<PAGE>

                              [MERRILL LYNCH LOGO]

                              HOTEL LOAN AGREEMENT

                           FOR A LOAN IN THE AMOUNT OF

                                   $36,000,000

                                MADE BY AND AMONG

                               ASHFORD DAYTON LP,
                              ASHFORD COLUMBUS LP,
                              ASHFORD FLAGSTAFF LP,
                             ASHFORD PHOENIX LP, AND
                              ASHFORD SYRACUSE LP,
                       EACH A DELAWARE LIMITED PARTNERSHIP

                                 AS "BORROWERS"

                                       AND

                             MERRILL LYNCH CAPITAL,
          A DIVISION OF MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC.,
                             A DELAWARE CORPORATION
                      222 NORTH LASALLE STREET - 16TH FLOOR
                             CHICAGO, ILLINOIS 60601

                                   AS "LENDER"

                             ASHFORD HOTEL PORTFOLIO

                          Dated as of December 24, 2003

<PAGE>

                                TABLE OF CONTENTS

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<S>                                                                                                            <C>
ARTICLE 1 INCORPORATION OF RECITALS, EXHIBITS AND SCHEDULES..................................................     2

         1.1      Incorporation of Recitals..................................................................     2
         1.2      Incorporation of Exhibits and Schedule.....................................................     2
         1.3      Definitional Provisions....................................................................     2

ARTICLE 2 LOAN AND LOAN DOCUMENTS............................................................................     2

         2.1      Conditions Precedent.......................................................................     2
         2.2      Loan Documents.............................................................................     2
         2.3      Disbursements..............................................................................     3
         2.4      Term of the Loan...........................................................................     4
         2.5      Prepayments................................................................................     5
         2.6      Interest...................................................................................     5
         2.7      Monthly Payments...........................................................................     6
         2.8      Exit Fee...................................................................................     6
         2.9      Default Interest and Late Charge...........................................................     6
         2.10     Project Partial Prepayments, Partial Releases..............................................     7

ARTICLE 3 FINANCIAL REPORTING COVENANTS......................................................................     7

         3.1      Financial Information Reporting............................................................     7
         3.2      Financial Information Form and Examination.................................................     9

ARTICLE 4 OPERATIONAL AND OTHER COVENANTS....................................................................     9

         4.1      Leasing and Operational Covenants..........................................................     9
         4.2      Other Borrower Covenants...................................................................    14
         4.3      Authorized Representative..................................................................    22

ARTICLE 5 BORROWER'S REPRESENTATIONS AND WARRANTIES..........................................................    23

         5.1      Borrower's Representations and Warranties..................................................    23

ARTICLE 6 ENVIRONMENTAL MATTERS..............................................................................    28

         6.1      Environmental Representations and Warranties...............................................    28
         6.2      Environmental Covenants....................................................................    28
         6.3      Right of Entry and Disclosure of Environmental Reports.....................................    29
         6.4      Environmental Indemnitor's Remedial Work...................................................    31
         6.5      Environmental Indemnity....................................................................    31
         6.6      Remedies Upon an Environmental Default.....................................................    32
         6.7      Unconditional Environmental Obligations....................................................    33
         6.8      Assignment of Environmental Obligations Prohibited.........................................    33
         6.9      Indemnification Separate from the Loan.....................................................    33

ARTICLE 7 CASUALTIES AND CONDEMNATION........................................................................    34

         7.1      Lender's Election to Apply Insurance Proceeds on Indebtedness..............................    34
         7.2      Borrower's Obligation to Rebuild and Use of Insurance Proceeds Therefor....................    34
</TABLE>

                                      -i-
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<TABLE>
<S>                                                                                                              <C>
ARTICLE 8 EVENTS OF DEFAULT AND REMEDIES.....................................................................    35

         8.1      Events of Default..........................................................................    35
         8.2      Remedies Conferred Upon Lender.............................................................    37

ARTICLE 9 LOAN EXPENSE, COSTS AND ADVANCES...................................................................    38

         9.1      Loan and Administration Expenses...........................................................    38
         9.2      Right of Lender to Make Advances to Cure Borrower's Defaults...............................    39
         9.3      Increased Costs............................................................................    39
         9.4      Borrower Withholding.......................................................................    39
         9.5      Document and Recording Tax Indemnification.................................................    39

ARTICLE 10 ASSIGNMENTS BY LENDER AND DISCLOSURE..............................................................    40

         10.1     Assignments and Participations.............................................................    40
         10.2     Disclosure of Information..................................................................    40

ARTICLE 11 GENERAL PROVISIONS................................................................................    40

         11.1     Captions...................................................................................    40
         11.2     Waiver of Jury Trial.......................................................................    40
         11.3     Jurisdiction...............................................................................    41
         11.4     Governing Law..............................................................................    42
         11.5     Lawful Rate of Interest....................................................................    42
         11.6     Modification; Consent......................................................................    42
         11.7     Waivers; Acquiescence or Forbearance Not to Constitute Waiver of Lender's
                  Requirements...............................................................................    42
         11.8     Disclaimer by Lender.......................................................................    43
         11.9     Partial Invalidity; Severability...........................................................    44
         11.10    Definitions Include Amendments.............................................................    44
         11.11    Execution in Counterparts..................................................................    44
         11.12    Entire Agreement...........................................................................    44
         11.13    Waiver of Damages..........................................................................    45
         11.14    Claims Against Lender......................................................................    45
         11.15    Set-Offs...................................................................................    45
         11.16    Relationship...............................................................................    45
         11.17    Agents.....................................................................................    46
         11.18    Interpretation.............................................................................    46
         11.19    Successors and Assigns.....................................................................    46
         11.20    Time is of the Essence.....................................................................    46
         11.21    Notices....................................................................................    46
         11.22    Joint and Several Liability................................................................    48
</TABLE>

                                      -ii-
<PAGE>

                LIST OF EXHIBITS AND SCHEDULES TO LOAN AGREEMENT

Joinder           Principal's Limited Joinder

Exhibit A         Legal Description of Land

Exhibit B         Permitted Exceptions

Exhibit C         Litigation

Exhibit D         Rent Roll

Exhibit E         Insurance Requirements

Exhibit F         Environmental Documents

Exhibit G         FF&E Not Owned by Borrower

Exhibit H         Intellectual Property

Exhibit I         Direct and Indirect Ownership of Borrowers, Project Lessee and
                   Principal

Exhibit J         Franchise Licenses

Exhibit K         Release Price

Exhibit L         Encroachments

Schedule I        Definitions

                                     -iii-
<PAGE>

                              HOTEL LOAN AGREEMENT

                  THIS HOTEL LOAN AGREEMENT ("AGREEMENT") is made as of December
__, 2003, by and among ASHFORD DAYTON LP, ASHFORD COLUMBUS LP, ASHFORD FLAGSTAFF
LP, ASHFORD PHOENIX LP, and ASHFORD SYRACUSE LP, each a Delaware limited
partnership (collectively, "BORROWERS"; each a "BORROWER"), and MERRILL LYNCH
CAPITAL, a Division of Merrill Lynch Business Financial Services Inc., a
Delaware corporation (collectively, with its successors and assigns, "LENDER").

                                    RECITALS

            A.    Each Borrower is the owner in fee simple of the land or, in
the case of Ashford Columbus LP, the lessee of the air rights legally described
in Exhibit A below the name of such Borrower, together with the improvements
located thereon or therein generally consisting of a hotel and related
facilities as more specifically described in Exhibit A.

            B.    Principal has applied to Lender for a loan to Borrowers of up
to Thirty-Six Million and No/100ths Dollars ($36,000,000.00) (the "LOAN") for
the purpose of refinancing acquisition costs and financing renovation costs for
the Projects, and Lender is willing to make the Loan on the terms and conditions
hereinafter set forth. The Loan is evidenced by that certain Promissory Note of
even date herewith made by Borrowers in the original principal amount of
Thirty-Six Million and No/100ths Dollars ($36,000,000.00) and payable to Lender
(the Promissory Note and all amendments thereto and substitutions therefor are
hereinafter referred to as the "NOTE"). The terms and provisions of the Note are
hereby incorporated by reference, in this Agreement.

            C.    Borrowers' obligations under the Loan will be secured by,
among other items, (a) the Mortgages, (b) a Security Agreement encumbering
Borrowers' personal property (the "SECURITY AGREEMENT") and (c) a Lessee
Security Agreement encumbering Project Lessee's personal property (the "LESSEE
SECURITY AGREEMENT"), each granting Lender a first priority security interest in
all of the assets of each Borrower and a security agreement executed by Project
Lessee granting Lender a first priority security interest in all personal
property owned by Project Lessee and used in connection with each Project. This
Agreement, the Note, the Mortgages, that certain Lessor Estoppel Certificate and
Agreement executed December __, 2003, by and between Ashford Columbus LP, Lender
and Huntington Center Associates, and any other documents evidencing or securing
the Loan or executed in connection therewith, and any modifications, renewals
and extensions thereof, are referred to herein collectively as the "LOAN
DOCUMENTS."

            D.    Each Borrower has entered into a lease of the Project owned by
such Borrower (each, a "PROJECT LEASE") with Ashford TRS Corporation, a Delaware
corporation (together with its successors and assigns, "PROJECT LESSEE"),
pursuant to which Project Lessee will lease each Project to the applicable
Borrower.

            NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:

<PAGE>

                                    ARTICLE 1
                INCORPORATION OF RECITALS, EXHIBITS AND SCHEDULES

1.1   INCORPORATION OF RECITALS.

            The foregoing preambles and all other recitals set forth herein are
made a part hereof by this reference.

1.2   INCORPORATION OF EXHIBITS AND SCHEDULE.

            Exhibits A through J, the Limited Joinder and Schedule I to this
Agreement, attached hereto are incorporated in this Agreement and expressly made
a part hereof by this reference.

1.3   DEFINITIONAL PROVISIONS.

            All terms defined in Schedule I of this Agreement or otherwise in
this Agreement shall, unless otherwise defined therein, have the same meanings
when used in the Note, Mortgage, any other Loan Documents, or any certificate or
other document made or delivered pursuant hereto. The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement. The word "include(s)" when used in this Agreement and
the other Loan Documents means "include(s), without limitation," and the word
"including" means "including, but not limited to."

                                   ARTICLE 2
                             LOAN AND LOAN DOCUMENTS

2.1   CONDITIONS PRECEDENT.

            Borrowers agree that Lender's obligation to close the Loan is
conditioned upon Borrowers' delivery, performance and satisfaction, in Lender's
sole discretion, of all items set forth (a) in that certain Loan Application
accepted by Principal on October 31, 2003 (the "LOAN APPLICATION") and (b) on
that certain Closing Checklist issued with respect to such Loan Application.

2.2   LOAN DOCUMENTS.

            Borrowers agree that Borrowers will, on or before the Closing Date,
execute and deliver or cause to be executed and delivered to Lender this
Agreement and the other Loan Documents in form and substance acceptable to
Lender. In addition, Borrowers shall deliver such other documents, instruments
or certificates as Lender and its counsel may reasonably require, including such
documents as Lender in its sole discretion deems necessary or appropriate to
effectuate the terms and conditions of this Agreement and the other Loan
Documents, and to comply with the laws of the states of Illinois and, as
applicable, New York, Ohio and Arizona. Furthermore, Borrowers acknowledge that
Borrowers are obligated to cause their counsel to issue a legal opinion (in form
reasonably satisfactory to Lender) for the benefit of Lender.

                                      -2-
<PAGE>

2.3   DISBURSEMENTS.

            (a)   Subject to the terms, provisions and conditions of this
Agreement and the other Loan Documents, on the Closing Date, Borrowers agree to
borrow from Lender and Lender shall disburse to Borrowers from the proceeds of
the Loan the sum of $27,800,000 (the "INITIAL FUNDING AMOUNT").

            (b)   Holdback. The balance of the proceeds of the Loan in an amount
equal to $8,200,000 (the "HOLDBACK") shall be retained by Lender as holdback for
the costs and expenses incurred in connection with renovating the Projects as or
to be approved by Lender in accordance with the terms and conditions hereof
(collectively, the "RENOVATION WORK"; with respect to any Project, the "PROJECT
RENOVATION WORK"). On or before the Closing Date, Borrowers shall submit to
Lender, for approval by Lender and Lender's Consultant, a preliminary
description of the Renovation Work, including a preliminary schedule for
completion of the Project Renovation Work for each Project (each, a "PRELIMINARY
HOLDBACK COMPLETION SCHEDULE"), and a preliminary budget for the Project
Renovation Work for each Project (each, a "PRELIMINARY PROJECT HOLDBACK
BUDGET"). Absent a default hereunder or under any of the other Loan Documents,
Lender shall make disbursements of portions of the Holdback subject to the
following conditions:

                  (i)   At least fifteen (15) business days prior to the date of
      any such advance, Borrowers shall provide Lender with a written request
      for payment executed by Borrowers together with copies of invoices, lien
      waivers, applications for payments, canceled checks, or other evidence of
      payment of amounts due and payable by Borrowers in connection with and
      specifying the portion thereof allocated to the Project Renovation Work
      for each Project to which such request for payment relates;

                  (ii)  Lender shall have received, at Borrowers' expense, an
      endorsement to the applicable Title Policy(ies) insuring the priority of
      the applicable Mortgage with respect to such advance and indicating that
      no intervening liens exist against the applicable Project(s);

                  (iii) Lender shall have approved, in its reasonable
      discretion, all Project Renovation Work, each Holdback Completion
      Schedule, each Project Holdback Budget and the other Project Construction
      Documents (as each term is defined herein);

                  (iv)  Borrowers shall have delivered evidence satisfactory to
      Lender, in its sole discretion, that the Holdback is sufficient to
      complete the Renovation Work in accordance with each Project Holdback
      Budget or, if insufficient, Borrowers shall have deposited with Lender
      additional funds necessary to complete the Renovation Work (Borrowers'
      deposit to be disbursed before any balance of the Holdback);

                  (v)   Lender's Consultant shall have inspected and approved
      each portion of the Renovation Work completed;

                                      -3-
<PAGE>

                  (vi)  Such advances shall be made no more than twice a month
in minimum amounts of $25,000 with the final advance to be made no later than
twenty (20) months after the Closing Date; and

                  (vii) Such advances shall be utilized to pay the actual costs
of the Renovation Work as portions of same are completed and, at Lender's
option, advances shall be made by Lender directly to the architect, contractor,
supplier or other third party entitled to receive payment thereto.

            Borrowers shall complete the Renovation Work within eighteen (18)
months after the Closing Date.

2.4   TERM OF THE LOAN.

            (a)   Unless due and payable sooner pursuant to Section 2.8 or
Article 8, all principal, interest and other sums due under the Loan Documents
shall be due and payable in full on December 31, 2007 (the "INITIAL MATURITY
DATE"), provided that Borrowers shall have the right to extend the Maturity Date
(the "EXTENSION OPTION") for an additional twelve (12) month term (such twelve
(12) month period is hereinafter referred to as the "EXTENSION TERM"), thereby
extending the Maturity Date to the twelve month anniversary of the Initial
Maturity Date (the "EXTENDED MATURITY DATE").

            (b)   Borrowers may only exercise the Extension Option upon
satisfying the following conditions:

                  (i)   Borrowers shall have delivered to Lender written notice
      (the "EXTENSION NOTICE") of such election no earlier than ninety (90) days
      and no later than forty-five (45) days prior to the Initial Maturity Date;

                  (ii)  Lender shall have received Borrowers' and Principal's
      most recent financial statements, certified as correct by Borrowers and
      Principal. There must be no Material Adverse Change in Borrowers' or
      Principal's financial condition;

                  (iii) The Renovation Work has been completed in accordance
      with all requirements of this Loan Agreement;

                  (iv)  Such notice is accompanied by a non-refundable extension
      fee equal to $180,000 or one-half percent (0.5%) of the outstanding
      principal balance of the Loan as of the date of the Extension Notice,
      whichever is less;

                  (v)   No Event of Default then exists under the Loan
      Documents, nor any event exists which would be an Event of Default if not
      cured within the time allowed;

                  (vi)  Project Yield must be equal to or greater than fifteen
      percent (15%); and

                                      -4-
<PAGE>

                  (vii) For the Extension Term, the Debt Service Coverage Ratio
      is not less than 1.4:1.00.

2.5   PREPAYMENTS.

            The Loan may not be voluntarily prepaid in full or in part prior to
the first day of the fourth (4th) month after the date hereof (the "LOCKOUT
PERIOD"). Thereafter, Borrowers shall have the right to make prepayments of the
Loan, in whole or in part at any time provided Borrowers (a) give Lender at
least seven (7) days' prior written notice, (b) pays all accrued and unpaid
interest, (c) pays the proportionate amount of the Exit Fee due hereunder based
upon the amount of the Loan prepaid at such time, and (d) pays all other fees
and costs due from Borrowers to Lender including any attorneys' fees and
disbursements incurred by Lender as a result of the prepayment. In the event
Lender declares the Loan immediately due and payable at a time when an Exit Fee
would be due or during the Lockout Period, such Exit Fee shall be paid upon any
tender of payment at any time or upon acceleration of the Loan. In the event any
Borrower receives any payment with respect to a Commercial Lease (other than
rental payments and expense reimbursements) including lease termination,
cancellation or similar fees and insurance or condemnation proceeds, Borrowers
shall immediately prepay the principal balance of the Loan in an amount equal to
such payment, but such prepayment will be net of the calculation of the Exit Fee
then due with respect to the portion of the Loan that is prepaid.

2.6   INTEREST.

            Except as provided in Section 2.10(a), the principal amount of the
Loan outstanding from time to time shall bear interest until paid at a rate
equal to a floating rate per annum equal to three and one-quarter percent
(3.25%) plus the Base Rate (the aggregate rate referred to as the "INTEREST
RATE"), but in no event shall the Interest Rate be lower than four and three
quarters percent (4.75%). Interest shall be calculated based on a three hundred
sixty (360) day year and charged for the actual number of days elapsed.

            Notwithstanding the foregoing, if Borrower fails to deliver the
Letter of Credit to Lender pursuant to the terms of Section 4.1(o)(ii) herein,
the Interest Rate shall increase to a floating rate per annum equal to one
percent (1%) plus the Base Rate (such aggregate rate is referred to herein as
the ("INCREASED INTEREST RATE") and Borrower shall pay interest on the
outstanding principal balance of the Loan at the Increased Interest Rate from
the date of such failure to deliver the Letter of Credit pursuant to Section
4.1(o)(i) until the Letter of Credit has been delivered to Lender. All
references is this Agreement and the other Loan Documents to the "Interest Rate"
shall be deemed to refer to the "Increased Interest Rate" until the Letter of
Credit has been delivered to Lender, or there is an Event of Default hereunder.

                                      -5-
<PAGE>

2.7   MONTHLY PAYMENTS.

            Commencing on February 1, 2004, Borrowers shall pay interest
computed on the outstanding principal balance of the Loan at the Interest Rate
monthly in arrears on the first (1st) day of each month.

            In addition to the interest payments due on the Loan, commencing on
the first day of January, 2006 and continuing on the first day of each month
thereafter until the outstanding principal amount has been repaid, Borrowers
shall make additional monthly principal amortization payments of Fifty-Seven
Thousand and No/100 Dollars ($57,000.00).

            Monthly payments of interest and amortization due to Lender as
described in this Section 2.7 shall be paid to Lender by Automated Clearing
House debit of immediately available funds from the financial institution
account designated by Borrowers in the Automated Clearing House debit
authorization executed by Borrowers in connection with this Agreement; and shall
be effective upon receipt. Borrowers shall execute any and all forms and
documentation necessary from time to time to effectuate such automatic debiting.
In no event shall any such payments be refunded to Borrowers.

2.8   EXIT FEE.

            Upon the repayment of the Loan (whether on the Maturity Date or on
any other date) or upon the acceleration of the Loan by Lender as provided
herein, Borrowers will pay to Lender an exit fee equal to $180,000 less any
portion of the Exit Fee already paid to Lender pursuant to Section 2.5 above
PLUS, if the Loan is repaid during the Lockout Period or accelerated by Lender
so that the Loan becomes due during the Lockout Period, the amount of interest
that would have accrued at the Interest Rate (assuming a Base Rate equal to the
Base Rate effective on the day the Loan is repaid or accelerated by Lender) from
the repayment or acceleration date through the end of the Lockout Period
(collectively, the "EXIT FEE"). The Exit Fee shall be deemed to be earned upon
the execution of this Agreement. In the event that Borrowers refinance the Loan
with a securitizable loan from any other Merrill Lynch & Co. division or
Affiliate, Lender will waive the payment of the Exit Fee otherwise due at the
time of the repayment of the Loan from the proceeds of such refinance. There is
no obligation by any Merrill Lynch & Co. division or Affiliate to provide a
securitizable loan or even a quote thereon (either based on the then-existing
market rates or otherwise). Any such securitizable loan shall be on terms
mutually acceptable to the parties thereto, in their sole discretion. Lender has
no obligation to provide any partial waiver or discount of the Exit Fee in any
other circumstances.

2.9   DEFAULT INTEREST AND LATE CHARGE.

            (a)   So long as an Event of Default has occurred and is then
continuing, interest shall accrue at a rate per annum equal to five percentage
points (500 basis points) in excess of the Interest Rate otherwise applicable on
each outstanding advance of the Loan, but shall not at any time exceed the
highest rate permitted by law (the "DEFAULT RATE").

