement are hereby
incorporated herein by reference. All amounts on deposit in the Deposit Account shall be held in
trust for the Lenders, shall constitute the property of the Lenders and once deposited into the
Deposit Account shall not be commingled with other property of Borrower, any Affiliate of Borrower,
or Servicer.



          (g) All funds on deposit in the Deposit Account (and all funds on deposit in any cash
collateral account established in accordance with Section 3.3(d) of this Agreement) may be
applied by Lender in such order and priority as Lender shall determine in its sole discretion and
Lender shall have no obligation to remit any such funds to Borrower. The insufficiency of funds
on deposit in the Deposit Account shall not relieve Borrower of the obligation to make any
payments, as and when due pursuant to this Agreement and the other Loan Documents, and such
obligations shall be separate and independent, and not conditioned on any event or circumstance
whatsoever.



     SECTION 4. COLLATERAL SECURITY



     4.1. Collateral; Security Interest. Borrower hereby pledges all of its right, title,
and interest in, to and under and grants a first priority lien on, and security interest in, all of
its right, title and interest in and to all of the following property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located (collectively, the
“Collateral”) to Administrative Agent, on behalf of Lenders, to secure the repayment of principal
of and interest on all Loans and all other amounts owing by Borrower to the Administrative Agent
and the Lenders hereunder and under the Notes, the Security Documents, and all other Loan Documents
(collectively, the “Secured Obligations”):




          (i) The Pledged Assets and all Records relating thereto, including, without limitation,
each Collateral File and Borrower’s rights under each of the Loan Documents, all servicing
agreements, all servicing records and servicing files related thereto, and any and all other
interests in the Pledged Assets or the servicing thereof;




          (ii) Any property of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible relating to the Pledged Assets and any other collateral pledged or
otherwise relating thereto;




          (iii) All insurance policies and insurance proceeds and condemnation proceeds relating
to any Pledged Asset, any Underlying Collateral or any Underlying



47









 







Property, including, but not limited to, any payments or proceeds under any primary
insurance or hazard insurance;




          (iv) All Income;




          (v) The Clearing Account, the Deposit Account, the Accounts and all monies from time to
time on deposit therein and all rights with respect thereto;




          (vi) All other accounts, including but not limited to escrow and reserve accounts (to
the extent they may be pledged under applicable law), relating to the Pledged Assets,
including accounts created under any Pledged Asset Documents and the balances from time to
time standing to the credit of such accounts and all rights with respect thereto;




          (vii) All “general intangibles”, “accounts”, “instruments”, “deposit accounts”,
“chattel paper” and “investment property” as defined in the UCC, contract rights, payment
rights, instruments, hedge agreements, interest or finance charges relating to or
constituting any and all of the foregoing;




          (viii) Any guarantees and insurance (issued by any Governmental Authority or otherwise)
relating to any Pledged Asset and any Pledged Asset Documents;




          (ix) All distributions with respect to any of the foregoing and any other property,
rights, title or interests specified on a Pledged Asset Schedule, a Request for Borrowing
and/or a Trust Receipt, in all instances, whether now owned or hereafter acquired, now
existing or hereafter created;




          (x) Any proceeds (including proceeds of sales (including securitizations)) of any of
the foregoing and any other property, rights, title or interests as are specified on a
Pledged Asset Schedule, a Request for Borrowing and/or a Trust Receipt; and




          (xi) All replacements, substitutions or distributions on or proceeds, payments, Income
and profits of, and records and files relating to any and all of any of the foregoing.



          4.2. Security Agreement; Financing Statements. For purposes of the grant of the
security interest pursuant to this Article 4, this Agreement shall be deemed to constitute a
security agreement under the New York Uniform Commercial Code (the “UCC”). Administrative
Agent, on behalf of Lenders, shall have all of the rights and may exercise all of the remedies of a
secured creditor under the UCC and the other laws of the State of New York. In furtherance of the
foregoing, (a) Borrower, at its sole cost and expense, shall cause to be filed in such locations as
may be necessary to perfect and maintain perfection and priority of the security interest granted
hereby, UCC financing statements and continuation statements (collectively, the “Filings”), and
shall forward copies of such Filings to Administrative Agent upon completion thereof, and (b)
Borrower shall from time to time take such further actions as may be reasonably requested by
Administrative Agent to maintain and continue the perfection



48









 







and priority of the security interest granted hereby under the laws of any applicable
jurisdiction (including marking its records and files to evidence the interests granted to Lenders
hereunder).



     4.3. Administrative Agent’s Appointment as Attorney-in-Fact.



          (a) Borrower hereby irrevocably constitutes and appoints the Administrative Agent and any
officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full power and authority in the place and stead of Borrower and in the name of Borrower or in
its own name, from time to time following the occurrence and during the continuance of an Event of
Default, to take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, Borrower hereby gives the Administrative Agent
the power and right, on behalf of Borrower, without assent by, but with notice to, Borrower, if an
Event of Default shall have occurred and be continuing, to do the following with respect to
Collateral:




          (i) in the name of Borrower or its own name, or otherwise, to take possession of and
endorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of monies due under any mortgage insurance or payable on or on account of any other
Collateral and to file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Administrative Agent for the purpose of
collecting any and all such monies due under any such mortgage insurance or with respect to
any other Collateral whenever payable;




          (ii) to pay or discharge taxes that are currently due and payable and Liens (other than
Permitted Encumbrances) levied or placed on or threatened against the Collateral; and




          (iii) (A) to direct any party liable for any payment under any Collateral to make
payment of any and all monies due or to become due thereunder directly to the Administrative
Agent or as the Administrative Agent shall direct for application in accordance with this
Agreement; (B) to ask or demand for, collect, receive payment of and receipt for, any and
all monies, claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral; (C) to sign and endorse any invoices, assignments,
verifications, notices and other documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (E) to defend any suit, action or proceeding
brought against Borrower with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as the Administrative Agent may deem
appropriate; and (G) generally, to sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely as though
the Administrative Agent were the absolute owner thereof for all purposes, and to do, at the
Administrative Agent’s option and Borrower’s expense, at any time, and from time to time,
all acts and things which the Administrative Agent deems necessary to protect, preserve or
realize upon the Collateral and the Administrative



49









 







Agent’s Liens thereon and to effect the intent of this Agreement, all as fully and
effectively as Borrower might do.


Borrower hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue
hereof. This power of attorney is a power coupled with an interest and shall be irrevocable until
the date on which the Revolving Credit Commitments shall have been terminated and the Secured
Obligations (other than surviving contingent obligations for which no demand for payment has been
made) shall have been paid in full.




          (b) Borrower also authorizes the Administrative Agent, at any time and from time to time, to
execute, in connection with any sale provided for in Section 10.2 hereof, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the Collateral and to
file any initial financing statements, amendments thereto and continuation statements with or
without the signature of Borrower as authorized by applicable law, as applicable to all or any part
of the Collateral and to file any initial financing statements, amendments thereto and continuation
statements with or without the signature of Borrower as authorized by applicable law, as applicable
to all or any part of the Collateral.



          (c) The powers conferred on the Administrative Agent are solely to protect the Lenders’
interests in the Collateral and shall not impose any duty upon the Administrative Agent to exercise
any such powers. The Administrative Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither the Administrative Agent nor any
of its officers, directors, or employees shall be responsible to Borrower for any act or failure to
act hereunder, except for its own gross negligence or willful misconduct.



     4.4. Performance by Administrative Agent of Borrower’s Obligations. If Borrower fails
to perform or comply with any of its agreements contained in the Loan Documents, which failure
constitutes an Event of Default hereunder, then the Administrative Agent may itself perform or
comply, or otherwise cause performance or compliance, with such agreement and the out-of-pocket
expenses of the Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at a rate per annum equal to the Default Rate, shall be payable by
Borrower to the Administrative Agent on demand and shall constitute Secured Obligations.



     4.5. Limitation on Duties Regarding Preservation of Collateral. The Administrative
Agent’s duty with respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the Uniform Commercial Code or otherwise, shall be to
deal with it in the same manner as the Administrative Agent deals with similar property for its own
account. Subject to the immediately preceding sentence, neither the Administrative Agent nor any
of its directors, officers or employees shall be liable to Borrower, any Guarantor or any other
Person for failure to demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of Borrower or otherwise.



     4.6. Powers Coupled with an Interest. All authorizations and agencies herein
contained with respect to the Collateral are irrevocable until the date on which the Revolving



50









 







Credit Commitments shall have been terminated and the Secured Obligations (other than
surviving contingent obligations for which no demand for payment has been made) shall have been
paid in full, and are powers coupled with an interest.



     4.7. Release of Security Interest.



          (a) General.




          (i) Except as set forth in Section 3.3 and this Section 4.7, no
repayment or prepayment of all or any portion of the Outstanding Principal Balance shall
cause, give rise to a right to require, or otherwise result in, the release of the Lien of
any Security Document. Except as provided in Section 4.7(c)(v), if a Borrowing Base
Deficiency exists hereunder, the Administrative Agent shall have no duty to release any Lien
with respect to any Pledged Asset and shall be entitled to retain all Pledged Assets as
Collateral for the Secured Obligations hereunder until such time as such Borrowing Base
Deficiency is cured as provided in Section 3.3.




          (ii) In connection with any release of any Lien of any Security Document as
contemplated by this Agreement, Borrower shall be obligated to pay to the Administrative
Agent, by the close of the Business Day of such release, an amount equal to Administrative
Agent’s and up to one Lender’s reasonable actual costs and expenses incurred in connection
therewith, including, without limitation, all reasonable fees and out-of-pocket expenses and
all commissions arising in connection with (i) the modification, termination or entering
into of any replacement Security Documents and related financing statements or other
instruments; (ii) paying any costs arising under Section 3.11 in connection
therewith, if any; and/or (iii) to the extent not included in (ii), terminating transactions
or substituting loans in like transactions with third parties in connection with or as a
result of such release.




          (iii) Notwithstanding any provision of this Agreement to the contrary, except in
connection with a payment in full pursuant to Section 4.7(b), no release of any Lien
of any Security Document, other than any release contemplated by Section 4.7(c)(i),
Section 4.7(c)(iii), the final paragraph of Section 5.31 or the final
paragraph of Section 10.1 of this Agreement (each of which may be made at any time
hereunder), shall be made during the three-month period immediately preceding the Revolving
Credit Termination Date.



          (b) Release on Payment in Full. Upon termination of this Agreement and repayment to
the Lenders of all Secured Obligations (other than surviving contingent obligations for which no
demand for payment has been made) and the performance of all obligations under the Loan Documents,
the Administrative Agent shall release its security interest in any remaining Pledged Assets and
all other Collateral.



          (c) Partial Release.




          (i) Upon receipt of the Defaulted Loan Prepayment Amount in respect of any Defaulted
Asset pursuant to Section 3.3(b) hereof or the satisfaction and payment in full of
any Pledged Asset pursuant to Section 3.3(c), Administrative Agent shall



51









 







execute and deliver to Borrower any and all documentation (including UCC-3 termination
statements or amendments prepared by Borrower at its sole cost and expense) necessary to
evidence the release of the Lien of the Security Documents with respect to the agreements,
instruments and documents evidencing Borrower’s interest in the applicable Defaulted Asset
or other Pledged Asset, as the case may be, and any related Collateral and instruct the
Custodian to deliver to the Borrower all documents, files and papers related to such
Defaulted Asset or Pledged Asset theretofore delivered to the Custodian (including without
limitation, all such documents, files and papers identified in the Collateral File for such
Defaulted Asset or Pledged Asset, together with any applicable endorsement);
provided that no Event of Default, no monetary Default and no other Default as to
which Administrative Agent shall have delivered a notice of default to Borrower hereunder
shall have occurred and be continuing under this Agreement.




          (ii) Upon receipt of any prepayment pursuant to Section 3.2(a) and/or on any
Market Determination Date, Administrative Agent shall, at the request of Borrower, execute
and deliver to Borrower any and all documentation (including UCC-3 termination statements or
amendments prepared by Borrower at its sole cost and expense) necessary to evidence the
release of the Lien of the Security Documents with respect to the agreements, instruments
and documents evidencing Borrower’s interest in any Pledged Asset and any related Collateral
and instruct the Custodian to deliver to the Borrower all documents, files and papers
related to such Pledged Asset theretofore delivered to the Custodian (including without
limitation, all such documents, files and papers identified in the Collateral File, for such
Pledged Asset, together with any applicable endorsement); provided that each of the
following conditions shall have been satisfied:




          A. no Event of Default, no monetary Default and no other Default as to which
Administrative Agent shall have delivered a notice of default to Borrower hereunder
shall have occurred and be continuing under this Agreement; and




          B. no Borrowing Base Deficiency would arise as a result of such release.




          (iii) Notwithstanding anything to the contrary contained in this Agreement, and
regardless of whether any Default or Event of Default then exists, if at any time the
Underlying Borrower, in accordance with the applicable terms set forth in the Pledged Asset
Documents for the applicable Pledged Asset, shall be entitled to the release of any or all
of the collateral granted pursuant to the applicable Pledged Asset Documents or to the
return of any Pledged Asset Documents or other documents, files or papers included within
the Collateral File for such Pledged Asset, Administrative Agent shall, upon Borrower’s
written request, execute and deliver to Borrower any and all documentation (including UCC-3
termination statements or amendments prepared by Borrower at its sole cost and expense)
necessary to evidence the release of the Lien of the Security Documents with respect to such
collateral, and shall deliver, or instruct the Custodian to deliver to the Borrower, all
such Pledged Asset Documents or other documents, files or papers (together with any
applicable endorsement) to which the



52









 







Underlying Borrower is entitled; provided that Administrative Agent shall have
received any Pledged Asset Prepayment (if any) to be delivered to Administrative Agent
pursuant to Section 3.3(c) in connection therewith.




          (iv) At all times from and after the time as of which the Administrative Agent shall be
obligated to release any Pledged Asset or Defaulted Asset from the Lien of the Security
Documents pursuant to this Section 4.7, such asset shall no longer be deemed a
“Pledged Asset” (and the applicable Underlying Collateral, Underlying Property and
Underlying Borrower with respect thereto shall no longer be deemed “Underlying Collateral,”
“Underlying Property” or an “Underlying Borrower” for purposes of any of the provisions set
forth in this Agreement or any of the Loan Documents).




          (v) Notwithstanding anything to the contrary contained in this Agreement, Borrower
shall be entitled to the release of any Pledged Asset by making an optional prepayment of
the Loans pursuant to Section 3.2 in an amount equal to the outstanding principal
amount of such Pledged Asset; provided that no Default or Event of Default shall
have occurred and be continuing. In such case, Administrative Agent shall execute and
deliver to Borrower any and all documentation (including UCC-3 termination statements or
amendments) necessary to evidence the release of the Lien of the Security Documents with
respect to the agreements, instruments and documents evidencing Borrower’s interest in the
applicable Pledged Asset, and any related Collateral, and shall remit to the Borrower any
cash retained in the Cash Management Account and derived from such Pledged Asset, and
instruct the Custodian to deliver to the Borrower all documents, files and papers related to
such Pledged Asset theretofore delivered to the Custodian (including without limitation, all
such documents, files and papers identified in the Collateral File, for such Pledged Asset,
together with any applicable endorsement).



     4.8. Substitution of Assets.



          (a) Subject to the terms and conditions set forth in this Section 4.8, Borrower may
obtain a release of the Lien of a Security Document (and the related Loan Documents) encumbering a
Pledged Asset (a “Substituted Asset”) by substituting therefor another Eligible Asset owned or
acquired by a Borrower (a “Substitute Asset”), which such Substitute Asset may be the same or a
different Asset Type and have the same or a different Advance Rate or Applicable Spread, so long as
no Borrowing Base Deficiency shall result from such substitution; provided that no such
substitution may occur after the date that is ninety (90) days prior to the Revolving Credit
Termination Date and substitution shall not be allowed more than three (3) times in a calendar year
and provided, further, that each of the conditions to closing set forth in
Section 6.2 of this Agreement shall have been satisfied or waived in connection with such
substitution. Borrower shall deliver written notice of any proposed substitution to the
Administrative Agent not less than fifteen (15) Business Days prior to the date on which such
substitution is anticipated to close, which notice shall state the anticipated closing date of such
substitution and shall identify the Substitute Asset.



53









 





          (b) Upon satisfaction or waiver of each of the conditions precedent set forth in Section
6.2 of this Agreement, the Administrative Agent will release its Lien from the Substituted
Asset and the Substitute Asset shall be deemed to be a Pledged Asset for purposes of this
Agreement. At the time of such substitution, the Administrative Agent shall determine a Base Case
DSCR, a Base Case Market Value and an Asset Value for such Substitute Asset.



          (c) If Borrower exercises its right to substitute a Substitute Asset for a Substituted Asset
under this Section 4.8, Borrower shall be obligated to pay to the Administrative Agent, by
the close of the Business Day of such substitution or termination, as the case may be, an amount
equal to Administrative Agent’s and Lenders’ actual cost (including all reasonable fees and out of
pocket expenses and all commissions) of (i) entering into replacement Security Documents; (ii)
evaluating the Eligible Assets proposed to be substituted in accordance with the procedures of this
Section 4.8, (iii) paying any costs arising under Section 3.11 in connection therewith, if
any; and/or (iv) to the extent not included in (ii), terminating transactions or substituting loans
in like transactions with third parties in connection with or as a result of such substitution.



          (d) With respect to any substitution under this Section 4.8, Administrative Agent may
conclusively rely upon, and shall incur no liability to Borrower in acting upon, any request or
other communication that Administrative Agent reasonably believes to have been given or made by an
authorized representative on Borrower’s behalf.



     SECTION 5. REPRESENTATIONS AND WARRANTIES



     To induce the Administrative Agent and the Lenders to enter into this Agreement and to make
the Loans, Borrower hereby represents and warrants to the Administrative Agent and each Lender
that:



     5.1. Financial Information; Fiscal Year. All financial data, including, without
limitation, the statements of cash flow and income and operating expense, that have been delivered
by Borrower and any Guarantor to the Administrative Agent in respect of Borrower, Ashford OP,
Ashford REIT and their respective Affiliates (a) fairly present, in all material respects, the
financial condition of Borrower, Ashford OP, Ashford REIT, and such Affiliates as of the dates and
for the periods specified in such reports, and (b) have been prepared in accordance with GAAP
(subject, in the case of interim statements, to year-end adjustment) throughout the periods
covered, except as disclosed therein. Neither Borrower nor any Guarantor has any contingent
liabilities, liabilities for taxes currently due and payable, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments that are known to
Borrower and reasonably likely to have a Materially Adverse Effect, except as referred to or
reflected in said financial statements. Since the date of the most recent financial statements
delivered by Borrower and Guarantors to the Administrative Agent, there has been no material
adverse change as of the date hereof and, except as disclosed to the Administrative Agent in
writing, after the date hereof, in the financial information set forth in said financial
statements. As of the date hereof, each fiscal year of Borrower commences on January 1 and ends on
the following December 31.



54









 





     5.2. Legal Name. The exact legal name of Borrower is Ashford Finance Subsidiary II LP
and Borrower has not used any previous names, assumed names or trade names.



     5.3. Organizational Identification Number. Borrower’s organizational identification
number is 20-3873674.



     5.4. Chief Executive Office; Jurisdiction of Organization. The chief executive office
of Borrower existing as of the date hereof is, and during the period of Borrower’s existence such
office has been, located at 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254. On the date
hereof, Borrower is a limited partnership organized under the laws of the State of Delaware.



     5.5. Location of Books and Records. The location where Borrower keeps its books and
records, including all records relating to the Collateral, and the Collateral, is its chief
executive office.



     5.6. Existence; Compliance with Law. Each of Borrower and each Guarantor (a) is duly
organized, validly existing and in good standing, with full power and authority to own its assets
and conduct its business, (b) is duly qualified in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such qualification, except where the
failure to maintain such qualification would not reasonably be expected to have a Material Adverse
Effect, (c) has taken all necessary action to authorize the execution, delivery and performance of
this Agreement and the other Loan Documents by it, and (d) has the power and authority to execute,
deliver and perform under this Agreement, the other Loan Documents and all the transactions
contemplated hereby.



     5.7. Proceedings. This Agreement and the other Loan Documents have been duly
authorized, executed and delivered by Borrower and constitute the legal, valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their respective terms,
except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’ rights generally, and by general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law).



     5.8. No Conflicts. The execution and delivery of this Agreement and the other Loan
Documents by Borrower and the performance of its obligations hereunder and thereunder will not
conflict with any provision of any law or regulation to which Borrower is subject, or conflict
with, result in a breach of, or constitute a default under, any of the terms, conditions or
provisions of any of Borrower’s Governing Documents or any Contractual Obligation, or any order or
decree applicable to Borrower, or result in the creation or imposition of any Lien on any of
Borrower’s assets or property (other than pursuant to the Loan Documents).



     5.9. Litigation. There is no action, suit, proceeding or investigation pending or, to
Borrower’s knowledge, threatened against Borrower, any Guarantor, or any Affiliates or Subsidiaries
of Borrower or any Guarantor or, to Borrower’s knowledge, except as disclosed in the applicable
Collateral File, with respect to any of the Pledged Assets, any Underlying Borrower, Underlying
Property or Underlying Collateral in any court or by or before any other



55









 







Governmental Authority which, if adversely determined, could reasonably be expected to have a
Material Adverse Effect.



     5.10. Agreements. Neither Borrower nor any Guarantor is in default with respect to
any order or decree of any court or any order, regulation or demand of any Governmental Authority,
which default could reasonably be expected to have a Material Adverse Effect. Neither Borrower nor
any Guarantor is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument to which it is a
party or by which it or any of its assets or properties (including any Pledged Asset, any
Underlying Property or any Underlying Collateral) is bound, which default could reasonably be
expected to have a Material Adverse Effect.



     5.11. Consents. No consent, approval, authorization or order of any court or
Governmental Authority is required to be obtained by Borrower for the execution, delivery and
performance by Borrower of, or compliance by Borrower with, this Agreement or the consummation of
the transactions contemplated hereby, other than those that have been (or will be when required)
obtained by Borrower.



     5.12. Title. Borrower has good and marketable title to the Pledged Assets pledged by
it hereunder and under the Security Documents and other Loan Documents, free and clear of all Liens
whatsoever except for (a) the Permitted Encumbrances and (b) such other Liens as are permitted
pursuant to the Loan Documents and the Liens created by the Loan Documents. The Security
Documents, when properly executed and delivered, together with the filing of any Uniform Commercial
Code financing statements required to be filed in connection therewith, possession by the
Administrative Agent of collateral which can be perfected by possession only, and “control” by the
Administrative Agent of any applicable deposit accounts, will create a valid, first priority,
perfected Lien on Borrower’s interest in the related Pledged Assets or other Collateral, all in
accordance with the terms thereof, in each case subject only to any Permitted Encumbrances. None
of the Permitted Encumbrances related to any Pledged Asset or other Collateral, individually or in
the aggregate, materially interfere with the benefits of the security intended to be provided by
any Security Document or other Loan Document.



     5.13. Taxes. Each of Borrower and each Guarantor has filed or caused to be filed (or
has obtained effective extensions for filing) all federal, state, commonwealth, district and local
tax returns which are required to be filed and has paid or made adequate provision for the payment
of all federal, state, commonwealth, district and local taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority (other than the
amount or validity of which are currently being contested in good faith by appropriate proceedings
and with respect to which reserves in conformity with GAAP have been provided on the books of
Borrower or Guarantors), except for any such taxes, assessments, fees or other charges, as to which
the failure to pay and discharge when due, individually or in the aggregate, would not have a
Material Adverse Effect. Except for such tax Liens that are being contested pursuant to and in
accordance with Section 7.2 hereof, no tax Lien has been filed, and, to the knowledge of
Borrower, no claim is being asserted, with respect to any such tax, fee or other charge.



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     5.14. Federal Regulations. No part of the proceeds of the Loans will be used for the
purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (or any successor), as the same may be modified
and supplemented and in effect from time to time, or for any other purpose which would be
inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this Agreement or the
other Loan Documents.



     5.15. ERISA. As of the date hereof and throughout the term of this Agreement (a)
Borrower is not and will not be an “employee benefit plan,” as defined in Section 3(3) of ERISA,
subject to Title I of ERISA, (b) none of the assets of Borrower constitutes or will constitute
“plan assets” of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101, (c)
Borrower is not and will not be a “governmental plan” within the meaning of Section 3(32) of ERISA,
and (d) transactions by or with Borrower are not and will not be subject to state statutes
regulating investment of, and fiduciary obligations with respect to, governmental plans. None of
Borrower, Ashford REIT or any ERISA Affiliate has or reasonably expects to incur any liability
under Title IV of ERISA or the minimum funding requirements of Section 302 of ERISA or Section 412
of the Code.



     5.16. Compliance. Borrower and, to Borrower’s knowledge, except as disclosed in the
applicable Collateral File, the Pledged Assets and other Collateral comply in all material respects
with all applicable Legal Requirements. Borrower is not in default or violation of any order,
writ, injunction, decree or demand of any Governmental Authority, the violation of which could
reasonably be expected to have a Material Adverse Effect. Borrower has not committed any act that
may give any Governmental Authority the right to cause Borrower to forfeit any Pledged Asset,
Collateral, Underlying Collateral or Underlying Property or other property or assets or any part
thereof or any monies paid in performance of Borrower’s obligations under any of the Loan
Documents.



     5.17. Investment Company Act; Other Regulations. Borrower is not (a) an “investment
company” or a company “controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended, (b) a “bank holding company” or a direct or indirect subsidiary of
a “bank holding company” as defined in the Bank Holding Company Act of 1956, as amended, and
Regulation Y thereunder of the Board of Governors of the Federal Reserve System, or (c) subject to
any other United States federal or state law or regulation which purports to restrict or regulate
its ability to borrow money. Borrower is not a “foreign person” within the meaning of Sections
1445 or 7701 of the Code.



     5.18. Enforceability. The Loan Documents are not subject to any right of rescission,
set off, counterclaim or defense by Borrower, including the defense of usury, nor would the
operation of any of the terms of the Loan Documents, or the exercise of any right thereunder,
render the Loan Documents unenforceable, and Borrower has not asserted any right of rescission, set
off, counterclaim or defense with respect thereto.



     5.19. Insurance. To Borrower’s knowledge, except as disclosed in the applicable
Collateral Files, (i) all insurance policies required to be obtained and maintained pursuant to the
Pledged Asset Documents are in full force and effect and the premiums due thereon have been



57









 







paid in full and (ii) the Underlying Borrowers are in compliance with the provisions of such
insurance policies and the provisions relating to insurance policies in the Pledged Asset
Documents, and no notice of cancellation, termination or default has been received by Borrower with
respect to any such policy. All insurance required to be maintained by Borrower and Guarantors
pursuant to Section 7.20 hereof is in full force and effect and the premiums thereon have
been paid in full.



     5.20. Use of Property. Each Underlying Property consists primarily of a hotel
property located in the United States of America and is used for no other purpose other than uses
that are related to the hotel use.



     5.21. Filing and Recording Taxes. All transfer taxes, deed stamps, intangible taxes
or other amounts in the nature of transfer taxes required to be paid under applicable Legal
Requirements in connection with the transfer of each Pledged Asset to Borrower have been paid. All
mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid under
applicable Legal Requirements in connection with the execution, delivery, recordation, filing,
registration, perfection or enforcement of any of the Pledged Asset Documents, including, without
limitation, any mortgages, have been paid or are being paid simultaneously herewith.



5.22. [Intentionally Omitted]




     5.23. Organizational Structure. The organizational chart attached hereto as
Schedule 5 accurately depicts the organizational structure of Borrower and its Affiliates
as of the date hereof.



     5.24. Guarantor Assets. Ashford REIT’s periodic filings pursuant to the Securities
Exchange Act of 1934, as amended, contain accurate information with respect to the material assets
of Ashford REIT and its Subsidiaries.



     5.25. Accounts.



          (a) Deposit Account.




          (i) The Cash Management Agreement, together with the other Loan Documents, creates a
valid and continuing security interest (as defined in the Uniform Commercial Code of the
State of New York) in the Deposit Account in favor of the Administrative Agent, on behalf of
the Lenders, which security interest is prior to all other Liens, other than Permitted
Encumbrances, and is enforceable as such against creditors of and purchasers from Borrower.
Other than in connection with the Loan Documents and except for Permitted Encumbrances,
Borrower has not sold or otherwise conveyed the Deposit Account;




          (ii) The Deposit Account constitutes a “deposit account” within the meaning of the
Uniform Commercial Code of the State of New York); and




          (iii) The Deposit Account is not in the name of any Person other than Administrative
Agent.



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          (b) Clearing Account.




          (i) The Clearing Account Agreement, together with the other Loan Documents, creates a
valid and continuing security interest (as defined in the Uniform Commercial Code of the
State of New York) in the Clearing Account in favor of the Administrative Agent, on behalf
of the Lenders, which security interest is prior to all other Liens, other than Permitted
Encumbrances, and is enforceable as such against creditors of and purchasers from Borrower.
Other than in connection with the Loan Documents and except for Permitted Encumbrances,
Borrower has not sold or otherwise conveyed the Clearing Account;




          (ii) The Clearing Account constitutes a “deposit account” within the meaning of the
Uniform Commercial Code of the State of New York); and




          (iii) The Clearing Account is not in the name of any Person other than Borrower, as
pledgor, or Administrative Agent, as pledgee.



     5.26. No Other Financing. Borrower has not borrowed any funds that have not
heretofore been repaid in full, except for the Loans.



     5.27. Full and Accurate Disclosure. No statement of fact made by Borrower in this
Agreement or by Borrower or any Guarantor in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to make statements
contained herein or therein, in light of the circumstance under which they were made, not
misleading. There is no material fact presently known to Borrower which has not been disclosed to
the Administrative Agent which could reasonably be expected to have a Material Adverse Effect.
Notwithstanding the foregoing, (i) financial information purported to be prepared in accordance
with GAAP are subject only to such standard, and (ii) with respect to projected financial
information, Borrower represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time, it being recognized by the Lenders that such
projections as they relate to future events are not to be viewed as fact and that actual results
during the period or periods covered by such projections may differ from the projected results set
forth therein by a material amount.



     5.28. Other Obligations and Liabilities. Neither Borrower nor any Guarantor has any
liabilities or other obligations that arose or accrued prior to the date hereof that, either
individually or in the aggregate, could have a Material Adverse Effect.



     5.29. Solvency. Borrower (a) has not entered into the transaction or any Loan
Document with the actual intent to hinder, delay, or defraud any creditor, and (b) received
reasonably equivalent value in exchange for their obligations under the Loan Documents. Giving
effect to the Loans, the fair saleable value of Borrower’s assets exceeds and will, immediately
following the making of the Loans, exceed Borrower’s total liabilities, including subordinated,
unliquidated, disputed and contingent liabilities. The fair saleable value of Borrower’s assets
is, and immediately following the making of the Loans, will be, greater than Borrower’s probable
liabilities, including the maximum amount of their contingent liabilities on their debts as such
debts become absolute and matured. Borrower’s assets do not and,



59









 







immediately following the making of the Loans will not, constitute unreasonably small capital
to carry out their respective business as conducted or as proposed to be conducted. Borrower does
not intend to, and does not believe that it will, incur Indebtedness and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such Indebtedness and
liabilities as they mature (taking into account the timing and amounts of cash to be received by
Borrower and the amounts to be payable on or in respect of the obligations of Borrower).



     5.30. Single Purpose. Borrower hereby represents and warrants to, and covenants with,
the Administrative Agent and each Lender that as of the Closing Date and until such time as the
Revolving Credit Commitments shall have been terminated and the Secured Obligations (other than
surviving contingent obligations for which no demand for payment has been made) shall have been
paid in full:



          (a) Borrower has not owned, does not owns and will not own any asset or property other than
(i) the Pledged Assets and other Collateral and (ii) incidental personal property necessary for the
ownership of the Pledged Assets and other Collateral.



          (b) Borrower has not engaged or will not engage in any business other than the ownership and
management of the Pledged Assets and other Collateral, and Borrower will conduct and operate its
business as presently conducted and operated.



          (c) Borrower has had, now has, and will have as its only general partner, a special purpose
limited liability company that is in compliance with the requirements for a “single purpose entity”
that are set forth in Schedule D to the limited liability company agreement of Ashford Finance
Subsidiary II General Partner LLC as in effect on the date hereof.



          (d) Borrower has not entered and will not enter into any contract or agreement with any
Affiliate of Borrower, any constituent party of Borrower or any Affiliate of any constituent party,
except in connection with the acquisition of Pledged Assets or in the ordinary course of business
on arm’s-length terms and conditions. Nothing contained in this Section 5.30 or any other
provision of the Loan Documents shall restrict or prevent, upon the release of any Pledged Asset
from the Liens created under the Loan Documents in compliance with this Agreement and the other
Loan Documents, Borrower’s transfer or conveyance of such released Pledged Asset to an Affiliate of
Borrower.



          (e) Borrower has not incurred and will not incur any Indebtedness other than the Loans
contemplated hereby.



          (f) Except for the Pledged Assets, Borrower has not made and will not make any loans or
advances to any third party (including any Affiliate or constituent party of Borrower), and has not
and shall not acquire obligations or securities of its Affiliates.



          (g) Borrower has had, now has, and will have a limited partnership agreement that provides
that Borrower will not, until such time as the Revolving Credit Commitments shall have been
terminated and the Secured Obligations (other than surviving contingent obligations for which no
demand for payment has been made) shall have been paid in full: (A) dissolve, merge, liquidate or
consolidate; (B) sell all or substantially all of its assets (as applicable); (C) engage in any
other business activity or amend its organizational documents with respect to the



60









 







matters set forth in this section; or (D) without the affirmative vote of the independent
member of the general partner of Borrower, take any Bankruptcy Action with respect to itself or any
other entity in which it has a direct or indirect legal or beneficial ownership interest.



          (h) Borrower is solvent and Borrower has paid and will pay its debts and liabilities from its
own assets as the same shall become due.



          (i) Borrower has done or caused to be done, and will do, all things necessary to observe
organizational formalities and preserve its existence, and Borrower will not: (i) terminate or fail
to comply with the provisions of its organizational documents, or (ii) unless the Administrative
Agent has consented to the same in writing, amend, modify or otherwise change in any material
respect its Governing Documents, including, without limitation, the single purpose, separateness or
bankruptcy remote provisions or requirements thereof.



          (j) Borrower has maintained and will maintain its accounts, books and records separate from
any other Person.



          (k) Borrower has been, will be, and at all times will hold itself out to the public as, a
legal entity separate and distinct from any other entity (including any Affiliate of Borrower or
any constituent party of Borrower), shall correct any known misunderstanding regarding its status
as a separate entity, and has conducted and shall conduct business in its own name. The
requirements of this Section 5.30 shall not prevent Borrower from being treated as an
entity which is “disregarded” from Ashford OP for income or other tax purposes.



          (l) Borrower has maintained and intends to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and in light of its
contemplated business operations.



          (m) Neither Borrower nor any constituent party of Borrower will seek or effect the
liquidation, dissolution, winding up, consolidation, merger or sale of all or substantially all of
its assets, in whole or in part, of Borrower.



          (n) Borrower has held and will hold all of its assets in its own name.



          (o) Borrower has maintained and will maintain its assets in such a manner that it will not be
costly or difficult to segregate, ascertain or identify its individual assets from those of any
Affiliate or constituent party of Borrower or any other Person.



          (p) Other than as required or permitted herein, Borrower has not assumed or guaranteed and
will not assume or guarantee or become obligated for the debts of any other Person, and Borrower
does not and will not hold itself out to be responsible for or have its credit available to satisfy
the debts or obligations of any other Person.



          (q) Borrower will not without the written consent of its general partner and the unanimous
written consent of all of the managers of its general partner take any Bankruptcy Action.



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          (r) The Governing Documents of the general partner of Borrower (“Borrower GP”) shall provide
that, until such time as the Revolving Credit Commitments shall have been terminated and the
Secured Obligations (other than surviving contingent obligations for which no demand for payment
has been made) shall have been paid in full, upon the occurrence of any event that causes the sole
member of Borrower GP to cease to be a member of Borrower GP (other than (i) upon an assignment by
the sole member of Borrower GP of all of its limited liability company interest in Borrower GP and
the admission of the transferee, if permitted pursuant to the Governing Documents of Borrower GP
and the Loan Documents, or (ii) the resignation of the sole member of Borrower GP and the admission
of an additional member of Borrower GP, if permitted pursuant to the Governing Documents of
Borrower GP and the Loan Documents), a Person designated as a special member of Borrower GP shall,
without any action of any Person and simultaneously with the sole member ceasing to be a member of
Borrower GP, automatically be admitted as the sole member of Borrower GP (the “Special Member”) and
shall preserve and continue the existence of Borrower GP without dissolution. The organizational
documents of Borrower GP shall further provide that for so long as any portion of the Revolving
Credit Commitments and/or the Secured Obligations is outstanding, no Special Member may resign or
transfer its rights as Special Member unless a successor Special Member has been admitted to
Borrower GP as a Special Member.



          (s) The Governing Documents of Borrower GP shall provide that, until such time as the
Revolving Credit Commitments shall have been terminated and the Secured Obligations (other than
surviving contingent obligations for which no demand for payment has been made) shall have been
paid in full, except as expressly permitted pursuant to the terms of this Agreement, (i) the sole
member of Borrower GP may not resign, and (ii) no additional member shall be admitted to Borrower
GP.



          (t) Borrower has compensated and shall compensate each of its consultants, agents and
employees (if any) from its funds for services provided to it and pay from its own assets all
obligations of any kind incurred.



          (u) Borrower has maintained and will maintain relationships with its Affiliates in compliance
with Section 8.7 hereof.



          (v) Except in connection with the Loans, Borrower has not pledged and will not pledge its
assets for the benefit of any other Person.



          (w) Borrower will consider the interests of Borrower’s creditors in connection with all
limited partnership actions.



     5.31. Pledged Assets.



          (a) Each Pledged Asset conforms to the applicable representations and warranties set forth in
Exhibit M attached hereto. It is understood and agreed that the representations and
warranties set forth in Exhibit M hereto shall survive delivery of the respective
Collateral File to Administrative Agent or its designee (including the Custodian). With respect to
each Pledged Asset, all of the documents required to be delivered under this Agreement and the
Custodial Agreement for such Pledged Asset have been delivered to



62









 







Administrative Agent or the Custodian on its behalf. Except as otherwise acknowledged and
agreed to in writing by Administrative Agent, Borrower has delivered to the Custodian a complete,
true and accurate Collateral File with respect to each Pledged Asset.



          (b) Immediately prior to the pledge of any Pledged Assets by Borrower to Administrative Agent
hereunder, such Pledged Assets were free and clear of any Lien, encumbrance or impediment to
transfer (including any “adverse claim” as defined in Section 8-102(a)(1) of the UCC), and Borrower
is the sole record and beneficial owner of and has good and marketable title to, and the right to
sell and transfer, and has satisfied any and all conditions to transfer, such Pledged Assets to
Administrative Agent.



          (c) Except as a result of any Permitted Encumbrances, there are (i) no outstanding rights,
options, warrants or agreements binding on Borrower or any Affiliate of Borrower for a purchase or
sale of any Pledged Asset and (ii) no agreements on the part of Borrower to sell or distribute any
Pledged Asset.



          (d) Each Collateral File delivered by Borrower represents a true and correct copy of the
documents contained therein and each Pledged Asset Schedule, together with all other information
contained therein prepared by Borrower or its Affiliates and delivered by Borrower to
Administrative Agent immediately prior to the applicable Borrowing Date, is true and correct and
conforms in all material respects to the preliminary diligence materials previously provided to
Administrative Agent and pursuant to which Administrative Agent has elected to enter into the
applicable Loan hereunder.



          (e) Upon receipt by Custodian of each Mortgage Note, Mezzanine Note, Junior Interest Note or
Junior Participation Interest Certificate endorsed in blank by a duly authorized officer of
Borrower and funding of the Loan that is secured by such Pledged Asset Administrative Agent shall
have a valid and fully perfected first priority security interest in all right, title and interest
of Borrower therein.



          (f) Administrative Agent shall be the collateral assignee of a valid and fully perfected first
priority security interest in, the “investment property” and all “deposit accounts” (each as
defined in the Uniform Commercial Code) comprising Collateral.


Notwithstanding anything to the contrary in this Agreement or any other Loan Document, in the event
any of the representations or warranties set forth in this Section 5.31 or Exhibit
M attached hereto or any other representation that relates to any Pledged Asset, Underlying
Property, Underlying Collateral or Underlying Borrower (including, without limitation, the
representations and warranties contained in Section 5.27 to the extent relating to any Pledged
Asset, Underlying Property, Underlying Collateral or Underlying Borrower), is not true and correct,
the same shall not be a Default, an Event of Default or otherwise a breach of this Agreement. The
sole and exclusive remedies of the Administrative Agent and the Lenders if any of such
representations or warranties is not true and correct shall be, with respect to the Pledged Asset
or related Underlying Property, Underlying Collateral or Underlying Borrower as to which such
representation or warranty is made, (i) to treat the same as a failure of a condition to the
obligations of the Lenders to make Loans with respect to such Pledged Asset or (ii) if any Loans
have been advanced with respect to such Pledged Asset, to treat such Pledged Asset as a


63









 






Defaulted Asset having a Market Value of zero and as to which Borrower shall be obligated, in
accordance with Section 3.3(b), to prepay the Outstanding Principal Balance in an amount
equal to the Defaulted Loan Prepayment Amount for such Pledged Asset (which prepayment shall be
treated as a prepayment in accordance with Section 3.3(b) hereof for all purposes of this
Agreement, including, without limitation, Section 4.7(c)) and to remove such Pledged Asset
from the Collateral hereunder as provided in Section 3.3(b); provided that, in any
event, Borrower shall indemnify and hold Administrative Agent and the Lenders harmless from and
against any liability to any third party and any out-of-pocket costs and expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by Administrative Agent or
any Lender as a result of such Defaulted Asset having been included in the Collateral hereunder.




     5.32. Ashford REIT Financial Status.



          (a) The Tangible Net Worth of Ashford REIT and its consolidated Subsidiaries as of the date
hereof is in excess of Three Hundred Thirty Five Million and No/100 Dollars ($335,000,000.00).



          (b) The Fixed Charge Coverage Ratio of Ashford REIT and its consolidated Subsidiaries during
the trailing twelve (12) calendar month period ending on the last day of the most recently
completed calendar quarter is not less than 1.50 to 1.00.



          (c) The Interest Coverage Ratio of Ashford REIT and its consolidated Subsidiaries during the
trailing twelve (12) calendar month period ending on the last day of the most recently completed
calendar quarter is not less than 1.75 to 1.00.



          (d) The Market Capitalization of Ashford REIT as of the date hereof is at least Three Hundred
Million and No/100 Dollars ($300,000,000.00).


The representations and warranties set forth in Article 5 shall survive until the Loans
have been paid and performed in full. Any exception to any representation or warranty shall be
accepted or rejected by Administrative Agent in its sole discretion.




     SECTION 6. CONDITIONS PRECEDENT



     6.1. Conditions to Agreement and Initial Loan.



          (a) Conditions to Agreement. The agreement of each Lender to enter into this
Agreement is subject to the satisfaction, on or before the date hereof, of the following conditions
precedent:




          (i) Loan Documents. The Administrative Agent shall have received:




          A. this Agreement, executed and delivered by a duly authorized officer of
Borrower, with a counterpart for each Lender;




          B. for the account of each Lender having a Revolving Credit Commitment, a Note
of Borrower conforming to the requirements hereof and executed by a duly authorized
officer of Borrower;



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C. the OP Guaranty of Payment and the REIT Guaranty of Payment, each executed
and delivered by a duly authorized officer of the applicable Guarantor, with a
counterpart or a conformed copy for each Lender;




          D. the Custodial Agreement, executed and delivered by a duly authorized officer
of each of Borrower and the Custodian, with a counterparty for Administrative Agent;
and




          E. each other document as the Administrative Agent shall reasonably require,
including, without limitation, amendments of any of the Loan Documents executed by
Borrower as of the Closing Date, all executed and delivered by a duly authorized
officer of each party thereto, with a counterpart or a conformed copy for each
Lender.




          (ii) Corporate Proceedings of Borrower. The Administrative Agent shall have
received a copy of the resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the board of directors or equivalent governing authority of
Borrower and each Guarantor authorizing (i) the execution, delivery and performance of this
Agreement and the other Loan Documents, (ii) the borrowings contemplated hereunder, and
(iii) the granting by it of the Liens created pursuant to this Agreement and the Security
Documents, certified by an authorized officer of Borrower or a Guarantor as of the date
hereof, which certificate shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.




          (iii) Incumbency Certificates. The Administrative Agent shall have received an
Officer’s Certificate of Borrower and each Guarantor, dated the date hereof, as to the
incumbency and signature of the officers of Borrower and each Guarantor executing any Loan
Document on behalf of Borrower or such Guarantor in form and substance reasonably
satisfactory to the Administrative Agent.




          (iv) Governing Documents. The Administrative Agent shall have received true
and complete copies of the Governing Documents of Borrower, certified as of the date hereof
as complete and correct copies thereof by an authorized officer of Borrower, and a
certification by an authorized officer of each Guarantor that the Governing Documents of
such Guarantor, copies of which were delivered to the Administrative Agent on the Closing
Date, have not been amended or modified since the Closing Date and remain in full force and
effect.




          (v) Good Standing Certificates. The Administrative Agent shall have received
certificates dated as of a recent date from the Secretary of State or other appropriate
authority, evidencing the good standing of Borrower and each Guarantor (i) in the
jurisdiction of its organization and (ii) in each other jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires it to qualify as a
foreign Person.