                                      -6-
<PAGE>

            (b)   If payments of principal (other than the final payment of
principal due at maturity), interest due on the Loan, or any other amounts due
hereunder or per the Note or the other Loan Documents are not timely made and
remain overdue for a period of five (5) days, Borrowers, without notice or
demand by Lender, promptly shall pay an amount ("LATE CHARGE") equal to five
percent (5%) of each delinquent payment.

2.10  PROJECT PARTIAL PREPAYMENTS, PARTIAL RELEASES.

            At any time after the Lockout Period, Borrowers shall have the right
to obtain a release of Lender's liens against a Project in connection with a
partial prepayment of the Loan provided that each of the following conditions
are satisfied: (a) the partial prepayment is in an amount equal to or greater
than the sum of the Release Price for such Project plus that portion of the Exit
Fee payable under Sections 2.5 and 2.8, (b) no default under the Loan Documents
has occurred and is then continuing, (c) no less than two of the Projects will
remain as collateral for Borrowers' obligations under the Loan Documents, (d)
Project Yield for the Projects remaining as collateral will be equal to or
greater than sixteen percent (16%), and (e) such release Project is refinanced
with or sold, in an arms-length transaction, to an unrelated third party who or
which is not an Affiliate of any Borrower or Principal. Upon any such permitted
prepayment and the satisfaction of such conditions Lender will release its liens
encumbering such Project and, except for all obligations accruing prior to such
prepayment and those obligations which under the terms hereof or under any other
Loan Document would otherwise expressly survive the repayment of the Loan, such
Project and the Borrower owning such Project shall no longer be subject to the
Loan Documents. If each of the foregoing conditions is satisfied and the Project
located in Syracuse, NY is released by Lender from the lien of the applicable
Mortgage pursuant to the terms of this Section 2.10, Lender shall also release
the partnership interests in Ashford Syracuse LP from the lien of those certain
Assignments of Partnership Interest of even date herewith.

                                    ARTICLE 3
                          FINANCIAL REPORTING COVENANTS

3.1   FINANCIAL INFORMATION REPORTING.

            (a)   Monthly Information. Within twenty (20) days following the end
of each month, each Borrower shall deliver to Lender with respect to such
Borrower and with respect to the Project owned by such Borrower (or cause
Project Lessee to deliver): (i) a balance sheet as of the end of the preceding
month, specifically identifying all prepayments and receipts in respect of
future Project operations; (ii) a statement of income and expenses showing the
results of operation for the preceding month and fiscal year-to-date, in
comparison the same month and year-to-date for the prior fiscal year, and in
comparison with the Annual Budget including room statistics (e.g., available
rooms, occupied rooms, average daily room rate and revenue per available room);
(iii) for the preceding month, the previous twelve (12) months and the fiscal
year-to-date (A) a cash summary detailing all cash activity and reconciling
beginning and end cash balances, (B) aged accounts receivable and accounts
payable, (C) a summary of activity in the FF&E Reserve with a detailed schedule
of computation, funding and uses of the FF&E Reserve, and (D) a detailed
accounting of any FF&E acquired, sold or otherwise disposed of by such Borrower
or the Project Lessee; (iv) current cash flow projections for the balance of the
period covered by the Annual Budget, a report of occupancy for the previous
month (including the average daily room rate) and a comparison of the budgeted
total income and total expenses for the subject month, with

                                      -7-
<PAGE>

a detailed explanation of variances of five percent (5%) or more between
budgeted and actual amounts for such month.

            (b)   Annual Information. Within thirty (30) days after the end of
each calendar year, each Borrower shall deliver or cause to be delivered to
Lender audited annual financial statements (including, balance sheet, an income
statement and a statement of cash flows) for such Borrower. Borrowers shall
cause Principal to provide Lender with its (i) annual Federal Income Tax Returns
within ten (10) days after timely filing thereof, and (ii) annual certified
financial statements within twenty (20) days after each fiscal year of such
Principal. Upon request from Lender, which, except after an Event of Default,
shall be no more frequently than annually, each Borrower shall deliver (or cause
Project Lessee to deliver) to Lender the following with respect to the
applicable Project: (i) a true, correct and complete copy of the check register
showing all paid invoices, indicating date paid, amount paid and check number;
(ii) a true correct and complete copy of the cash disbursements journal; (iii) a
reforecast of income and expenses for the remainder of the current fiscal year
as compared to the Annual Budget; (iv) a report explaining variances, the bases
for reforecasts, changes in competition and market conditions and other items;
and (v) evidence of the timely payment of all taxes.

            (c)   Budgets. Prior to the Closing Date and within thirty (30) days
prior to the end of each fiscal year, each Borrower shall deliver (or cause
Project Lessee to deliver) to Lender the following with respect to the
applicable Project: (i) a projection of Net Operating Income by fiscal month for
the next fiscal year presented in a form consistent with the Uniform System of
Accounts (the "OPERATING BUDGET") and including projections of average daily
room rates and occupancy levels; and (ii) a projection by fiscal month of
capital expenditures for the next fiscal year presented in a form approved by
Lender (the "CAPITAL BUDGET"). Any expense that will involve a payment to or for
the benefit of such Borrower, Manager or any Affiliate shall be noted as a
separate line item in the Operating Budget. The Operating Budget will be
presented in comparison with the budgeted and actual performance for the fiscal
year then ending. The Operating Budget and the Capital Budget shall constitute
the "ANNUAL BUDGET" for the applicable Project. By written notice to Lender,
Borrowers shall have the one time right during each fiscal quarter to modify
Projected Operating Revenue for such fiscal quarter, provided that such
modification is based upon actual results or known circumstances described in
such notice believed by Borrowers in good faith to justify such modification.
The delivery of the Annual Budgets shall be deemed a certification by Borrowers
that each contains information and relies upon assumptions, in each case, only
to the extent reasonably believed to be correct and achievable by Borrowers and
Manager. Borrowers shall also provide Lender with notice of any material changes
in the marketing plan for each Project. If requested by Lender, each Borrower
and Manager shall meet with Lender to explain and discuss the Annual Budgets.
Borrowers shall use commercially reasonable efforts to comply with each Annual
Budget in regard to Operating Revenue and shall not incur any material expense
not included in such Annual Budget except in the event of an emergency requiring
an expenditure for the preservation of the applicable Project, or any part
thereof, or prevention of injury to guests or employees and except for

                                      -8-
<PAGE>

expenses which are beyond the reasonable control of Borrowers and expenses
incurred as a result of an unanticipated increase in occupancy at the applicable
Project.

            (d)   Reports and Inspections. Within ten (10) days after receipt,
Borrowers shall deliver to Lender (i) each Smith travel/Star research report,
(ii) each Licensor inspection report and (iii) any other financial or quality
scores or reports or material notices from Manager or Licensor (to the extent
not otherwise required to be delivered under this Agreement).

3.2   FINANCIAL INFORMATION FORM AND EXAMINATION.

            All financial statements to be provided to Lender as described
herein shall be in a format approved in writing by Lender in Lender's reasonable
discretion, in accordance with sound accounting practices prepared on a
consistent basis (and with respect to annual financial statements, such
statements shall be audited by an independent certified public accountant
reasonably acceptable to Lender), which fairly present the financial
condition(s) as of the date(s) indicated. Each financial statement shall be
certified as true, complete and correct by its preparer and by the applicable
Borrower or, as applicable, Project Lessee or the Principal. Borrowers and
Principal shall provide such additional financial information as Lender
reasonably requires (which may include specific information concerning each
Borrower's, General Partner's and Principal's other real estate holdings,
including property income and expenses, debt service requirements and
occupancy). Borrowers and Principal shall during regular business hours on
reasonable advance notice permit Lender or any of Lender's representatives
(including an independent firm of certified public accountants) to have access
to and examine all of its books and records regarding Borrowers, General
Partner, Manager, Project Lessee in each case as the same related to the
development and operation of the Projects. Borrowers shall within ten (10) days
after Lender's request, furnish Lender with a written statement, duly
acknowledged, setting forth the sums according to each Borrower's books and
records of any right of set-off, counterclaim or other defense that exists
against such sums and such Borrower's obligations under the Loan Documents.

                                    ARTICLE 4
                         OPERATIONAL AND OTHER COVENANTS

4.1   LEASING AND OPERATIONAL COVENANTS.

            (a)   Leasing Restrictions. Without the prior written consent of
Lender, no Borrower shall (i) enter into (or permit any Project Lessee to enter
into) any Commercial Leases of the Project or any portion thereof, (ii) modify,
amend or terminate (or permit each Project Lessee to modify, amend or terminate)
any Commercial Lease, (iii) accept any rental payment on a Commercial Lease for
more than one month in advance of its due date or (iv) enter into any ground
lease of the Project. Borrowers shall provide (or cause each Project Lessee to
provide) Lender with a copy of all Commercial Leases no less than ten (10) days'
prior to execution of such Commercial Leases and the effectiveness of each such
Commercial Lease shall be subject to Lender's approval. Borrowers shall add (or
require each Project Lessee to add) an automatic attornment provision to such
Commercial Lease

                                      -9-
<PAGE>

whereby in the event of a foreclosure, the tenant automatically shall recognize
the successor owner as landlord and such tenant shall have no right to terminate
its Commercial Lease in the event of such foreclosure). If Lender consents to
any new Commercial Lease or the modification or renewal of any existing
Commercial Lease at Lender's request, Borrowers shall cause (or shall require
each Project Lessee to cause) the Tenant thereunder to execute a subordination
and attornment agreement in form and substance satisfactory to Lender. Borrowers
shall provide Lender with a copy of the fully executed original of all
Commercial Leases promptly following their execution.

            (b)   Defaults Under Leases.

                  (i)   Project Lease. No Borrower will suffer or permit any
      breach or default to occur in any of such Borrower's obligations under the
      applicable Project Lease nor suffer or permit the same to terminate by
      reason of any failure of such Borrower to meet any requirement of such
      Project Lease. Borrowers shall notify Lender promptly in writing in the
      event a Project Lessee commits a material default under a Project Lease.
      Borrower shall require Project Lessee to comply with the terms of the
      Project Lease and will not materially modify or terminate the Project
      Lease without Lender's consent.

                  (ii)  Commercial Leases. Borrowers will not suffer or permit
      any breach or default to occur in any Borrower's obligations under any of
      the Commercial Leases nor suffer or permit the same to terminate by reason
      of any failure of any Borrower to meet any requirement of any Commercial
      Lease including those with respect to any time limitation within which any
      Borrower's work is to be done or the space is to be available for
      occupancy by the Tenant. Borrowers shall notify Lender promptly in writing
      in the event a Tenant commits a material default under a Commercial Lease.

            (c)   Management Contracts. No Borrower shall change (or permit any
Project Lessee to change) the manager of a Project or enter into, modify, amend,
terminate or cancel (or permit any Project Lessee to enter into, modify, amend,
terminate or cancel) any management contracts for a Project or agreements with
lenders or brokers, without the prior written approval of Lender.

            (d)   Furnishing Notices. Borrowers shall provide Lender with copies
of all material notices pertaining to each Borrower, General Partner, any
Principal or the Projects received by any Borrower from any Tenant, Principal,
Governmental Authority or insurance company within seven (7) days after such
notice is received. In addition, Borrowers shall promptly provide Lender with
written notice of any litigation, arbitration, or other proceeding or
governmental investigation pending or, to any Borrower's or Principal's
knowledge, threatened against or relating to any Borrower, General Partner,
Principal or any Project. Notwithstanding the foregoing, Borrowers shall not be
obligated to provide Lender with such written notice in respect of personal
injury litigation against any Borrower or any Project in an amount less than One
Hundred Thousand and No/100 Dollars ($100,000.00), so long as the maximum
liability under such cases is covered in its entirety by liability

                                      -10-
<PAGE>

insurance maintained by Borrowers and the insurance carrier has not refused
tender or defense or coverage. Furthermore, Borrowers shall promptly provide
Lender with prior written notice of any capital or other equity contributions to
any Borrower.

            (e)   Alterations. Without the prior written consent of Lender, no
Borrower shall make any material alterations to a Project, except for tenant
improvements required by the terms of Commercial Leases and the Project
Renovation Work.

            (f)   Cash Distributions. So long as an Event of Default has
occurred and is continuing, no Borrower shall make or permit any Project Lessee
to make any distribution of Gross Revenue to any partner of such Borrower or
such Project Lessee. Except as otherwise specifically provided in the Loan
Documents, Gross Revenue received by any Borrower shall be applied to the
Indebtedness then due and payable, Operating Expenses, the FF&E Reserve or other
Project capital improvements, repairs or replacements in accordance with the
Annual Budget before distribution by such Borrower or Project Lessee to
Principal or General Partner or any shareholder of such Project Lessee.

            (g)   Renovation Work. All Project Renovation Work shall be
completed in substantial accordance with the Project Construction Documents and
in compliance with all applicable Laws, regulations, ordinances, codes, permits,
licenses, declarations, covenants, or restrictions of record or other agreements
relating to the applicable Project or any part thereof. No Borrower shall
materially amend or modify Project Construction Documents without Lender's prior
written consent. In no event shall Borrowers be permitted to reallocate funds
from a hard cost line item to a soft cost line item in any Project Holdback
Budget or reallocate amounts from one Project Holdback Budget to another.

            (h)   Reserved.

            (i)   Compliance With Laws. Each Borrower shall comply with all
applicable requirements (including applicable Laws) of any Governmental
Authority having jurisdiction over such Borrower or the applicable Project
including all building, zoning, density, land use, covenants, conditions and
restrictions, subdivision requirements (including parcel maps and environmental
impact and other environmental requirements), whether now existing or later to
be enacted and whether foreseen or unforeseen.

            (j)   Compliance with Contractual Obligations, Conversion Certain
Licenses. Borrowers will comply with and will cause Project Lessee and Manager
to comply with the obligations, covenants and conditions contained in the
applicable License Agreement and all other material contractual obligations of
each Borrower and maintain or obtain and will cause Project Lessee and Manager
to maintain or obtain all licenses, qualifications and permits now held or
hereafter required to be held by such Borrower, Project Lessee or Manager for
which the loss, suspension, revocation or failure to obtain or renew, could
reasonably be expected to have a material adverse effect upon the financial
condition of such Borrower or the ability to operate the applicable Project in
compliance with the License or the requirements of the Loan Documents. No
Borrower shall amend, modify or terminate, or permit the amendment, modification
or termination of, any License

                                      -11-
<PAGE>

Agreement, provided that no Event of Default has occurred and is then
continuing, with Lender's prior written consent, which will not be unreasonably
withheld, Borrowers may at their sole expense elect to convert the Projects
located in Columbus, Ohio and Dayton, Ohio from Doubletree Guest Suites to
Hilton Garden Inns, provided further that any such consent by Lender shall be
conditioned upon receipt and approval by Lender of the new License Agreement
evidencing each such conversion and a comfort letter in form satisfactory to
Lender covering each such new License Agreement. No Borrower shall assign or
transfer its interest under a License Agreement without Lender's prior written
consent.

            (k)   Use of Project. Unless required by applicable Law, no Borrower
shall permit changes in the use of a Project from that of the time this
Agreement was executed. Without Lender's prior written consent, no Borrower
shall either initiate or acquiesce in a change in the plat of subdivision, or
zoning classification or use of any Project, or grant any encumbrances or
easements burdening a Project.

            (l)   No Commingling of Funds. No Borrower shall (or permit Project
Lessee to) commingle the funds related to a Project with funds from any other
property.

            (m)   Maintenance and Preservation of the Projects. Borrowers shall
keep the Projects in good condition and repair and if all or part of any Project
becomes damaged or destroyed, the applicable Borrower shall promptly and
completely repair and/or restore such Project in a good and workmanlike manner
in accordance with sound building practices, regardless of whether Lender agrees
to disburse Insurance Proceeds or other sums to pay costs of the work of repair
or reconstruction under Article 7 hereof. No Borrower shall commit or allow
waste or permit impairment or deterioration of any Project. Borrowers shall
perform such acts to preserve the value of Projects and no Borrower shall
abandon a Project.

            (n)   FF&E Reserve. Within twenty (20) days after the end of every
month during the term of the Loan, Borrowers shall deposit (the "FF&E FUNDS")
with Lender an amount equal to (X) four percent (4.0%) of one-twelfth (1/12th)
of annual Projected Operating Revenue for each Project for the immediately
preceding calendar month (provided, however, that if Project Operating Revenue
is for a period of less than twelve (12) months, the monthly payment shall be
adjusted to reflect the shorter period) plus (Y) net proceeds from the sale or
other disposition of FF&E during the immediately preceding calendar quarter (or
shorter period) plus (Z) net insurance proceeds and other recoveries resulting
from the loss of or damage to FF&E during the immediately preceding calendar
quarter (or shorter period), except to the extent such net proceeds of sale or
insurance or other recoveries are not immediately used to purchase or reimburse
a Borrower for replacement FF&E. If Projected Operating Revenue for a Project
changes by reason of a change in the Operating Budget for such Project, then the
amount of the monthly FF&E Funds will be adjusted effective as of the first day
of the next month. Absent a default hereunder or under any of the other Loan
Documents, on the first day of each fiscal year during the term of the Loan,
Borrowers shall be entitled to a credit toward subsequent FF&E Funds in the
amount of any over deposits made by Borrowers in respect of the FF&E Funds
during the immediately preceding fiscal year, based on the actual Operating
Revenue for such immediately preceding fiscal year. The FF&E Funds may be
commingled with the

                                      -12-
<PAGE>

general funds of Lender and shall not be deemed to be held in trust for the
benefit of Borrowers. The undisbursed amount of the FF&E Funds is hereinafter
referred to as the "FF&E RESERVE". From time to time, Borrowers may request
Lender to disburse portions of the FF&E Reserve for the purpose of acquiring,
repairing or replacing FF&E and for other capital improvements. In no event
shall the FF&E Reserve be used to fund any Renovation Work. Disbursements of the
FF&E Reserve shall be subject to the following: (i) no default under this
Agreement or any of the other Loan Documents shall have occurred and be
continuing; (ii) each request for disbursement shall be in writing and delivered
at least fifteen (15) business days prior to the date of any such disbursement;
(iii) not more than one (1) disbursement shall be made during any calendar month
nor shall any request be for an amount less than Twenty-Five Thousand and No/100
Dollars ($25,000); (iv) each disbursement request shall be accompanied by such
invoices, bills of sale, cancelled checks, sworn contractor's statements and
lien waivers, as applicable, and such other evidence as Lender may request in
order to confirm the amount and purpose of each such expenditure or
reimbursement included in such disbursement request; and (v) each disbursement
will be used solely for the acquisition of FF&E or other capital expenditures
approved by Lender or contained in the Capital Budget portion of the Annual
Budget. If an Event of Default occurs, Lender shall have the right to apply all
or any portion of the FF&E Reserve to the obligations evidenced by the Loan
Documents in such order as Lender in its sole discretion determines.

            (o)   Principal Net Worth/Letter of Credit.

                  (i)   At all times prior to the date on which all principal,
      interest, costs and expenses under the Loan Documents have been paid in
      full, the net worth of Principal, calculated in accordance with the
      methodology used to prepare Principal's certified financial statements,
      Principal's net worth shall be equal to or greater than $40,000,000
      ("MINIMUM NET WORTH").

                  (ii)  If Lender determines or Borrower otherwise obtains
      notice that Principal's net worth is less than the Minimum Net Worth,
      Borrower shall deliver to Lender within sixty (60) days after Borrower
      obtains such notice or receives such determination of an irrevocable
      standby letter of credit (as amended, renewed or replaced from time to
      time, the "LETTER OF CREDIT"), in form and substance acceptable to Lender,
      in the face amount of Three Million and No/100 Dollars ($3,000,000.00) The
      Letter of Credit shall: (a) be unconditional and non-documentary (meaning
      free of any conditions whatsoever); (b) be payable in whole or in part up
      to its face amount upon presentation of Lender's sight draft only; (c) be
      issued by a bank with a credit rating by Moody's or Standard & Poor's of A
      or better; and (d) have a term expiring no sooner than one (1) year after
      its issuance or thirty (30) days after maturity, whichever is sooner.

                  The Letter of Credit shall be continuously renewed for periods
      of twelve (12) months, at least thirty (30) days prior to each expiration
      or renewal date, until such time as the Loan has been paid in full. In the
      event the issuer's credit rating by Moody's or Standard & Poor's falls
      below A, Borrower shall, upon Lender's request, provide Lender with a new
      Letter of Credit meeting all of the terms and

                                      -13-
<PAGE>

      conditions of this section within thirty (30) days of such request. If the
      net worth of Principal (calculated pursuant to Section 4.1(o)(i) above)
      shall equal or exceed the Minimum Net Worth at any time after Borrowers
      have delivered the Letter of Credit to Lender as set forth above, and
      provided no default then exists hereunder or under any of the other Loan
      Documents, Lender shall return the Letter of Credit to Borrowers, provided
      that the requirements of this Section 4.1(o) shall remain effective.

                  The Lender shall be entitled to draw on the Letter of Credit:
      (i) upon the occurrence of any uncured default under the Loan Documents;
      (ii) if any Letter of Credit is not renewed or extended at least thirty
      (30) days at all times prior to its then current expiration or renewal
      date; or (iii) if Borrower fails to provide a replacement Letter of Credit
      within thirty (30) days after Lender's request concerning a change in the
      net worth or financial condition of the issuing bank. Letter of Credit
      proceeds shall be applied by Lender to principal, interest, fees, charges,
      costs, expenses and other indebtedness and obligations under the Loan
      Documents in such manner as Lender may elect, in its sole discretion.
      Lender shall have no obligation to notify Borrower of any draw on the
      Letter of Credit.