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          (vi) Legal Opinions. The Administrative Agent shall have received, with a
counterpart for each Lender, the executed legal opinion of Morrison & Foerster LLP, counsel
to Borrower and Guarantors, and local counsel where applicable, covering the matters set
forth on Schedule 6 hereto, in form and substance reasonably satisfactory to the
Administrative Agent.




          (vii) Actions to Perfect Liens. The Administrative Agent shall have received
evidence in form and substance satisfactory to it that all filings, recordings,
registrations and other actions, including, without limitation, the filing of duly executed
financing statements on form UCC-1, necessary or, in the opinion of the Administrative
Agent, desirable to perfect the Liens created by the Security Documents shall have been
completed.




          (viii) Lien Searches. The Administrative Agent shall have received the results
of a recent search by a Person satisfactory to the Administrative Agent, of the Uniform
Commercial Code and judgment and tax lien filings that may have been filed with respect to
Borrower or any Affiliate of Borrower that has previously held any Eligible Asset being
added to the Collateral as of such Borrowing Date and the results of such search shall be
satisfactory to the Administrative Agent.




          (ix) Insurance. The Administrative Agent shall have received evidence in form
and substance satisfactory to it that all of the requirements of Section 7.20 shall
have been satisfied.



          (b) Conditions to Initial Loan. In addition to the conditions set forth in
Sections 6.1(a) and 6.2, the agreement of each Lender to make the initial Loan
hereunder is subject to the satisfaction, on or before the Borrowing Date applicable thereto, of
the following conditions precedent:




          (i) Loan Documents. The Administrative Agent shall have received:




          A. each of the Security Documents encumbering any Pledged Assets and other
Collateral delivered in connection with such Loan, each executed and delivered by a
duly authorized officer of each party thereto, with a counterpart or a conformed copy
for each Lender;




          B. the Equity Pledge Agreement, executed and delivered by a duly authorized
officer of Ashford OP, with a counterpart or a conformed copy for each Lender;




          C. the Cash Management Agreement, executed and delivered by a duly authorized
officer of Borrower and each other party thereto, with a counterparty for
Administrative Agent, together with evidence satisfactory to Administrative Agent of
the existence of the Deposit Account;




          D. the Clearing Account Agreement, executed and delivered by a duly authorized
officer of Borrower and each other party thereto, with a



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counterparty for Administrative Agent, together with evidence satisfactory to
Administrative Agent of the existence of the Clearing Account; and




          E. each other document as the Administrative Agent shall reasonably require,
including, without limitation, amendments of any of the Loan Documents executed by
Borrower as of the Closing Date, all executed and delivered by a duly authorized
officer of each party thereto, with a counterpart or a conformed copy for each
Lender.




          (ii) Borrowing Base Certificate. The Administrative Agent shall have received
a Borrowing Base Certificate showing the Borrowing Base as of such Borrowing Date, with
appropriate insertions and dated such Borrowing Date, executed by an authorized officer of
Borrower.



     6.2. Conditions to Each Loan and/or Pledged Asset. The agreement of each Lender to
make any Loan requested to be made by it on any date (including, without limitation, its initial
Loan and including, without limitation, a new Loan that evidences or constitutes a re-borrowing by
Borrower hereunder) and the acceptance by the Administrative Agent of any Eligible Asset as
additional Collateral hereunder on any date shall be subject to the satisfaction or waiver by
Administrative Agent of each of the following conditions precedent:



          (a) Representations and Warranties. Except as set forth on a schedule to a Borrowing
Base Certificate and which are acceptable to the Administrative Agent, each of the representations
and warranties (other than those that expressly relate to a specified date) made by Borrower and
each Guarantor in or pursuant to the Loan Documents shall be true and correct in all material
respects on and as of such date as if made on and as of such date.



          (b) No Default. No Event of Default, no monetary Default and no other Default as to
which Administrative Agent shall have delivered a notice of default to Borrower hereunder shall
have occurred and be continuing on such date or after giving effect to the Loans requested to be
made on such date.



          (c) Borrowing Base. The Administrative Agent shall have timely received a Borrowing
Base Certificate with appropriate insertions and executed by an authorized officer of Borrower
showing that no Borrowing Base Deficiency will exist after giving effect to the requested Loan.



          (d) Additional Matters. All of the requirements and procedures set forth in
Section 2.4 hereof shall have been satisfied. In addition, in connection with any Loans
that are made in connection with the addition of Eligible Assets to the Collateral hereunder, all
corporate and other proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement and the other Loan Documents, shall
be in form and substance reasonably satisfactory to the Administrative Agent, and the
Administrative Agent shall have received such other documents and legal opinions in respect of any
aspect or consequence of the transactions contemplated hereby or thereby as it shall reasonably
request, which legal opinion shall address only such matters as are indicated in Schedule
6.



          (e) Loan Documents. The Loan Documents shall be in full force and effect.



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          (f) Security Documents and Security Interest. In connection with any Loans that are
made in conjunction with the addition of Eligible Assets to the Collateral hereunder, evidence that
all actions necessary or, in the opinion of Administrative Agent in its sole discretion, desirable
to properly perfect Lenders’ Lien on such Eligible Asset and other related Collateral and to
protect Lenders’ interest therein have been taken, including, without limitation, delivery by
Borrower to Administrative Agent or Custodian of each of the following:




          (i) with respect to any Eligible Asset that is a Mortgage Loan,




          (A) an allonge assigning the related Mortgage Note from the originator
of such Eligible Asset to Borrower;




          (B) an allonge assigning the related Mortgage Note in blank;




          (C) an Assignment of Mortgage relating to such Eligible Asset assigning
the Mortgage for such Eligible Asset from the originator of such Eligible
Asset to Borrower;




          (D) a Collateral Assignment of Mortgage relating to such Eligible Asset
assigning the Mortgage for such Eligible Asset from Borrower to
Administrative Agent for the benefit of the Lenders, as collateral security
for the Loans hereunder;




          (E) an Assignment of Mortgage relating to such Eligible Asset assigning
the Mortgage for such Eligible Asset in blank;




          (F) an Assignment of Assignment of Leases from the originator of such
Eligible Asset to Borrower;




          (G) a Collateral Assignment of Assignment of Leases from Borrower to
Administrative Agent for the benefit of the Lenders, as collateral security
for the Loans hereunder; and




          (H) an Assignment of Assignment of Leases in blank;




          (ii) with respect to any Eligible Asset that is a Mezzanine Loan,




          (A) an allonge assigning the related Mezzanine Note from the originator
of such Eligible Asset to Borrower;




          (B) an allonge assigning the related Mezzanine Note in blank;




          (C) an assignment of the applicable Mezzanine Pledge Agreement from the
originator of such Eligible Asset to Borrower;




          (D) a Collateral Assignment of Pledge relating to such Eligible Asset
assigning the Mezzanine Pledge Agreement for such Eligible Asset



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from Borrower to Administrative Agent for the benefit of the Lenders, as
collateral security for the Loans hereunder;




          (iii) with respect to any Eligible Asset that is a Junior Interest,




          (A) an allonge assigning any participation certificate or note
evidencing such Junior Interest, if any, from the originator of such Eligible
Asset to Borrower;




          (B) an allonge assigning any participation certificate or note
evidencing such Junior Interest, if any, in blank;




          (C) an assignment of such Eligible Asset, together with the applicable
participation agreement or other Pledged Asset Document for such Eligible
Asset, from the originator of such Junior Interest to Borrower;




          (D) a Collateral Assignment of Participation Interest relating to such
Eligible Asset assigning the applicable participation agreement or other
Pledged Asset Document for such Eligible Asset from Borrower to
Administrative Agent for the benefit of the Lenders, as collateral security
for the Loans hereunder;




          (iv) an original omnibus assignment for such Eligible Asset in form and substance
reasonably acceptable to Administrative Agent pursuant to which all of the originator’s
right, title and interest in and to such Eligible Asset have been assigned to Borrower;




          (v) an original omnibus assignment for such Eligible Asset in form and substance
reasonably acceptable to Administrative Agent pursuant to which all of the originator’s
right, title and interest in and to such Eligible Asset have been assigned from Borrower to
Administrative Agent for the benefit of the Lenders;




          (vi) UCC-1 financing statements prepared by Borrower for the purpose of assigning to
Borrower all of the originator’s right, title and interest in and to such Eligible Asset,
which such UCC-1 financing statements shall be reasonably acceptable to Administrative Agent
and in form and substance acceptable for filing;




          (vii) UCC-3 assignments for the purpose of assigning Borrower’s security interest in
such Eligible Asset to Administrative Agent on behalf of the Lenders, which such UCC-3
assignments shall be in form and substance acceptable for filing; and




          (viii) UCC-1 financing statements prepared by Borrower for the purpose of perfecting
the Lenders’ security interest in such Eligible Asset, which such UCC-1 financing statements
shall be reasonably acceptable to Administrative Agent and in form and substance acceptable
for filing.



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          (g) Diligence; Approval of Assets. Borrower shall have delivered a Request for
Borrowing, and Administrative Agent shall have determined that each proposed Eligible Asset
described in such Request for Borrowing is an Eligible Asset, shall have approved the acceptance of
such Eligible Asset as a Pledged Asset constituting additional security for the Secured
Obligations, in each case, in Administrative Agent’s sole and absolute discretion, in accordance
with the procedures in Section 2 hereof and, in connection with any Loans that are made in
conjunction with the addition of Eligible Assets to the Collateral hereunder, shall have obtained
all necessary internal investment committee and credit approvals for the addition of such Eligible
Assets to the Collateral, which such approvals may be granted or withheld in Administrative Agent’s
sole and absolute discretion. In connection with any Eligible Assets that are to be added to the
Collateral hereunder, subject to Administrative Agent’s right to perform one or more due diligence
reviews pursuant to Section 9, Administrative Agent shall have completed its due diligence
review of the Collateral File and the related Underwriting Package for each such Eligible Asset
(which shall include, without limitation, such appraisals, structural reports and environmental
reports as Administrative Agent shall require), and such other documents, records, agreements,
instruments, property or information relating to such Eligible Asset as Administrative Agent in its
sole discretion deems appropriate to review and such review shall be satisfactory to Administrative
Agent in its sole discretion.



          (h) Officer’s Certificate. Administrative Agent shall have received an Officer’s
Certificate from Borrower (i) certifying and showing in detail the calculations demonstrating that,
after giving effect to the requested Loan, upon consummation of the Loan, the Outstanding Principal
Balance shall not exceed the Borrowing Base, (ii) stating that, to the best of such officer’s
knowledge, each of Borrower and each Guarantor is then in compliance in all material respects with
all of its covenants and other agreements, and has satisfied every condition, contained in this
Agreement and the related documents to be observed, performed or satisfied by it and that such
officer has obtained no knowledge of any Default or Event of Default except as specified in such
certificate, (iii) in connection with any Loans that are made in conjunction with the addition of
Eligible Assets to the Collateral hereunder, certifying that the related Collateral File delivered
by Borrower represents a true and correct copy of the documents contained therein, and that the
related Pledged Asset Schedule, together with all other information contained therein prepared by
Borrower or its Affiliates and delivered by Borrower to Administrative Agent immediately prior to
the applicable Borrowing Date, is true and correct and conforms in all material respects to the
diligence materials previously provided to Administrative Agent and pursuant to which
Administrative Agent has elected to enter into the Loan (provided that the sole and exclusive
remedies of the Administrative Agent and the Lenders if the certification contained in this clause
(iii) is not correct shall be those remedies set forth in Section 5.31), (iv) in connection
with any Eligible Assets to be added to the Collateral hereunder, certifying that each such
Eligible Asset is an “Eligible Asset” as defined herein and that, after adding any proposed
Eligible Assets to the Collateral in connection with the requested Loan, the Collateral will not
include more than 15% seasonal or beach properties, (v) certifying that, immediately prior to and
as of the applicable Borrowing Date, Ashford REIT and its consolidated Subsidiaries have (A)
Tangible Net Worth of at least Three Hundred Thirty Five Million and No/100 Dollars
($335,000,000.00), (B) a Fixed Charge Coverage Ratio for the trailing twelve (12) calendar month
period ending on the last day of the most recently completed calendar quarter of not less than 1.50
to 1.00, and (C) and an Interest Coverage Ratio for such trailing twelve (12) calendar month period
of not less than 1.75 to 1.00 and (vi) setting forth the



70









 







Market Capitalization of Ashford REIT as of the day immediately preceding the date of such
certificate, together with the method of calculating such Market Capitalization in reasonable
detail, and certifying that such Market Capitalization is in excess of Three Hundred Million and
No/100 Dollars ($300,000,000.00).



          (i) Servicing Agreement. With respect to any Eligible Asset to be pledged as
Collateral hereunder which is not directly serviced by Borrower or its Affiliates, Borrower shall
have provided to Administrative Agent a copy of the related servicing agreement, certified as a
true, correct and complete copy of the original at least ten (10) days prior to the Borrowing Date
for such Eligible Asset, together with a copy of a written notice to such servicer, fully executed
by Borrower and such servicer, of the pledge of the Eligible Asset to Administrative Agent, and
acknowledgement by such servicer of the rights of Administrative Agent as pledgee thereunder.



          (j) Expenses. Administrative Agent shall have received, if applicable, payment of all
reasonable fees and expenses of counsel to Administrative Agent as contemplated by this Agreement,
and, in connection with any Loans that are made in conjunction with the addition of any Eligible
Assets to the Collateral, Administrative Agent shall have received the reasonable costs and
expenses incurred by it in connection with the entering into of any Loan hereunder or accepting any
Eligible Asset as additional Collateral hereunder, including, without limitation, costs associated
with due diligence with respect to any Eligible Asset and recording, or other administrative
expenses necessary or incidental to the execution of any Loan hereunder, which amounts, at
Administrative Agent’s option, may be withheld from the proceeds of any Loan hereunder, provided
that Administrative Agent has notified Borrower in reasonable detail of such expenses prior to the
date of such Loan.



          (k) No Material Adverse Change. There shall not have occurred a material adverse
change, since the date of the last audited financial statements provided to Administrative Agent
under this Agreement, in the business, assets, operations or condition (financial or otherwise) of
Borrower or any Guarantor, or in the facts and information regarding such entities as represented
to Administrative Agent through the applicable Borrowing Date.



          (l) Market and Financial Changes. If any Eligible Assets are to be added to the
Collateral hereunder on any Borrowing Date, none of the following shall have occurred and/or be
continuing:




          (i) an event or events shall have occurred in the good faith determination of
Administrative Agent resulting in the effective absence of a “lending market” for financing
debt obligations secured by commercial mortgage loans or securities or an event or events
shall have occurred resulting in Administrative Agent not being able to finance assets such
as the Eligible Assets through the “repo market” or “lending market” with traditional
counterparties at rates which would have been reasonable prior to the occurrence of such
event or events; or




          (ii) an event or events shall have occurred resulting in the effective absence of a
“securities market” for securities backed by assets such as the Eligible Assets or an event
or events shall have occurred resulting in Administrative Agent not



71









 







being able to sell securities backed by assets such as the Eligible Assets at prices
which would have been reasonable prior to such event or events.



          (m) Compliance with Financial Obligations. There shall not have occurred (i) any
payment default (after giving effect to any applicable notice and/or cure periods), or (ii) any
non-payment default pursuant to which the applicable lender has exercised its right to accelerate
the maturity date thereof under (x) any Indebtedness for borrowed money that is recourse, directly
or indirectly, to Ashford REIT or Ashford OP, unless a cure of such default shall have been
accepted, or such default shall have been waived, by the holder of such Indebtedness or (y) any
other Indebtedness for borrowed money that is non-recourse to Ashford REIT, Ashford OP or any
Affiliate or Subsidiary of Ashford REIT or Ashford OP (or any Person comprising any of such Persons
or any of their respective Affiliates), and, in connection with any enforcement action or exercise
or assertion by or on behalf of the lender of any right or remedy with respect to any default or
event of default under such non-recourse Indebtedness, the related borrower or borrowers shall (A)
in bad faith seek any defense, judicial intervention or injunctive or other equitable relief of any
kind, or assert in a pleading filed in connection with a judicial proceeding any defense against
such lender or any right in connection with any security for such Indebtedness or (B) file a
voluntary petition or file an answer consenting to, or otherwise acquiescing in, or joining in, any
involuntary petition filed against it by any other Person under the Bankruptcy Code or any other
federal or state bankruptcy or insolvency law, or solicit or cause to be solicited petitioning
creditors for any involuntary petition from any Person.



          (n) Trust Receipt. In connection with any Loans that are made in conjunction with the
addition of Eligible Assets to the Collateral hereunder, Administrative Agent shall have received
from Custodian on the applicable Borrowing Date a Trust Receipt confirming possession by Custodian
of each of the documents, instruments and agreements required to be delivered to Custodian in
accordance with this Agreement and an Exceptions Report with respect to each Eligible Asset to be
pledged as additional security for the Secured Obligations on such Borrowing Date, dated the
Borrowing Date, duly completed and with exceptions acceptable to Administrative Agent in its sole
discretion; provided that any items listed on the Exceptions Report and otherwise
acceptable to Administrative Agent shall be delivered within 10 Business Days after such Borrowing
Date.



          (o) Opinions. The Administrative Agent shall have received, with a counterpart for
each Lender the executed legal opinion of Morrison & Foerster LLP, counsel to Borrower and
Guarantors, in form and substance reasonably satisfactory to the Administrative Agent, which legal
opinion shall address only such matters as are indicated on Schedule 6.



          (p) No Change in Law; No Adverse Proceedings. Administrative Agent shall not have
determined that the introduction of, or a change in, any Legal Requirement or in the interpretation
or administration of any Legal Requirement applicable to Administrative Agent has made it unlawful,
and no Governmental Authority shall have asserted that it is unlawful, for Administrative Agent to
enter into Loans hereunder. No action, suit, investigation or proceeding, shall be pending or
threatened, in any court or before any Governmental Authority that purports to affect (i) Borrower
or any Loan contemplated hereby or (ii) any Guarantor, any Subsidiary or Affiliate of any Guarantor
or any Pledged Asset that, in each case under this clause (ii), could reasonably be expected to
have a Material Adverse Effect.



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          (q) Certificates of Insurance. In connection with any Loans that are made in
conjunction with the addition of Eligible Assets to the Collateral hereunder, the Administrative
Agent shall have received valid certificates of insurance indicating that the requirements for
insurance policies required for the Underlying Property hereunder have been satisfied with respect
to such Eligible Assets under any Security Document on such Borrowing Date and evidence of the
payment of all premiums payable for the existing policy period.



          (r) Environmental Reports. In connection with any Loans that are made in conjunction
with the addition of Eligible Assets to the Collateral hereunder, the Administrative Agent shall
have received a Phase I environmental report and, if recommended under the Phase I environmental
report, a Phase II environmental report, with respect to any Eligible Asset being pledged as
additional Collateral under any Security Document on such Borrowing Date, each from a consultant
satisfactory to the Administrative Agent and in form and substance satisfactory to the
Administrative Agent.



          (s) Insurance Premiums and Real Estate Taxes. In connection with any Loans that are
made in conjunction with the addition of Eligible Assets to the Collateral hereunder, with respect
to each Eligible Asset being pledge as additional Collateral on such Borrowing Date, the Underlying
Borrower shall have paid, in accordance with the terms and conditions of the applicable Pledged
Asset Documents, (A) all accrued but unpaid insurance premiums relating to the applicable
Underlying Property, and (B) currently due Real Estate Taxes (including any in arrears) relating to
such Underlying Property.



          (t) Compliance with Law. In connection with any Loans that are made in conjunction
with the addition of Eligible Assets to the Collateral hereunder, with respect to each Eligible
Asset being pledged as additional Collateral on such Borrowing Date, the Administrative Agent shall
have received evidence, satisfactory in form and substance to the Administrative Agent, that the
Underlying Property of such Eligible Asset and its use comply in all material respects with all
applicable Legal Requirements (including, without limitation, zoning, subdivision and building laws
and regulations).



          (u) Payment Direction Letters. With respect to each Eligible Asset to be added to the
Collateral in connection with such Loan, Borrower shall deliver to the Administrative Agent a
payment direction letter, substantially in the form of Exhibit L hereto, from Borrower to
the applicable Underlying Borrower (or, if applicable, any servicer with respect to such Pledged
Asset or, if applicable for any Mezzanine Loan, the servicer, deposit bank or other agent
administering the cash management account for the related mortgage loan) instructing the Underlying
Borrower (or such servicer, deposit bank or other agent, if applicable) to remit all Income that is
payable or required to be remitted to Borrower, as the holder of such Pledged Asset, to the
Clearing Account or as otherwise directed in a written notice signed by Administrative Agent.



          (v) Hedging. Any Hedging Transactions entered into with respect to any Pledged Assets
shall be on terms and conditions, including with respect to protection against fluctuations in
interest rates, acceptable to Administrative Agent in its sole discretion.



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          (w) Other. Administrative Agent shall have received all such certificates and other
and further documents and documentation as Administrative Agent in its sole discretion shall
reasonably require.


Each borrowing by Borrower hereunder shall constitute a representation and warranty by Borrower as
of the date thereof that, except to the extent waived in writing by the Administrative Agent, the
conditions contained in this Section 6.2 have been satisfied.




     SECTION 7. AFFIRMATIVE COVENANTS



     Borrower hereby covenants and agrees that, so long as any of the Revolving Credit Commitments
remain in effect or any amount is owing to any Lender or the Administrative Agent hereunder or
under any other Loan Document:



     7.1. Existence; Compliance with Legal Requirements. Borrower shall do or cause to be
done all things necessary to preserve, renew and keep in full force and effect its existence,
rights, licenses, permits and franchises and comply with all Legal Requirements applicable to
Borrower and the Collateral. There shall never be committed by Borrower, and Borrower, consistent
with its rights under the applicable Pledged Asset Documents, shall not permit any other Person
involved with the Collateral to commit, any act or omission affording the federal government or any
state or local government the right of forfeiture against the Collateral or any part thereof or any
monies paid in performance of Borrower’s obligations under any of the Loan Documents. Borrower
hereby covenants and agrees not to commit, or, consistent with its rights under the applicable
Pledged Asset Documents, permit or suffer to exist any act or omission affording such right of
forfeiture. After prior notice to the Administrative Agent, Borrower, at its own expense, shall
have the right to contest by appropriate legal proceeding promptly initiated and conducted in good
faith and with due diligence, the validity of any Legal Requirement, the applicability of any Legal
Requirement to Borrower or the Collateral or any alleged violation of any Legal Requirement;
provided that (a) no Event of Default, no monetary Default and no other Default as to which
Administrative Agent shall have delivered a notice of default to Borrower hereunder shall have
occurred and remain uncured; (b) Borrower is permitted to do so under the provisions of any Pledged
Asset Document, (c) such proceeding shall be permitted under and be conducted in accordance with
the provisions of any instrument to which Borrower is subject and shall not constitute a default
thereunder and such proceeding shall be conducted in accordance with all applicable statutes, laws
and ordinances; (d) neither the Collateral nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, cancelled or lost; (e) Borrower shall, upon final
determination thereof, promptly comply with any such Legal Requirement determined to be valid or
applicable or cure any violation of any Legal Requirement; (f) such proceeding shall suspend the
enforcement of the contested Legal Requirement against Borrower and the Collateral; and (g)
Borrower shall furnish such security as may be required in the proceeding, or as may be reasonably
requested by the Administrative Agent, to insure compliance with such Legal Requirement, together
with all interest and penalties payable in connection therewith. The Administrative Agent may
apply any such security, as necessary to cause compliance with such Legal Requirement at any time
when, in the reasonable judgment of the Administrative Agent, the validity, applicability or
violation of such Legal Requirement is finally established or the Collateral (or any part thereof
or interest therein) shall be in danger of being sold, forfeited, terminated, cancelled or lost.



74









 





     7.2. Taxes and Other Claims. Borrower shall exercise any rights that it may have to
cause each Underlying Borrower, from time to time when the same shall become delinquent, to pay and
discharge, or to cause the owner of the applicable Underlying Property to pay and discharge, all
taxes of every kind and nature, all general and special assessments, levies, permits, inspection
and license fees, all water and sewer rents and charges, and all other public charges, whether of a
like or different nature, imposed upon or assessed against any Underlying Property or any part
thereof, or upon the revenues, rents, issues, income and profits of any Underlying Property or
arising in respect of the occupancy, use or possession thereof (all of the foregoing, “Taxes”), as
well as all lawful claims for labor, materials and supplies or otherwise which could become a lien,
claim or encumbrance on any Underlying Property. In addition, Borrower shall pay and discharge all
taxes, assessments and governmental charges or levies imposed on it or on its income or profits or
on any of its property prior to the date on which penalties attach thereto, except for any such
tax, assessment, charge or levy the payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained.



     7.3. Perform Loan Documents, Pledged Asset Documents. Borrower shall in a timely
manner observe, perform and satisfy all the terms, provisions, covenants and conditions of, and
shall pay when due all costs, fees and expenses to the extent required under the Loan Documents
executed and delivered by, or applicable to, Borrower. Borrower shall observe, perform and satisfy
all the terms, provisions, covenants and conditions of, and shall pay when due by Borrower all
costs, fees and expenses to the extent required under the Pledged Asset Documents.



     7.4. [Intentionally Omitted].



     7.5. Further Assurances. Borrower shall, at Borrower’s sole cost and expense:



          (a) furnish to Administrative Agent all instruments, documents, certificates, agreements and
instruments required to be furnished by Borrower pursuant to the terms of the Loan Documents or
which are reasonably requested by Administrative Agent in connection therewith;



          (b) execute and deliver to Administrative Agent such documents, instruments, certificates,
assignments and other writings, and do such other acts reasonably necessary, to evidence, preserve
and/or protect the Collateral at any time securing or intended to secure the obligations of
Borrower under the Loan Documents, as Administrative Agent may reasonably require, including,
without limitation, the filing of any financing or continuation statements under the Uniform
Commercial Code in effect in any jurisdiction with respect to the Liens created hereby; and



          (c) do and execute all and such further lawful and reasonable acts, conveyances and assurances
for the better and more effective carrying out of the intents and purposes of this Agreement and
the other Loan Documents, as Administrative Agent shall reasonably require from time to time.



     7.6. Cooperate in Legal Proceedings. Borrower shall cooperate fully with
Administrative Agent with respect to any proceedings before any court, board or other Governmental
Authority which may in any way affect the rights of Lenders hereunder or any



75









 







rights obtained by Lenders or Administrative Agent under any of the other Loan Documents and,
in connection therewith, permit Administrative Agent, on behalf of Lenders, at its election, to
participate in any such proceedings.



     7.7. Financial Reporting.



          (a) Borrower shall keep and maintain or will cause to be kept and maintained proper and
accurate books and records, in accordance with GAAP, reflecting the financial affairs of Borrower.
The Administrative Agent shall have the right from time to time during normal business hours upon
reasonable written notice to Borrower to examine such books and records at the office of Borrower
or other Person maintaining such books and records and to make such copies or extracts thereof as
the Administrative Agent shall desire, provided, that Borrower shall not be required to
disclose to the Administrative Agent, any Lender or any agents or representatives thereof any
information which is the subject of attorney-client privilege or attorney’s work-product privilege
properly asserted by the applicable Person to prevent the loss of such privilege in connection with
such information. After the occurrence of an Event of Default, Borrower shall pay any costs
incurred by the Administrative Agent to examine such books, records and accounts, as the
Administrative Agent shall determine to be necessary or appropriate in the protection of its
interest.



          (b) Borrower shall furnish the Administrative Agent annually, within ninety (90) days
following the end of each Fiscal Year, (i) a complete copy of the annual consolidated financial
statements of Ashford REIT and its Subsidiaries audited by a “Big Four” accounting firm or other
independent certified public accountant acceptable to the Administrative Agent prepared in
accordance with the GAAP for such Fiscal Year and containing statements of income and expense and
cash flow and a consolidated balance sheet for Ashford REIT and its Subsidiaries and (ii) certified
copies of the federal, state and local income tax returns of Ashford REIT for the preceding Fiscal
Year. Borrower will also provide (1) an Officer’s Certificate from Borrower certifying that such
annual unaudited financial statements of Borrower have been prepared in accordance with GAAP and
fairly present the financial condition and the results of operations of Borrower, and (ii) an
Officer’s Certificate from Borrower certifying whether, to the best of Borrower’s knowledge, there
exists an event or circumstance which constitutes a Default or Event of Default by Borrower under
the Loan Documents and if such Default or Event of Default exists, the nature thereof, the period
of time it has existed and the action then being taken to remedy the same.



          (c) Borrower shall furnish to the Administrative Agent on or before the forty-fifth (45th) day
after the end of each of the first three (3) calendar quarters of each fiscal year, unaudited
quarterly and year-to-date consolidated statements of income and expense and cash flow prepared for
Ashford REIT and its Subsidiaries (including Borrower) for such quarter and a consolidated balance
sheet as of such quarter for Ashford REIT and its Subsidiaries, accompanied by an Officer’s
Certificate from Ashford REIT stating that the same has been prepared in accordance with GAAP and
fairly presents the financial condition and results of the operations of Ashford REIT and its
Subsidiaries.



          (d) Concurrently with the delivery of the financial statements referred to in Sections
7.5(b) and (c), Ashford REIT shall furnish to the Administrative Agent an Officer’s



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Certificate showing in detail the calculations reflecting Ashford REIT’s compliance with the
requirements of Sections 8.1(a) through 8.1(e), including a certification of the
Market Capitalization of Ashford REIT as of the last day of the period covered by such financial
statements showing in detail the calculations used in determining such Market Capitalization.



          (e) Not later than ten (10) days following the end of each month, Borrower shall furnish to
the Administrative Agent a Borrowing Base Certificate showing the Borrowing Base as of the last day
of the immediately preceding month, certified as complete and correct by an authorized senior
officer of Borrower, together with such supporting documentation to such Borrowing Base Certificate
as the Administrative Agent may require.



          (f) Concurrently with the release of the Lien of any Security Document pursuant to Section
4.7, the addition of any Pledged Asset to the Borrowing Base hereunder, a Condemnation or
Casualty with respect to any Underlying Property, the substitution of any Substituted Asset for any
Substitute Asset under Section 4.8, Borrower shall furnish to the Administrative Agent a
Borrowing Base Certificate showing the Borrowing Base as of the date of such release, acquisition,
Condemnation, Casualty or increase in Indebtedness, certified as complete and correct in all
material respects by an authorized senior officer of Borrower.



          (g) Borrower shall promptly furnish to the Administrative Agent such further detailed
information as is in Borrower’s possession with respect to the operation of the Underlying
Properties, any construction at an Underlying Property and the financial affairs of Guarantors and
their respective Subsidiaries (including Borrower) as may be reasonably requested by the
Administrative Agent. In addition, Borrower shall promptly furnish to Administrative Agent, at its
request, a calculation, in reasonable detail, of the Market Capitalization of Ashford REIT as of
any date specified by Administrative Agent.



     7.8. Business and Operations. Borrower will continue to engage in the businesses
presently conducted by it as and to the extent the same are necessary for the ownership,
maintenance, management and operation of the Collateral, including the Pledged Assets. Borrower
will qualify to do business and will remain in good standing under the laws of each jurisdiction as
and to the extent the same are required for the ownership, maintenance, management and operation of
the Collateral.



     7.9. Preservation of Pledged Assets. Borrower and Guarantors shall do all
commercially reasonable things necessary to preserve the Pledged Assets and the other Collateral so
that they remain subject to a first priority perfected security interest hereunder. Without
limiting the foregoing, Borrower will cause the Pledged Assets and the related Collateral to comply
with all applicable rules, regulations and other laws, the failure to comply with which would have
a Material Adverse Effect. Notwithstanding the collateral assignment of the Collateral File with
respect to each Pledged Asset to Administrative Agent, Borrower agrees and covenants with
Administrative Agent to enforce diligently in accordance with industry custom and practice for
assets similar to the applicable Pledged Asset Borrower’s rights and remedies set forth in the
Pledged Asset Documents. Borrower will not allow any default for which it is responsible to occur
under any Pledged Assets or the related Collateral or any Loan Document and shall fully perform
when due all of its obligations under any Pledged Assets or the related Collateral and any Loan
Document



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     7.10. Title to the Collateral.



          (a) Borrower will warrant and defend (i) the title to the Collateral and every part thereof,
subject only to Liens permitted hereunder (including Permitted Encumbrances), and (ii) the validity
and priority of the Lien of the Security Documents, subject only to Liens permitted hereunder
(including Permitted Encumbrances), in each case against the claims of all Persons whomsoever.
Borrower shall reimburse Lender for any losses, costs, damages or expenses (including reasonable
attorneys’ fees and court costs) incurred by Lender if an interest in the Collateral, other than as
permitted hereunder, is claimed by another Person.



          (b) Borrower shall exercise any rights it may have, under any Pledged Asset Document or
otherwise, to cause each Underlying Borrower not to create, incur, assume or suffer to exist any
Lien on, of or against, or otherwise affecting all or any portion of, the Underlying Collateral
and/or the Underlying Properties, except for the Liens evidenced by the Pledged Asset Documents and
any other Liens permitted under the applicable Pledged Asset Documents (and subject to the rights
of the holders of any participation interests in any loan underlying any Pledged Asset that is a
Junior Interest and the rights of any senior lenders under any intercreditor agreements governing
any Mezzanine Loan), other than Liens in favor of Borrower which have been assigned by Borrower to
Lender. Borrower shall not approve or consent to any action referred to in the preceding sentence
by any Underlying Borrower without, in each instance, Administrative Agent’s prior consent.



     7.11. Costs of Enforcement. In the event (a) that the Lien granted by the Security
Documents is foreclosed in whole or in part or that the Security Documents are put into the hands
of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any mortgage
or security interest prior to or subsequent to the Security Documents in which proceeding
Administrative Agent or any Lender is made a party, or (c) of the bankruptcy, insolvency,
rehabilitation or other similar proceeding in respect of Borrower or any of its constituent Persons
or an assignment by Borrower or any of its constituent Persons for the benefit of its creditors,
Borrower, on behalf of itself and its successors and assigns, agrees that it/they shall be
chargeable with and shall pay all costs of collection and defense, including attorneys’ fees and
costs, incurred by Administrative Agent or Borrower in connection therewith and in connection with
any appellate proceeding or post-judgment action involved therein, together with all required
service or use taxes.



     7.12. Estoppel Statement.



          (a) After request by Administrative Agent from time to time, Borrower shall within ten (10)
Business Days furnish Administrative Agent with a statement, duly acknowledged and certified,
setting forth (i) the original principal amount of each Loan, (ii) the Outstanding Principal
Balance, (iii) the Advance Rate, Applicable Spread, and interest rate applicable to each Loan, (iv)
the date installments of interest and/or principal were last paid in respect of each Loan, (v) any
offsets or defenses to the performance of the Secured Obligations, if any, (vi) that the Notes,
this Agreement, the Security Documents and the other Loan Documents are valid, legal and binding
obligations of Borrower enforceable in accordance with their terms and have not been modified or if
modified, giving particulars of such modification, (vii) the unpaid principal of and interest due
on each Pledged Asset and any other sums



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evidenced or secured by the Pledged Asset Documents, (viii) the date through which interest
has been paid thereunder, and (vi) whether or not, to Borrower’s knowledge, any offsets, defenses
or counterclaims exist with respect to the Pledged Assets.



          (b) If requested, such certificate will also attach true and correct copies of any Loan
Documents and/or any Pledged Asset Documents and state such other information as Administrative
Agent shall reasonably require. Upon request of Administrative Agent, Borrower shall furnish
Administrative Agent or such other party or parties as Administrative Agent may reasonably request,
a written certificate certifying as to such matters as Administrative Agent may reasonably request.
Upon request of Administrative Agent, Borrower shall exercise any right it may have under the
applicable Pledged Asset Documents to request each Underlying Borrower within ten (10) Business
Days after such request to furnish to, or cause to be furnished to, Administrative Agent or such
other party or parties as Administrative Agent may request, a written certificate certifying as to
such matters as Administrative Agent may reasonably request.



          (c) Borrower shall exercise any right it may have to request each Underlying Borrower to
obtain and deliver (to the extent of such Underlying Borrower’s rights to so obtain and deliver) to
Administrative Agent upon request (or deliver to Borrower and Borrower shall deliver to
Administrative Agent), which may be made from time to time, tenant estoppel certificates from each
commercial tenant at any Underlying Property in form and substance reasonably satisfactory to
Administrative Agent.



     7.13. [Intentionally Omitted].



     7.14. Maintenance of Properties. Borrower shall enforce Borrower’s rights and
remedies under the Pledged Asset Documents to cause each Underlying Borrower (and/or the owner of
the applicable Underlying Property) to maintain each Underlying Property at all times in good
operating order and condition, subject to reasonable wear and tear, and promptly to make, from time
to time, all repairs, renewals, replacements, additions and improvements in connection therewith
which are necessary or desirable to such end.



     7.15. Delivery of Notices.



          (a) Borrower will promptly, but in no event later than five (5) Business Days after Borrower
becomes aware of any of the following events, furnish a written notice to Administrative Agent
(together with the applicable correspondence and papers relating thereto) specifying the nature and
period of existence of such condition or event and, with respect to events described below, what
action Borrower is taking or proposes to take with respect thereto (compliance with the provisions
of this Section 7.15 shall not be deemed or construed to constitute a waiver of or consent
to any Default or Event of Default of which Borrower has given Lender notice pursuant to this
Section 7.15):




          (i) the occurrence of any Default or any Event of Default hereunder or under any of the
other Loan Documents;




          (ii) (A) the occurrence of any event of default under any Pledged Asset Document, (B)
any receipt or delivery by Borrower of a notice of default or termination under any Pledged
Asset Document, (C) any request by any Underlying Borrower or any



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other Person for any consent or approval required to be given by Borrower under any of
the Pledged Asset Documents as to which the Administrative Agent or Lenders have a consent
right hereunder, (D) any request by any Underlying Borrower or any other Person for any
waiver by Borrower of any provision of any of the Pledged Asset Documents as to which the
Administrative Agent or Lenders have a consent right hereunder, (E) any proposed action with
respect to any material default under any of the Pledged Asset Documents, or (F) the
occurrence of any breach of any representation or warranty by any Underlying Borrower under
any Pledged Asset Document;




          (iii) any event of default under any Contractual Obligation of Borrower or any
Guarantor which, if not cured, could reasonably be expected to have a Material Adverse
Effect;




          (iv) any written notice received from any Governmental Authority asserting a violation
of any material Legal Requirement and any correspondence to or from Borrower and/or any
Underlying Borrower with respect thereto, and any other litigation, investigation or
proceeding which may exist at any time between Borrower or any Guarantor and any
Governmental Authority which, if adversely determined, could reasonably be expected to have
a Material Adverse Effect;




          (v) any litigation or proceeding affecting Borrower, any Guarantor or any Pledged Asset
that, if adversely determined, could reasonably be expected to have a Material Adverse
Effect;




          (vi) the filing of any action, suit or proceeding against or affecting Borrower, any
Guarantor, any Underlying Borrower or any Underlying Property that, if adversely determined,
could singly or collectively (A) impair the validity or enforceability of any of the Pledged
Asset Documents, (B) have a material adverse effect on the value of the Collateral, the
Underlying Collateral or any of the Underlying Properties or their respective current uses,
or (C) result in a Lien on any portion of the Collateral, the Underlying Collateral or any
of the Underlying Properties;




          (vii) any material amendment to its Governing Documents (for the purposes of this
Section 7.15, any amendment of the single purpose, separateness or bankruptcy remote
provisions or requirements of its Governing Documents shall be deemed to be a material
amendment) within thirty (30) days following the effective date of such amendment;
provided that any such material amendment or other modification shall not be binding
upon the Lenders unless and until the Administrative Agent shall have received and approved
such amended or modified Governing Documents;




          (viii) any change in Borrower’s organizational identification number;




          (ix) any change in Borrower’s organizational structure;




          (x) any Conveyance of any interest, direct or indirect, in Borrower (exclusive of any
transfers of publicly traded securities of Ashford REIT or any issuance or conveyance of
partnership units in Ashford OP that are convertible into securities of Ashford REIT) or any
Pledged Asset ; and/or



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          (xi) any development or event that has had or could reasonably be expected to have a
Material Adverse Effect.



          (b) Each notice pursuant to this Section shall be accompanied by an Officer’s Certificate of
Borrower setting forth details of the occurrence referred to therein and stating what action
Borrower proposes to take with respect thereto.



          (c) Without limiting the generality of the foregoing, Borrower will transmit to Administrative
Agent:




          (i) immediately upon receipt thereof, a copy of any notice required to be given to
Borrower by any Person pursuant to any Pledged Asset Document; provided that, solely
with respect to any notice from an Underlying Borrower, Borrower shall provide
Administrative Agent with a copy thereof only to the extent that Administrative Agent or any
Lender is required or permitted to take any action with respect thereto under this Agreement
or Administrative Agent’s or any Lender’s consent is required hereunder for Borrower to take
any action with respect to such matter;




          (ii) promptly, but in no event later than five (5) Business Days after Borrower
receives the same, a copy of any other report, statement, certificate, financial statement,
budget, investigation, study, audit, test, review or other analyses, received by Borrower or
any Affiliate of Borrower relating to the Collateral, the Underlying Collateral or the
Underlying Properties; and




          (iii) upon receipt of same, each budget for each Underlying Property prepared by or on
behalf of any Underlying Borrower.



     7.16. After Acquired Property. Borrower will grant to Lender a first lien security interest
in and to all equipment and other personal property owned by Borrower and relating to the Pledged
Assets, immediately upon acquisition of same or any part of same.



     7.17. [Intentionally Omitted]



     7.18. Delivery of Documents Regarding Ownership. Borrower will exercise any rights
that it may have under any Pledged Asset Document or otherwise to cause each Underlying Borrower to
deliver to Borrower (and Borrower shall provide a copy to Administrative Agent) copies of all
documents reasonably requested by Administrative Agent which evidence such Underlying Borrower’s
title in or to any materials, fixtures or articles incorporated in the improvements thereon or
subject to the Lien of any of the Pledged Asset Documents.



     7.19. Attorneys’ Fees and Expenses. Borrower shall appear in and defend any action or
proceeding purporting to affect the security interests granted to Lenders under any of the Loan
Documents, including, without limitation, the Security Documents, the security interests granted to
Borrower under any of the Pledged Asset Documents, the rights and powers of Administrative Agent,
on behalf of Lenders, under any of the Loan Documents and/or the rights and powers of Borrower
under any of the Pledged Asset Documents, and Borrower (in addition to reasonable attorneys’ fees
and expenses to be paid by Borrower otherwise pursuant to this Agreement or the other Loan
Documents) shall pay all of Administrative Agent’s and up to one Lender’s



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reasonable attorneys’ fees and expenses in connection with the enforcement of this Agreement
and the other Loan Documents, the collection of all amounts payable hereunder and thereunder, the
enforcement of the Pledged Asset Documents and the collection of all amounts thereunder. In case
of any Default under this Agreement or any of the other Loan Documents, or if any action or
proceeding is commenced in which it becomes necessary to defend or uphold the Lien or priority of
any of the Security Documents, the other Loan Documents or any Pledged Asset Documents, or which
materially and adversely affects Borrower’s or the Lenders’ interests in the Underlying Collateral
or any part thereof, including, but not limited to, proceedings of any nature affecting the
Underlying Collateral or involving the bankruptcy, insolvency, arrangement, reorganization or other
form of debtor relief with respect to Borrower, any Guarantor, any Underlying Borrower or any
Affiliate of any thereof or relating to a decedent, then Administrative Agent may, but without
obligation to do so, and without releasing Borrower or any Guarantor from any obligation hereunder
or under the other Loan Documents, make such appearances, disburse such reasonable sums and take
such action as Administrative Agent deems necessary or appropriate to protect the Lenders’ interest
in the Collateral and/or Borrower’s interest in the Underlying Collateral. All reasonable costs
incurred by Administrative Agent and up to one Lender, including reasonable attorneys’ fees and
disbursements, in taking any action described above shall be paid by Borrower within thirty (30)
days of demand therefor, and in the event the same are not paid within such thirty (30) day period
there shall also be payable interest thereon at the Default Rate from the date paid by
Administrative Agent through the date of repayment by Borrower. All such costs incurred by
Administrative Agent and/or such Lender shall be deemed to constitute protective advances evidenced
by the Note and secured by the Loan Documents. In addition to, and without limiting the generality
of, the foregoing, if, at any time hereafter, Administrative Agent employs counsel to protect,
collect, lease, sell, take possession of, foreclose upon or liquidate all or any part of the
Collateral or the Underlying Collateral, or to attempt to enforce any security interest or Lien in
all or on any part of the Collateral or the Underlying Collateral, or to enforce any rights of
Borrower or any of any Underlying Borrower’s rights under any of the Pledged Asset Documents, or to
enforce any rights of Administrative Agent or Lenders or any of Borrower’s obligations hereunder or
under any of the other Loan Documents, or any obligations of any other Person which may be
obligated to Lenders or Administrative Agent by virtue of this Agreement or any other agreement,
instrument or document heretofore or hereafter delivered to Administrative Agent by or for the
benefit of Borrower, or to enforce any obligations of any other Person which may be obligated to
Borrower by virtue of any agreement, instrument or document heretofore or hereafter delivered to
Borrower (which said obligations have been assigned by Borrower to Administrative Agent or
Lenders), then, in any such event, all of the attorneys’ fees and expenses arising from such
services, and all expenses, costs and charges relating thereto, shall be paid by Borrower within
thirty (30) days of demand therefor, and in the event the same are not paid within such thirty (30)
day period, there shall also be payable interest thereon at the Default Rate from the date paid by
Administrative Agent through the date of repayment by Borrower. All such costs incurred by
Administrative Agent shall be deemed to constitute protective advances evidenced by the Note and
secured by the other Loan Documents.