                  Upon the failure of Borrower to deliver the Letter of Credit,
      the Interest Rate shall equal the Increased Interest Rate pursuant to the
      terms of Section 2.7 and shall continue at such Increased Interest Rate
      until such time as the Letter of Credit is delivered to Lender as
      aforesaid.

4.2   OTHER BORROWER COVENANTS.

            Borrowers further covenant and agree as follows:

            (a)   Loan Closing. All conditions precedent to the closing of the
Loan shall be complied with on or prior to the Closing Date. If such conditions
are not complied with as of the Closing Date, Lender may terminate Lender's
obligation to fund the Loan by written notice to Borrowers.

            (b)   Prohibition of Assignments and Transfers by Borrower.

                  (i)   Generally. No Borrower shall assign or attempt to assign
      its rights under this Agreement and any purported assignment shall be
      void. Without the prior written consent of Lender, in Lender's sole
      discretion, Borrowers shall not suffer or permit (a) any change in the
      Manager of any Project, (b) any assignment of any of a Borrower's interest
      in the applicable Project or (c) any assignment of any Project Lease. In
      addition Lender may, at Lender's option, declare the Loan to be
      immediately due and payable and may invoke any remedies permitted by the
      Loan Documents if Archie Bennett and/or Monty Bennett fails to continue to
      Control (through Control of the

                                      -14-
<PAGE>

      Manager) the management and operation of the Projects and Borrowers have
      not, within sixty (60) days after such change or loss of Control of the
      Manager, employed a substitute Manager or person(s) who will control
      Manager which or who is/are satisfactory to and approved by Lender.

                  (ii)  Transfers Prohibited by ERISA. In addition to the
      prohibitions set forth in Section 4.2(b)(i), above, no Borrower shall
      engage in or permit a Transfer that would constitute or result in the
      occurrence of one or more non-exempt prohibited transactions under ERISA
      or the Internal Revenue Code. Borrowers agree to unwind any such Transfer
      upon notice from Lender or, at Lender's option, to assist Lender in
      obtaining such prohibited transaction exemption(s) from the United States
      Pension and Welfare Benefits Administration with respect to such Transfer
      as are necessary to remedy such prohibited transactions. In addition to
      its general obligation to indemnify Lender under Section 4.2(j), Borrowers
      shall reimburse Lender for any Expenses incurred by Lender to obtain any
      such prohibited transaction exemptions. Borrowers' obligations under this
      Section 4.2(b)(ii) shall survive the expiration of this Agreement and the
      other Loan Documents.

            (c)   Mechanics' Liens and Contest Thereof. Borrowers will not
suffer or permit any mechanics' lien claims to be filed or otherwise asserted
against any Project and will promptly discharge the same in case of the filing
of any claims for lien or proceedings for the enforcement thereof, provided,
however, that Borrowers shall have the right to contest in good faith and with
reasonable diligence the validity of any such lien or claim provided that
Borrowers notify Lender of their desire to do so in writing and posts a
statutory lien bond that removes such lien from title to the applicable Project
within twenty (20) days of the earlier of written notice by Borrowers to Lender
of the existence of such lien or written notice by Lender to Borrowers of the
existence of the lien. Lender will not be required to make any further
disbursements of the proceeds of the Loan until any mechanics' lien claims have
been removed and Lender may, at its option, restrict disbursements to reserve
sufficient sums to pay 150% of the lien. In the event Borrowers shall fail to
discharge any such lien or fails to prosecute such contest as set forth above,
Lender may, at its election in its sole discretion, cause such lien to be
satisfied and released or otherwise provide security to the Title Insurer to
indemnify over such lien, and any amounts so expended by Lender, including
premiums paid or security furnished in connection with the issuance of any
surety company bonds, shall be deemed to constitute disbursement of the proceeds
of the Loan hereunder. In settling, compromising or discharging any claims for
lien, Lender shall not be required to inquire into the validity or amount of any
such claim.

            (d)   Renewal of Insurance. Borrowers shall timely pay all premiums
on all insurance policies to assure that at all times Borrowers have in effect
insurance as required pursuant to the Insurance Requirements, and as and when
additional insurance is required, from time to time, and as and when any
policies of insurance may expire, furnish to Lender, premiums prepaid,
additional and renewal insurance policies with companies, coverage and in
amounts satisfactory to Lender. "INSURANCE REQUIREMENTS" shall mean the
requirements described on Exhibit E attached hereto. No Borrower shall bring or
keep any article on any Project or cause or allow any condition to exist on it,
if that could invalidate or would be prohibited by any insurance

                                      -15-
<PAGE>

coverage required to be maintained by such Borrower on such Project. If
Borrowers have not provided Lender with appropriate evidence of the insurance
coverage required by this Agreement, Lender may purchase insurance at Borrowers'
expense to protect Lender's interests in the Projects and to maintain the
insurance required by this Agreement, provided that if Borrowers have not
delivered any renewal insurance policy required by the terms hereof on or before
the day which is thirty (30) days prior to the expiration of such policy, Lender
shall provide Borrowers with written notice of such failure and if Borrowers
have not delivered such evidence of insurance coverage or renewal insurance
policy as required by the terms hereof on or before the date which is ten (10)
business days prior to the expiration of such insurance policy, Lender may
purchase such insurance as aforesaid. Prior to purchasing any such insurance,
Lender will use its good faith efforts to provide notice to Borrowers of its
intention to do so; provided, however, that Lender's failure to provide such
notice shall not affect Borrowers' responsibility for the expense of such
insurance purchased by Lender. This insurance may, but need not, protect
Borrowers' interests. The coverage purchased by Lender may not pay any claim
made by Borrowers or any claim that is made against Borrowers in connection with
a Project or any required insurance policy. Borrowers may later cancel any
insurance purchased by Lender, but only after providing Lender with appropriate
evidence that Borrowers have obtained insurance as required by this Agreement.
If Lender purchases insurance for any Project or insurance otherwise required by
this Agreement, Borrowers will be responsible for the costs of that insurance
and other charges imposed by Lender in connection with the placement of the
insurance until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Indebtedness effective
as of the date Lender purchases such insurance and such costs may be more than
the cost of insurance Borrowers are able to obtain on their own. The effective
date of coverage may be the date the prior coverage lapsed or the date on which
Borrowers failed to provide Lender proof of coverage.

            (e)   Payment of Taxes. Borrowers shall, subject to the terms of
Section 4.2(f) below, pay all real estate taxes and assessments and charges of
every kind upon the Projects before the same become delinquent, provided,
however, that Borrowers shall have the right to pay such tax under protest or to
otherwise contest any such tax or assessment, but only if (i) such contest has
the effect of preventing the collection of such taxes so contested and also of
preventing the sale or forfeiture of such Project or any part thereof or any
interest therein, (ii) Borrowers have notified Lender of Borrower's intent to
contest such taxes, and (iii) the amounts deposited with Lender in respect of
taxes, assessments and other similar charges levied against the applicable
Project or Projects pursuant to Section 4.2(f) below, together with such
additional cash or other security satisfactory to Lender is sufficient to cover
the amount of such tax, assessment or charge being contested plus any interest
or penalty thereon. If Borrowers fail to commence such contest or, having
commenced to contest the same, and having deposited such security required by
Lender for its full amount, shall thereafter fail to prosecute such contest in
good faith or with due diligence, or, upon adverse conclusion of any such
contest, shall fail to pay such tax, assessment or charge, Lender may, at its
election (but shall not be required to), pay and discharge any such tax,
assessment or charge, and any interest or penalty thereon, and any amounts so
expended by Lender in excess of amounts on deposit with Lender hereunder in
respect of such tax, assessment or charge shall be deemed to constitute
disbursements of the Loan proceeds hereunder (even if the total amount of
disbursements would exceed the

                                      -16-
<PAGE>

face amount of the Note). Borrowers shall, unless Lender has paid such taxes
directly on Borrower's behalf, furnish to Lender evidence that taxes are paid at
least five business (5) days prior to the last date for payment of such taxes
and before imposition of any penalty or accrual of interest.

            (f)   Funds for Insurance and Taxes. Borrowers shall pay to Lender,
at the time of and in addition to the monthly installments of principal and/or
interest due under the Note, a sum equal to 1/12 of the amount estimated by
Lender to be sufficient to enable Lender to pay at least sixty (60) days before
they become due and payable, all taxes, assessments and other similar charges
levied against the Projects and all insurance premiums relating to Borrowers and
the Projects as determined by Lender (the "PROPERTY TAX AND INSURANCE DEPOSIT").
So long as no Event of Default exists hereunder and provided that Borrowers
shall have delivered to Lender a copy of the tax bill or insurance premium bill,
as the case may be, and sufficient funds on deposit from Borrowers for the
purpose of paying such tax bill and/or insurance premium bill, Lender shall
apply the sums to pay such real estate tax items and/or insurance premiums, as
the case may be. These sums will be held by a depository institution insured by
the Federal Deposit Insurance Corporation (which institution may be an Affiliate
of Lender), may be commingled with the general funds of Lender at such
institution and shall not be deemed to be held in trust for the benefit of
Borrowers. If such amount on deposit with Lender is insufficient to fully pay
such tax items and/or insurance premiums, as the case may be, Borrowers shall,
within ten (10) days following notice at any time from Lender, deposit such
additional sum as may be required for the full payment of such tax items and/or
insurance premiums, as the case may be. Borrowers hereby grant Lender a first
priority security interest in such funds, including all interest accruing
thereon, and all such funds are pledged as additional collateral for the Loan
and Borrowers shall execute any other documents and take any other actions
necessary to provide Lender with such a perfected security interest in such
funds. Upon the Maturity Date or at any time following an Event of Default, the
moneys then remaining on deposit with Lender or its agent shall, at Lender's
option, be applied against the Indebtedness. The obligation of Borrowers to pay
such tax items and/or insurance premiums is not affected or modified by the
provisions of this paragraph.

            (g)   Personal Property. Except to the extent permitted in Section
4.2(l), all of each Borrower's FF&E shall be kept free and clear of all liens,
encumbrances and security interests. No Borrower shall (nor shall it permit
Project Lessee to), without the prior written consent of Lender, sell, assign,
transfer, encumber, remove or permit to be removed from any Project any of FF&E,
except in accordance with the provisions of Section 4.1(o). So long as no Event
of Default has occurred and is continuing, Borrowers may sell or otherwise
dispose of the FF&E when obsolete, worn out, inadequate, unserviceable or
unnecessary for use in the operation of the Project, but only upon replacing the
same with other FF&E at least equal in value and utility to the disposed FF&E in
accordance with the provisions of Section 4.1(o). No Borrower shall permit
Project Lessee to own any FF&E, except that Project Lessee may acquire FF&E if
acquisition of such FF&E by a Borrower for purposes of the Project Lease is
incidental to repairs and replacements of existing FF&E, provided that in no
event will the aggregate value of FF&E owned by Project Lessee at any time
exceed

                                      -17-
<PAGE>

$20,000 on a Project-by-Project basis. Upon the request of Lender, Borrowers
will cause Project Lessee to confirm compliance with the foregoing covenant.

            (h)   Appraisals. Lender shall have the right to obtain a new or
updated Appraisal of each Project from time to time. Borrowers shall cooperate
with Lender in this regard. If the Appraisal is obtained to comply with this
Agreement or any applicable law or regulatory requirement, or bank policy
promulgated to comply therewith, or if an Event of Default exists, Borrowers
shall pay for any such Appraisal upon Lender's request.

            (i)   Loss of Note or other Loan Documents. Upon notice from Lender
of the loss, theft, or destruction of the Note and upon receipt of an affidavit
of lost note and an indemnity reasonably satisfactory to Borrowers from Lender,
or in the case of mutilation of the Note, upon surrender of the mutilated Note,
Borrowers shall make and deliver a new note of like tenor in lieu of the then to
be superseded Note. If any of the other Loan Documents were lost or mutilated,
Borrowers agree to execute and deliver replacement Loan Documents in the same
form of such Loan Document(s) that were lost or mutilated.

            (j)   Publicity. Lender reserves the right to publicize the making
of the Loan and, in such publicity, may include a brief description of the
Projects and the Loan.

            (k)   Indemnification. Borrowers shall indemnify Lender, including
each party owning an interest in the Loan and their respective successors,
assigns, officers, directors, employees and consultants (each, an "INDEMNIFIED
PARTY") and defend and hold each Indemnified Party harmless from and against all
claims, injury, damage, liability, criminal and civil penalties, excise taxes
and Expenses of any and every kind to any persons or property by reason of (i)
the operation or maintenance of the Projects; (ii) any breach of representation
or warranty, default or Event of Default hereunder or under any of the other
Loan Documents; or (iii) any other matter arising in connection with the Loan,
Borrowers, or Principal, Project Lessee, Manager, any Commercial Lease or any
Tenant, or any Project. No Indemnified Party shall be entitled to be indemnified
against its own gross negligence or willful misconduct. Upon written request by
an Indemnified Party, Borrowers will undertake, at their own cost and expense,
on behalf of such Indemnified Party, using counsel reasonably satisfactory to
the Indemnified Party, the defense of any legal action or proceeding whether or
not such Indemnified Party shall be a party and for which such Indemnified Party
is entitled to be indemnified pursuant to this section. At Lender's option,
Lender may, at Borrowers' expense, prosecute or defend any action involving the
priority, validity or enforceability of any of the Loan Documents.

            (l)   No Additional Debt or Encumbrances. Except for the Loan, no
Borrower shall incur any indebtedness (whether personal or nonrecourse, secured
or unsecured) including without limitation, for borrowed money, liabilities
under guaranties, or reimbursement obligations or as lessee under capital or
operating leases other than (i) payables for goods and services in the ordinary
course of business, provided that payables for goods or services in excess of
One Hundred Fifty Thousand and No/100 Dollars ($150,000.00) in the aggregate at
any time which are more than thirty (30) days past due or not paid within ninety
(90) days after invoice (regardless of when due) shall be deemed to be

                                      -18-
<PAGE>

additional indebtedness for borrowed money, provided that Borrowers shall be
entitled to written notice and a thirty (30) day cure period therefrom with
respect to a default under this subsection 4.2(l)(i) and (ii) up to Two Hundred
Fifty Thousand and No/100 Dollars ($250,000.00) of additional indebtedness
(i.e., indebtedness in excess of the Loan amount and the amount described in
clause (i)) for purchase money indebtedness, capital leases or operating leases
(such amount to be determined in the case of operating leases on the basis of
what the book value of the property subject to each such operating lease would
be if such property had been purchased on the commencement date of such lease).
Capital or operating leases of any items of FF&E shall be deemed to be
additional indebtedness for borrowed money and shall require Lender's prior
written consent unless such lease would not require Lender's consent under
clause (ii) above or such lease is a renewal or replacement of a lease described
on Exhibit D or the items leased are replacements for any of the items subject
to a lease described on Exhibit D. Borrowers shall not permit there to be any
other encumbrances against any Project. No Borrower shall default on the payment
of any indebtedness that is not cured within the time, if any, specified
therefor in any agreement governing the same.

            (m)   Organizational Documents. No Borrower shall, without the prior
written consent of Lender, permit or suffer (i) a material amendment or
modification of its Organizational Documents or the organizational documents of
any constituent entity within such Borrower, (ii) the admission of any new
member, partner or shareholder, (iii) any dissolution or termination of its
existence, or (iv) change in its state of formation or its name.

            (n)   Single Purpose Entity. Each Borrower at all times shall remain
a Single Purpose Entity until after the Indebtedness has been repaid in full.

            (o)   Furnishing Reports. Upon Lender's request, Borrowers shall
provide Lender with copies of all inspections, reports, test results and other
information received by any Borrower, which in any way relate to any Project or
any part thereof.

            (p)   Affiliate Transactions. Prior to entering into any agreement
with an Affiliate pertaining to any Project, Borrowers shall deliver to Lender a
copy of such agreement, which shall be satisfactory to Lender in its sole
discretion. If requested by Lender, such agreement shall provide Lender the
right to terminate it upon Lender's (or its designee's) taking possession of the
applicable Project or acquisition of the applicable Project through foreclosure,
a deed in lieu of foreclosure, UCC sale or otherwise.

            (q)   Site Visits, Observation and Testing. Lender and its agents
and representatives shall have the right at any reasonable time to enter and
visit each Project for the purpose of performing appraisals, observing such
Project, inspecting the progress of the Project Renovation Work, taking and
removing soil or groundwater samples, and conducting tests on any part of any
Project. Lender has no duty, however, to visit or observe any Project or to
conduct tests, and no site visit, observation or testing by Lender, its agents
or representatives shall impose any liability on any of Lender, its agents or
representatives. No Borrower or any other party is entitled to rely on any site
visit, observation or testing by any of Lender, its agents or representatives.
Neither Lender, its agents nor representatives owe any duty of care to protect
any Borrower or any other party against, or to inform Borrowers

                                      -19-
<PAGE>

or any other party of any other adverse condition affecting any Project. Lender
shall give Borrower reasonable notice before entering a Project. Lender shall
make reasonable efforts to avoid interfering with any Borrower's use of a
Project in exercising any rights provided in this Section 4.2(q).

            (r)   Compliance With Anti-Terrorism Orders. No Borrower will permit
the transfer of any interest in such Borrower to any person or entity who is
listed on the specially Designated Nationals and Blocked Persons List maintained
by the Office of Foreign Asset Control, Department of the Treasury pursuant to
Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other
list of terrorists or terrorist organizations maintained pursuant to any of the
rules and regulations of the Office of Foreign Asset Control, Department of the
Treasury or pursuant to any other applicable Executive Orders (such lists are
collectively referred to as the "OFAC LISTS"). No Borrower will knowingly enter
into a Commercial Lease with any party who is listed on the OFAC Lists.
Borrowers shall immediately notify Lender if any Borrower has knowledge that
Principal or any member or beneficial owner of any Borrower or Principal is
listed on the OFAC Lists or (A) is indicted on or (B) arraigned and held over on
charges involving money laundering or predicate crimes to money laundering.
Borrowers shall immediately notify Lender if any Borrower knows that any Tenant
is listed on the OFAC Lists or (A) is convicted on, (B) pleads nolo contendere
to, (C) is indicted on or (D) is arraigned and held over on charges involving
money laundering or predicate crimes to money laundering.

            (s)   Notice of Change. Borrowers shall give Lender prior written
notice of any change in: (i) its chief executive office; (ii) the location of
any FF&E, including any Borrower's books and records; and (iii) any Borrower's
or Principal's name or business structure. Unless otherwise approved by Lender
in writing, all FF&E (other than the books and records) will be located at the
applicable Project and all books and records will be located at Principal's
chief executive office.

            (t)   No Use of Merrill Lynch Name. No Borrower shall, without
Lender's prior written consent (which consent shall be exercised in Lender's
sole discretion), directly or indirectly publish, disclose or otherwise use in
any advertising or promotional material, or press release or interview, the
name, logo or any trademark of Lender, Merrill Lynch & Co., Inc. or any of their
affiliates.

            (u)   Bank Accounts; Notices to Account Debtors; Agreements with
Credit Card Issuers. Each Borrower will, and will cause Project Lessee and
Manager to, cause all Gross Revenue to be deposited into an account or accounts
subject to a bank agency or blocked account agreement in form satisfactory to
Lender pursuant to Section 7 of the Lessee Security Agreement (each such
account, a "DEPOSITORY ACCOUNT"). Borrowers and Manager shall give irrevocable
notices to all current and future Credit Card Issuers or any other account
debtors doing business with any Borrower or any Project who pay any Borrower (or
Project Lessee or Manager with respect to a Project) by direct deposit or wire
transfer to make or wire payments to a Depository Account. Borrowers shall
deliver to Lender, in form acceptable to Lender, an undated letter of direction
to each current and future Credit Card Issuer and each current and future
commercial tenant of any Project pursuant to which each

                                      -20-
<PAGE>

such Credit Card Issuer or commercial tenant (as applicable) agrees that all
payments by such Credit Card Issuer or commercial tenant (as applicable) will be
made directly to a depository account designated by Lender. Upon the occurrence
of an Event of Default, Lender shall have the right to date and deliver such
letters of direction.

            (v)   Project Construction Documents. On or before January 31, 2004,
Borrowers shall have delivered to Lender and Lender shall have approved (i) a
final budget for the Project Renovation Work for each Project, each
substantially similar in form and substance to the applicable Preliminary
Project Holdback Budget (each, a "PROJECT HOLDBACK BUDGET"), (ii) a final
schedule for completion of the Project Renovation Work for each Project, each
substantially similar in form and substance to the applicable Preliminary
Holdback Completion Schedule (each, a "HOLDBACK COMPLETION SCHEDULE") and (iii)
final construction documents (if any) for the Renovation Work for each Project,
including without limitation the final architect's agreement, general contract
and plans and specifications (in each case, the "PROJECT CONSTRUCTION
DOCUMENTS").

            (w)   Post Closing Covenants.