     7.20. Insurance.



          (a) Borrower shall exercise any right that it may have under any Pledged Asset Document or
otherwise to cause each Underlying Borrower (and/or the owner of the



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applicable Underlying Property) to maintain (or cause to be maintained), all insurance
policies required to be obtained and maintained by such Underlying Borrower pursuant to the terms
of the Pledged Asset Documents (or by the owner of the applicable Underlying Property if the
Underlying Borrower is not such owner).



          (b) Borrower will continue to maintain insurance coverage for Borrower with respect to
employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe
burglary, property (other than money and securities) and computer fraud in an aggregate amount
equal to at least $1,000,000.



     7.21. Collateral Files; Custodian. From time to time, Borrower shall forward to the
Custodian additional original documents or additional copies of documents evidencing any
assumption, modification, consolidation or extension of any Pledged Asset approved in accordance
with the terms of this Agreement, and upon receipt of any such other documents, the Custodian shall
hold such other documents as Administrative Agent shall request from time to time. With respect to
any documents which have been delivered or are being delivered to recording offices for recording
and have not been returned to Borrower in time to permit their delivery hereunder at the time
required, in lieu of delivering such original documents, Borrower shall deliver to Administrative
Agent a true copy thereof with an officer’s certificate certifying that such copy is a true,
correct and complete copy of the original, which has been transmitted for recordation. Borrower
shall deliver such original documents to the Custodian promptly when they are received. Each
Collateral File shall be maintained in accordance with the Custodial Agreement. Any Collateral
File not required to be delivered to Administrative Agent or its designee (including the Custodian)
are and shall be held in trust by Borrower or its designee for the benefit of Lenders as the
secured parties under the Loan Documents. Borrower or its designee shall maintain a copy of each
Collateral File. The temporary possession of any documents required to be included in any
Collateral File by Borrower under any provision hereof is at the will of Administrative Agent for
the sole purpose of servicing the related Pledged Asset, and such retention and possession by
Borrower or its designee is in a custodial capacity only. The books and records (including,
without limitation, any computer records or tapes) of Borrower shall be marked appropriately to
reflect clearly the pledge of the Pledged Assets and Borrower’s interest therein to Lenders.
Borrower shall pay ongoing custodial and bank fees and expenses as and to the extent set forth in
the Custodial Agreement.



     7.22. Collateral Records. Borrower will execute and deliver to the Administrative
Agent, from time to time, solely for the Administrative Agent’s convenience in maintaining a record
of the Collateral, such written statements and schedules as the Administrative Agent may reasonably
require designating, identifying or describing the Collateral pledged to the Administrative Agent
for the ratable benefit of the Lenders under the Loan Documents. Failure to provide the
Administrative Agent with any of the foregoing shall in no way affect, diminish, modify or
otherwise limit the security interest granted under the Loan Documents.



     7.23. Collateral File; Pledged Asset Schedule. In the event that, after the date of
delivery of any Collateral File or Pledged Asset Schedule by Borrower to Administrative Agent under
this Agreement, Borrower shall discover that such Collateral File or Pledged Asset Schedule or any
information contained therein is not true, correct and complete in any material respect, Borrower
shall promptly notify Administrative Agent in writing, specifying the nature of



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such false, incorrect or incomplete information and supplying Administrative Agent and
Custodian with any missing or corrected information.



     7.24. Records. Borrower shall collect and maintain or cause to be collected and
maintained all Records relating to the Pledged Assets and other Collateral in accordance with
industry custom and practice for assets similar to the Pledged Assets and all such Records shall be
in Custodian’s possession unless Administrative Agent otherwise approves. Borrower will not allow
any such papers, records or files that are an original or an only copy to leave Custodian’s
possession, except for individual items removed in connection with servicing a specific Pledged
Asset, in which event Borrower will obtain or cause to be obtained a receipt from a financially
responsible person for any such paper, record or file. Borrower will maintain any such Records in
good and complete condition in accordance with industry practices for assets similar to the Pledged
Assets and preserve them against loss. For so long as Administrative Agent has an interest in or
lien on any Pledged Asset, Borrower will hold or cause to be held all related Records in trust for
Administrative Agent. Borrower shall notify, or cause to be notified, every other party holding
any such Records of the interests and liens in favor of Administrative Agent granted hereby. Upon
reasonable advance notice from Custodian or Administrative Agent, Borrower shall (x) make any and
all such Records available to Custodian or Administrative Agent to examine any such Records, either
by its own officers or employees, or by agents or contractors, or both, and make copies of all or
any portion thereof, and (y) permit Administrative Agent or its authorized agents to discuss the
affairs, finances and accounts of Borrower with its chief operating officer and chief financial
officer and to discuss the affairs, finances and accounts of Borrower with its independent
certified public accountants.



     7.25. Delivery of Servicing Report. Upon the occurrence of any of the following (a)
the occurrence and continuation of an Event of Default, (b) the fifth (5th) Business Day of each
month, or (c) upon the request of Administrative Agent, Borrower shall provide to Administrative
Agent, electronically, in a format mutually acceptable to Administrative Agent and Borrower, a
Servicing Report. If the Pledged Assets are not directly serviced by Borrower or its Affiliate,
Borrower shall not cause the Pledged Assets to be serviced by any servicer other than a servicer
expressly approved in writing by Administrative Agent.



     7.26. Borrowing Base Deficiency. If at any time there exists a Borrowing Base
Deficiency, Borrower shall cure the same in accordance with Section 3.2 or 3.3
hereof.



     7.27. Patriot Act.



          (a) Borrower hereby represents, warrants, covenants and agrees that none of Borrower, any of
its constituents or Affiliates (exclusive of any holder of the publicly traded securities of
Ashford REIT or any holder of any interest in Ashford OP other than the Subsidiaries of Ashford
REIT, as to which Borrower makes no representation or warranty), or, to Borrower’s knowledge, any
of their respective brokers or other agents acting or benefiting in any capacity in connection with
the Loans, is or will be a Prohibited Person.



          (b) Borrower hereby represents, warrants, covenants and agrees that none of Borrower, any of
its constituents or Affiliates (exclusive of any holder of the publicly traded securities of
Ashford REIT or any holder of any interest in Ashford OP other than the



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Subsidiaries of Ashford REIT, as to which Borrower makes no representation or warranty), or,
to Borrower’s knowledge, any of their respective brokers or other agents acting in any capacity in
connection with the Loans, (i) has conducted or will conduct any business or has engaged or will
engage in any transaction or dealing with any Prohibited Person, including making or receiving any
contribution of funds, goods or services to or for the benefit of any Prohibited Person, (ii) has
dealt or will deal in, or otherwise has engaged or will engage in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Order, or (iii) has engaged or
will engage in or has conspired or will conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in the Patriot Act.



          (c) Borrower covenants and agrees to deliver to the Administrative Agent any certification or
other evidence requested from time to time by the Administrative Agent in its reasonable
discretion, confirming Borrower’s compliance with this Section 7.27.



     7.28. [Intentionally Omitted]



     7.29. Future Funding Obligations. Notwithstanding anything to the contrary in this
Agreement or in any other Loan Document, Borrower acknowledges and agrees that, in the case of any
Pledged Asset pledged to Administrative Agent on or subsequent to the date hereof and for which any
Pledged Asset Document includes any Future Funding Obligation, (A) Administrative Agent does not
hereby assume any liability to make, pay or perform any Future Funding Obligation or otherwise
perform any of Borrower’s or its predecessors-in-interest’s obligations in connection therewith,
(B) Borrower shall remain solely liable for, and agrees hereby to pay and to perform or to cause to
be paid and performed, any such Future Funding Obligation, (C) such Future Funding Obligation shall
constitute Secured Obligations of Borrower under this Agreement, and (D) in addition to all other
rights and remedies of Administrative Agent hereunder, Borrower and each Guarantor each hereby
agrees to indemnify and hold harmless Administrative Agent, each Lender and their respective
Affiliates from and against any and all liabilities, losses, damages, judgments, costs and expenses
(including, without limitation, reasonable fees and expenses of counsel) (“Costs”) imposed on,
incurred by or asserted against Administrative Agent or such Indemnified Party as the result of
Borrower’s or any of its predecessors-in-interest’s performance or non-performance of any Future
Funding Obligation, including any Costs occasioned by Administrative Agent’s inability to exercise
any remedy, or any delay with respect to Administrative Agent’s exercise of any remedy, under or in
respect of any Pledged Asset that includes a Future Funding Obligation. In the event that Borrower
or any Affiliate of Borrower performs any Future Funding Obligation by extending credit to any
Underlying Borrower under any Pledged Asset Document which is secured by a Lien on any Underlying
Collateral or Underlying Property all or a portion of which is included in or otherwise the subject
of any Collateral File, Borrower shall, at Administrative Agent’s election, deliver to
Administrative Agent simultaneously therewith, a subordination and intercreditor agreement in form
and substance satisfactory to Administrative Agent, pursuant to which Borrower and Servicer shall
subordinate any rights to payment and enforcement thereof as such rights relate to any funded
Future Funding Obligation to the rights and remedies of Administrative Agent with respect to such
Pledged Asset and to the payment in full and discharge (1) by Borrower of all of its obligations in
respect of such Pledged Asset that are owing to Administrative Agent hereunder, and (2) by Borrower
of the related Obligations of



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Borrower hereunder; provided that, notwithstanding the foregoing, nothing contained in
this Agreement, including this Section 7.29, shall be deemed or read in any way to alter,
modify or waive any provision of the representations and warranties made by Borrower with respect
to any Pledged Asset pursuant to Exhibit M to this Agreement.



     7.30. True and Correct Information. All information, reports, exhibits, schedules,
financial statements or certificates of Borrower, Guarantors, any Affiliate thereof or any of their
officers furnished to Administrative Agent hereunder and during Administrative Agent’s diligence of
Borrower are and will be true and complete when made in all material respects and do not and will
not omit to disclose any material facts necessary to make the statements herein or therein, in
light of the circumstances in which they are made, not misleading when made; provided that, with
respect to projected financial information, Borrower represents only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the time. All required
financial statements, information and reports delivered by Borrower to Administrative Agent
pursuant to this Agreement shall be prepared in accordance with GAAP (subject, in the case of
interim statements, to year-end adjustments), and/or, if applicable, the appropriate securities law
accounting regulations.



     7.31. Environmental Laws.



          (a) Borrower shall comply with, and shall use commercially reasonable efforts, consistent with
its rights under the Pledged Asset Documents, to ensure compliance by all Underlying Borrowers with
all applicable Environmental Laws and shall obtain and comply with and maintain, and use
commercially reasonable efforts consistent with its rights under the Pledged Asset Documents to
ensure that all Underlying Borrowers obtain and comply with and maintain, any and all material
licenses, approvals, notifications, registrations or permits required by applicable Environmental
Laws.



          (b) Borrower shall conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required of Borrower under Environmental Laws and promptly
comply with all lawful orders, requests, notices, requirements and directives of all Governmental
Authorities applicable to Borrower regarding Environmental Laws except to the extent that the same
are being contested in good faith by appropriate proceedings and the pendency of such proceedings
could not be reasonably expected to have a Material Adverse Effect.



     SECTION 8. NEGATIVE COVENANTS



     So long as the Revolving Credit Commitments remain in effect or any amount is owing to any
Lender or the Administrative Agent hereunder or under any other Loan Document:



     8.1. Financial Condition Covenants. The Ashford REIT shall not:



          (a) Interest Coverage Ratio. Permit the Interest Coverage Ratio of Ashford REIT and
its consolidated Subsidiaries during any trailing twelve (12) calendar month period to be less than
1.75 to 1.00.




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          (b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio of Ashford
REIT and its consolidated Subsidiaries during any trailing twelve (12) calendar month period to be
less than 1.50 to 1.00.




          (c) Tangible Net Worth. Permit the Tangible Net Worth of Ashford REIT and its
consolidated Subsidiaries to be less than Three Hundred Thirty Five Million and No/100 Dollars
($335,000,000.00).




          (d) Hedging Obligations. Permit the portion of Ashford REIT’s outstanding
Indebtedness for borrowed money that is not subject to Hedging Transactions to be greater than 40%
of all such outstanding Indebtedness for borrowed money; provided that the portion of the
Outstanding Principal Balance that is secured by Pledged Assets that accrue interest at a
LIBOR-based floating rate shall be excluded from both the numerator and the denominator for
purposes of calculating such percentage, so long as no Event of Default, no monetary Default and no
other Default as to which Administrative Agent shall have delivered a notice of default to Borrower
shall have occurred hereunder.




          (e) Minimum Market Capitalization. Permit Ashford REIT’s Market Capitalization to be
less than Three Hundred Million and No/100 Dollars ($300,000,000.00).




     8.2. Limitation on Indebtedness. Borrower shall not create, incur, assume or suffer
to exist (i) any unsecured Indebtedness of Borrower; (ii) any Indebtedness secured by the Pledged
Assets or other Collateral, except Indebtedness of Borrower under this Agreement.



     8.3. Limitation on Liens. Borrower shall not:



          (a) Except for Liens in favor of the Administrative Agent for the ratable benefit of the
Lenders, create, incur, assume or suffer to exist any Lien upon (i) any Pledged Asset (except for
Permitted Encumbrances), or (ii) any Collateral that is not a Pledged Asset (except for Permitted
Encumbrances and except as collateral for any Indebtedness permitted under Section 8.2
above).




          (b) Except for Liens in favor of the Administrative Agent for the ratable benefit of the
Lenders, create, incur, assume or suffer to exist any Lien upon any direct or indirect interest in
Borrower.




     8.4. Transfers of Interests. Borrower shall not:



          (a) Without the prior written consent of the Administrative Agent, which consent may be
granted or withheld in the sole and absolute discretion of the Administrative Agent, Borrower shall
not sell, convey, mortgage, grant, bargain, encumber, pledge, assign or otherwise transfer (a
“Conveyance”), or permit a Conveyance of, any interest, direct or indirect, in any Pledged Asset or
any Underlying Collateral or Underlying Property or any part thereof, or any direct interest in
Borrower or the general partner of Borrower or in any Underlying Borrower, whether voluntarily or
involuntarily, except for (x) transfers of any Underlying Collateral, Underlying Property,
Underlying Borrower or interests therein that are permitted under the Pledged Asset Documents or
(y) transfers of any direct interest in Borrower or the general partner of Borrower that do not
result in a Change in Control; provided that the





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transferee of any such interest agrees to
be bound by the terms and conditions of the Equity Pledge Agreement and ratifies and affirms the
liens granted to the Administrative Agent thereunder and that such liens remain valid perfected and
first priority liens after such conveyance and Borrower and its general partner remain in
compliance with Section 8.16.




          (b) As a condition to obtaining the consent of the Administrative Agent to any Conveyance,
Borrower shall provide to the Administrative Agent not less than ten (10) Business Days (or such
shorter period of time as may be set forth in any applicable Pledged Asset Document) prior written
notice of such Conveyance and shall deliver to the Administrative Agent such information and
materials as the Administration Agent may reasonably require in order to run background and credit
checks with respect to the proposed transferee and its principals, the results of which background
and credit checks must be satisfactory to the Administrative Agent in its sole discretion.




     8.5. Limitation on Fundamental Changes. Borrower shall not enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or
substantially all of its property, business or assets, or make any material adverse change in its
present method of conducting business.



     8.6. Changes in Locations, Name, etc. Borrower shall not (a) change the location of
its chief executive office or chief place of business from that specified in Section 5.4
hereof, (b) change the location where it maintains its records with respect to the Collateral, (c)
change its name or identity or change its corporate structure in any respect which would result in
a Change in Control, or (d) reincorporate or reorganize under the laws of another jurisdiction,
unless (i) in the case of any change set forth in clause (c) or clause (d) above,
the Administrative Agent has consented to such change in writing and (ii) in the case of any change
set forth in any of clauses (a) through (d) above, Borrower shall have given the
Administrative Agent at least thirty (30) days prior written notice thereof and shall have
delivered to the Administrative Agent all Uniform Commercial Code financing statements and
amendments thereto as the Administrative Agent shall reasonably request and taken all other actions
deemed reasonably necessary by the Administrative Agent to continue its perfected status in the
Collateral with the same priority.



     8.7. Limitation on Transactions with Affiliates. Borrower shall not enter into any
transaction, including, without limitation, any purchase, sale, lease or exchange of property or
the rendering of any service, with any Affiliate unless such transaction is (a) otherwise permitted
under this Agreement, (b) in the ordinary course of Borrower’s or such Affiliate’s business, and
(c) upon fair and reasonable terms no less favorable to Borrower or such Affiliate, as the case may
be, than it would obtain in a comparable arm’s length transaction with a Person which is not an
Affiliate.



     8.8. Limitation on Changes in Fiscal Year. Without the prior written consent of the
Administrative Agent, such consent not to be unreasonably withheld, Borrower shall not permit the
fiscal year of Borrower or any Guarantor to end on a day other than December 31.



     8.9. Limitation on Negative Pledge Clauses. Borrower shall not enter into with any
Person any agreement, other than this Agreement and the other Loan Documents, which



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prohibits or
limits the ability of any Guarantor to pledge the income, profits, payments, returns of capital,
dividends and other distributions paid or payable to such Guarantor from time to time on or with
respect to its direct or indirect ownership interests in Borrower.




     8.10. Limitation on Lines of Business. Borrower shall not enter into any business,
except for those businesses in which Borrower is engaged on the date of this Agreement or which are
directly related or incidental thereto, or change the current use of any Underlying Property in any
material adverse respect.



     8.11. ERISA. Borrower shall not become an “employee benefit plan” within the meaning
of Section 3(3) of ERISA subject to ERISA or permit of such party’s assets to constitute assets of
any such plan.



     8.12. Debt Cancellation. Borrower shall not cancel or otherwise forgive or release
any claim or debt owed to Borrower by any Person, except for adequate consideration and in the
ordinary course of Borrower’s business.



     8.13. Zoning. Borrower shall not initiate or consent to any zoning reclassification
of any portion of any Underlying Property or seek any variance under any existing zoning ordinance
or use or permit the use of any portion of any Underlying Property in any manner that could
reasonably be expected to result in such use becoming a non-conforming use under any zoning
ordinance or any other applicable land use law, rule or regulation, without the prior written
consent of the Administrative Agent, which consent shall not be unreasonably withheld, conditioned
or delayed.



     8.14. No Joint Assessment. Borrower shall not initiate or consent to the joint
assessment of any Underlying Property (a) with any other real property constituting a tax lot
separate from such Underlying Property, or (b) with any portion of such Underlying Property which
may be deemed to constitute personal property, or any other procedure whereby the Lien of any taxes
which may be levied against such personal property shall be assessed or levied or charged to such
Underlying Property.



     8.15. Governing Documents. The Governing Documents of Borrower shall not be amended
in any material respect without the prior written consent of the Required Lenders (for the purposes
of this Section 8.15, any amendment of the single purpose, separateness or bankruptcy
remote provisions or requirements of such Governing Documents shall be deemed to be a material
amendment). In addition, the Governing Documents of either Guarantor shall not be amended if such
amendment would result in the breach by such Guarantor of any covenant contained in any Loan
Document.



     8.16. Special Purpose. Without in any way limiting the provisions of this Article
8, Borrower shall not take or permit any action that would result in Borrower not being in
compliance with the representations, warranties and covenants set forth in Section 5.30.



     8.17. Compliance with Restrictive Covenants, Etc. Borrower shall not modify, waive in
any material respect or release any easements, restrictive covenants or other
with respect to any Underlying Property, or suffer, consent to or permit the foregoing, without



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the prior written consent of the Administrative Agent, which consent shall not be unreasonably
withheld, conditioned or delayed.




     8.18. Embargoed Person. At all times throughout the term of this Agreement, including
after giving effect to any Conveyances permitted pursuant to the Loan Documents, (a) none of the
funds or other assets of Borrower or any Guarantor shall constitute property of, or shall be
beneficially owned, directly or indirectly, by any Person subject to trade restrictions under
United States law, including, but not limited to, the International Emergency Economic Powers Act,
50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
Executive Orders or regulations promulgated thereunder (exclusive of any holder of the publicly
traded securities of Ashford REIT or any holder of any interest in Ashford OP other than the
Subsidiaries of Ashford REIT, as to which Borrower makes no representation or warranty), with the
result that the investment in Borrower or any Guarantor, as applicable (whether directly or
indirectly), would be prohibited by law (each, an “Embargoed Person”), or the Loans made by the
Lenders would be in violation of law, (b) no Embargoed Person shall have any interest of any nature
whatsoever in Borrower or any Guarantor, as applicable, with the result that the investment in
Borrower or any Guarantor, as applicable (whether directly or indirectly), would be prohibited by
law or the Loans would be in violation of law, and (c) none of the funds of Borrower or any
Guarantor, as applicable, shall be derived from any unlawful activity with the result that the
investment in Borrower or any Guarantor, as applicable (whether directly or indirectly), would be
prohibited by law or the Loans would be in violation of law; provided that, in connection with the
foregoing, Borrower makes no representation or warranty with respect to any holder of the publicly
traded securities of Ashford REIT.



     8.19. Certain Actions Relating to Pledged Assets.



          (a) Borrower shall not, without Administrative Agent’s prior written consent, file any
pleading or proof of claim and/or vote any claim or take any other action which it is entitled to
take as a creditor of any Underlying Borrower in any Bankruptcy Action. In the event that
Administrative Agent shall grant its consent to any of the foregoing actions, Administrative Agent
shall reasonably cooperate with Borrower to the extent necessary to allow Borrower to undertake
such actions, but at the sole cost and expense of Borrower.




          (b) Borrower shall not, without Administrative Agent’s prior written consent, exercise or
waive any rights or remedies in respect of the Pledged Assets or under the Pledged Asset Documents
or grant any consent to or enter into or otherwise suffer or permit any action, amendment,
supplement, termination or other modification of any Pledged Asset Document if any of the foregoing
would (i) decrease the interest rate payable on the applicable Pledged Asset, (ii) lengthen or
shorten the maturity of the applicable Pledged Asset, (iii) reduce or waive any principal required
to be paid under the applicable Pledged Asset, (iv) release the borrower or any guarantor from any
of its material obligations under the applicable Pledged Asset, (v) modify the financial covenants
of the applicable Pledged Asset, (vi) except to the extent such release may be consummated without
the consent of Borrower pursuant to the terms of the applicable Pledged Asset Documents, release
any material Underlying Collateral, or (vii) except to the extent such change may be effected
without the consent of Borrower pursuant to the terms of the applicable Pledged Asset Documents,
consent to any material change in the terms of any franchise or management agreement applicable to
the related Underlying Property without, in each such case,




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the consent of the Administrative
Agent; provided that, with respect to any Defaulted Asset, Borrower shall not be required
to comply with any of the foregoing at any time during which the Market Value of such Defaulted
Asset has been reduced to zero pursuant to the terms and conditions of this Agreement. With
respect to any matter requiring Administrative Agent’s consent in accordance with this Section
8.19(b), Borrower shall request such consent in writing at least ten (10) Business Days’ prior
to the proposed closing date for such action. Administrative Agent shall use good faith efforts to
respond within five (5) Business Days after Administrative Agent’s receipt of Borrower’s written
request for such approval or consent. If Administrative Agent fails to respond to such request
within five (5) Business Days, and Borrower sends a second request containing a legend clearly
marked in not less than fourteen (14) point bold face type, underlined, in all capital letters
“REQUEST DEEMED APPROVED IF NO RESPONSE WITHIN 3 BUSINESS DAYS”, Administrative Agent shall be
deemed to have approved or consented to such matter if Administrative Agent fails to respond to
such second written request before the expiration of such additional three (3) Business Day period.




          (c) In addition, Borrower agrees that, with respect to any Pledged Asset for which Borrower
has a right to cure any default by the holder of any senior loan (in the case of a Mezzanine Loan)
or senior interest (in the case of a Junior Interest) but as to which the applicable Pledged Asset
Documents (including any intercreditor agreement, participation agreement or similar agreement) do
not expressly grant Administrative Agent or the Lenders a right to exercise such cure independently
of Borrower, Borrower hereby appoints Administrative Agent as its attorney-in-fact, from and after
the occurrence of an Event of Default, a monetary Default or any Default as to which Administrative
Agent has delivered a notice of default hereunder, for purposes of exercising any such cure rights
so long as such Pledged Asset is included in the Collateral hereunder.




     8.20. Accounting Policies. Borrower shall not make any material change to its
accounting policies, practices or procedures in effect on the date hereof unless required by law or
if such policy, practice or procedure is adopted as consistent with GAAP; provided that
Borrower shall notify Administrative Agent of any such change. Additionally, Borrower shall not
approve or consent to any Underlying Borrower taking any of the actions referred to in the
preceding sentence, without Administrative Agent’s prior written consent.



     8.21. Lienable Work. Subject to the terms of the Pledged Asset Documents, Borrower
shall not approve or consent to any Underlying Borrower doing any excavation, construction, earth
work, site work or any other mechanic’s lienable work (collectively, “Lienable Work”) to any
Underlying Property without Administrative Agent’s prior consent (which consent shall not be
unreasonably withheld, conditioned or delayed), except for (x) normal repair and maintenance in the
ordinary course of business, (y) any Lienable Work that is expressly contemplated by the applicable
Pledged Asset Documents, and (z) any Lienable Work that does not involve expenditures of more than
$5,000,000.00 in the aggregate for any single Underlying Property.



     8.22. Conversion. Borrower shall not give its consent to any Underlying Borrower for
the conversion of any Underlying Property or any portion thereof to condominium or cooperative form
of ownership.



     SECTION 9. DUE DILIGENCE



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          (a) Borrower acknowledges that Administrative Agent (or its designated representatives or
accounting firm) has the right to perform continuing due diligence reviews with respect to Borrower
and the Pledged Assets, for purposes of verifying compliance with the representations, warranties
and specifications made hereunder, or otherwise, and Borrower agrees that upon reasonable (but no
less than one (1) Business Day) prior notice (unless an Event of Default, a monetary Default or
another Default pursuant to which Administrative Agent shall have delivered a notice of default to
Borrower hereunder shall have occurred, in which case no notice is required) to Borrower,
Administrative Agent or its designated representatives or accounting firm will be permitted during
normal business hours to examine, inspect, and make copies and extracts of, the Collateral Files,
servicing records and any and all documents, records, agreements, instruments or information
relating to such Pledged Assets in the possession or under the control of Borrower, the Servicer,
any other servicer or subservicer (and/or the Custodian). Without limiting the generality of the
foregoing, Borrower acknowledges that Administrative Agent may enter into Loans with Borrower based
solely upon the information provided by Borrower to Administrative Agent and the representations,
warranties and covenants contained herein, and that Administrative Agent, at its option, has the
right at any time to conduct a partial or complete due diligence review on some or all of the
Pledged Assets including, without limitation, ordering price opinions, new credit reports and new
appraisals on the related Underlying Properties and otherwise re-generating the information used to
originate such Pledged Asset. Administrative Agent may underwrite such Pledged Assets itself or
engage a mutually agreed upon third party underwriter to perform such underwriting. Borrower
agrees to reasonably cooperate with Administrative Agent and any third party underwriter reasonably
acceptable to Borrower in connection with such underwriting, including, but not limited to,
providing Administrative Agent and any third party underwriter with access to any and all
documents, records, agreements, instruments or information relating to such Pledged Assets in the
possession, or under the control, of Borrower. Administrative Agent and Borrower hereby agree that
Borrower shall pay all due diligence out-of-pocket costs, legal fees and expenses incurred by
Administrative Agent in connection with Administrative Agent’s due diligence pursuant to this
Section 9 (“Due Diligence Costs”).




     SECTION 10. EVENTS OF DEFAULT



     10.1. Events of Default. Each of the following events shall constitute an Event of
Default hereunder:



          (a) Borrower shall fail to pay any principal of or interest on any Loan, including, without
limitation, any prepayment required by Section 3.3 of this Agreement, when due in accordance with
the terms thereof or hereof;




          (b) Borrower shall fail to pay any other amount payable hereunder or under the other Loan
Documents within five (5) Business Days (or such shorter period as may be applicable under any
other applicable provision of this Agreement) after any such other amount becomes due in accordance
with the terms hereof;




          (c) Borrower shall (i) default in any payment of principal of or interest on any Indebtedness
(other than the Loans) or in the payment of any Guarantee, beyond the period of grace (not to
exceed thirty (30) days), if any, provided in the instrument or agreement under




92









 







which such
Indebtedness or Guarantee was created, if the aggregate amount of the Indebtedness and/or
Guarantees in respect of which such default or defaults shall have occurred is at least
$1,000,000.00; or (ii) default in the observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee, or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated maturity or such Guarantee
to become payable;




          (d) Any representation or warranty made by Borrower or any Guarantor herein or in any other
Loan Document, or in any report, certificate, financial statement or other instrument, agreement or
document furnished to the Administrative Agent by Borrower, any Guarantor or their agents or
Affiliates, shall have been false or misleading in any material respect as of the date such
representation or warranty was made; provided that, notwithstanding the foregoing, the
exclusive remedies for a breach of a representation and warranty set forth in Exhibit M or
Section 5.31 or any other representation or warranty that relates specifically to any
Pledged Asset or any Underlying Property, Underlying Collateral or Underlying Borrower related
thereto shall be as set forth in Section 5.31.




          (e) (i) Borrower or any Guarantor shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part of its assets, or
Borrower or any Guarantor shall make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against Borrower or any Guarantor any case, proceeding or other action of
a nature referred to in the preceding clause (i) which (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of ninety (90) days; or (iii) there shall be commenced against Borrower or
any Guarantor any case, proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have been vacated, discharged,
or stayed or bonded pending appeal within ninety (90) days from the entry thereof; or (iv) Borrower
or any Guarantor shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in the preceding clauses (i),
(ii), or (iii); or (v) Borrower or any Guarantor shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they become due;




          (f) Borrower shall become an “employee benefit plan” within the meaning of Section 3(3) of
ERISA subject to ERISA or any of a Borrower’s assets shall constitute assets of any such plan;




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          (g) One or more judgments or decrees shall be entered against Borrower or any Guarantor that
could reasonably be expected to have a Material Adverse Effect, and all such judgments or decrees
shall not have been paid, vacated, discharged, stayed or bonded pending appeal within sixty (60)
days from the entry thereof;




          (h) Any of the Security Documents shall cease, for any reason, to be in full force and effect,
or Borrower or any Guarantor shall so assert, or the Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and priority purported to be created thereby;
provided, that there shall be a five (5) Business Day cure period commencing from the
earlier of (A) receipt by Borrower of notice from the Administrative Agent of the event, fact or
circumstance constituting or resulting in any of the foregoing, and (B) the time at which the
senior management of Ashford REIT had actual knowledge of such event, fact or circumstance
constituting or resulting in any of the foregoing;




          (i) Subject to Section 5.13 and Section 7.2 hereof, any of the Taxes are not
paid prior to delinquency;




          (j) Any insurance policy that is required by this Agreement to be kept in full force and
effect is not kept in full force and effect in compliance with the terms hereof;




          (k) Borrower breaches any negative covenant contained in Sections 8.1, 8.2,
8.3, 8.4, 8.5, 8.9, 8.10, 8.11, 8.12 or
8.18;




          (l) Borrower or any Guarantor shall be convicted of any violation, or of conspiracy to commit
or of aiding and abetting another to commit any violation, of the criminal laws of the United
States of America or of any of the several states relating to terrorism or the laundering of
monetary instruments, including any offense under (i) the criminal laws against terrorism; (ii) the
criminal laws against money laundering, (iii) the Bank Secrecy Act, as amended, (iv) the Money
Laundering Control Act of 1986, as amended, or (v) the Patriot Act;




          (m) Borrower shall default in the observance or performance of any other agreement contained
in this Agreement not specified in paragraphs (a) through (l) or (n)
through (s) of this Section 10.1 or any other Loan Document, and such Default shall
continue unremedied for a period of thirty (30) days after written notice thereof from the
Administrative Agent to Borrower; provided that if such Default is susceptible of cure but
cannot reasonably be cured within such 30-day period, and provided, further, that
Borrower shall have commenced to cure such Default within such 30-day period and shall thereafter
diligently and expeditiously proceed to cure the same, such 30-day period shall be extended for
such time as is reasonably necessary for Borrower in the exercise of due diligence to cure such
Default, such additional period not to exceed ninety (90) days;




          (n) If there shall be a default under any of the other Loan Documents beyond any applicable
cure periods contained in such Loan Documents, whether as to Borrower, any Guarantor or any
Underlying Property, or if any other event shall occur or condition shall exist if the effect of
such event or condition is to accelerate the termination of the Revolving Credit Commitments or to
permit the Administrative Agent to accelerate the termination of the Revolving Credit Commitments;




94









 








          (o) Any Governmental Authority or any person, agency or entity acting or purporting to act
under governmental authority shall have taken any action to condemn, seize or appropriate, or to
assume custody or control of, all or any substantial part of the property or assets of Borrower or
any Guarantor, or shall have taken any action to displace the management of Borrower or any
Guarantor or to curtail its authority in any material respect in the conduct of the business of
Borrower or any Guarantor, and such action provided for in this subparagraph (o) shall not
have been discontinued or stayed within 30 days;




          (p) The occurrence of a Change in Control not approved in writing by the Administrative Agent;




          (q) Borrower’s and/or any Guarantor’s audited annual financial statements or the notes thereto
or other opinions or conclusions stated therein shall be qualified or limited by reference to the
status of Borrower or such Guarantor as a “going concern” or a reference of similar import;




          (r) There shall occur (i) any payment default (after giving effect to any applicable notice
and/or cure periods), or (ii) any non-payment default pursuant to which the applicable lender has
exercised its right to accelerate the maturity date thereof under (x) any Indebtedness for borrowed
money that is recourse, directly or indirectly, to Ashford REIT or Ashford OP and as to which the
outstanding principal balance is greater than Twenty-Five Million and No/100 Dollars
($25,000,000.00), unless a cure of such default shall have been accepted, or such default shall
have been waived, by the holder of such Indebtedness, or (y) any other Indebtedness for borrowed
money held by any Lender or Lenders hereunder that is non-recourse to Ashford REIT, Ashford OP or
any Affiliate or Subsidiary of Ashford REIT or Ashford OP (or any Person comprising any of such
Persons or any of their respective Affiliates), and, in connection with any enforcement action or
exercise or assertion by or on behalf of such Lender(s) of any right or remedy with respect to any
default or event of default under such non-recourse Indebtedness, the related borrower or borrowers
shall (A) in bad faith seek any defense, judicial intervention or injunctive or other equitable
relief of any kind, or assert in a pleading filed in connection with a judicial proceeding any
defense against such Lender(s) or any right in connection with any security for such Indebtedness
or (B) file a voluntary petition or file an answer consenting to, or otherwise acquiescing in, or
joining in, any involuntary petition filed against it by any other Person under the Bankruptcy Code
or any other federal or state bankruptcy or insolvency law, or solicit or cause to be solicited
petitioning creditors for any involuntary petition from any Person; or




          (s) if, in connection with the resignation of the Clearing Bank appointed under the Clearing
Account Agreement, a successor to the resigning Clearing Bank that is acceptable to Administrative
Agent shall not have been designated or shall not have assumed the obligations of the resigning
Clearing Bank prior to the effective date of the resigning Clearing Bank’s resignation;



then, and in any such event, (A) if such event is an Event of Default specified in Section
10.1(e) above with respect to Borrower, automatically the Revolving Credit Commitments shall
immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts
owing under this Agreement shall immediately become due and payable, and (B) if




95









 







such event is any
other Event of Default, either or both of the following actions may be taken so long as such Event
of Default is continuing: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to
Borrower, declare the Revolving Credit Commitments to be terminated forthwith, whereupon the
Revolving Credit Commitments shall immediately terminate; and (ii) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to Borrower, exercise any and all rights or remedies granted
under the Security Documents and the other Loan Documents, including, without limitation, declaring
the Loans hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement to be due and payable forthwith, whereupon the same shall immediately become due and
payable.




     Notwithstanding anything to the contrary contained herein, if any Default or Event of Default
occurs which affects one or more Pledged Assets, and such Default or Event of Default would not
have occurred if such Pledged Asset(s) were not Collateral or Pledged Asset(s) hereunder, Borrower
shall have the right, notwithstanding the occurrence of such Default or Event of Default, to cure
such Default or Event of Default by exercising its rights set forth in Section 3.2 to
release such Pledged Asset(s) as Collateral (provided that no other Event of Default or Borrowing
Base Deficiency would result therefrom), and upon the full payment of all sums due in connection
with such release, and compliance with all other terms relating thereto as set forth in Section
3.2, such Default or Event of Default shall be deemed cured, and Borrower, the Administrative
Agent and the Lenders shall be restored to their respective positions as if such Default or Event
of Default had never occurred.



     10.2. UCC Remedies. If an Event of Default shall occur and be continuing, the
Administrative Agent may exercise, in addition to all other rights and remedies granted to it in
this Agreement, the Security Documents and any other Loan Document, all rights and remedies of a
secured party under the Uniform Commercial Code. Without limiting the generality of the foregoing,
the Administrative Agent without demand of performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice required by law) to or upon Borrower or any
other Person (each and all of which demands, presentments, protests, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive, appropriate and realize upon
the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of and deliver the Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels or as an entirety at any public or
private sale or sales, at any exchange, broker’s board or office of the Administrative Agent or
elsewhere upon such terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any credit risk. The
Administrative Agent shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in Borrower, which right or equity is
hereby waived or released. Borrower further agrees, at the Administrative Agent’s request, to
assemble the Collateral and make it available to the Administrative Agent at places that the
Administrative Agent shall reasonably select, whether at a Borrower’s premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all costs and expenses of every kind incurred
therein or incidental to the care or safekeeping of any of the



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Collateral or in any way relating to
the Collateral or the rights of the Lenders hereunder, including, without limitation, attorneys’
fees and disbursements, to the payment in whole or in part of the Secured Obligations, in such
order as the Administrative Agent may elect in its sole discretion, and only after such application
and after the payment by the Administrative Agent of any other amount required or permitted by any
provision of law, including, without limitation, Section 9-615(a)(3) of the Uniform Commercial
Code, need the Administrative Agent account for the surplus, if any, to Borrower. To the extent
permitted by applicable law, Borrower waives all claims, damages and demands it may acquire against
the Administrative Agent arising out of the exercise by the Administrative Agent of any of its
rights hereunder, other than those claims, damages and demands arising from the gross negligence or
willful misconduct of the Administrative Agent. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least ten (10) Business Days before such sale or other disposition. To the
extent permitted by applicable law, Borrower shall remain liable for any deficiency (plus accrued
interest thereon as contemplated pursuant to Section 3.1(b) hereof) if the proceeds of any
sale or other disposition of the Collateral are insufficient to pay the Secured Obligations and the
fees and disbursements of any attorneys employed by the Administrative Agent to collect such
deficiency. The rights, powers and remedies of the Administrative Agent and the Lenders under this
Agreement shall be cumulative and not exclusive of any other right, power or remedy which the
Administrative Agent or the Lenders may have against Borrower pursuant to this Agreement, the
Mortgages or the other Loan Documents, or existing at law or in equity or otherwise.




     10.3. Possession. Administrative Agent also shall have the right to obtain physical
possession, and to commence an action to obtain physical possession, of any and all Records and
files of Borrower relating to the Pledged Assets and all documents relating to the Pledged Assets
(including, without limitation, any legal, credit or servicing files relating to the Pledged
Assets) which are then or may thereafter come into the possession of Borrower or any third party
acting for Borrower. To obtain physical possession of any Pledged Assets held by Custodian,
Administrative Agent shall present to Custodian a Trust Receipt. Administrative Agent shall be
entitled to specific performance of all agreements of Borrower contained in this Agreement.



     10.4. Collections. Administrative Agent shall have the right to direct all servicers
then servicing any Pledged Assets to remit all collections thereon to Administrative Agent for
deposit in the Clearing Account, and if any such payments are received by Borrower, Borrower shall
not commingle the amounts received with other funds of Borrower and shall promptly pay them over to
the Clearing Account or to Administrative Agent for deposit into the Clearing Account.
Administrative Agent shall also have the right to terminate any one or all of the servicers then
servicing any Pledged Assets with or without cause.



     10.5. Liquidation. Administrative Agent shall deliver to Borrower notice of its
intention to liquidate the Pledged Assets and other Collateral at least ten (10) Business Days
prior to selling or otherwise liquidating any such Pledged Assets and other Collateral.
Thereafter, Administrative Agent shall have the right to sell immediately and/or liquidate all or
any portion of the Pledged Assets and/or all other Collateral. Such disposition of Pledged Assets
and/or all other Collateral may be, at Administrative Agent’s option, on either a servicing
released or a servicing retained basis. Administrative Agent shall not be required to give any
warranties as to the Pledged Assets and/or other Collateral with respect to any such disposition



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thereof. Administrative Agent may specifically disclaim or modify any warranties of title or the
like relating to the Pledged Assets and/or other Collateral. The foregoing procedure for
disposition of the Pledged Assets and liquidation of the Collateral shall not be considered to
adversely affect the commercial reasonableness of any sale thereof.




     10.6. Private Sale. The parties recognize that it may not be possible to sell all of
the Pledged Assets on a particular Business Day, or in a transaction with the same purchaser, or in
the same manner, because the market for such Pledged Assets may not be liquid. In view of the
nature of the Pledged Assets, the parties agree that, upon ten (10) Business Days prior written
notice to Borrower and each Guarantor, liquidation of the Pledged Assets does not require a public
purchase or sale and that a private purchase or sale shall be deemed to have been made in a
commercially reasonable manner.



     10.7. Costs. Borrower shall be liable to Administrative Agent for (i) the amount of
all reasonable legal or other expenses, including, without limitation, all reasonable costs and
expenses of Administrative Agent in connection with the enforcement of this Agreement or any other
Loan Document, whether in action, suit or litigation or bankruptcy, insolvency or other similar
proceeding affecting creditors’ rights generally, further including, without limitation, the
reasonable fees and expenses of counsel (including the costs of internal counsel of Administrative
Agent) incurred in connection with or as a result of an Event of Default, and (ii) any other loss,
damage or reasonable cost or expense directly arising or resulting from the occurrence of an Event
of Default.



     10.8. Remedies Cumulative; Waiver. Subject to the notice and grace periods set forth
herein, each party to this Agreement may exercise any or all of the remedies available to such
party immediately upon the occurrence of an Event of Default and at any time during the continuance
thereof without prior notice to the other parties hereto. Except as expressly provided herein, all
rights and remedies arising under the Loan Documents, as amended from time to time, are cumulative
and not exclusive of any other rights or remedies which each party to this Agreement may have. No
modification, amendment, extension, discharge, termination or waiver of any provision of this
Agreement or of any other Loan Document, nor consent to any departure by any party to this
Agreement therefrom, shall in any event be effective unless the same shall be in a writing signed
by the party against whom enforcement is sought, and then such waiver or consent shall be effective
only in the specific instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on any party to this Agreement, shall entitle such party
to any other or future notice or demand in the same, similar or other circumstances. Neither any
failure nor any delay on the part of any party to this Agreement in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any right, power, remedy
or privilege hereunder, or under any other Loan Document shall operate as or constitute a waiver
thereof, nor shall a single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting any Pledged Asset as security for any Loan under this Agreement on any
Borrowing Date, Administrative Agent shall not be deemed to have waived any right to assert any
Default, Event of Default or breach by Borrower of any term, condition, covenant, representation or
warranty under this Agreement or any Loan Document, notwithstanding that such Default, Event of
Default or breach may have arisen prior to such Borrowing Date.



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     10.9. Non-judicial Remedies. Administrative Agent may enforce its rights and remedies
hereunder without prior judicial process or hearing, and Borrower hereby expressly waives any
defenses Borrower might otherwise have to require Administrative Agent to enforce its rights by
judicial process. Borrower also waives any defense Borrower might otherwise have arising from the
use of nonjudicial process, disposition of any or all of the Pledged Assets, or from any other
election of remedies. Borrower recognizes that nonjudicial remedies are consistent with the usages
of the trade, are responsive to commercial necessity and are the result of a bargain at arm’s
length.



     10.10. Appointment of Receiver. Upon the occurrence of an Event of Default,
Administrative Agent shall without regard to the adequacy of the security for the Secured
Obligations, be entitled to the appointment of a receiver by any court having jurisdiction, without
notice, to take possession of and protect, collect, manage, liquidate, and sell the Pledged Assets
and any other Collateral or any portion thereof, collect the payments due with respect to the
Pledged Assets and any other Collateral or any portion thereof, and do anything that Administrative
Agent is authorized hereunder to do. Borrower shall pay all reasonable costs and expenses incurred
by Administrative Agent in connection with the appointment and activities of such receiver.



     SECTION 11. THE ADMINISTRATIVE AGENT



     11.1. Appointment of Administrative Agent. Each Lender hereby irrevocably designates
and appoints the Administrative Agent as the administrative agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and to exercise such powers and perform such duties as
are expressly delegated to the Administrative Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent
shall not have any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.



     11.2. Delegation of Duties. The Administrative Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.



     11.3. Exculpatory Provisions. Neither the Administrative Agent, nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates, shall be (a) liable to any
of the Lenders for any action lawfully taken or omitted to be taken by it or such Person under or
in connection with this Agreement or any other Loan Document (except for its or such Person’s own
gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by Borrower, any Guarantor or any
officer thereof contained in this Agreement or any other Loan Document or in



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any certificate,
report, statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of Borrower or any Guarantor to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of Borrower or Guarantors.