                  (i)   On or before January 31, 2004, Borrowers shall cause
      title to the Cadillac Deville Sedan 1997, VIN Number 1G6KD54Y1VV259626 to
      be transferred by the Secretary of State of Ohio from FelCor Lodging
      Limited Partnership to Ashford Columbus, LP and shall cause a copy of such
      vehicle title to be delivered to Lender;

                  (ii)  At all times following the Closing Date, Borrowers shall
      use commercially reasonable efforts to cause the following items to be
      unconditionally released of record (and shall concurrently with any such
      release provide Lender with evidence thereof);

                        (A)   UCC-1 Financing Statement by and between PH
            Management Company, as Debtor and Doubletree Partners, a Delaware
            limited partnership ("DOUBLETREE"), as secured party, recorded
            September 10, 1999, as Financing Statement number 0438112/011572
            Official Records Volume 04383, Page I-14 as Instrument number
            199504100011547, and continuation statement recorded February 28,
            2000, in Instrument Number 20002280038972, Recorder's Office,
            Franklin County, Ohio;

                        (B)   Amended and Restated Memorandum of Agreement by
            and between Columbus/Front, Ltd., an Ohio limited partnership and
            Doubletree dated April 28, 1995, and recorded June 19, 1995, in
            Official Records Volume 29279, page A-12, Recorder's Office,
            Franklin County, Ohio; and

                        (C)   Those certain easement rights reserved by the City
            of Columbus to operate and maintain any and all sewers, waterlines
            and any

                                      -21-
<PAGE>

            other public utilities owned by the City of Columbus and any other
            public utilities existing on or in the alley vacated by Ordinance
            No. 15-81, together with the right of entry at any time for the
            purpose of constructing, installing, replacing, operating and
            maintaining same;

                  (iii) On or before February 23, 2004 (or, if any item in (a),
      (b) or (c) below is not capable of being satisfied on or before February
      23, 2004 and Borrowers are diligently pursuing satisfaction of each such
      item, then on or before March 31, 2004), Borrowers shall cause (a) the
      monitoring well referenced in the Phoenix Report (and installed at the
      Phoenix, Arizona Project by ATC Associates in 1995) to be properly
      abandoned in accordance with applicable Law, (b) the drywells referenced
      in the Phoenix Report (and located at the Phoenix, Arizona Project) to be
      properly registered with the State of Arizona in accordance with
      applicable Law (and Borrowers shall obtain all other permits or
      authorizations with respect to such drywells required thereunder) and (c)
      the diesel drum referenced in the Columbus Report (and located at the
      Columbus, Ohio Project) to be outfitted with secondary containment and
      equipped with overfill and spill protection, each as required by
      applicable Law. Compliance with the terms of this Subsection 4.2(w)(iii)
      shall be subject to confirmation and reasonable approval by Lender and
      Lender's independent environmental consultant; and

                  (iv)  On or before January 31, 2004, Borrowers shall (i) cause
      not less than nine (9) parking spaces to be striped in the area designated
      as "Proposed Spaces, None Striped at Time of Survey" on that certain
      ALTA/ACSM Land Title Survey, Job No. 03-082, dated December 18, 2003,
      prepared by Northland Exploration Surveys, Inc. (the "SURVEY") and (ii)
      cause an updated Survey showing such striped spaces to be delivered to
      Lender.

4.3   AUTHORIZED REPRESENTATIVE.

            Borrowers hereby appoint David A. Brooks as its "AUTHORIZED
REPRESENTATIVE" for purposes of dealing with Lender on behalf of Borrowers in
respect of any and all matters in connection with this Agreement, the other Loan
Documents, and the Loan. Subject to the terms of Section 4.2(b) above
(concerning transfers), the Authorized Representative shall have the power, in
his discretion, to give and receive all notices, monies, approvals, and other
documents and instruments, and to take any other action on behalf of Borrowers.
All actions by the Authorized Representative shall be final and binding on
Borrowers. Lender may rely on the authority given to the Authorized
Representative until actual receipt by Lender of a duly authorized resolution
substituting a different person as the Authorized Representative. No more than
one person shall serve as Authorized Representative at any given time.

                                    ARTICLE 5
                    BORROWER'S REPRESENTATIONS AND WARRANTIES

5.1   BORROWER'S REPRESENTATIONS AND WARRANTIES.

            To induce Lender to execute this Agreement and perform its
obligations hereunder, Borrowers hereby represent and warrant to Lender as
follows:

                                      -22-
<PAGE>

            (a)   Each Borrower lawfully possesses and holds fee simple title to
or, as applicable, lawfully possesses and holds a leasehold interest in the
applicable Project, free and clear of all liens, claims, encumbrances,
covenants, conditions and restrictions, security interest and claims of others,
except only the Permitted Exceptions. Each Borrower is a Single Purpose Entity
and has never conducted any business in any manner other than ownership and
operation of the applicable Project.

            (b)   Except as set forth in Exhibit C, there is no litigation or
proceedings pending, or to the best of Borrower's knowledge threatened, against
any Project, any Borrower, Project Lessee or Principal, which could, if
adversely determined, cause a Material Adverse Change with respect to such
Borrower, Project Lessee, Principal or such Project. There are no Environmental
Proceedings and no Borrower has any knowledge of any threatened Environmental
Proceedings or any facts or circumstances which may give rise to any future
Environmental Proceedings.

            (c)   Each Borrower is a duly limited partnership, duly formed,
validly existing and in good standing under the laws of the State of Delaware
with its principal place of business at 14180 Dallas Parkway, Suite 900, Dallas,
Texas 75240-4376. Borrower is in good standing under and authorized to transact
business in the State where the Project owned by such Borrower is located. Each
Borrower has full power and authority to execute, deliver and perform all Loan
Documents to which such Borrower is a party, and such execution, delivery and
performance have been duly authorized by all requisite action on the part of
such Borrower. The Loan Documents have each been duly executed and delivered and
each constitutes the duly authorized, valid and legally binding obligation of
Borrowers and the Principal, as the case may be, enforceable against Borrower
and the Principal, as the case may be, in accordance with their respective
terms. No Borrower uses a trade name other than its actual name(s) set forth
herein.

            (d)   General Partner is a limited liability company duly organized
or formed, validly existing and in good standing under the laws of the State of
Delaware with its principal place of business at 14180 Dallas Parkway, Suite
900, Dallas, Texas 75240-4376. General Partner is the sole general partner of
Borrower and owns one hundredth of one percent (0.01%) of the partnership
interests in each Borrower free and clear of all liens, claims, encumbrances and
rights of others. General Partner has full right, power and authority to execute
the Loan Documents on its own behalf and on behalf of each Borrower. Principal
is the sole member of General Partner. Principal is the sole limited partner of
such Borrower and owns ninety-nine and nine tenths percent (99.9%) of the
partnership interests in each Borrower. The direct and indirect ownership of
Borrowers, Project Lessee and Principal are accurately reflected on Exhibit I.

            (e)   A true and complete copy of the certificate of limited
partnership and partnership agreement creating each Borrower, and all other
documents creating and governing each Borrower and any and all amendments
thereto (collectively, the "ORGANIZATIONAL DOCUMENTS") has been furnished to
Lender. There are no other agreements, oral or written, among any of the
partners of any Borrower relating to such Borrower. The Organizational Documents
were duly executed and delivered, are in full force and effect, and

                                      -23-
<PAGE>

binding upon and enforceable in accordance with their terms. The Organizational
Documents constitute the entire understanding among the partners of such
Borrower. No breach exists under the Organizational Documents and no act has
occurred and no condition exists which, with the giving of notice or the passage
of time would constitute a breach under the Organizational Documents.

            (f)   No consent, approval or authorization of or declaration,
registration or filing with any Governmental Authority or nongovernmental person
or entity, including any creditor, partner, or member of any Borrower, General
Partner or Principal, is required in connection with the execution, delivery and
performance of this Agreement or any of the other Loan Documents other than the
recordation of the Mortgages and the filing of UCC Financing Statements, except
for such consents, approvals or authorizations of or declarations or filings
with any Governmental Authority or non-governmental person or entity where the
failure to so obtain would not have an adverse effect on any Borrower or
Principal or which have been obtained as of any date on which this
representation is made or remade. None of Borrower, any partner in any Borrower,
Project Lessee or Principal is insolvent and there has been no: (i) assignment
made for the benefit of the creditors of any of them; (ii) appointment of a
receiver for any of them or for the property of any of them; or (iii)
bankruptcy, reorganization, or liquidation proceeding instituted by or against
any of them.

            (g)   There is no default under this Agreement or the other Loan
Documents, nor any condition, which, after notice or the passage of time or
both, would constitute a default or an Event of Default under, said documents.
In addition, no Borrower is in default under any contract, agreement or
commitment to which it is a party. The execution, delivery and compliance with
the terms and provisions of this Agreement and the other Loan Documents will not
(i) to the best of Borrowers' knowledge, violate any provisions of law or any
applicable regulation, order or other decree of any court or governmental
entity, or (ii) conflict or be inconsistent with, or result in any default
under, any contract, agreement or commitment to which any Borrower is bound.
Borrowers have delivered to Lender copies of any agreements (including the
Project Leases) between any Borrower and any Affiliate related in any way to any
Project and any other agreements or documents materially affecting the use and
operation of any Project or the Renovation Work.

            (h)   To the best of each Borrower's and Principal's knowledge, (1)
no condemnation of any portion of any Project, (2) no condemnation or relocation
of any roadways abutting any Project, and (3) no proceeding to deny access to
any Project from any point or planned point of access to such Project, has
commenced or is contemplated by any Governmental Authority.

            (i)   The use of each Project as an Embassy Suites or, as
applicable, a Doubletree Guest Suites or a Hilton Garden Inn hotel and the
contemplated accessory uses do not violate (i) any Laws (including subdivision,
zoning, building, environmental protection and wetland protection Laws), or (ii)
any building permits, covenants, conditions and restrictions of record, or
agreements affecting the applicable Project or any part thereof. Neither the
zoning authorizations, subdivision approvals or variances nor any other right to

                                      -24-
<PAGE>

construct or to use the applicable Project is to any extent dependent upon or
related to any real estate other than the land, leasehold or air rights owned by
a Borrower and, as applicable, occupied by such Project. No building or other
improvement encroaches upon any property line, building line, set back line,
side yard line or any recorded or visible easement (or other easement of which
any Borrower is aware or has reason to believe may exist) with respect to a
Project, except as set forth on Exhibit L attached hereto. No Project is
situated in an area designated as having special flood hazards as defined by the
Flood Disaster Protection Act of 1973, as amended, or as a wetland by any
governmental entity having jurisdiction over such Project. All Governmental
Approvals required for the operation of the Projects have been obtained. All
Laws relating to the operation of the Projects have been complied with and all
permits and licenses (including, if applicable, temporary licenses or permits)
required for the Renovation Work and operation of each Project have been
obtained or, in the case of the Renovation Work, will be obtained before
commencement thereof, including a liquor license and, if applicable, an
innkeeper's license. Each Project is accessible through fully improved and
dedicated roads, accepted for maintenance and public use by public authority
having jurisdiction. Each Project has adequate water, gas and electrical supply,
storm and sanitary sewerage facilities, telephone facilities, other required
public utilities, fire and police protection, and means of access between such
Project and public highways; none of the foregoing will be foreseeably delayed
or impeded by virtue of any requirements under any applicable Laws. Each Project
includes all property and rights that may be reasonably necessary or desirable
to promote the present and any reasonable future beneficial uses and enjoyment
thereof. To the best of each Borrower's knowledge, there are no, nor are there
any alleged or asserted, violations of law, regulations, ordinances, codes,
permits, licenses, declarations, covenants, conditions or restrictions of
record, or other agreements relating to the Project, or the Renovation Work, or
any part thereof.

            (j)   No brokerage fees or commissions are payable by or to any
person in connection with this Agreement or the Loan to be disbursed hereunder.

            (k)   All financial statements and other documents and information
previously furnished by Borrowers or Principal to Lender in connection with the
Loan are true, complete and correct and fairly present on a consistent basis
with the financial conditions of the subjects thereof for the immediately prior
periods as of the respective dates thereof and do not fail to state any material
fact necessary to make such statements or information not misleading, and no
Material Adverse Change with respect to Borrower, Principal, General Partner,
Project Lessee or the Projects has occurred since the respective dates of such
statements and information. No Borrower or Principal has any material liability,
contingent or otherwise, not disclosed in such financial statements. Principal
has delivered collateral value statements prepared on a basis that is acceptable
to Lender and certified as true and correct by Principal.

            (l)   Each Project is taxed separately without regard to any other
property and for all purposes such Project may be mortgaged, conveyed and
otherwise dealt with as an independent parcel. There are no unpaid or
outstanding real estate or other taxes or assessments on or against any Project
or any part thereof, except general real estate taxes not

                                      -25-
<PAGE>

yet due or payable. To Borrowers' and Principal's knowledge, there is no pending
or contemplated action pursuant to which any special assessment may be levied
against any portion of the Project.

            (m)   Except for the Project Leases and the Commercial Lease
described on Exhibit D, Borrowers have not entered into any Commercial Leases,
subleases or other arrangements for occupancy of space within any Project that
are currently in effect other than agreements for the rental of guestrooms and
meeting/conference rooms in the ordinary course of business. Each of the Project
Leases are in full force and effect without material amendment, except for
material amendments approved by Lender. No Borrower or Project Lessee is in
default under any Commercial Lease. Borrowers have disclosed to Lender in
writing any material default by any Tenant under any Commercial Lease and no
notice of termination has been issued under any Commercial Lease.

            (n)   The proceeds of the Loan shall be used for proper business
purposes. The Loan is not being made for the purpose of purchasing or carrying
"margin stock" within the meaning of Regulation G, T, U or X issued by the Board
of Governors of the Federal Reserve System and no portion of the proceeds of the
Loan shall be used in any matter that would violate such Regulations or
otherwise violate the Securities Act of 1933 or the Securities Exchange Act of
1934, and each Borrower agrees to execute all instruments necessary to comply
with all the requirements of Regulation U of the Federal Reserve System.

            (o)   No Borrower is a party in interest to any plan defined or
regulated under ERISA, and no assets of Borrower are "plan assets" of any
employee benefit plan covered by ERISA or Section 4975 of the Internal Revenue
Code.

            (p)   No Borrower nor any partner in Borrower is or will be, and no
legal or beneficial interest of a partner in Borrower is or will be held,
directly or indirectly, by a "foreign corporation", "foreign partnership",
"foreign trust", "foreign estate", "foreign person", "affiliate" of a "foreign
person" or a "United States intermediary" of a "foreign person" within the
meaning of the Internal Revenue Code Sections 897, 1445 or 7701, the Foreign
Investments in Real Property Tax Act of 1980, the International Foreign
Investment Survey Act of 1976, the Agricultural Foreign Investment Disclosure
Act of 1978, or the regulations promulgated pursuant to such Acts or any
amendments to such Acts.

            (q)   Borrower and Principal have furnished Lender with a true and
complete copy of all Preliminary Project Construction Documents and (not later
than January 31, 2004) a true and complete copy of all Project Construction
Documents.

            (r)   Attached to this Agreement as Exhibit G is a true, correct and
complete schedule of (a) all FF&E not owned by any Borrower and (b) all FF&E (or
categories thereof) subject to a capital or operating lease. Except for the FF&E
shown on Exhibit G, Borrowers own all FF&E used in connection of the maintenance
or operations of the Projects.

                                      -26-
<PAGE>

            (s)   To the best of each Borrower's knowledge, there are no
strikes, boycotts, or labor disputes which could reasonably be anticipated to
have a material adverse effect on the operation of any Project.

            (t)   As of the Closing Date, credit cards accepted by Borrowers or
Manager are issued or processed only by the following entities: American
Express, MasterCard/Visa, Diner's Club and Discover (collectively, the "CREDIT
CARD ISSUERS").

            (u)   No Borrower has any employees.

            (v)   Except as set forth on Exhibit H, no Borrower has any interest
in any trademarks, copyrights, patents or other intellectual property with
respect to any Project.

            (w)   None of any Borrower, Principal, Project Lessee or General
Partner or any officer thereof is currently listed on the OFAC Lists.

            (x)   All statements set forth in the Recitals are true and correct.

            (y)   There has been no damage or destruction of any part of any
Project by fire or other casualty that has not been repaired. Except as part of
the Renovation Work or routine maintenance, there are presently no existing
defects in any Project and no repairs or alterations thereof are reasonably
necessary or appropriate.

            (z)   Each License Agreement is in full force and effect.

                  Borrowers agree that all of the representations and warranties
set forth above and elsewhere in this Agreement are true as of the date hereof,
will be true at the Closing Date and, except for matters which have been
disclosed by Borrowers and approved by Lender in writing, at all times
thereafter. It shall be a condition precedent to the Closing Date and each
subsequent disbursement, if any, that each of said representations and
warranties is true and correct as of the date of such requested disbursement.
Each disbursement of Loan proceeds shall be deemed to be a reaffirmation by
Borrowers that each of the representations and warranties is true and correct as
of the date of such disbursement. In addition, at Lender's request, Borrowers
shall reaffirm such representations and warranties in writing prior to each
disbursement hereunder.

                                    ARTICLE 6
                              ENVIRONMENTAL MATTERS

6.1   ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES.

            Each Environmental Indemnitor hereby represents and warrants to and
Lender that (i) except as specifically disclosed in the documents listed in
Exhibit F attached hereto (the "ENVIRONMENTAL DOCUMENTS"), to the best of
Environmental Indemnitor's actual knowledge, (a) each Project is in a clean,
safe and healthful condition and, except for materials used in the ordinary
course of maintenance and operation (and in compliance with all Laws) of such
Project, has been and is free of all Hazardous Material, and (b) no release

                                      -27-
<PAGE>

of any Hazardous Material has occurred on, onto or about any Project; (ii) that,
except as specifically disclosed in the Environmental Documents and except for
materials used in the ordinary course of maintenance and operation (and in
compliance with all Laws) of such Borrower's or any Tenant's business, no
Borrower or, to the best of Environmental Indemnitor's actual knowledge, any
other person or entity, has ever caused or permitted any Hazardous Material to
be placed, held, located or disposed of on, under, at or in a manner to affect
any Project, or any part thereof, and no Project has never been used (whether by
any Borrower or, to the best of Environmental Indemnitor's actual knowledge, by
any other person or entity) for any activities involving, directly or
indirectly, the use, generation, treatment, storage, transportation, or disposal
of any Hazardous Material; (iii) except as specifically disclosed in the
Environmental Documents, each Project currently complies, and will comply based
on its anticipated use, with all Laws relating to Hazardous Material; (iv) to
the best of Environmental Indemnitor's actual knowledge in connection with the
ownership, operation, and use of each Project, all necessary notices have been
filed and all required permits, licenses and other authorizations have been
obtained, including those relating to the generation, treatment, storage,
disposal or use of Hazardous Material; (v) to the best of Environmental
Indemnitor's actual knowledge, there is no present, past or threatened
investigation, inquiry or proceeding relating to the environmental condition of,
or to events on or about, any Project; (vi) no Project or any Borrower is
subject to any remedial obligations under any Laws relating to Hazardous
Material, health or the environment; (vii) there are no underground tanks,
vessels, or similar facilities for the storage, containment or accumulation of
Hazardous Materials of any sort on, under or affecting any Project; and (viii)
it has not, nor will it, release or waive the liability of any previous owner,
lessee or operator of any Project or any party who may be potentially
responsible for the presence of or removal of Hazardous Material from any
Project, nor has it made promises of indemnification regarding Hazardous
Material on any Project to any party, except as contained herein and in the Loan
Documents.

6.2   ENVIRONMENTAL COVENANTS.

            Environmental Indemnitors shall:

            (a)   comply, and cause all other persons on or occupying any
Project to comply, with all Laws relating to Hazardous Material;

            (b)   not install, use, generate, manufacture, store, treat, release
or dispose of, nor permit the installation, use, generation, storage, treatment,
release or disposal of, Hazardous Material on, under or about any Project,
except as specifically disclosed in the Environmental Documents and except for
materials used in the ordinary course of maintenance and operation (and in
compliance with all Laws) of a Borrower's or any Tenant's business;

            (c)   immediately advise Lender in writing of: (i) any and all
Environmental Proceedings; (ii) the presence of any Hazardous Material on, under
or about any Project of which Lender has not previously been advised in writing;
(iii) any remedial action taken by, or on behalf of, any Environmental
Indemnitor in response to any Hazardous Material on,

                                      -28-
<PAGE>

under or about any Project or to any Environmental Proceedings of which Lender
has not previously been advised in writing; (iv) the discovery by any
Environmental Indemnitor of the presence of any Hazardous Material on, under or
about any real property or bodies of water adjoining or in any way affecting any
Project; and (v) the discovery by any Environmental Indemnitor of any occurrence
or condition on any real property adjoining or in any way affecting any Project
that could cause such Project or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of such Project
under any Laws relating to Hazardous Material;

            (d)   provide Lender with copies of all reports, analyses, notices,
licenses, approvals, orders, correspondences or other written materials in its
possession or control relating to the environmental condition of each Project or
real property or bodies of water adjoining or in any way affecting each Project
or Environmental Proceedings immediately upon receipt, completion or delivery of
such materials;

            (e)   not install or allow to be installed any tanks on, at or under
the Project (other than above ground tanks used in the ordinary course of
operation and maintenance (and in compliance with all Laws) of Borrower's
business; provided that Borrower promptly provide Lender written notice of the
installation of any such tank);

            (f)   not create or permit to continue in existence any lien
(whether or not such lien has priority over the lien created by the Mortgage)
upon the Project imposed pursuant to any Laws relating to Hazardous Material;
and

            (g)   not change or alter the present use of any Project unless
Environmental Indemnitors shall have notified Lender thereof in writing and
Lender shall have determined, in its sole and absolute discretion, that such
change or modification will not result in the presence of Hazardous Material on
such Project in question in such a level that would increase the potential
liability for Environmental Proceedings.