     11.4. Reliance by Administrative Agent. The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to Borrower), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent may deem and treat
the payee of any Note as the owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders, and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the Lenders and all future
holders of the Loans.



     11.5. Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the
Administrative Agent has received notice from a Lender or a Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a “notice of default”.
In the event that the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such action with respect
to such Default or Event of Default as shall be reasonably directed by the Required Lenders;
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders.



     11.6. Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly
acknowledges that none of the Administrative Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that
no act by the Administrative Agent hereinafter taken, including any review of the affairs of
Borrower or Guarantors, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it
has, independently and without reliance upon the Administrative Agent or any other Lender, and



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based on such documents and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other condition and
creditworthiness of Borrower and any Guarantor and made its own decision to make its Loans
hereunder and enter into this Agreement. Each Lender also represents that it will, independently
and without reliance upon the Administrative Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and creditworthiness of Borrower and
Guarantors. Except for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder or under the other Loan Documents, the
Administrative Agent shall have no duty or responsibility to provide any Lender with any credit or
other information concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of Borrower or any Guarantor which may come into the
possession of the Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.




     11.7. Indemnification. The Lenders agree to indemnify the Administrative Agent in
their respective capacities as such (to the extent not reimbursed by Borrower or Guarantors and
without limiting the obligation of Borrower or Guarantors to do so), ratably according to their
respective Credit Exposure Percentages in effect on the date on which indemnification is sought,
from and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to or arising out of
the Revolving Credit Commitments, this Agreement, any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Administrative Agent’s gross negligence or willful
misconduct. The agreements in this Section shall survive the termination of the Revolving Credit
Commitments and the payment of the Loans and all other amounts payable hereunder.



     11.8. Administrative Agent in its Individual Capacity. The Administrative Agent and
its Affiliates may make loans to, accept deposits from and generally engage in any kind of business
with Borrower or Guarantors as though the Administrative Agent were not the administrative agent
hereunder and under the other Loan Documents. With respect to the Loans made by it, the
Administrative Agent shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not the Administrative Agent,
and the terms “Lender” and “Lenders” shall include the Administrative Agent in its individual
capacity.



     11.9. Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon ten (10) days’ notice to the Lenders and Borrower, such resignation to be
effective upon appointment and approval of a successor administrative agent as hereinafter



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provided. If the Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a
successor administrative agent for the Lenders, which successor agent shall be approved by Borrower
(such approval not to be unreasonably withheld or delayed), whereupon such successor administrative
agent shall succeed to the rights, powers and duties of the Administrative Agent and the term
“Administrative Agent” shall mean such successor administrative agent effective upon such
appointment and approval, and the former Administrative Agent’s rights, powers and duties as
administrative agent shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any holders of the
Loans. After any retiring Administrative Agent’s resignation as administrative agent, the
provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement and the other Loan
Documents.




     11.10. Certain Collateral Matters.



          (a) Each Lender authorizes and directs the Administrative Agent to enter into the Security
Documents for the benefit of the Lenders. Each Lender also authorizes and directs the
Administrative Agent to review and approve all agreements relating to the cash management system of
Borrower, including lockboxes and lockbox accounts, as the Administrative Agent shall deem
necessary. Each Lender hereby agrees, and each holder of any Note by the acceptance thereof will
be deemed to agree, that, except as otherwise set forth herein, any action taken by the
Administrative Agent, the Required Lenders or each of the Lenders, as applicable, in accordance
with the provisions of this Agreement or any other Loan Document, and the exercise by the
Administrative Agent, the Required Lenders or each of the Lenders, as applicable, of the powers set
forth herein or therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all of the Lenders. The Administrative Agent is hereby
authorized on behalf of all of the Lenders, without the necessity of any notice to or further
consent from any Lender, from time to time prior to the occurrence of any Event of Default, to take
any action with respect to any Collateral or Security Document which may be necessary or
appropriate to perfect and maintain perfected the security interest in and liens upon the
Collateral granted pursuant to this Agreement and the Security Documents.




          (b) The Lenders hereby authorize the Administrative Agent, at is option and in its discretion,
to release any Lien granted or held by the Administrative Agent upon any Collateral (i) upon
termination of the Revolving Credit Commitments and payment in cash and satisfaction of all of the
Secured Obligations at any time arising under or in respect of this Agreement or the other Loan
Documents or the transactions contemplated thereby, or upon the compliance with the provisions of
Section 4.7 or any other provision set forth in this Agreement or any other Loan Document
relating to the release of the Lien with respect to any Pledged Asset and any other Collateral
relating thereto, (ii) constituting property being sold or disposed of upon receipt of the proceeds
of such sale by the Administrative Agent if Borrower certifies to the Administrative Agent that the
sale or disposition is made in compliance with the terms hereof (and the Administrative Agent may
rely conclusively on any such certificate, without further inquiry), or (iii) if approved,
authorized or ratified in writing by the Required Lenders, unless such release is required to be
approved by all of the Lenders hereunder. Upon request by the Administrative Agent at any time,
the Lenders will confirm in writing the Administrative




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Agent’s authority to release particular
types or items of Collateral pursuant to this Section 11.10(b).




          (c) Upon any sale and transfer of Collateral which is expressly permitted pursuant to the
terms of this Agreement, or consented to in writing by the Required Lenders or all of the Lenders,
as applicable, and upon at least five (5) Business Days’ prior written request by Borrower, or in
any other circumstances under which the Administrative Agent is required to release any Pledged
Asset or related Collateral, the Administrative Agent shall (and is hereby irrevocably authorized
by the Lenders to) execute such documents as may be necessary or desirable to evidence the release
of the Liens granted to the Administrative Agent for the benefit of the Lenders in this Agreement
or pursuant to the Security Documents upon the Collateral that was sold or transferred or that is
required to be so released; provided that (i) the Administrative Agent shall not be
required to execute any such document on terms which, in the Administrative Agent’s opinion, would
expose the Administrative Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty and (ii) such release shall not
in any manner discharge, affect or impair the Secured Obligations or any Liens upon (or obligations
of Borrower in respect of) any remaining Collateral. In the event of any sale or transfer of
Collateral, or any foreclosure with respect to any of the Collateral, the Administrative Agent
shall be authorized to deduct all of the expenses reasonably incurred by the Administrative Agent
from the proceeds of any such sale, transfer or foreclosure. At all times from and after the time
as of which the Administrative Agent shall be obligated to release any Pledged Asset from the Lien
of the Security Documents pursuant to this Section, such asset shall no longer be deemed a “Pledged
Asset” (and the applicable Underlying Collateral, Underlying Property and Underlying Borrower with
respect thereto shall no longer be deemed “Underlying Collateral,” “Underlying Property” or an
“Underlying Borrower” for purposes of any of the provisions set forth in this Agreement or any of
the Loan Documents).




          (d) The Administrative Agent shall have no obligation whatsoever to the Lenders or to any
other Person to assure that the Collateral exists or is owned by a Borrower or any Guarantor or is
cared for, protected or insured.




          (e) The Administrative Agent and each Lender executing or becoming a party to this Agreement
represents and warrants by executing this Agreement or any Assignment and Acceptance delivered
pursuant hereto that such Lender is a Qualified Transferee, Eligible Transferee or Qualified
Institutional Lender, or similar such term, as applicable (as such terms are defined in each of the
applicable intercreditor agreements, co-lender agreements, participation agreements, trust and
servicing agreement or similar such agreements that are included within the Pledged Asset
Documents).




     SECTION 12. INDEMNIFICATION



          (a) In addition to any other indemnity provided elsewhere in this Agreement or any other Loan
Document, Borrower and each Guarantor agree to hold Administrative Agent and the Lenders and each
of their respective Affiliates and their officers, directors, employees, agents and advisors (each,
an “Indemnified Party”) harmless from and indemnify each Indemnified Party (and will reimburse each
Indemnified Party as the same is incurred) against all Costs of any kind which may be imposed on,
incurred by, or asserted against any Indemnified




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Party relating to or arising out of this
Agreement, any Request for Borrowing, any Loan, any Loan Document or any other transaction
contemplated hereby or thereby resulting from anything other than the Indemnified Party’s gross
negligence, willful misconduct or bad faith; provided that from and after any foreclosure
upon or acquisition (other than as Collateral hereunder) of any Pledged Asset by the Administrative
Agent or its designee, in no event shall the Costs of any Indemnified Party to be indemnified
hereunder include any Costs of such Indemnified Party to the extent incurred or arising with
respect to any Pledged Asset as the result of any circumstance, action or event occurring
subsequent to the acquisition by the Administrative Agent or its designee of such Pledged Asset
whether through foreclosure or otherwise, but shall, in all events, include all Costs to the extent
incurred by such Indemnified Party as the result of any circumstance, action or event occurring
prior to such acquisition. Borrower and Guarantors also jointly and severally agree to reimburse
each Indemnified Party for all reasonable expenses in connection with the enforcement of this
Agreement and the exercise of any right or remedy provided for herein or in any other Loan
Document, including, without limitation, the reasonable fees and disbursements of counsel.
Borrower’s and each Guarantor’s agreements in this Section 12 shall survive the payment in
full of the Outstanding Principal Balance and satisfaction in full of the Secured Obligations and
the expiration or termination of this Agreement. Borrower hereby acknowledges that its obligations
hereunder are recourse obligations of Borrower and are not limited to recoveries each Indemnified
Party may have with respect to the Pledged Assets. Borrower also agrees not to assert any claim
against Administrative Agent, Lenders or any of their respective Affiliates, or any of their
respective officers, directors, employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or otherwise relating to the
facility established hereunder, the actual or proposed use of the proceeds of any Loan, this
Agreement or any other Loan Document, or any of the transactions contemplated thereby or thereby.




          (b) THE FOREGOING INDEMNITY AND AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT
LIMITATION, TO THE NEGLIGENCE (BUT NOT GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR BAD FAITH) OF THE
INDEMNIFIED PARTIES.




     SECTION 13. MISCELLANEOUS



     13.1. Amendments and Waivers. Neither this Agreement nor any other Loan Document, nor
any terms hereof or thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 13.1. The Required Lenders may, or, with the written consent of
the Required Lenders, the Administrative Agent may, from time to time, (a) enter into with Borrower
written amendments, supplements or modifications hereto and to the other Loan Documents for any
purpose, including without limitation, adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Lenders or of Borrower hereunder or
thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative
Agent, as the case may be, may specify in such instrument, any of the requirements or other
provisions of this Agreement or the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall (i) reduce the amount or extend the scheduled date of maturity of
any Loan or of any installment thereof, or reduce the stated rate of any interest or fee payable
hereunder or extend the scheduled date of any payment



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thereof or increase the aggregate amount or
extend the expiration date of any Lender’s Revolving Credit Commitment, in each case without the
written consent of each Lender affected thereby (other than any Defaulting Lender), (ii) amend,
modify or waive any provision of this Section 13.1 or reduce the percentage specified in
the definition of Required Lenders, or consent to the assignment or transfer by Borrower of any of
its rights and obligations under this Agreement and the other Loan Documents or, except as
otherwise provided herein, release all or substantially all of the Collateral, in each case without
the written consent of each Lender (other than any Defaulting Lender) affected thereby, or (iii)
amend, modify or waive any provision of Section 11 without the written consent of the
Administrative Agent (to the extent affected by such amendment, modification or waiver),
provided that no such amendment, modification or waiver of Section 11 (except for the
provisions of Section 11.9 and Section 11.10) shall require the consent of
Borrower. Any such waiver and any such amendment, supplement or modification shall apply equally
to each of the Lenders and shall be binding upon Borrower, the Lenders, the Administrative Agent
and all future holders of the Loans. In the case of any waiver, Borrower, the Lenders and the
Administrative Agent, following such waiver, shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of Default waived in writing
shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent
or other Default or Event of Default or impair any right consequent thereon.




     13.2. Notices. All notices, demands, requests, consents, approvals or other
communications (any of the foregoing, a “Notice”) required, permitted or desired to be given
hereunder shall be in writing sent by telefax (with answer back acknowledged) or by registered or
certified mail, postage prepaid, return receipt requested, or delivered by hand or reputable
overnight courier addressed to the party to be so notified at its address hereinafter set forth, or
to such other address as such party may hereafter specify in accordance with the provisions of this
Section 13.2. Any Notice shall be deemed to have been received: (a) three (3) days after
the date such Notice is mailed, (b) on the date of sending by telefax if sent during business hours
on a Business Day (otherwise on the next Business Day), (c) on the date of delivery by hand if
delivered during business hours on a Business Day (otherwise on the next Business Day), and (d) on
the next Business Day if sent by an overnight commercial courier, in each case addressed to the
parties as follows:


Borrower:



Ashford Finance Subsidiary II LP

c/o Ashford Hospitality Trust, Inc.

14185 Dallas Parkway, Suite 1100

Dallas, TX 75254

Attention: David A. Brooks

Chief Legal Officer/Head of Transactions

Fax: (972) 490-9605

Telephone: (972) 778-9207



with a copy to:



Morrison & Foerster LLP




105









 







555 West Fifth Street—Suite 3500

Los Angeles, California 90013-1024

Attention: Thomas R. Fileti

Fax: (213) 892-5454

Telephone: (213) 892-5276



The Administrative Agent:



UBS Real Estate Investments Inc.

1285 Avenue of the Americas, 11th Floor,

New York, New York 10019

Attention: Robert Pettinato

Fax: (212) 713-4391

Telephone: (212) 713-8769



and



Attention: Greta Guggenheim

Fax: (212) 713-4391

Telephone: (212) 713-2919



with a copy to:



UBS Real Estate Investments Inc.

1285 Avenue of the Americas, 11th Floor,

New York, New York 10019

Attention: Tessa Peters, Esq.

Fax: (212) 713-1153

Telephone: (212) 713-2173



with a copy to:



Brown Raysman Millstein Felder & Steiner LLP

900 Third Avenue

New York, New York 10022

Attention: Jeffrey B. Steiner, Esq.

Fax: (212) 895-2900

Telephone: (212) 895-2260




     13.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.



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     13.4. Survival of Representations and Warranties. All representations and warranties
made hereunder, in the other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and delivery of this
Agreement and the making of the Loans hereunder.



     13.5. Payment of Expenses and Taxes. Borrower agrees (a) to pay or reimburse the
Administrative Agent for all of its out-of-pocket costs and reasonable expenses incurred in
connection with the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, (b) to pay or reimburse the Administrative Agent and up to one Lender for all
of its reasonable costs and expenses incurred in connection with the enforcement or preservation of
any rights under this Agreement, the other Loan Documents and any such other documents, including,
without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent
and up to one Lender, and (c) to pay, indemnify, and hold each Lender and the Administrative Agent
harmless from and against any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any,
which may be payable or determined to be payable in connection with the execution and delivery of,
or consummation of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan
Documents and any such other documents.



     13.6. Successors and Assigns; Participations and Assignments.



          (a) This Agreement shall be binding upon and inure to the benefit of Borrower, the Lenders,
the Administrative Agent and their respective successors and assigns, except that no Borrower may
assign or transfer any of its rights or obligations under this Agreement (and any such attempted
assignment by Borrower shall be null and void).




          (b) Any Lender may, in the ordinary course of its commercial banking, commercial lending or
investing business and in accordance with applicable law, and at no cost to Borrower, at any time
and from time to time sell to one or more Persons (“Participants”) participating interests in any
Loan owing to such Lender, any Revolving Credit Commitment of such Lender or any other interest of
such Lender hereunder and under the other Loan Documents; provided that such Participant
complies with all applicable limits on and requirements with respect to transfer and/or pledge set
forth in the Pledged Asset Documents included in any Collateral File. In the event of any such
sale by a Lender of a participating interest to a Participant, such Lender’s obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender in connection with
such Lender’s rights and obligations under this Agreement and the other Loan Documents. Borrower
agrees that if amounts outstanding under this Agreement are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of Default, each




107









 







Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right
of setoff in respect of its participating interest in amounts owing under this Agreement to the
same extent as if the amount of its participating interest were owing directly to it as a Lender
under this Agreement, provided that in purchasing such participating interest, such
Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as
provided in Section 13.7(a) as fully as if it were a Lender hereunder. Borrower also
agrees that each Participant shall be entitled to the benefits of Sections 3.6, 3.8
and 3.9 with respect to its participation in the Revolving Credit Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that in the case of
Section 3.9, such Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
amount pursuant to any such Section than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred.




          (c) Any Lender may, in the ordinary course of its commercial banking or commercial lending
business and in accordance with applicable law, and at no cost to Borrower, at any time and from
time to time assign to any other Lender or any Approved Fund thereof or, with the consent of the
Administrative Agent (which shall not be unreasonably withheld), to an Eligible Transferee (an
“Assignee”) all or any part of its rights and obligations under this Agreement and the other Loan
Documents pursuant to an Assignment and Acceptance, substantially in the form of Exhibit K,
with appropriate completions (an “Assignment and Acceptance”), executed by such Assignee, such
assigning Lender (and, in the case of an Assignee that is not then a Lender or an Affiliate
thereof, by the Administrative Agent) and delivered to the Administrative Agent for its acceptance
and recording in the Register; provided that such Assignee and assignment comply with all
applicable limits on and requirements with respect to transfer and/or pledge set forth in the
Pledged Asset Documents included in any Collateral File; and provided, further,
that, in the case of any such assignment to an Eligible Transferee, the sum of the aggregate
principal amount of the Loans and the aggregate amount of the unused Revolving Credit Commitments
being assigned to such Assignee and being retained by the assigning Lender is not less than
$5,000,000.00. Upon such execution, delivery, acceptance and recording, from and after the
effective date determined pursuant to such Assignment and Acceptance, (i) the Assignee thereunder
shall be a party hereto as a Lender to the extent provided in such Assignment and Acceptance, and
shall have the rights and obligations of a Lender hereunder with Revolving Credit Commitments as
set forth in such Assignment and Acceptance, and (ii) except in the case of an assignment by an
assigning Lender to an Affiliate or Approved Fund of such assigning Lender (in which case the
assigning Lender shall remain jointly liable with such assignee with respect to its obligations
under this Agreement), the assigning Lender thereunder (but not UBS) shall, to the extent provided
in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement, such assigning Lender shall cease to be a
party hereto). In accordance with Section 3.9(e), each Assignee shall deliver or cause to
be delivered to the Administrative Agent and Borrower a properly completed and duly executed (i)
U.S. Internal Revenue Form W-9 (or any successor thereto), (ii) U.S. Internal Revenue Form W-8BEN
(or any successor thereto), (iii) U.S. Internal Revenue Service Form W-8ECI (or any successor
thereto), or (iv) other manner of certification that is approved by the applicable Governmental
Authority and establishes an exemption from backup withholding tax and other




108









 







withholding tax,
including all appropriate attachments, within three (3) Business Days of becoming a party to this
Agreement. Such Assignee will be subject to all the provisions of Section 3.9(e) as if it
were a Lender.




          (d) The Administrative Agent, on behalf of Borrower, shall maintain at the address of the
Administrative Agent referred to in Section 13.2 a copy of each Assignment and Acceptance
delivered to it and a register (the “Register”) for the recordation of the names and addresses of
the Lenders and the Revolving Credit Commitments of, and principal amounts of the Loans owing to,
each Lender from time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrower, the Administrative Agent and the Lenders may (and, in the case of any
Loan or other obligation hereunder not evidenced by a Note, shall) treat each Person whose name is
recorded in the Register as the owner of a Loan or other obligation hereunder as the owner thereof
for all purposes of this Agreement and the other Loan Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder not evidenced by a Note shall
be effective only upon appropriate entries with respect thereto being made in the Register. The
Register shall be available for inspection by Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.




          (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an
Assignee (and, in the case of an Assignee that is not then a Lender or an Affiliate thereof, by the
Administrative Agent), the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto, record the information
contained therein in the Register and give notice of such acceptance and recordation to the Lenders
and Borrower.




          (f) Subject to Section 13.19, Borrower authorizes each Lender to disclose to any
Eligible Transferee and any prospective transferee, any and all financial information in such
Lender’s possession concerning Borrower and its Affiliates which has been delivered to such Lender
by or on behalf of Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of Borrower in connection with such Lender’s credit evaluation of Borrower and its
Affiliates prior to becoming a party to this Agreement.




          (g) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of
this Section 13.6 concerning assignments of the Loans and the Notes relate only to absolute
assignments and that such provisions do not prohibit assignments creating security interests,
including, without limitation, any pledge or assignment by a Lender of any Loan or any Note to any
Federal Reserve Bank in accordance with applicable law, but foreclosure of any such security
interest requires compliance with this Section 13.6.




     13.7. Adjustments; Set-off.



          (a) If any Lender (a “benefited Lender”) shall at any time receive any payment of all or part
of its Loans, or interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set off, pursuant to events or proceedings of the nature referred
to in Section 10.1(e), or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other Lender’s Loans, or




109









 







interest thereon, such benefited Lender shall purchase for cash from the other Lenders (other than
any Defaulting Lender) a participating interest in such portion of each such other Lender’s Loan,
or shall provide such other Lenders (other than any Defaulting Lender) with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to
share the excess payment or benefits of such collateral or proceeds ratably with each of the
Lenders (other than any Defaulting Lender); provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Borrower agrees that each Lender so purchasing a portion of
another Lender’s Loan may exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Lender were the direct holder of such
portion.




          (b) If an Event of Default shall have occurred and be continuing, in addition to any rights
and remedies of the Lenders provided by law, each Lender (other than any Defaulting Lender) shall
have the right, without prior notice to Borrower, any such notice being expressly waived by
Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by
Borrower hereunder (whether at the stated maturity, by acceleration or otherwise), to set-off and
appropriate and apply against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at
any time held or owing by such Lender or any branch or agency thereof to or for the credit or the
account of Borrower. Each Lender agrees promptly to notify Borrower and the Administrative Agent
after any such set-off and application made by such Lender, provided that the failure to
give such notice shall not affect the validity of such set-off and application.




     13.8. Brokers and Financial Advisors. Borrower hereby represents that (a) it has not
dealt with any financial advisors, brokers, underwriters, placement agents, agents or finders in
connection with the transactions contemplated by this Agreement; (b) in the event Borrower has
engaged any brokers, Borrower agrees to pay any and all amounts, including all commissions and
other similar fees, owing to said brokers; and (c) Borrower shall indemnify, defend and hold the
Administrative Agent and the Lenders harmless from and against any and all claims, liabilities,
costs and expenses of any kind (including, without limitation, reasonable attorneys’ fees and
expenses) incurred by the Administrative Agent or any Lender as a result of a breach of any of the
foregoing. Borrower acknowledges that the Lenders may pay, at no cost to Borrower, additional
compensation, fees or other payments to brokers, finders, correspondents or other parties
(collectively, “Referrer”) related to the origination, sale and/or securitization of the Loans, in
addition to any other payments due from Borrower. Such additional compensation, fees or other
payments may include direct, one-time payments, incentive payments based on volume of referrals,
profit-sharing payments, and/or an ongoing financial interest in the Loans. Borrower acknowledges
and agrees that neither Agent nor any Lender is responsible for any recommendation, services
(sub-servicing or otherwise) or advice given to Borrower by the Referrer and that no fiduciary or
other special relationship exists or shall exist between them. The provisions of this Section
13.8 shall survive the expiration and termination of this Agreement and the payment of the
Secured Obligations.



     13.9. Servicing.



110









 





          (a) Servicer; Servicing Agreement. The Loans shall be serviced by a servicer (the
“Servicer”) selected by the Administrative Agent and the Administrative Agent may delegate all or
any portion of its responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between the Administrative
Agent and the Servicer. Borrower shall be responsible for payment, on a monthly basis, of
servicing fees due to the Servicer under the Servicing Agreement in accordance with a fee schedule
approved by Borrower (“Servicing Fees”).




     13.10. Preferences. The Administrative Agent shall have the continuing and exclusive
right to apply or reverse and reapply any and all payments by Borrower to any portion of the
then-outstanding obligations of Borrower hereunder. To the extent that Borrower makes a payment or
payments to the Administrative Agent on behalf of the Lenders, which payment or payments or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment or payments
received, the obligations hereunder or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been received by the
Administrative Agent.



     13.11. Prior Agreements. This Agreement and the other Loan Documents contain the
entire agreement of the parties hereto and thereto in respect of the transactions contemplated
hereby and thereby, and all prior agreements among or between such parties, whether oral or
written, are superseded by the terms of this Agreement and the other Loan Documents.



     13.12. Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts (including by facsimile transmission of
signature pages hereto), and all of said counterparts taken together shall be deemed to constitute
one and the same instrument. A set of the copies of this Agreement signed by all the parties shall
be lodged with Borrower and the Administrative Agent.



     13.13. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.



     13.14. Integration. This Agreement and the other Loan Documents represent the
agreement of Borrower, the Administrative Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties by the
Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.



13.15. Governing Law.




          (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY THE ADMINISTRATIVE
AGENT AND THE LENDERS AND ACCEPTED BY BORROWER IN THE STATE OF NEW YORK, AND THE




111









 







PROCEEDS OF THE
NOTES DELIVERED PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES
AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED
HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT
OF LAWS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PERFECTION, THE EFFECT OF
PERFECTION OR NONPERFECTION, AND PRIORITY OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT
HERETO SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE OR STATES APPLICABLE
THERETO DETERMINED IN ACCORDANCE WITH THE NEW YORK UNIFORM COMMERCIAL CODE.




          (b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST ANY LENDER OR BORROWER ARISING OUT OF OR
RELATING TO THIS AGREEMENT MAY AT SUCH LENDER’S OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT
IN THE CITY OF NEW YORK, COUNTY AND STATE OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED
ON VENUE AND/OR FORUM NON-CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.
BORROWER DOES HEREBY DESIGNATE AND APPOINT:




Mitchell Bernstein, Esq.

Moses & Singer LLP

The Chrysler Building

405 Lexington Avenue

New York, New York 10174



AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW
YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AUTHORIZED AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL
BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING IN THE STATE OF NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF ANY
CHANGED ADDRESS OF ITS AUTHORIZED AGENT


112









 






HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME
DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE
AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III)
SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE IN NEW
YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.




     (c) BORROWER WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.



     (d) NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE LENDERS AND THE ADMINISTRATIVE
AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.



     13.16. Acknowledgements. Borrower hereby acknowledges that:



          (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;




          (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or
duty to Borrower arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between Borrower, on one hand, and the Administrative Agent and
Lenders, on the other hand, in connection herewith or therewith is solely that of debtor and
creditor; and




          (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Lenders or among Borrower and the Lenders.




          13.17. Waivers of Jury Trial. BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.




          13.18. Discretion.




          (a) Subject to Section 13.18(c), whenever pursuant to this Agreement the
Administrative Agent or any Lender exercises any right given to it to approve or disapprove any
matter, or any arrangement or term is to be satisfactory to it, the decision of the Administrative
Agent or such Lender to approve or disapprove such matter or to decide whether arrangements or
terms are satisfactory or not satisfactory shall (except as is otherwise specifically herein




113









 







provided) be in the sole discretion of the Administrative Agent or such Lender and shall be final
and conclusive.




          (b) The Administrative Agent or any Lender may, in its sole and absolute discretion, accept or
reject any proposed cure of an Event of Default. In no event shall any provision of this Agreement
or any of the other Loan Documents that provides that the Administrative Agent or any Lender shall
have certain rights and/or remedies only during the continuance of an Event of Default be construed
so as to require the Administrative Agent or such Lender to accept a cure of any such Event of
Default. Unless and until the Administrative Agent or any Lender, as the case may be, expressly
accepts any proposed cure of an Event of Default in writing, such Event of Default shall be deemed
to be continuing for purposes of this Agreement and the other Loan Documents. The provisions of
this Section 13.18(b) do not apply to any cure of an Event of Default tendered by Borrower
pursuant to the final unnumbered paragraph of Section 10.1 of this Agreement.




          (c) Except with respect to the matters set forth in Section 8.19(b), which shall be
governed by the provisions thereof, with respect to any approval, consent or decision to be made by
the Administrative Agent or any Lender hereunder which involves any approval, consent or decisions
to be made by Borrower pursuant to the terms of any of the Pledged Asset Documents, the
Administrative Agent and the Lenders shall be bound by the same standards as are applicable to
Borrower under the applicable Pledged Asset Documents with respect to such approval, consent or
decision, and shall be required to provide such approval, consent or decision on or prior to the
Business Day prior to the day on which Borrower is required to provide such approval, consent or
decision under the terms set forth in the applicable Pledged Asset Documents; provided that
Borrower shall have provided Administrative Agent with written notice of such request for approval
or consent at least five (5) Business Days (or such shorter period as may be provided in the
applicable Pledged Asset Documents) prior to the day on which Borrower is required to provide the
same under the applicable Pledged Asset Documents. Such request shall contain a legend clearly
marked in not less than fourteen (14) point bold face type, underlined, in all capital letters
“REQUEST DEEMED APPROVED IF NO RESPONSE WITHIN 5 BUSINESS DAYS (OR SUCH SHORTER PERIOD AS MAY
BE PROVIDED IN THE APPLICABLE PLEDGED ASSET DOCUMENTS)”, Administrative Agent shall be deemed
to have approved or consented to such matter if Administrative Agent fails to respond to such
written request before the expiration of such five (5) Business Day period. In any event, and
notwithstanding anything herein to the contrary, if Administrative Agent shall not have responded
to any request for approval or consent hereunder prior to the day on which Borrower is required to
provide such approval or consent under any Pledged Asset Document, Administrative Agent shall be
deemed to have approved or consented to such matter.




          (d) Confidentiality. The Administrative Agent and each Lender agree to maintain the
confidentiality of the Information (as defined below), except that Information may be disclosed (i)
to the Affiliates of the Administrative Agent and each Lender and their respective officers,
directors, employees, agents, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (ii) to the extent required by
applicable laws or regulations or by any court order, subpoena or other legal process, (iii) to any
other party to this Agreement, (iv) in connection with the exercise of




114









 







any remedies hereunder or
any suit, action or proceeding relating to this Agreement, any other Loan Document or the
enforcement of rights hereunder or thereunder, at law or in equity, (v) in connection with any
litigation between or among the Administrative Agent and the Lenders, on the one hand, and Borrower
or any Guarantor, on the other hand, (vi) subject to an agreement containing provisions
substantially the same as those of this Section 13.19, to any assignee of or participant
in, or any prospective assignee of or participant in, any Lender’s rights or obligations under this
Agreement, (vii) with the consent of Borrower or (viii) to the extent such Information (x) was or
becomes publicly available other than as a result of a breach of this Section 13.19 by the
applicable party seeking to use such information or (y) was or becomes available to the
Administrative Agent or a Lender on a non-confidential basis from a source other than the Borrower.
For the purposes of this section, “Information” means all non-public information received from
Borrower relating to any of the Eligible Assets (including, without limitation, those proposed by
Borrower hereunder to be, but not accepted as, Pledged Assets for purposes hereof), Pledged Assets,
Underlying Borrowers, Underlying Properties, Underlying Collateral, Collateral, Borrower, any
Guarantor or any of their respective Affiliates or Subsidiaries or any of their respective
businesses.




[NO FURTHER TEXT ON THIS PAGE]




115









 








     IN WITNESS WHEREOF, Borrower, the Administrative Agent
and the Lenders have caused this Revolving Credit Loan and Security Agreement to be duly executed
and delivered by their proper and duly authorized officers as of the day and year first above
written.



	 	 	 	 	 
	 	BORROWER:





ASHFORD FINANCE SUBSIDIARY II LP,

a Delaware limited partnership

 	 
	 	By:  	Ashford Finance Subsidiary II
 	 
	 	 	General Partner LLC, a Delaware
limited liability company, its general partner 	 



	 	 	 	 	 
	 	 	 
	 	By:  	                                  /S/ DAVID A. BROOKS
 	 
	 	 	David A. Brooks 	 
	 	 	Vice President and Secretary 	 
	 



	 	 	 	 	 
	 	ADMINISTRATIVE AGENT AND LENDERS:



UBS REAL ESTATE INVESTMENTS INC.,

a Delaware corporation,

as Administrative Agent and as a Lender

 	 
	 	By:  	/S/ GRETA GUGGENHEIM
 	 
	 	 	Name:  	Greta Guggenheim 	 
	 	 	Title:  	Vice President 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	                /S/ PAMELA MCCORMACK
 	 
	 	 	Name:  	Pamela McCormack 	 
	 	 	Title:  	Vice President 	 
	 




 









 








SCHEDULE 1




LENDERS, COMMITMENTS AND APPLICABLE LENDING OFFICES




	 	 	 	 	 
	Lender and Lending Offices	 	Revolving Credit Commitment	 
	 
	UBS Real Estate Investments Inc.
	 	$	100,000,000.00	 
	 
	 	 	 	 
	Applicable Lending Offices:
	 	 	 	 
	 
	 	 	 	 
	1285 Avenue of the Americas
	 	 	 	 
	11th Floor
	 	 	 	 
	New York, New York 10019
	 	 	 	 
	Attention: Robert Pettinato
	 	 	 	 
	Telephone: (212) 713-8769
	 	 	 	 
	Telecopy: (212) 713-4391
	 	 	 	 
	 
	 	 	 	 
	Total:
	 	$	100,000,000.00	 
	 
	 	 	 






SCHEDULE 1





 









 








SCHEDULE 2




ADVANCE RATES AND APPLICABLE SPREADS




	 	 	 	 	 
	Asset Type	 	Advance Rate	 	Applicable Spread
	 
	Mezzanine Loan

	 	up to 80%
	 	275 bps
	 

	 	up to 70%
	 	225 bps
	 

	 	up to 60%
	 	200 bps
	Junior Interests

	 	up to 80%
	 	250 bps
	 

	 	up to 70%
	 	215 bps
	 

	 	up to 60%
	 	190 bps
	Mortgage Loans

	 	up to 80%
	 	175 bps
	 

	 	up to 70%
	 	150 bps






SCHEDULE 2





 









 








SCHEDULE 3




COLLATERAL FILE




     In connection with each borrowing, on or prior to each Borrowing Date with respect to any
proposed Eligible Assets to be added to the Collateral in connection with such borrowing, Borrower
shall deliver or cause to be delivered and released to the Custodian the following documents
(collectively, the “Collateral File”), pertaining to each of the Eligible Assets identified in the
Custodial Delivery Letter delivered therewith:



          (a) With respect to each Eligible Asset constituting a Mortgage Loan:





          (i) the original Mortgage Note bearing all intervening endorsements into Borrower, and
further endorsed by Borrower “Pay to the order of ___without recourse or, except as
provided in that certain Revolving Credit Loan and Security Agreement, dated as of December
23, 2005 between among Ashford Finance Subsidiary II LP, as Borrower, the several Lenders
from time to time parties thereto, and UBS Real Estate Investments Inc., as Administrative
Agent, warranty (but subject to the limits on survival and other limits on the enforcement
of any such warranty set forth in such Revolving Credit Loan and Security Agreement)” and
signed in the name of Borrower by an authorized Person, or a lost note affidavit, together
with an indemnity in a form reasonably approved by Administrative Agent with a copy of the
applicable Mortgage Note attached thereto;




          (ii) the original or copy of any loan agreement, guarantee or indemnity executed in
connection with such Eligible Asset;




          (iii) the original or a certified copy of the Mortgage with evidence of recording
thereon, or a copy thereof together with an officer’s certificate of Borrower certifying
that such copy represents a true and correct copy of the original and that such original has
been submitted for recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located;




          (iv) the originals or certified copies of all assumption, modification, consolidation
or extension agreements with evidence of recording thereon, or copies thereof together with
an officer’s certificate of Borrower certifying that such copies represent true and correct
copies of the originals and that such originals have each been submitted for recordation in
the appropriate governmental recording office of the jurisdiction where the Mortgaged
Property is located;




          (v) the original assignment of mortgage in blank for each Eligible Asset, in form and
substance suitable for recording and otherwise reasonably acceptable




 









 









to Administrative Agent
and signed in the name of Borrower, sufficient to collaterally assign to the Administrative
Agent Borrower’s rights in the applicable Mortgage;




          (vi) the originals of all intervening assignments of mortgage entered into by the
originator of such Eligible Asset with evidence of recording thereon, or copies thereof
together with an officer’s certificate of Borrower certifying that such copies represent
true and correct copies of the originals and that such originals have each been submitted
for recordation in the appropriate governmental recording office of the jurisdiction where
the Mortgaged Property is located;




          (vii) if applicable, an Assignment of Mortgage relating to such Eligible Asset
assigning the Mortgage for such Eligible Asset from the originator of such Eligible Asset to
Borrower;




          (viii) the original or a copy of the mortgagee title insurance policy or, if the
original mortgagee title insurance policy has not been issued, the original or a copy of the
irrevocable marked commitment to issue the same;




          (ix) the original or a copy of any cash management agreement, security agreement,
chattel mortgage or equivalent document executed in connection with such Eligible Asset, if
any;




          (x) copies of all other documents and instruments evidencing, guaranteeing, insuring or
otherwise constituting or modifying or otherwise affecting such Eligible Asset, or otherwise
executed or delivered in connection with, or otherwise relating to, such Eligible Asset,
including all documents establishing or implementing any lockbox pursuant to which Borrower
is entitled to receive any payments from cash flow of the underlying real property;




          (xi) the original assignment of leases and rents, if any, with evidence of recording
thereon, or a copy thereof together with an officer’s certificate of Borrower certifying
that such copy represents a true and correct copy of the original and that such original has
been submitted for recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located;




          (xii) the originals of all intervening assignments of assignments of leases and rents
in blank for each Eligible Asset, in form and substance suitable for recording and otherwise
reasonably acceptable to Administrative Agent and signed in the name of Borrower, or copies
thereof together with an officer’s certificate of Borrower certifying that such copies
represent true and correct copies of the originals and that such originals have each been
submitted for recordation in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located;




          (xiii) a copy of any UCC-1 financing statements filed in connection with such Eligible
Asset, certified as true and correct by Borrower, and all necessary UCC-3 continuation
statements with evidence of filing thereon or copies thereof together with an officer’s
certificate of Borrower certifying that such copies represent true and correct




 









 









copies of the
originals and that such originals have each been submitted for filing in the appropriate
governmental recording office of the appropriate jurisdiction and UCC-3 assignments prepared
by Borrower in blank, which UCC assignments shall be in form and substance acceptable for
filing;




          (xiv) the original or a copy of any environmental indemnity agreement executed in
connection with the Eligible Assets;




          (xv) originals or certified copies of all letters of credit and originals or certified
copies of any interest rate cap or swap agreements or other Hedging Transactions relating to
such Eligible Asset;




          (xvi) the original omnibus assignment in blank, if any, for each Eligible Asset in form
and substance reasonably acceptable to Administrative Agent and sufficient to collaterally
assign to Administrative Agent all of Borrower’s rights, title and interest in and to the
Eligible Asset, signed in the name of Borrower;




          (xvii) UCC-1 financing statements prepared by Borrower for the purpose of perfecting
Borrower’s security interest in such Eligible Asset, which such UCC-1 financing statements
shall be reasonably acceptable to Administrative Agent and in form and substance acceptable
for filing;




          (xviii) UCC-3 assignments prepared by Borrower in favor of Administrative Agent for the
purpose of collaterally assigning Borrower’s security interest in such Eligible Asset to
Administrative Agent, which such UCC-3 assignments shall be reasonably acceptable to
Administrative Agent and in form and substance acceptable for filing;




          (xix) UCC-1 financing statements prepared by Borrower in favor of Administrative Agent
for the purpose of perfecting Administrative Agent’s security interest in such Eligible
Asset, which such UCC-1 financing statements shall be reasonably acceptable to
Administrative Agent and in form and substance acceptable for filing;




          (xx) copies of any franchise or reservation system agreement and any franchise “comfort
letter”;




          (xxi) in respect of any Eligible Asset as to which the Mortgaged Property or underlying
real property, as applicable, consists of a leasehold interest, copies of the ground lease,
the memorandum of ground lease and the ground lessor consent and/or estoppel; and




          (xxii) copies of such other documents, agreements or instruments as shall be reasonably
requested by Administrative Agent.



          (b) With respect to each Eligible Asset constituting a Mezzanine Loan:




 









 









          (i) the original Mezzanine Note signed in connection with the Eligible Asset, bearing
all intervening endorsements into Borrower, and further endorsed by Borrower “Pay to the
order of ___without recourse or, except as provided in that certain Revolving Credit
Loan and Security Agreement, dated as of December 23, 2005 between among Ashford Finance
Subsidiary II LP, as Borrower, the several Lenders from time to time parties thereto, and
UBS Real Estate Investments Inc., as Administrative Agent, warranty (but subject to the
limits on survival and other limits on the enforcement of any such warranty set forth in
such Revolving Credit Loan and Security Agreement)” and signed in the name of Borrower by an
authorized Person or a lost note affidavit together with an indemnity in a form reasonably
approved by Administrative Agent with a copy of the applicable Mezzanine Note attached
thereto;




          (ii) the original or a copy of any loan agreement and guarantee or indemnity executed
in connection with such Eligible Asset;




          (iii) the original or a copy of any intercreditor or loan coordination agreement
executed in connection with such Eligible Asset;




          (iv) the original or a copy security agreement executed in connection with such
Eligible Asset, pursuant to which the pledged ownership interests have been transferred to,
or otherwise made subject to a first priority security interest in favor of Borrower;




          (v) the original or a copy of all other documents and instruments evidencing,
guaranteeing, insuring or otherwise constituting or modifying or otherwise affecting such
Eligible Asset, or otherwise executed or delivered in connection with, or otherwise relating
to, such Eligible Asset, including all documents establishing or implementing any lockbox
pursuant to which Borrower is entitled to receive any payments from cash flow of the
underlying real property;




          (vi) a copy of any UCC-1 financing statements filed in connection with such Eligible
Asset, certified as true and correct by Borrower, and all necessary UCC-3 continuation
statements with evidence of filing thereon or copies thereof together with an officer’s
certificate of Borrower certifying that such copies represent true and correct copies of the
originals and that such originals have each been submitted for filing in the appropriate
governmental recording office of the appropriate jurisdiction and UCC-3 assignments prepared
by Borrower in blank, which UCC assignments shall be in form and substance acceptable for
filing;




          (vii) the original certificates representing the pledged equity interests (if any);




          (viii) original stock powers relating to each pledged equity interest, executed in
blank, if an original stock certificate is provided;




          (ix) a copy of the environmental indemnity agreement, if any, executed in connection
with such Eligible Asset;



 









 






          (x) originals or certified copies of all letters of credit and originals or certified
copies of any interest rate cap or swap agreements or other Hedging Transaction relating to
such Eligible Asset;




          (xi) the original omnibus assignment in blank, if any, for such Eligible Asset in form
and substance reasonably acceptable to Administrative Agent and sufficient to collaterally
assign to Administrative Agent all of Borrower’s rights, title and interest in and to the
Eligible Asset, signed in the name of Borrower;




          (xii) UCC-1 financing statements prepared by Borrower for the purpose of perfecting
Borrower’s security interest in such Eligible Asset, which such UCC-1 financing statements
shall be reasonably acceptable to Administrative Agent and in form and substance acceptable
for filing;




          (xiii) UCC-3 assignments prepared by Borrower in favor of Administrative Agent for the
purpose of collaterally assigning Borrower’s security interest in such Eligible Asset to
Administrative Agent, which such UCC-3 assignments shall be reasonably acceptable to
Administrative Agent and in form and substance acceptable for filing;




          (xiv) UCC-1 financing statements prepared by Borrower in favor of Administrative Agent
for the purpose of perfecting Administrative Agent’s security interest in such Eligible
Asset, which such UCC-1 financing statements shall be reasonably acceptable to
Administrative Agent and in form and substance acceptable for filing;




          (xv) copies of the documents listed in subclauses (i), (ii), (iii), (iv), (ix), (xi),
(xiv), (xv) and (xx)(to the extent available to Borrower) of clause (a) above with respect
to the senior loan(s) related to such Mezzanine Loan; and




          (xvi) copies of such other documents, agreements or instruments as shall be reasonably
requested by Administrative Agent.



          (c) With respect to each Eligible Asset constituting a Junior Interest:





          (i) the original certificates representing such Eligible Asset, if any, together with
originals of all intervening assignments;




          (ii) the original or a certified copy of any participation agreement, intercreditor
agreement, paying agency, servicing agreement or similar agreement executed in connection
with such Eligible Asset, together with the original or certified copies of all intervening
assignments;




          (iii) the original assignment of such Eligible Asset sufficient to collaterally assign
to Administrative Agent all of Borrower’s rights, title and interest in and to such Eligible
Asset;



 









 






          (iv) originals or certified copies of all letters of credit and originals or certified
copies of any interest rate cap or swap agreements or other Hedging Transaction relating to
such Eligible Asset;




          (v) UCC-1 financing statements prepared by Borrower in favor of Administrative Agent
for the purpose of perfecting Administrative Agent’s security interest in such Eligible
Asset, which such UCC-1 financing statements shall be reasonably acceptable to
Administrative Agent and in form and substance acceptable for filing;




          (vi) copies of the documents listed in subclauses (i), (ii), (iii), (iv), (ix), (xi),
(xiv), (xv) and (xx) of clause (a) above with respect to the underlying mortgage loan; and




          (vii) copies of such other documents, agreements or instruments as shall be reasonably
requested by Administrative Agent.



 









 





SCHEDULE 4




UCC FILING JURISDICTIONS




Delaware Secretary of State




 









 








SCHEDULE 5




ORGANIZATIONAL STRUCTURE




[See Attached Charts]



Schedule 6