6.3   RIGHT OF ENTRY AND DISCLOSURE OF ENVIRONMENTAL REPORTS.

            Each Borrower hereby grants to Lender its agents, employees,
consultants and contractors, an irrevocable license and authorization to enter
upon and inspect each Project at reasonable times and upon reasonable advance
notice, and conduct such environmental audits and tests, including, without
limitation, subsurface testing, soils and groundwater testing, and other tests
which may physically invade such Project, in its sole and absolute discretion,
determine are necessary or desirable. With respect to invasive testing, such as
soil borings, Lender shall consult with Borrowers in advance of such tests.
Lender agrees, however, that it shall not conduct any such audits or tests,
unless a default (and the expiration of all cure periods applicable thereto)
exists under the Loan Documents or Lender has reason to believe that such audit
or test may disclose the presence or release of Hazardous Material or unless an
environmental audit deems further testing necessary. Without limiting the
generality of the foregoing, Borrowers agree that Lender shall have the right to
appoint a receiver to enforce this right to enter and inspect the Projects to
the extent such authority is provided under applicable law. All reasonable
out-of-pocket costs and expenses incurred by

                                      -29-
<PAGE>

Lender in connection with any inspection, audit or testing conducted in
accordance with this Section 6.3 shall be paid by Borrowers. The results of all
investigations and reports prepared by Lender shall be and at all times remain
the property of Lender and under no circumstances shall Lender have any
obligation whatsoever to disclose or otherwise make available to Environmental
Indemnitors or any other party such results or any other information obtained by
it in connection with such investigations and reports; provided, however, that
if there exists no Event of Default under the Loan Documents, if requested by
Borrowers, Lender shall provide to Borrowers a copy of the written report with
respect to any inspection, audit or testing for which Borrowers have paid
hereunder. Lender hereby reserves the right, and Environmental Indemnitors
hereby expressly authorize Lender to make available to any party in connection
with a sale of any Project following the occurrence of an Event of Default, any
and all environmental reports, whether prepared by Lender or prepared by
Borrowers and provided to Lender (collectively, the "ENVIRONMENTAL REPORTS"),
which Lender may have with respect to the Projects. Each Borrower consents to
Lender notifying any party under such circumstances of the availability of any
or all of the Environmental Reports and the information contained therein. Each
Environmental Indemnitor further agrees that Lender may disclose such
Environmental Reports to any governmental agency or authority if it reasonably
believes that it is required to disclose any matter contained therein to such
agency or authority; provided that Lender shall give Borrowers at least five (5)
days' prior written notice before so doing. Each Environmental Indemnitor
acknowledges that Lender cannot control or otherwise assure the truthfulness or
accuracy of the Environmental Reports, and that the release of the Environmental
Reports, or any information contained therein, to prospective bidders at any
foreclosure sale of any Project may have a material and adverse effect upon the
amount, which a party may bid at such sale. Each Environmental Indemnitor agrees
that Lender shall not have any liability whatsoever as a result of delivering
any or all of the Environmental Reports or any information contained therein to
any third party in accordance with the terms hereof, and each Environmental
Indemnitor hereby releases and forever discharges Lender from any and all
claims, damages, or causes of action arising out of connected with or incidental
to the Environmental Reports or the delivery thereof in accordance with the
terms hereof.

6.4   ENVIRONMENTAL INDEMNITOR'S REMEDIAL WORK.

            Environmental Indemnitors shall promptly perform any and all
necessary remedial work ("REMEDIAL WORK") required by Law or regulations in
response to any Environmental Proceedings or the presence, storage, use,
disposal, transportation, discharge or release of any Hazardous Material on,
under or about any Project; provided, however, that Borrowers shall perform or
cause to be performed such Remedial Work so as to minimize any impairment to
Lender's security under the Loan Documents.

            All Remedial Work shall be conducted: (a) in a diligent and timely
fashion by licensed contractors acting under the supervision of a consulting
environmental engineer; (b) pursuant to a detailed written plan for the Remedial
Work approved by any public or private agencies or persons with a legal or
contractual right to such approval; (c) with such insurance coverage pertaining
to liabilities arising out of the Remedial Work as is then customarily
maintained with respect to such activities; and (d) only following receipt of
any required

                                      -30-
<PAGE>

permits, licenses or approvals. The selection of the Remedial Work contractors
and consulting environmental engineer, the contracts entered into with such
parties, any disclosures to or agreements with any public or private agencies or
parties relating to Remedial Work and the written plan for the Remedial Work
(and any changes thereto) shall each be subject to Lender's prior written
approval, which shall not be unreasonably withheld or delayed. In addition,
Environmental Indemnitors shall submit to Lender, promptly upon receipt or
preparation, copies of any and all reports, studies, analyses, correspondence,
governmental comments or approvals, proposed removal or other Remedial Work
contracts and similar information prepared or received by Environmental
Indemnitors in connection with any Remedial Work, or Hazardous Material relating
to any Project. All costs and expenses of such Remedial Work shall be paid by
Environmental Indemnitors, including, without limitation, the charges of the
Remedial Work contractors and the consulting environmental engineer, any taxes
or penalties assessed in connection with the Remedial Work and Lender's
reasonable fees and out-of-pocket costs incurred in connection with monitoring
or review of such Remedial Work. Lender shall have the right but not the
obligation to join and participate in, as a party if it so elects, any legal
proceedings or actions initiated in connection with any Environmental
Proceedings.

6.5   ENVIRONMENTAL INDEMNITY.

            Environmental Indemnitors shall protect, indemnify, defend and hold
Lender and any participants, successors or assigns to Lender's interest in the
Loan, and any other affiliate thereof who acquires any portion of a Project at a
foreclosure sale or otherwise through the exercise of Lender's rights and
remedies under the Loan Documents, and all directors, officers, employees and
agents of all of the aforementioned indemnified parties, harmless from and
against any and all claims, liabilities, damages (direct or indirect), and
Expenses which arise out of or relate in any way to any breach of any
representation, warranty or covenant contained in this Article 6, or any
Environmental Proceedings or any use, handling, production, transportation,
disposal, release or storage of any Hazardous Material in, under or on such
Project, whether by any Environmental Indemnitor or any other person, including,
without limitation:

            (a)   all foreseeable and all unforeseeable Expenses (including any
loss of principal and interest due and owing on the Loan) arising out of: (i)
Environmental Proceedings or the use, generation, storage, discharge or disposal
of Hazardous Material by Environmental Indemnitors, any prior owner or operator
of such Project or any person on or about such Project; (ii) any residual
contamination affecting any natural resource or the environment; or (iii) any
exercise by Lender of any of its rights and remedies hereunder; and

            (b)   the costs of any required or necessary investigation,
assessment, testing, remediation, repair, cleanup, or detoxification of such
Project and the preparation of any closure or other required plans.

            Environmental Indemnitors' liability to the aforementioned
indemnified parties shall (subject to any applicable notice and cure periods
expressly provided for in Section 6.6) arise upon the earlier to occur of (1)
discovery of any Hazardous Material on, under or about

                                      -31-
<PAGE>

such Project, or (2) the institution of any Environmental Proceedings, and not
upon the realization of loss or damage, and Environmental Indemnitors shall pay
to Lender from time to time, immediately upon request, an amount equal to the
Expenses actually incurred (or as reasonably determined by Lender with respect
to Expenses that have not actually been incurred). In addition, in the event any
Hazardous Material is removed, or caused to be removed from such Project, by
Environmental Indemnitors, Lender or any other person, the number assigned by
the U.S. Environmental Protection Agency to such Environmental Proceedings or
any similar identification shall in no event be in the name of Lender or
identify the Lender as a generator, arranger or other designation. The foregoing
indemnity shall not include Expenses, claims, liabilities or damages arising
solely from Hazardous Material which first exist on such Project following the
date on which the Lender or any Lender Affiliate takes title to such Project,
whether by foreclosure of the applicable Mortgage, or a deed or
assignment-in-lieu thereof or otherwise.

6.6   REMEDIES UPON AN ENVIRONMENTAL DEFAULT.

            In addition to any other rights or remedies Lender may have under
this Article 6, at law or in equity, in the event that Environmental Indemnitors
shall fail to timely comply with any of the provisions of this Article 6, or in
the event that any representation or warranty made in this Article 6 proves to
be false or misleading, then, in such event, after (i) delivering written notice
to Environmental Indemnitors, which notice specifically states that
Environmental Indemnitors have failed to comply with the provisions of this
Article 6; and (ii) the expiration of the earlier to occur of (A) a (30) day
period after receipt of such notice and (B) the cure period, if any, permitted
under any applicable law, rule, regulation or order with which Environmental
Indemnitors shall have failed to comply, Lender may declare an Event of Default
in this Agreement or any other Loan Documents and exercise any and all remedies
provided for therein, and/or do or cause to be done whatever is reasonably
necessary to cause each Project to comply with all Laws relating to Hazardous
Material and other applicable Laws, rules, regulations or orders and the cost
thereof shall constitute an Expense hereunder and shall become immediately due
and payable without notice and with interest thereon at the Default Rate until
paid. Environmental Indemnitors shall give to Lender and its agents and
employees access to the Projects for the purpose of effecting such compliance
and hereby specifically grant to Lender a license, effective upon expiration of
the applicable period as described above, if any, to do whatever is necessary to
cause each Project to so comply, including, without limitation, to enter each
Project and remove therefrom any Hazardous Material or otherwise comply with any
Laws relating to Hazardous Material.

6.7   UNCONDITIONAL ENVIRONMENTAL OBLIGATIONS.

            Notwithstanding any term or provision contained herein or in the
other Loan Documents, the covenants and obligations of the Environmental
Indemnitors under this Article 6 (the "ENVIRONMENTAL OBLIGATIONS") are
unconditional. Environmental Indemnitors shall be fully, personally, jointly and
severally liable for the Environmental Obligations, and such liability shall not
be limited to the original principal amount of the Loan. The Environmental
Obligations shall be enforceable by Lender, its Affiliates, and its successors

                                      -32-
<PAGE>

and assigns. The Environmental Obligations shall survive the repayment of the
Loan and any foreclosure, deed-in-lieu or transfer in lieu of foreclosure or
similar proceedings transferring title to any Project or any portion thereof.

6.8   ASSIGNMENT OF ENVIRONMENTAL OBLIGATIONS PROHIBITED.

            The Environmental Obligations may not be assigned or transferred, in
whole or in part, by Environmental Indemnitors and any purported assignment by
Environmental Indemnitors of the Environmental Obligations shall be void ab
initio and of no force or effect.

6.9   INDEMNIFICATION SEPARATE FROM THE LOAN.

            (a)   The Environmental Indemnitors agree that the Environmental
Obligations are separate, independent of and in addition to the undertakings of
the Environmental Indemnitors, as applicable, pursuant to the Loan, the Note,
the other provisions of this Agreement and the other Loan Documents. A separate
action may be brought to enforce the provisions of this Article 6, which shall
in no way be deemed to be an action on the Note, whether or not the Loan has
been repaid and whether or not Lender would be entitled to a deficiency judgment
following a judicial foreclosure, trustee's sale or UCC sale. The Environmental
Obligations shall not be affected by any exculpatory provisions contained in the
Note, this Agreement or any of the other Loan Documents. The Environmental
Obligations and the rights of Lender and its Affiliates hereunder shall survive
performance and repayment of the obligations evidenced by and arising under the
Loan Documents, surrender of the Note, reconveyance of any Mortgage, release of
other security provided in connection with the Loan, trustee's sale or
foreclosure under any Mortgage and/or any of the other Loan Documents (whether
by deed or other assignment in lieu of foreclosure, or otherwise, acquisition of
a Project by Lender, any other transfer of a Project, and transfer of all of
Lender's rights in the Loan, the Loan Documents, and the Projects.

            (b)   Environmental Indemnitors waive all rights to require Lender
to (i) proceed against or exhaust any security for the Loan or (ii) pursue any
remedy in Lender's power whatsoever. Each Borrower waives all defenses by reason
of any disability or other defense under the Loan or by reason of the cessation
from any cause whatsoever of its liability under the Loan, or that it may
acquire by reason of Lender's election of any remedy against it including,
without limitation, Lender's exercise of its rights to foreclose any Mortgage.

                                    ARTICLE 7
                           CASUALTIES AND CONDEMNATION

7.1   LENDER'S ELECTION TO APPLY INSURANCE PROCEEDS ON INDEBTEDNESS.

            (a)   Subject to the provisions of Section 7.1(b) below, Lender may
elect to collect, retain and apply upon the Indebtedness of Borrowers under this
Agreement or any of the other Loan Documents all proceeds of insurance resulting
from any loss at any Project or

                                      -33-
<PAGE>

condemnation or other taking of any Project or a portion thereof (individually
and collectively referred to as "INSURANCE PROCEEDS") after deduction of all
expenses of collection and settlement, including attorneys' and adjusters' fees
and charges. Any proceeds remaining after repayment of the Indebtedness shall be
paid by Lender to Borrowers.

            (b)   Notwithstanding anything in Section 7.1(a) to the contrary, in
the event of any casualty to any condemnation of part of any Project, Lender
agrees to make available the Insurance Proceeds to restoration of such Project
if (i) no Event of Default exists, (ii) all Insurance Proceeds are deposited
with Lender, (iii) in Lender's reasonable judgment, the amount of Insurance
Proceeds available for restoration of such Project is sufficient to pay the full
and complete costs of such restoration, (iv) no material Commercial Leases
(which for this purpose shall mean Commercial Leases demising more than five
percent (5%) of the rentable square feet of space at the Project) in effect at
the time of such casualty or condemnation are or will be terminated as a result
of such casualty or condemnation, (v) the amount of the Insurance Proceeds does
not exceed One Million and No/100ths Dollars ($1,000,000.00), (vi) in Lender's
reasonable determination, such Project can be restored to an architecturally and
economically viable project in compliance with applicable Laws, (vii) each
Principal reaffirms its personal guaranty in writing, and (viii) in Lender's
reasonable determination, such restoration is likely to be completed not later
than six (6) months prior to the Maturity Date.

7.2   BORROWER'S OBLIGATION TO REBUILD AND USE OF INSURANCE PROCEEDS THEREFOR.

            In case Lender does not elect to apply or does not have the right to
apply the Proceeds to the Indebtedness, as provided in Section 7.1 above,
Borrowers shall:

            (a)   Proceed with diligence to make settlement with insurers or the
appropriate governmental authorities and cause the Proceeds to be deposited with
Lender;

            (b)   In the event of any delay in making settlement with insurers
or the appropriate governmental authorities or effecting collection of the
Proceeds, and if Borrowers commence restoration of the applicable Project prior
to receipt of such Insurance Proceeds, Borrowers shall promptly (i) deliver to
Lender a construction budget and a completion schedule in respect of such
restoration (each, reasonably acceptable to Lender) and (ii) deposit with Lender
cash in an amount equal to ten percent (10%) of the total cost required to
complete such restoration, as aforesaid (and, absent a default under this
Agreement or any of the other Loan Documents, Lender will return such deposit to
Borrowers if the Insurance Proceeds deposited with Lender are sufficient to
complete the total cost of restoration as provided in the approved budget);

            (c)   In the event the Proceeds and the amount deposited with Lender
pursuant to Section 7.1(b) above are insufficient to assure Lender that the all
contemplated repairs or construction will be completed, promptly deposit with
Lender any amount necessary to assure that such contemplated repairs or
construction will be completed; and

                                      -34-
<PAGE>

            (d)   Promptly proceed with the commencement of restoration of the
applicable Project, including the repair of all damage resulting from such fire,
condemnation or other cause and restoration to its former condition.

            Any request by a Borrower for a disbursement by Lender of Proceeds
and funds deposited by Borrowers shall be treated by Lender as if such request
were for an advance of the Loan hereunder, and the disbursement thereof shall be
conditioned upon Borrowers' compliance with and satisfaction of the same
conditions precedent as would be applicable under this Agreement for an advance
of the Holdback as if the repair or restoration work were Renovation Work.

                                    ARTICLE 8
                         EVENTS OF DEFAULT AND REMEDIES

8.1   EVENTS OF DEFAULT.

            The occurrence of any one or more of the following shall constitute
an "EVENT OF DEFAULT" as said term is used herein:

            (a)   Failure of Borrowers to pay the outstanding principal amount,
all interest thereon and all other amounts owing hereunder or the other Loan
Documents (the "INDEBTEDNESS") on the Maturity Date or the failure to pay,
within five (5) days of the due date, any of other payment obligations of
Borrowers to Lender, including any payments of interest or principal due
pursuant to this Agreement;

            (b)   Failure of Borrowers to strictly comply with the provisions of
Section 4.2(b) (transfers), Section 4.2(d) (insurance), Section 4.2(l) (no
additional debt), Section 4.2(m) (organizational documents), Section 4.2(n)
(single purpose entity), 4.2(v) (project construction documents), 4.2(w) (post
closing covenants) and Article 6 (environmental matters);

            (c)   Failure of Borrowers for a period of thirty (30) days after
written notice from Lender, to observe or perform any non-monetary covenant or
condition contained in this Agreement or any other Loan Documents not set forth
in the subsections above; provided that if any such failure concerning a
non-monetary covenant or condition is susceptible to cure and cannot reasonably
be cured within said thirty (30) day period, then Borrowers shall have an
additional ninety (90) day period to cure such failure and no Event of Default
shall be deemed to exist hereunder so long as Borrowers commence such cure
within the initial thirty (30) day period and diligently and in good faith
pursues such cure to completion within such resulting one hundred twenty (120)
day period from the date of Lender's notice; and provided further that if a
different notice or grace period is specified under any other subsection of this
Section 8.1 with respect to a particular breach, or if another subsection of
this Section 8.1 applies to a particular breach and does not expressly provide
for a notice or grace period, the specific provision shall control;

                                      -35-
<PAGE>

            (d)   Any material default by any Borrower, as lessor, under the
terms of any Commercial Lease following the expiration of any applicable notice
and cure period, provided that if the Commercial Lease does not provide a notice
and cure period, then the notice and cure period provided in (a) above will
apply to any such monetary default, and the notice and cure period provided in
(c) will apply to any such non-monetary default (which respective periods shall
commence upon written notice of default from Lender or the applicable Tenant,
whichever occurs first);

            (e)   If any warranty, representation, statement, report or
certificate made now or hereafter by Borrowers or Principal is untrue or
incorrect at the time made or delivered, provided that if such breach is
reasonably susceptible of cure, then no Event of Default shall exist so long as
the applicable party cures said breach (i) within thirty (30) days for a breach
that can be cured by the payment of money or (ii) within the notice and cure
period provided in (c) above for any other breach;

            (f)   A petition under any Chapter of Title 11 of the United States
Code or any similar law or regulation is filed by or against any Borrower,
Project Lessee, General Partner or Principal (and in the case of an involuntary
petition in bankruptcy, such petition is not discharged within sixty (60) days
of its filing), or a custodian, receiver or trustee for any Project is
appointed, or any Borrower, Project Lessee, General Partner or Principal makes
an assignment for the benefit of creditors, or any of them are adjudged
insolvent by any state or federal court of competent jurisdiction, or any of
them admit their insolvency or inability to pay their debts as they become due
or an attachment or execution is levied against any Project or portion thereof;

            (g)   The occurrence of a default and the expiration of any cure
period applicable thereto available to a Borrower or Project Lessee, as
applicable, under the License Agreement, the Project Lease or the Management
Agreement, or any Borrower or Project Lessee materially modifies or terminates
the applicable License Agreement, Project Lease or Management Agreement without
Lender's consent;

            (h)   The liquor license for any Project is revoked; or

            (i)   The occurrence of any other event or circumstance denominated
as an Event of Default herein or under any of the other Loan Documents and the
expiration of any applicable grace or cure periods, if any, specified for such
Event of Default herein or therein, as the case may be.

8.2   REMEDIES CONFERRED UPON LENDER.

            Lender's rights, remedies and powers, as provided herein and the
other Loan Documents, are cumulative and concurrent, and may be pursued singly,
successively or together against Borrowers, any Borrower, any guarantor of the
Loan, the security described in the Loan Documents, and any other security given
at any time to secure the payment hereof, all at the sole discretion of Lender.
Additionally, Lender may resort to every other right or remedy available at law
or in equity without first exhausting the rights and remedies

                                      -36-
<PAGE>

contained herein, all in Lender's sole discretion. Failure of Lender, for any
period of time or on more than one occasion, to exercise its option to
accelerate the Maturity Date shall not constitute a waiver of the right to
exercise the same at any time during the continued existence of any Event of
Default or any subsequent Event of Default. Upon the occurrence of any Event of
Default, Lender may pursue any one or more of the following remedies
concurrently or successively, it being the intent hereof that none of such
remedies shall be to the exclusion of any other:

            (a)   Take possession of the Projects and do anything that is
necessary or appropriate in its sole judgment to fulfill the obligations of
Borrowers under this Agreement and the other Loan Documents. Without restricting
the generality of the foregoing and for the purposes aforesaid, Borrowers hereby
appoint and constitute Lender their lawful attorney-in-fact with full power of
substitution in any Project to use unadvanced funds remaining under the Note or
which may be reserved, escrowed or set aside for any purposes hereunder at any
time, or to advance funds in excess of the face amount of the Note, to pay,
settle or compromise all existing bills and claims, which may be liens or
security interests, or to avoid such bills and claims becoming liens against the
Projects; to execute all applications and certificates in the name of any
Borrower prosecute and defend all actions or proceedings in connection with a
Project; and to do any and every act which such Borrower might do in its own
behalf; it being understood and agreed that this power of attorney shall be a
power coupled with an interest and cannot be revoked;

            (b)   Declare the Note or the Indebtedness to be immediately due and
payable;

            (c)   Use and apply any monies or letters of credit deposited by
Borrowers or Principal with Lender, regardless of the purposes for which the
same was deposited, to cure any such default or to apply on account of any
Indebtedness under this Agreement which is due and owing to Lender;

            (d)   Exercise or pursue any other remedy or cause of action
permitted under this Agreement or any other Loan Documents, or conferred upon
Lender by operation of Law.

            Notwithstanding the foregoing, upon the occurrence of any Event of
Default under Section 8.1(f) all amounts evidenced by the Note shall
automatically become due and payable, without any presentment, demand, protest
or notice of any kind to Borrowers.

                                    ARTICLE 9
                        LOAN EXPENSE, COSTS AND ADVANCES

9.1   LOAN AND ADMINISTRATION EXPENSES.

            Whether or not the Loan is made, Borrowers unconditionally agree to
pay all reasonable costs and expenses of the Loan, including all amounts payable
pursuant to Sections 2.7, 2.8 and 9.2 and any and all other fees owing to Lender
pursuant to the Loan

                                      -37-
<PAGE>

Documents, and also including all documentation, modification, or workout costs
relating to the Loan, all costs and expenses relating to any release
contemplated by Section 2.10, recording, filing and registration fees and
charges, mortgage or documentary taxes, UCC searches, title and survey charges,
all reasonable fees and disbursements of Lender's consultants, any costs
involved in the disbursement of the Loan, any reasonable repair or maintenance
costs or payments made to remove or protect against liens, all costs and
expenses incurred by Lender in connection with the determination of whether or
not Borrowers have performed the obligations undertaken by Borrowers hereunder
or has satisfied any conditions precedent to the obligations of Lender hereunder
and, if any default or Event of Default occurs hereunder or under any of the
Loan Documents or if the Loan or Note or any portion thereof is not paid in full
when and as due, all reasonable costs and expenses of Lender incurred in
attempting to enforce or collect payment of the Loan or enforce any rights of
Lender or any Borrower's obligations hereunder and expenses of Lender incurred
(including expenses relating to documentary and expert evidence, publication
costs) in attempting to realize, while a default or Event of Default exists, on
any security or incurred in connection with the sale, disposition (or
preparation for sale or disposition) or liquidation of any security for the Loan
(including any foreclosure sale, deed in lieu transaction or costs incurred in
connection with any litigation or bankruptcy or administrative hearing and any
appeals therefrom and any post-judgment enforcement action including, without
limitation, supplementary proceedings in connection with the enforcement of this
Agreement). All such costs or expenses incurred or advances or payments made by
Lender shall also include court costs, legal fees and disbursements relating
thereto and shall be included as additional Indebtedness evidenced by the Note
and secured by the Mortgage and the other Loan Documents bearing interest at the
Default Rate set forth in the Note until paid. Borrowers agree to pay all
brokerage, finder or similar fees or commissions payable in connection with the
transactions contemplated hereby and shall indemnify, defend and hold Lender
harmless against all claims, liabilities, and Expenses arising in relation to
any claim by broker, finder or similar person. Lender may require the payment of
Lender's outstanding fees and expenses as a condition to any disbursement of the
Loan. Lender is hereby authorized, without any specific request or direction by
Borrowers, to make disbursements from time to time in payment of or to reimburse
Lender for all Loan expenses and fees.

9.2   RIGHT OF LENDER TO MAKE ADVANCES TO CURE BORROWER'S DEFAULTS.

            In the event that Borrowers fail to perform any of Borrowers'
covenants, agreements or obligations contained in this Agreement or any of the
other Loan Documents (after the expiration of applicable grace periods, except
in the event of an emergency or other exigent circumstances), Lender may (but
shall not be required to) perform any of such covenants, agreements and
obligations, and any reasonable amounts expended by Lender in so doing and shall
constitute additional Indebtedness evidenced by the Note and secured by the
Mortgages and the other Loan Documents and shall bear interest at a rate per
annum equal to the Interest Rate (or Default Rate following an Event of
Default).

9.3   INCREASED COSTS.

            Borrowers agree to pay Lender additional amounts to compensate
Lender for any increase in its actual costs incurred in maintaining the Loan or
any portion thereof

                                      -38-
<PAGE>

outstanding or for the reduction of any amounts received or receivable from
Borrowers as a result of any change after the date hereof in any applicable Law,
regulation or treaty, or in the interpretation or administration thereof, or by
any domestic or foreign court, changing the basis of taxation of payments under
this Agreement to Lender (other than taxes imposed on or measured by the net
income or receipts of Lender or any franchise tax imposed on Lender). Any amount
payable by Borrowers under this Article 9 shall be paid within ten (10) days of
receipt by Borrowers of a notice from Lender setting forth the amount due and
the basis for the determination of such amount, which statement shall be
conclusive and binding upon Borrowers, absent manifest error. Failure on the
part of Lender to demand payment from Borrowers for any such amount attributable
to any particular period shall not constitute a waiver of Lender's right to
demand payment of such amount for any subsequent or prior period.

9.4   BORROWER WITHHOLDING.

            If by reason of a change in any applicable Laws occurring after the
date hereof, any Borrower is required by Law to make any deduction or
withholding in respect of any taxes (other than taxes imposed on or measured by
the net income of or receipts of Lender or any franchise tax imposed on Lender),
duties or other charges from any payment due under the Note, the sum due from
Borrowers in respect of such payment shall be increased to the extent necessary
to ensure that, after the making of such deduction or withholding, Lender
receives and retains a net sum equal to the sum which it would have received had
no such deduction or withholding been required to be made.

9.5   DOCUMENT AND RECORDING TAX INDEMNIFICATION.

            Borrowers agree to indemnify, defend and hold harmless Lender from
and against any claim that any documentary or mortgage tax is due and payable in
connection with the Loan or the execution, delivery or recording of the Loan
Documents to pay such taxes and Expenses incurred by Lender in connection
therewith. Any Borrower may contest any determination that any such taxes are
due, but shall pay any such taxes (including penalties and interest) when
legally required. This paragraph shall survive repayment of the Loan.

                                   ARTICLE 10
                      ASSIGNMENTS BY LENDER AND DISCLOSURE

10.1  ASSIGNMENTS AND PARTICIPATIONS.

            Lender may from time to time, without the consent of any Borrower,
sell, transfer, pledge, assign and convey the Loan and the Loan Documents (or
any interest therein) and may grant participations in the Loan. Borrowers agree
to cooperate with Lender's efforts to do any of the foregoing and to execute all
documents reasonably required by Lender in connection therewith which do not
materially adversely affect Borrowers' rights under the Loan Documents.

                                      -39-
<PAGE>

10.2  DISCLOSURE OF INFORMATION.

            Lender shall have the right (but shall be under no obligation) to
make available to any party for the purpose of granting participations in or
selling, transferring, assigning or conveying all or any part of the Loan
(including any governmental agency or authority and any prospective bidder at
any foreclosure sale of any Project) any and all information that Lender may
have with respect to the Projects and Borrowers, whether provided by Borrowers,
Principal or any third party or obtained as a result of any environmental
assessments. Borrowers and Principal agree that Lender shall have no liability
whatsoever as a result of delivering any such information to any third party,
and Borrowers and Principal, on behalf of themselves and their successors and
assigns, hereby release and discharge Lender from any and all liability, claims,
damages, or causes of action, arising out of, connected with or incidental to
the delivery of any such information to any third party.

                                   ARTICLE 11
                               GENERAL PROVISIONS

11.1  CAPTIONS.

            The captions and headings of various Articles, Sections and
subsections of this Agreement and the other Loan Documents and the Exhibits and
Schedules pertaining thereto are for convenience only and are not to be
considered as defining or limiting in any way the scope or intent of the
provisions hereof or thereof.

11.2  WAIVER OF JURY TRIAL.

            BORROWERS, LENDER AND PRINCIPAL EACH KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY CLAIM, CONTROVERSY
DISPUTE, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS (INCLUDING WITHOUT LIMITATION ANY ACTIONS OR
PROCEEDINGS FOR ENFORCEMENT OF THE LOAN DOCUMENTS) AND AGREE THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
BORROWERS, LENDER AND PRINCIPAL EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS RELIED
ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. BORROWERS, LENDER AND PRINCIPAL EACH WARRANT AND REPRESENT THAT EACH
HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND
THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

                                      -40-
<PAGE>

11.3  JURISDICTION.

            TO THE GREATEST EXTENT PERMITTED BY LAW, EACH BORROWER AND PRINCIPAL
HEREBY WAIVES ANY AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER.
WITH RESPECT TO ANY SUIT, ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT
(EACH, A "PROCEEDING"), EACH BORROWER AND PRINCIPAL IRREVOCABLY (A) SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING
JURISDICTION IN THE CITY OF CHICAGO, COUNTY OF COOK AND STATE OF ILLINOIS, AND
(B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF
ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO
OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT DOES NOT HAVE
JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL PRECLUDE LENDER
FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL THE BRINGING OF A
PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE BRINGING OF A
PROCEEDING IN ANY OTHER JURISDICTION. EACH BORROWER AND PRINCIPAL HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS AND FURTHER AGREES AND CONSENTS THAT, IN
ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW,
ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY ILLINOIS STATE OR UNITED STATES
COURT SITTING IN THE CITY OF CHICAGO AND COUNTY OF COOK MAY BE MADE BY CERTIFIED
OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWERS OR, AS
APPLICABLE, TO PRINCIPAL, AT THE ADDRESS INDICATED BELOW OR AT THE ADDRESS ON
THE ATTACHED LIMITED JOINDER (AS APPLICABLE), AND SERVICE SO MADE SHALL BE
COMPLETE UPON RECEIPT; EXCEPT THAT IF ANY BORROWER OR PRINCIPAL SHALL REFUSE TO
ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME
SHALL HAVE BEEN SO MAILED.

11.4  GOVERNING LAW.

            Irrespective of the place of execution and/or delivery, this
Agreement and the other Loan Documents shall be governed by, and shall be
construed in accordance with, the internal laws of the State of Illinois,
without regard to conflicts of law principles except as provided in the
Mortgages.

11.5  LAWFUL RATE OF INTEREST.

            In no event whatsoever shall the amount of interest paid or agreed
to be paid to Lender pursuant to this Loan Agreement, the Note or any of the
Loan Documents exceed the highest lawful rate of interest permissible under
applicable law. If, from any circumstances whatsoever, fulfillment of any
provision of this Loan Agreement, the Note and the other

                                      -41-
<PAGE>

Loan Documents shall involve exceeding the lawful rate of interest which a court
of competent jurisdiction may deem applicable hereto ("EXCESS INTEREST"), then
ipso facto, the obligation to be fulfilled shall be reduced to the highest
lawful rate of interest permissible under such law and if, for any reason
whatsoever, Lender shall receive, as interest, an amount which would be deemed
unlawful under such applicable law, such interest shall be applied to the Loan
(whether or not due and payable), and not to the payment of interest, or
refunded to Borrowers if such Loan has been paid in full. No Borrower nor any
guarantor, endorser or surety nor their heirs, legal representatives, successors
or assigns shall have any action against Lender for any damages whatsoever
arising out of the payment or collection of any such Excess Interest. Without
limiting the foregoing, Borrowers agree to an effective rate of interest that is
the rate stated in Section 2.6 hereof, plus any additional rate of interest
resulting from any other sums, amounts, and charges in the nature of interest
paid or to be paid by or on behalf of Borrowers, or any benefit or value
received or to be received by the holder of the Note, in connection with the
Loan.

11.6  MODIFICATION; CONSENT.

            No modification, waiver, amendment or discharge of this Agreement or
any other Loan Document shall be valid unless the same is in writing and signed
by the party against which the enforcement of such modification, waiver,
amendment or discharge is sought. Consent by Lender to any act or omission by
any Borrower shall not be construed as a consent to any other or subsequent act
or omission or to waive the requirement for Lender's consent to be obtained in
any future or other instance.

11.7  WAIVERS; ACQUIESCENCE OR FORBEARANCE NOT TO CONSTITUTE WAIVER OF LENDER'S
      REQUIREMENTS.

            (a)   Each Borrower for itself and all endorsers, guarantors and
sureties and their heirs, legal representatives, successors and assigns, (i)
waives presentment for payment, demand, notice of nonpayment or dishonor,
protest of any dishonor, protest and notice of protest and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of the Loan; (ii) waives and renounces all rights to the benefits of
any statute of limitations and any moratorium, reinstatement, marshalling,
forbearance, valuation, stay, extension, redemption, appraisement, or exemption
and homestead laws now provided, or which may hereafter be provided, by the laws
of the United States and of any state thereof against the enforcement and
collection of the obligations evidenced by the Note or this Loan Agreement or as
a bar to the enforcement of the lien created by any of the Loan Documents.

            (b)   Each Borrower for itself and all endorsers, guarantors and
sureties and their heirs, legal representatives, successors and assigns, (i)
agrees that its liability shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver, or modification granted or consented to by
Lender; (ii) consents to any indulgences and all extensions of time, renewals,
waivers, or modifications that may be granted by Lender with respect to the
payment or other provisions of this Loan Agreement, the Note, and to any
substitution, exchange or release of the collateral, or any part thereof, with
or without

                                      -42-
<PAGE>

substitution, and agrees to the addition or release of any Borrowers, endorsers,
guarantors, or sureties, or whether primarily or secondarily liable, without
notice to any Borrower and without affecting its liability hereunder; (iii)
agrees that its liability shall be unconditional and without regard to the
liability of any other tax; and (iv) expressly waives the benefit of any statute
or rule of law or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the foregoing.

            (c)   Each and every covenant and condition for the benefit of
Lender contained in this Agreement and the other Loan Documents may be waived by
Lender, provided, however, that to the extent that Lender may have acquiesced in
any noncompliance with any requirements or conditions precedent to the closing
of the Loan or to any subsequent disbursement of Loan proceeds, such
acquiescence shall not be deemed to constitute a waiver by Lender of such
requirements with respect to any future disbursements of Loan proceeds and
Lender may at any time after such acquiescence require Borrowers to comply with
all such requirements. Any forbearance by Lender in exercising any right or
remedy under any of the Loan Documents, or otherwise afforded by applicable law,
including any failure to accelerate the Maturity Date shall not be a waiver of
or preclude the exercise of any right or remedy nor shall it serve as a novation
of the Note or as a reinstatement of the Loan or a waiver of such right of
acceleration or the right to insist upon strict compliance of the terms of the
Loan Documents. Lender's acceptance of payment of any sum secured by any of the
Loan Documents after the due date of such payment shall not be a waiver of
Lender's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of the
Loan, nor shall Lender's receipt of any awards, proceeds, or damages under
Article 7 of this Agreement operate to cure or waive any Borrower's or
Principal's default in payment of sums secured by any of the Loan Documents.

11.8  DISCLAIMER BY LENDER.

            This Agreement and the other Loan Documents are made for the sole
benefit of Borrowers and Lender, and no other person or persons shall have any
benefits, rights or remedies under or by reason of this Agreement or the other
Loan Documents, or by reason of any actions taken by Lender pursuant to this
Agreement or the other Loan Documents. Lender shall not be liable to any
contractors, subcontractors, supplier, architect, engineer, Tenant or other
party for labor or services performed or materials supplied in connection with
any Project. Lender shall not be liable for any debts or claims accruing in
favor of any such parties against any Borrower or others or against any Project.
Lender neither undertakes nor assumes any responsibility or duty to Borrowers to
select, review, inspect, supervise, pass judgment upon or inform any Borrower of
any matter in connection with any Project. Each Borrower shall rely entirely
upon its own judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment or supply of information to such Borrower by
Lender in connection with such matters is for the protection of Lender only, and
no Borrower or any third party is entitled to rely thereon.

                                      -43-
<PAGE>

11.9  PARTIAL INVALIDITY; SEVERABILITY.

            If any of the provisions of this Agreement or the other Loan
Documents, or the application thereof to any person, party or circumstances,
shall, to any extent, be invalid or unenforceable, the remainder of this
Agreement or the other Loan Documents, or the application of such provision or
provisions to persons, parties or circumstances other than those as to whom or
which it is held invalid or unenforceable, shall not be affected thereby, and
every provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law and to this end, the provisions of this Agreement and
all the other Loan Documents are declared to be severable.

11.10 DEFINITIONS INCLUDE AMENDMENTS.

            Definitions contained in this Agreement which identify documents,
including, but not limited to, the Loan Documents, shall be deemed to include
all amendments and supplements to such documents from the date hereof, and all
future amendments, modifications, and supplements thereto entered into from time
to time to satisfy the requirements of this Agreement or otherwise with the
consent of Lender. Reference to this Agreement contained in any of the foregoing
documents shall be deemed to include all amendments and supplements to this
Agreement.

11.11 EXECUTION IN COUNTERPARTS.

            This Agreement, including the Limited Joinder attached hereto, and
the other Loan Documents may be executed in any number of counterparts and by
different parties hereto or thereto in separate counterparts, each of which when
so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.

11.12 ENTIRE AGREEMENT.

            This Agreement, taken together with all of the other Loan Documents
and all certificates and other documents delivered by Borrowers to Lender,
embody the entire agreement and supersede all prior commitments, agreements,
representations, and understandings, written or oral, relating to the subject
matter hereof, and may not be contradicted or varied by evidence of prior,
contemporaneous, or subsequent oral agreements or discussions of the parties
hereto.

11.13 WAIVER OF DAMAGES.

            In no event shall Lender be liable to any Borrower for punitive,
exemplary or consequential damages, including, without limitation, lost profits,
whatever the nature of a breach by Lender of its obligations under this
Agreement or any of the Loan Documents, and each Borrower for itself and
Principal waives all claims for punitive, exemplary or consequential damages.

                                      -44-
<PAGE>

11.14 CLAIMS AGAINST LENDER.

            Lender shall not be in default under this Agreement, or under any
other Loan Documents, unless a written notice specifically setting forth the
claim of any Borrower shall have been given to Lender within three (3) months
after such Borrower first had knowledge of the occurrence of the event which
such Borrower alleges gave rise to such claim and Lender does not remedy or cure
the default, if any there be, promptly thereafter. Each Borrower waives any
claim, set-off or defense against Lender arising by reason of any alleged
default by Lender as to which Borrowers do not give such notice timely as
aforesaid. Borrowers acknowledge that such waiver is or may be essential to
Lender's ability to enforce its remedies without delay and that such waiver
therefore constitutes a substantial part of the bargain between Lender and
Borrowers with regard to the Loan. None of Principal, Project Lessee or any
Tenant is intended to have any rights as a third-party beneficiary of the
provisions of this Section 11.14.

11.15 SET-OFFS.

            After the occurrence and during the continuance of an Event of
Default, Borrowers hereby irrevocably authorize and direct Lender from time to
time to charge Borrowers' accounts and deposits with Lender (or its Affiliates),
and to pay over to Lender an amount equal to any amounts from time to time due
and payable to Lender hereunder, under the Note or under any other Loan
Document. Each Borrower hereby grants to Lender a security interest in and to
all such accounts and deposits maintained by such Borrower with Lender (or its
Affiliates).

11.16 RELATIONSHIP.

            The relationship between Lender and Borrowers shall be that of
creditor-debtor only. No term in this Agreement or in the other Loan Documents
and no course of dealing between the parties shall be deemed to create any
relationship of agency, partnership or joint venture or any fiduciary duty by
Lender to any Borrower or any other party.

11.17 AGENTS.

            In exercising any rights under the Loan Documents or taking any
actions provided for therein, Lender may act through its employees, agents or
independent contractors as authorized by Lender.

11.18 INTERPRETATION.

            With respect to all Loan Documents, whenever the context requires,
all words used in the singular will be construed to have been used in the
plural, and vice versa, and each gender will include any other gender. The word
"obligations" is used in its broadest and most comprehensive sense, and includes
all primary, secondary, direct, indirect, fixed and contingent obligations. It
further includes all principal, interest, prepayment charges, late charges, loan
fees and any other fees and charges accruing or assessed at any time, as well as
all obligations to perform acts or satisfy conditions. No listing of specific
instances,

                                      -45-
<PAGE>

items or matters in any way limits the scope or generality of any language in
the Loan Documents. This Agreement and all of the other Loan Documents shall not
be construed more strictly against one party than against the other, merely by
virtue of the fact that it may have been prepared primarily by counsel for one
of the parties. For purposes of clarity, each reference to "the Borrower" shall
be deemed to refer to, unless otherwise specified and as the context requires,
Borrowers, collectively, each Borrower, the applicable Borrower or any Borrower.
For purposes of clarity, each reference to "the Project " shall be deemed to
refer to, unless otherwise specified and as the context requires, the Projects,
collectively, each Project, the applicable Project or any Project.

11.19 SUCCESSORS AND ASSIGNS.

            Subject to the restrictions in Section 4.2(b) on transfer and
assignment contained in this Agreement, this Agreement and the other Loan
Documents shall inure to the benefit of and shall be binding on Lender,
Borrowers and Principal and their respective heirs, successors and permitted
assigns.

11.20 TIME IS OF THE ESSENCE.

            Borrowers agree that time is of the essence under this Agreement and
the other Loan Documents and the performance of each of the covenants and
agreements contained herein and therein.

11.21 NOTICES

            Any notice, demand, request or other communication which any party
hereto may be required or may desire to give hereunder shall be in writing and
shall be deemed to have been properly given (a) if hand delivered, when
delivered; (b) if mailed by United States Certified Mail (postage prepaid,
return receipt requested), three (3) Business Days after mailing (c) if by
Federal Express or other reliable overnight courier service, on the next
Business Day after delivered to such courier service or (d) if by telecopier on
the day of transmission if before 3:00 p.m. (Chicago time) on a Business Day so
long as copy is sent on the same day by overnight courier as set forth below:

                                      -46-
<PAGE>

            If to Borrowers or any Borrower:

                  Ashford Dayton LP
                  Ashford Columbus LP
                  Ashford Flagstaff LP
                  Ashford Phoenix LP
                  Ashford Syracuse LP
                  c/o Ashford Hospitality Limited Partnership
                  14180 Dallas Parkway
                  Pacific Center I, Suite 700
                  Dallas, Texas 75240-4376
                  Attention: David A. Brooks
                  Telephone: (972) 778-9207
                  Facsimile: (972) 980-2705

            With a copy to:

                  Andrews Kurth LLP
                  1717 Main Street, Suite 3700
                  Dallas, Texas 75201
                  Attention: Brigitte G. Kimichik
                  Telephone: (214) 659-4441
                  Facsimile: (214) 659-4401

            If to Lender:

                  Merrill Lynch Capital, a Division of
                    Merrill Lynch Business Financial Services Inc.
                  222 North LaSalle Street - 16th Floor
                  Chicago, Illinois 60601
                  Attention: Vice President, Portfolio Manager
                  Telephone: 312-499-3128
                  Facsimile: 312-499-3026

            With a copy to:

                  Merrill Lynch Capital, a Division of
                    Merrill Lynch Business Financial Services Inc.
                  222 North LaSalle Street - 16th Floor
                  Chicago, Illinois 60601
                  Attention: Real Estate Legal
                  Telephone: 312-499-3140
                  Facsimile: 312-499-3026

or at such other address as the party to be served with notice may have
furnished in writing to the party seeking or desiring to serve notice as a place
for the service of notice. Any notice

                                      -47-
<PAGE>

or demand delivered to the person or entity named above to accept notices and
demands for such party shall constitute notice or demand duly delivered to such
party, even if delivery is refused.

11.22 JOINT AND SEVERAL LIABILITY.

            (a)   The Indebtedness and all other obligations of Borrowers under
the Loan Documents (collectively, the "OBLIGATIONS") shall be the joint and
several obligations and liabilities of Borrowers. Hence, each Borrower shall be
primarily and directly liable for repayment of the Indebtedness and all other
Obligations.

            (b)   Notwithstanding any provisions of this Agreement to the
contrary, it is intended that the joint and several nature of the liability of
each Borrower for the Obligations and the liens and security interests granted
by Borrowers to secure the Obligations, not constitute a "Fraudulent Conveyance"
(as defined below). Consequently, Lender and each Borrower agree that if the
liability of a Borrower for the Obligations, or any liens or security interests
granted by such Borrower securing the Obligations would, but for the application
of this sentence, constitute a Fraudulent Conveyance, the liability of such
Borrower and the liens and security interests securing such liability shall be
valid and enforceable only to the maximum extent that would not cause such
liability or such lien or security interest to constitute a Fraudulent
Conveyance, and the liability of such Borrower and this Agreement shall
automatically be deemed to have been amended accordingly. For purposes hereof,
"FRAUDULENT CONVEYANCE" means a fraudulent conveyance under Section 548 of
Chapter 11 of Title II of the United States Code (11 U.S.C. Section 101, et
seq.), as amended (the "BANKRUPTCY CODE") or a fraudulent conveyance or
fraudulent transfer under the applicable provisions of any fraudulent conveyance
or fraudulent transfer law or similar law of any state, nation or other
governmental unit, as in effect from time to time.

            (c)   Lender is hereby authorized, without notice or demand and
without affecting the liability of either Borrower hereunder, to, at any time
and from time to time, (i) renew, extend or otherwise increase the time for
payment of the Obligations; (ii) with the written agreement of any Borrower
accelerate or otherwise change the terms relating to the Obligations or
otherwise modify, amend or change the terms of any promissory note or other
agreement, document or instrument now or hereafter executed by either Borrower
and delivered to Lender; (iii) accept partial payments of the Obligations; (iv)
take and hold security or collateral for the payment of the Obligations or for
the payment of any guaranties of the Obligations and exchange, enforce, waive
and release any such security or collateral; (v) after an Event of Default,
apply such security or collateral and direct the order or manner of sale
thereof, in Lender's sole discretion, as Lender may determine; and (vi) settle,
release, compromise, collect or otherwise liquidate the Obligations and any
security or collateral therefor in any manner, without affecting or impairing
the obligations of either Borrower. Except as specifically provided in this
Agreement or any of the other Loan Documents, Lender shall have the exclusive
right to determine the time and manner of application of any payments or
credits, whether received from any Borrower or any other source, and such
determination shall be binding on both Borrowers. All such payments and credits
may be applied, reversed and reapplied, in whole or in part, to any of the
Obligations Lender shall

                                      -48-
<PAGE>

determine in its sole discretion without affecting the validity or
enforceability of the Obligations of the other Borrower.

            (d)   Each Borrower hereby agrees that, except as hereinafter
provided, its obligations hereunder shall be unconditional, irrespective of (i)
the absence of any attempt to collect the Obligations from any obligor or other
action to enforce the same; (ii) the waiver or consent by Lender with respect to
any provision of any instrument evidencing the Obligations, or any part thereof,
or any other agreement heretofore, now or hereafter executed by a Borrower and
delivered to Lender; (iii) failure by Lender to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
collateral for the Obligations; (iv) the institution of any proceeding under the
Bankruptcy Code, or any similar proceeding, by or against a Borrower or Lender's
election in any such proceeding of the application of Section 1111(b)(2) of the
Bankruptcy Code; (v) any borrowing or grant of a security interest by a Borrower
as debtor-in-possession, under Section 364 of the Bankruptcy Code; (vi) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of
Lender's claim(s) for repayment of any of the Obligations; or (vii) any other
circumstance other than payment in full of the Obligations which might otherwise
constitute a legal or equitable discharge or defense of a guarantor.

            (e)   Until all Obligations have been paid and satisfied in full, no
payment made by or for the account of a Borrower including, without limitation,
(i) a payment made by such Borrower on behalf of the liabilities of the other
Borrower or (ii) a payment made by any other person under any guaranty, shall
entitle such Borrower, by subrogation or otherwise, to any payment from such
other Borrower or from or out of such other Borrower's property and such
Borrower shall not exercise any right or remedy against such other Borrower or
any property of such other Borrower by reason of any performance of such
Borrower of its joint and several obligations hereunder.

                            [SIGNATURE PAGES FOLLOW]

                                      -49-
<PAGE>

            EXECUTED as of the date first set forth above.

BORROWERS:                         ASHFORD DAYTON LP, a Delaware limited
                                   partnership

                                   By: Ashford Properties General Partner, LLC,
                                       a Delaware limited liability company

                                       By: /s/ David A. Brooks
                                           -------------------
                                       Name: David A. Brooks
                                       Title: Vice President
                                       Borrower's Tax ID No. 20-0255658

                                   ASHFORD COLUMBUS LP, a Delaware limited
                                   partnership

                                   By: Ashford Properties General Partner, LLC,
                                       a Delaware limited liability company

                                       By: /s/ David A. Brooks
                                           -------------------
                                       Its Vice President
                                       Borrower's Tax ID No. 20-0255650

                                   ASHFORD FLAGSTAFF LP, a Delaware
                                   limited partnership

                                   By: Ashford Properties General Partner, LLC,
                                       a Delaware limited liability company

                                       By: /s/ David A. Brooks
                                           -------------------
                                       Its Vice President
                                       Borrower's Tax ID No. 20-0255623

                     [SIGNATURES CONTINUE ON FOLLOWING PAGE]

Signature Page to Loan Agreement

<PAGE>

                                   ASHFORD PHOENIX LP, a Delaware limited
                                   partnership

                                   By: Ashford Properties General Partner, LLC,
                                       a Delaware limited liability company

                                       By: /s/ David A. Brooks
                                           -------------------
                                       Its Vice President
                                       Borrower's Tax ID No. 20-0255644

                                   ASHFORD SYRACUSE LP, a Delaware
                                   limited partnership

                                   By: Ashford Properties General Partner, LLC,
                                       a Delaware limited liability company

                                       By: /s/ David A. Brooks
                                           -------------------
                                       Its Vice President
                                       Borrower's Tax ID No. 20-0255613

LENDER:                            MERRILL LYNCH CAPITAL, a Division of
                                   Merrill Lynch Business Financial Services
                                   Inc., a Delaware corporation

                                   By: /s/ Cynthia M. Lozano
                                       ---------------------
                                   Name: Cynthia M. Lozano
                                   Title: Asst. Vice President

Signature Page to Loan Agreement

<PAGE>

                                 LIMITED JOINDER

            In order to induce Lender to make the Loan, the undersigned
Principal has agreed to enter into this Limited Joinder, which is attached to
and made a part of that certain Loan Agreement (the "LOAN AGREEMENT") dated
December 24, 2003 between ASHFORD DAYTON LP, ASHFORD COLUMBUS LP, ASHFORD
FLAGSTAFF LP, ASHFORD PHOENIX LP, and ASHFORD SYRACUSE LP, each a Delaware
limited partnership (collectively, "BORROWERS"), and MERRILL LYNCH CAPITAL, a
Division of Merrill Lynch Business Financial Services Inc., a Delaware
corporation (collectively, with its successors and assigns, "LENDER"). (All
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Loan Agreement.) Principal acknowledges that without this Limited
Joinder, Lender would be unwilling to make the Loan. NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the undersigned
hereby agree and covenant as follows:

            1.    RETAINED LIABILITIES. Except for the Retained Liabilities
(defined below), Principal shall not be personally liable to pay the Loan, or
any other amount due, or to perform any obligation, under the Loan Documents,
and Lender agrees to look solely to all revenue and assets of Borrowers, the
Projects and any other collateral heretofore, now, or hereafter pledged by any
party to secure the Loan. This Limited Joinder is a guaranty of full and
complete payment and performance and not of collectability. Principal shall be
personally liable for the following (the "RETAINED LIABILITIES"):

            (a)   All losses, damages, causes of actions, suits and Expenses
incurred by Lender or any Affiliate or agent thereof as a result of (i) any
failure after the occurrence and during the continuance of any default (without
benefit of any applicable grace or cure period) to apply any portion of the
revenue from any Project to the Loan as required by the Loan Agreement or to
customary operating expenses of such Project, (ii) fraud, (iii) misapplication,
misappropriation or conversion of any rents, proceeds or funds deriving from (A)
any Project, (B) any insurance proceeds paid by reason of any loss, damage or
destruction to any Project and not used by Borrowers for restoration or repair
of such Project; and/or (C) any awards or amounts received in connection with
condemnation of all or a portion of any Project and not used by Borrowers for
restoration or repair of such Project, (iv) material misrepresentation, (v) any
material waste or abandonment of any Project, (vi) failure to keep any Project
insured in accordance with the terms of the Loan Documents, (vii) any fees paid

to a Principal or any Affiliate after any default under the Loan Documents
except as provided in the Collateral Assignment of Management Agreement and
Waiver of Manager's and Broker's Liens executed by Lender, Borrowers, Project
Lessee and Manager, (viii) any breach of the Environmental Obligations or any
representation or warranty contained in Article 6 of the Loan Agreement
(Environmental Matters) subject to notice and cure periods set forth in Section
6.6 of the Loan Agreement, (ix) any Borrower's hiring of employees in violation
of the Loan Documents, (x) voluntary termination of any License Agreement, (xi)
any failure of any Borrower or Principal (or any other holder of the liquor
license) to fully cooperate with Lender in the transfer of the liquor license
for any Project to Lender, or its designee, following a foreclosure or
deed-in-lieu of foreclosure or in operating all bar and other facilities
requiring a liquor license during such transition period as provided

<PAGE>

in that certain letter to Lender regarding the liquor licenses executed by
Borrowers or (xii) any claim or assertion of liability against Lender by any
Depository Bank unless such claim or assertion is solely the result of Lender's
gross negligence or willful misconduct; and

            (b)   Repayment of the Loan, the Exit Fee, all costs and expenses of
Lender, and all other obligations of Borrowers under the Loan Documents in the
event of (i) any breach of any of the covenants of the Loan Agreement in (A)
Section 4.2(b) (transfers), (B) Section 4.2(l) (no additional debt or
encumbrances), (C) Section 4.2(m) (organizational documents), (D) Section 4.2(n)
(single purpose entity) or (E) Section 4.2(u) (depository accounts and credit
card issuers), or (ii) the filing by any Borrower, or the filing against any
Borrower by Principal or any Affiliate of Principal, of any proceeding for
relief under any federal or state bankruptcy, insolvency or receivership laws or
any assignment for the benefit of creditors made by such Borrower.

            The liability of Principal shall be direct and immediate as a
primary and not a secondary obligation or liability, and is not conditional or
contingent upon the pursuit of any remedies against Borrowers, or any other
person, or against any collateral or liens held by Lender.

            The foregoing shall in no way limit or impair the enforcement
against the Borrowers, any Project or any other collateral security granted by
the Loan Documents of any of the Lender's rights and remedies pursuant to the
Loan Documents.

            2.    WAIVERS. To the fullest extent permitted by applicable law,
Principal waives all rights and defenses of sureties, guarantors, accommodation
parties and/or co-makers and agrees that its obligations under this Joinder
shall be direct, primary, absolute and unconditional and that its obligations
under this Joinder shall be unaffected by any of such rights or defenses,
including,

            (a)   Any rights which it may have to require that (1) Lender first
                  proceed against Borrowers, or any other Person with respect to
                  the Retained Liabilities or (2) Lender first proceed against
                  any collateral held by Lender or (3) any party to be joined in
                  any proceeding to enforce the Retained Liabilities;

            (b)   The incapacity or lack of authority of any Borrower or any
                  other Person;

            (c)   The failure of Lender to commence an action against a Borrower
                  or Borrowers or any other Person or to proceed against or
                  exhaust any security held by Lender at any time or to pursue
                  any other remedy whatsoever at any time;

            (d)   Any duty on the part of Lender to disclose to Principal any
                  facts it may now or hereafter know regarding Borrowers
                  regardless of whether Lender has reason to believe that any
                  such facts materially increase the

                                      -2-
<PAGE>

                  risk beyond that which Principal intends to assume or has
                  reason to believe that such facts are unknown to Principal,
                  Principal acknowledging that it is fully responsible for being
                  and keeping informed of the financial condition and affairs of
                  Borrowers;

            (e)   Lack of notice of default, demand of performance or notice of
                  acceleration to Borrowers or any other party with respect to
                  the Loan or the Retained Liabilities;

            (f)   The consideration for this Limited Joinder;

            (g)   Any acts or omissions of Lender (other than gross negligence
                  or willful misconduct of Lender or its Affiliates or agents)
                  which vary, increase or decrease the risk of Principal;

            (h)   Any statute of limitations affecting the liability of
                  Principal hereunder, the liability of any Borrower or any
                  guarantor under the Loan Documents, or the enforcement hereof,
                  to the extent permitted by law;

            (i)   The application by any Borrower of the proceeds of the Loan
                  for purposes other than the purposes represented by Borrowers
                  to Lender;

            (j)   An election of remedies by Lender, including any election to
                  proceed against any collateral by judicial or non-judicial
                  foreclosure, whether real property or personal property, or by
                  deed in lieu thereof, and whether or not every aspect of any
                  foreclosure sale is commercially reasonable, and whether or
                  not any such election of remedies destroys or otherwise
                  impairs the subrogation rights of Principal or the rights of
                  Principal to proceed against any Borrower or any guarantor for
                  reimbursement, or both;

            (k)   Any statute or rule of law which provides that the obligation
                  of a surety must be neither larger in amount nor in any other
                  aspects more burdensome than that of a Principal;

            (l)   Any rights to enforce any remedy which Lender may have against
                  Borrowers, any rights to participate in any security for the
                  Loan and any rights of indemnity, reimbursement, contribution
                  or subrogation which Principal may have against any Borrower
                  or any other Person;

            (m)   Lender's election, in any proceeding instituted under the
                  Federal Bankruptcy Code, of the application of Section
                  1111(b)(2) of the Federal Bankruptcy Code or any successor
                  statute; and

            (n)   Any borrowing or any grant of a security interest under
                  Section 364 of the Federal Bankruptcy Code.

                                      -3-
<PAGE>

            (o)   Without limiting any of the foregoing, Principal, to the
                  extent applicable, unconditionally waives and agrees not to
                  assert any and all rights, benefits and defenses which might
                  otherwise be available under the provisions of Ariz. Rev.
                  Stat. Sections 12-1641, et seq., 44-141, 44-142 or 47-3605,
                  Arizona Rules of Civil Procedure Rule 17(f), and all other
                  laws, rules and statutes of similar import, and any other
                  statutes or rules (including any statutes or rules amending,
                  supplementing or supplanting same) which might operate,
                  contrary to Principal's agreements herein to limit Principal's
                  liability under, or the enforcement of, this Limited Joinder.

            3.    CONSENTS AND RELEASES. Principal hereby consents and agrees
that Lender may at any time, and from time to time, without notice to or further
consent from Principal and either with or without consideration do any one or
more of the following, all without affecting the agreements contained herein or
the liability of Principal for the Retained Liabilities: (a) surrender without
substitution any property or other collateral of any kind or nature whatsoever
held by it, or by any person, firm or corporation on its behalf or for its
account, securing the Loan or the Retained Liabilities; (b) modify the terms of
any document evidencing, securing or setting forth the terms of the Loan; (c)
grant releases, compromises and indulgences with respect to the Loan or the
Retained Liabilities or any persons or entities now or hereafter liable thereon;
or (d) take or fail to take any action of any type whatsoever with respect to
the Loan or the Retained Liabilities. To the maximum extent permitted by law,
Principal knowingly, voluntarily and intentionally agrees to be bound by the
provisions of Article 3 of the Loan Agreement (solely with respect to providing
financial information with respect to itself), Section 4.2(m) of the Loan
Agreement and Article 11 of the Loan Agreement, including, without limitation,
the waiver of the right to a trial by jury in Section 11.2, and the consents to
jurisdiction and the governing law of Illinois set forth in Sections 11.3, and
11.4, respectively.

                         [SIGNATURES ON FOLLOWING PAGE]

                                      -4-
<PAGE>

Executed as of December __, 2003.

PRINCIPALS:

ASHFORD HOSPITALITY LIMITED PARTNERSHIP,
a Delaware limited partnership

By:   Ashford OP General Partner LLC, a Delaware
      limited liability company

      /s/ David A. Brooks
      -----------------------------
      By:  David A. Brooks
      Its: Vice President

Address:    14180 Dallas Parkway
            Pacific Center I, Suite 900
            Dallas, Texas  75240-4376

Tax I.D. #: 20-0110897

                                      -5-
<PAGE>

                                    EXHIBIT A

                            LEGAL DESCRIPTION OF LAND

<TABLE>
<CAPTION>
                              ASHFORD                  ASHFORD                    ASHFORD
                             DAYTON LP               COLUMBUS LP                FLAGSTAFF LP
------------------------------------------------------------------------------------------------
<S>                 <C>                       <C>                      <C>
Name:               Doubletree Guest Suites   Doubletree Guest Suites    Embassy Suites

Address:            300 Prestige Place        505 Front Street           706 South Milton Road
                    Dayton, OH 45342          Columbus, OH 43215         Flagstaff, AZ 86001

No. of Buildings:              1                        1                          4

Units                         137                      194                        119

                          146 regular          100 regular spaces      124 regular,
Parking                  5 handicapped                                 6 handicapped, plus an
                                                                       additional 16 by easement

Legal Description       Attached as A-1          Attached as A-2            Attached as A-3

<CAPTION>
                         ASHFORD              ASHFORD
                        PHOENIX LP           SYRACUSE LP
-------------------------------------------------------------
<S>                 <C>                <C>
Name:               Embassy Suites     Embassy Suites

Address:            1515 N. 44th St    6646 Old Collamer Road
                    Phoenix, AZ 85008  Dewitt, NY 13057

No. of Buildings:           6                     1

Units                      229                   215

                       229 regular,          203 regular
Parking               11 handicapped        8 handicapped

Legal Description    Attached as A-4       Attached as A-5
</TABLE>

<PAGE>

                                   EXHIBIT A-1

                            DAYTON LEGAL DESCRIPTION

PARCEL ID NO. K45 25815 0005

Situate in Section 18, Town 2, Range 5, MRS, Miami Township, Montgomery County,
Ohio, and being all of Lot Numbered 5 (divided in two parts) of Frisch's Replat
as recorded in Book 154, page 36 of the Plat Records of said County, said part
lots being more particularly described as follows:

PART I:

Beginning at an iron pin on the easterly right-of-way line of Interstate 75 at
the Southwest corner of Lot No. 5 (Part I) of Contemporary Plaza as recorded in
Book 106, Page 89 of the Plat Records of Montgomery County, Ohio;

Thence from said point of beginning, South 85 degrees 12' 20" East with the
South boundary line of Contemporary Plaza, a distance of 209.14 feet to a point;

Thence South 4 degrees 47' 40" West a distance of 50.25 feet to a point;

Thence South 85 degrees 12' 20" East a distance of 463.54 feet to a point of
curvature;

Thence Southeastwardly on a curve to the right with a radius of 264.00 feet, an
arc distance of 39.80 feet to a point (said curve having a central angle of 8
degrees 38' 16", a chord bearing South 80 degrees 53' 12" East and a chord
distance of 39.76 feet);

Thence South 76 degrees 35' 27" East a distance of 39.22 feet to a point;

Thence South 5 degrees 12' 30" West a distance of 351.82 feet to an iron pin;

Thence North 84 degrees 47' 31" West a distance of 468.50 feet to an iron pin;

Thence North 6 degrees 28' 20" West a distance of 89.87 feet to a point;

Thence North 84 degrees 47' 31" West a distance of 199.18 feet to an iron pin on
the Easterly right-of-way line of Interstate 75;

Thence with said right-of-way North 6 degrees 28' 20" West a distance of 324.23
feet to the place of beginning, containing 5.619 acres, more or less.

PART II:

Beginning at the interstate of the South line of Contemporary Plaza as recorded
in Book 106, Page 89 of the Plat Records of Montgomery County, Ohio, and the
Easterly right-of-way of Prestige Place as recorded in Frisch's in Plat Book
130, Page 10, said point being South 85 degrees 12' 20" East a distance of
265.56 feet from the Southwest corner of Lot No. 5 of Contemporary Plaza;

Thence from said point of beginning, South 85 degrees 12' 20" East a distance of
485.97 feet to a point;

<PAGE>

Thence South 5 degrees 12' 30" West a distance of 1.29 feet to a point in the
North right-of-way line of Prestige Plaza;

Thence North 81 degrees 19' 58" West a distance of 2.21 feet to a point of
curvature;

Thence Northwestwardly on a curve to the left having a radius of 427.40 feet an
arc distance of 27.61 feet to a point (said curve having a central angle of 3
degrees 42' 05", a chord bearing of North 83 degrees 21' 18" West, and a chord
distance of 27.61 feet);

Thence North 85 degrees 12' 20" West a distance of 456.16 feet to a point;

Thence North 4 degrees 47' 40" East a distance of 0.25 feet to the point of
beginning, containing .003 acres, more or less.

Together with those appurtenant and non-exclusive rights under a Deed of
Easement between Frisch's Restaurants, Inc., and PC Development Limited
Partnership dated January 30, 1987 and recorded January 30, 1987 at 12:34 P.M.
in Deed Microfiche No. 87-0055E04, Montgomery county recorder's office.

Part III:

Together with those appurtenant and non-exclusive rights under a Deed of
Easement between Frisch's Restaurants, Inc., and PC Development Limited
Partnership dated January 30, 1987 and recorded January 30, 1987 at 12:34 P.M.
in Deed Microfiche No. 87-0055E04, Montgomery county recorder's office.

                                      -2-
<PAGE>

                                   EXHIBIT A-2

                           COLUMBUS LEGAL DESCRIPTION

PARCEL ID NO. 010-000474-00

The leasehold estate created by the Memorandum of Air Space and Air Rights Lease
executed by Huntington Center Associates, an Ohio general partnership, Lessor,
and Columbus/Front Ltd., an Ohio limited partnership, Lessee, dated March 28,
1984, recorded in Official Records Volume 04149, Page H-16 and the Memorandum of
Amended and Restated Air Space and Air Rights Lease and Agreement dated March
23, 1995, recorded April 11, 1995 in Official Records Volume 28829, Page I-08,
demising and leasing for the term commencing March 23, 1995 and ending December
31, 2045, and assigned to FelCor Suites Limited Partnership, a Delaware limited
partnership, by Assignment of Amended and Restated Air Space and Air Rights
Lease and Agreement dated February 6, 1998, recorded February 20, 1998 in
Instrument Number 199802200038452, and being further assigned to Ashford
Columbus LP, a Delaware limited partnership, by Assignment and Assumption of Air
Rights Lease Agreement dated October 8, 2003 and recorded October 10, 2003 in
Instrument Number 200310100327318, Recorder's Office, Franklin County, Ohio, the
following described premises, to-wit:

PARCEL A:

Situated in the State of Ohio, County of Franklin and City of Columbus,

And being all of the three dimensional air space above a level plane at the
elevation of 801.75 feet above mean sea level datum, as related to U.S. Coast
and Geodetic Survey Bench Mark Q 308 at the Southwest corner of the Capital
Building published elevation 773.509.

Said level plane being located over parts of Inlots Nos. 193, 194, 195, 196 and
197 in said City of Columbus as said inlots are numbered and delineated on the
record plat thereof, of record in Deed Book "F", Page 332 (reproduced in Plat
Book 3, Page 248 and Plat Book 14, Page 27), records of the Recorder's Office,
Franklin County, Ohio.

Said level plane area being limited and defined by parallel vertical side
planes, the location of the intersection of said vertical side planes with the
surface of the earth being more particularly described as follows:

Beginning at ground level at a point in the Westerly line of the above mentioned
Inlot No. 193 and the Easterly line of South Front Street (82.5') said point
being South 12 degrees 00 minutes 00 seconds East a distance of 14.50 feet from
the Northwesterly corner of said Inlot No. 193 and the intersection of the
Easterly line of South Front Street with the Southerly line of West Capital
Street (35');

Thence North 78 degrees 00 minutes 00 seconds East at right angles to the
Westerly line of said Inlot No. 193 a distance of 67.00 feet to a point in said
Inlot No. 193;

Thence South 12 degrees 00 minutes 00 seconds East across the above mentioned
Inlots Nos. 193, 194, 195, 196 and 197 and parallel to the Westerly line of said
Inlots and the Easterly line of South Front Street, 295.08 feet to a point in
said Inlot No. 197;

<PAGE>

Thence South 78 degrees 00 minutes 00 seconds West a distance of 67.00 feet to
the Westerly line of said Inlot No. 197;

Thence North 12 degrees 00 minutes 00 seconds West along the Westerly line of
said Inlots and the Easterly line of Front Street 295.08 feet to the place of
beginning.

Containing 19,768 square feet, more or less.

TOGETHER WITH those easements appurtenant to the interest insured herein as
granted in the Memorandum of Lease dated April 19, 1984, filed April 25, 1984 at
11:05 A.M., and recorded in Official Record 04149H16, as amended in Second
Amendment to Air Space and Air Rights Lease and Agreement in Official Record
17323G20 and Memorandum of Amended and Restated Air Space and Air Rights Lease
and Agreement in Official Record 28829I08.

PARCEL B:

TOGETHER WITH those easements granted in the said Easement from the City of
Columbus, a municipal corporation in Franklin County, State of Ohio, dated
February 10, 1982, filed March 12, 1982 at 11:00 A.M., in Official Record
01598A20.

PARCEL C:

TOGETHER WITH those easements granted in the said Easement from the City of
Columbus, dated April 6, 1984, filed April 13, 1984 at 8:50 A.M. in Official
Record 04104D18.

PARCEL D:

TOGETHER WITH those easements granted in the said Easement from the City of
Columbus, dated July 16, 1984, filed for record July 18, 1984 at 3:10 P.M. in
Official Record 04529H14.

                                      -2-
<PAGE>

                                   EXHIBIT A-3

                           FLAGSTAFF LEGAL DESCRIPTION

PARCEL NO. 1:

A parcel of land described in Docket 1645, page 428, records of Coconino County,
Arizona, (R1) being that part of the Northwest quarter of Section 21, Township
21 North, Range 7 East, of the Gila and Salt River Base and Meridian, Coconino
County, Arizona, and more particularly described as follows:

BEGINNING at the center quarter corner of said Section 21, said point being a
found 1 1/2 inch brass cap in concrete marked "C1/4S21";

Thence North 00(degree)30' West, along the North-South centerline of said
Section 21, a distance of 1398.60 feet (record 1402.95 feet (R1) and record
1398.90 feet according to Docket 1721, page 586 (R2)), to the most Easterly
corner of that certain parcel of land described in Docket 910, page 901,(R4);

Thence South 38(degree)16'27" West, a distance of 211.03 feet (Record South
38(degree)12' West, 211 feet (R1) and record 210.89 feet (R2)) along the
Southeasterly line of said R4, to that certain point described of record as the
most Southerly corner of the Park Plaza Motel property;

Thence continue South 38(degree)16'27" West, a distance of 417.13 feet (record
South 38(degree)12' West, 417.35 feet (R1)) to the most Southerly corner of said
R4;

Thence North 46(degree)15'34 West, a distance of 106.66 feet (record North
46(degree)20' West (R1) and North 46(degree)16'43" West, 106.49 (R1)) along the
Southwesterly line of said R4 to the most Westerly corner of said R4, and the
TRUE POINT OF BEGINNING;

Thence continue North 46(degree)15'34" West (record North 46(degree)20' West
(R1)) a distance of 327.11 feet to the most Westerly corner of said R1, said
point being a found 3/8 inch iron pin set in concrete, and which point is on the
Southeasterly right-of-way line of Milton Avenue (formerly U. S. Highway 89-A);

Thence North 46(degree)51'18" East, a distance of 437.57 feet (record North
46(degree)51' East, 437.66 feet (R1)), along said Southeasterly right-of-way
line to a point on the Southwesterly line of R2, and which point is the most
Northerly corner of said R1;

Thence South 42(degree)54'26" East (record South 43(degree)00'30" East (R1) a
distance of 263.45 feet along said Southwesterly line R2, and along the
Northeasterly line of said R1 to the most Easterly corner of said R1, which
point lies on the Northwesterly line of said R4;

Thence South 38(degree)16'27" West, a distance of 423.45 feet along said
Northwesterly line of said R4, to the Point of Beginning.

<PAGE>

PARCEL NO. 2:

TOGETHER WITH EASEMENT RIGHTS in that certain Reciprocal Easement for Ingress
and Egress and rights incident thereto, as set forth in instrument recorded in
Document No. 86-07886, recorded in Docket 1083, Page 339, re-recorded in Docket
1084, Page 595, as amended by that certain Modification of Reciprocal Easement
for Ingress and Egress dated as of December, 2003, recorded in the office of the
County Recorder of Coconino County, Arizona, covering the following described
property:

A portion of the Northwest quarter of Section 21, Township 21 North, Range 7
East, of the Gila and Salt River Base and Meridian, Coconino County, Arizona,
being an Easement for ingress and Egress purposes, granted in Docket 1083, page
339, and re-recorded in Docket 1084, page 595, and more particularly described
as follows:

COMMENCING at the Center quarter corner of Section 21;

Thence North 00(degree)30'00" West, along the North-South mid-Section line
(Basis of Bearing) a distance of 1398.90 feet (1400.00 record) to a found
aluminum cap marked "ARENCO LS13010";

Thence South 38(degree)12'37" West (South 38(degree)12' West record) along the
West line of N.A.U. property, a distance of 210.89 feet (211.00 record) to a
found aluminum cap marked "ARENCO LS13010";

Thence North 42(degree)55'17"West (North 43(degree)15' West record) a distance
of 107.26 feet to the TRUE POINT OF BEGINNING;

Thence continue North 42(degree)55'17" West (North 43(degree)15' West record) a
distance of 263.86 feet to the Easterly right-of-way line of Oak Creek Highway,
50 feet to the right of the established center line of said Highway;

Thence South 46(degree)50'51" West (South 46(degree)45' West record) along the
Highway right-of-way, a distance of 60.00 feet;

Thence South 44(degree)06'41" East. a distance of 272.15 feet;

Thence North 38(degree)12'37" East, a distance of 55.00 feet to the Point of
Beginning.

PARCEL 3:

TOGETHER WITH EASEMENT RIGHTS in that certain Declaration of Restriction of Use
of Real Property dated February 17, 1995, recorded on February 28, 1995, in
Docket (Book) 1749, Page 157, as reinstated and modified by Reinstatement and
Modification of Declaration of Restriction of Use of Real Property dated as of
January 22, 2003, recorded in the Official Records.

                                      -2-
<PAGE>

                                   EXHIBIT A-4

                            PHOENIX LEGAL DESCRIPTION

That portion of Section 6, Township 1 North, Range 4 East, of the Gila and Salt
River Base and Meridian, Maricopa County, Arizona, described as follows:

Commencing at the North quarter corner of Section 6;

Thence South 89 degrees 59 minutes 43 seconds East, along the North line of said
Section 6 and the center line of McDowell Road, 326.00 feet;

Thence South 00 degrees 07 minutes 00 seconds West, 40.00 feet to a point on the
South right-of-way line of said McDowell Road said point also being the True
Point of Beginning;

Thence continuing South 00 degrees 07 minutes 00 seconds West along the East
line of the West 326.00 feet of the Northeast quarter of said Section 6, 131.00
feet;

Thence East, along the South line of the North 171.00 feet of Lot 2 of said
Section 6, 136.00 feet;

Thence South, along the West line of the East 181.50 feet of the East 317.50
feet of the West 643.50 feet of Lot 2, Section 6, 162.00 feet;

Thence South 89 degrees 59 minutes 43 seconds East, 22.75 feet;

Thence South 00 degrees 07 minutes 00 seconds West, along the East line, of the
West half, of the East 317.50 feet, of the North 660.00 feet, of the West 643.50
feet of the North half of said Lot 2, 281.00 feet, to a point on the North
right-of-way line of Willetta Street,

Thence North 89 degrees 59 minutes 43 seconds West, along said North
right-of-way line of Willetta Street 434.75 feet to a point on the East
right-of-way line of 44th Street;

Thence North 00 degrees 07 minutes 00 seconds East, along said East right-of-way
line of 44th Street, 559.00 feet;

Thence North 45 degrees 03 minutes 39 seconds East, 21.23 feet to a point on the
South right-of-way line of said McDowell Road;

Thence South 89 degrees 59 minutes 33 seconds East, along the South right-of-way
line of said McDowell Road, 261.00 feet to a point, said point also being the
True Point of Beginning.

ALSO DESCRIBED AS:

That portion of Section 6, Township 1 North, Range 4 East, of the Gila and Salt
River Base and Meridian, Maricopa County, Arizona, described as follows:

Commencing at the North quarter corner of Section 6;

THENCE along the North line of said Section 6 and the Center line of McDowell
Road, South 89

<PAGE>

degrees 59 minutes 43 seconds East (R) [North 89 Degrees 59 Minutes 33 Seconds
West (M)], a distance of 326.00 feet (R&M);

Thence South 00 degrees 07 minutes 00 seconds West (R)[South 00 Degrees 00
Minutes 05 Seconds West (M)], a distance of 40.00 feet (R) [39.98 feet (M)], to
a point on the South right-of-way line of said McDowell Road, said point also
being the TRUE POINT OF BEGINNING;

Thence along the East line of the West 326.00 feet of the Northeast quarter of
said Section 6, South 00 Degrees 07 Minutes 00 Seconds West (R) [North 00
Degrees 09 Minutes 25 Seconds East (M)], a distance of 131.00 feet (R&C);

Thence along the South line of the North 171.00 feet of Lot 2 of said Section 6,
South 89 Degrees 59 Minutes 43 Seconds East (R) [South 89 Degrees 55 Minutes 54
Seconds East (C)], a distance of 136.00 feet (R&C);

Thence along the West line of the East 181.50 feet of the East 317.50 feet of
the West 643.50 feet of Lot 2, Section 6, South 00 Degrees 07 Minutes 20 Seconds
West (R)[South 00 Degrees 09 Minutes 25 Seconds West (C), a distance of 162.00
feet (R) [161.96 feet (C)];

Thence South 89 degrees 59 Minutes 43 seconds East (R) [North 89 Degrees 55
Minutes 54 Seconds West (M)], a distance of 22.75 feet (R&C);

Thence along the East line of the West half, of the East 317.50 feet, of the
North 660.00 feet, of the West 643.50 feet, of the North half of said Lot 2,
South 00 Degrees 07 Minutes 00 Seconds West (R) [South 00 Degrees 05 Minutes 25
Seconds West (M)], a distance of 281.00 feet (R) [280.86 feet (M)], to a point
on the North right-of-way line of Willetta Street;

Thence along said North right-of-way line of Willetta Street, North 89 Degrees
59 Minutes 43 Seconds West (R&M), a distance of 434.75 (R&M), feet to a point on
the East right-of-way line of 44th Street;

Thence along said East right-of-way line of 44th Street, North 00 Degrees 07
Minutes 00 Seconds East (R&M), a distance of 559.00 feet (R&M);

Thence North 45 Degrees 03 Minutes 39 Seconds East (R) [North 45 Degrees 03
Minutes 40 Seconds East (M), a distance of 21.23 feet (R&M), to a point on the
South right-of-way line of said McDowell Road;

Thence along the South right-of-way line of said McDowell Road, South 89 Degrees
59 Minutes 33 Seconds East (R) [South 89 Degrees 59 Minutes 48 Seconds East
(M)], a distance of 261.00 feet (R)[261.08 feet (M)], to a point, said point
also being the TRUE POINT OF BEGINNING.

Note: (R)=Recorded bearing or distance; (M)=Measured bearing or distance;
(C)=Calculated bearing or distance

                                      -2-
<PAGE>

                                   EXHIBIT A-5

                           SYRACUSE LEGAL DESCRIPTION

PARCEL "A"

ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Dewitt, County of
Onondaga and State of New York, being part of Lot 21, in said Town, and being
more specifically described as follows:

BEGINNING at a point in the easterly line of Old Collamer Road at the
intersection of said easterly line with the southerly line of lands of the New
York State Thruway as appropriated and recorded in Book 1422 of Deeds at page
577 in the Onondaga County Clerk's Office; running thence north 86(degree)55'26"
east a distance of 404.62 feet along the southerly line of lands of New York
State Thruway to an angle point; thence north 86(degree)39' 48" east a distance
of 203.41 feet along the southerly line of lands of New York State Thruway to a
point; thence south 03(degree)00'58" east a distance of 275.00 feet to a point;
thence south 86(degree)38'42' west a distance of 128.59 feet to a point in the
northerly line of Embassy Drive as proposed to be dedicated to the Town of
Dewitt; thence continuing south 86(degree)38'42" west a distance of 69.79 feet
along the northerly line of Embassy Drive, as proposed, to the northwesterly
corner thereof; thence south 86(degree)49'12" west a distance of 540.65 feet to
a point in the easterly line of Old Collamer Road; thence north 22(degree)21'45"
east a distance of 305.65 feet along the easterly line of Old Collamer Road to
the point of beginning.

TOGETHER with a non-exclusive right of way and easement on, over, in, under, and
across the following described Easements I, II and III:

EASEMENT I

ALL THAT TRACT OR PARCEL OF LAND, situate in the Town of Dewitt, County of
Onondaga and State of New York, being part of Lot 21, in said Town, and being
more particularly described as follows:

BEGINNING at a point in the northerly line of Court Street Road at the
intersection of said northerly line with the easterly line of a parcel of land
conveyed to Welter and recorded in Book 1037 of Deeds at page 310 in the
Onondaga County Clerk's Office; running thence north 03(degree)10'48" west a
distance of 737.0 feet along the easterly line of said parcel conveyed to Welter
and a prolongation northerly thereof to a point; thence north 86(degree)38'42"
east a distance of 69.79 feet to a point of curvature (said point to be known as
"Point A" for future reference); thence easterly and southerly on a curve to the
right with a radius of 70.00 feet a distance of 177.02 feet to a point
(designated as "Point B" for future, reference); thence continuing on said curve
to the right with a radius of 70.00 feet a distance of 20.48 feet to a point of
reverse curvature; thence on a curve to the left with a radius of 50.00 feet a
distance of 62.38 feet to a point of tangency; thence south 03(degree)10'48"
east a distance of 23.42 feet to a point (designated as "Point C" for future
reference); thence continuing south 03(degree)10'48" east a distance of 530.00
feet to a point in the northerly line of Court Street Road; thence south
86(degree)49'12" west a distance of 58.10 feet along the northerly line of Court
Street Road to the point of beginning.

<PAGE>

EASEMENT II

A strip of land 20 feet in width, the center line of which is more particularly
described as follows:

BEGINNING at a point 40.00 feet westerly of the southeast corner of Parcel "A"
referred to above as shown on the proposed subdivision map of Court Street Road
Development as presented to the Town of Dewitt; thence south 21(degree)16'19"
west a distance of 155.00 feet, more or less, to a point in the northerly line
of Easement III described below.

EASEMENT III

BEGINNING at the point designated as "Point B" in the afore-described Easement 1
above, said point being located in the easterly line of Embassy Drive, as
proposed; running thence south 41(degree)35'00" east a distance of 101.60 feet
to a point in the northerly line of a proposed Detention Area; thence north
86(degree)35'49" east a distance of 289.00 feet to a point; thence north
86(degree)13'38" east a distance of 496.08 feet to a point in the westerly line
of Kinne Street; thence south 03(degree)39'57" east a distance of 60.00 feet
along the westerly line of Kinne Street to a point; thence south
86(degree)49'12" west a distance of 407.67 feet to a point; thence south
03(degree)10'48" east a distance of 91.71 feet to a point; thence south
86(degree)49'12" west a distance of 493.32 feet to a point in the easterly line
of Embassy Drive, as proposed; thence north 03(degree)10'48" west a distance of
145.00 feet along the easterly line of said Embassy Drive to the point
designated as "Point C" in the afore-described Easement I; thence north
86(degree)35'49" east a distance of 90.00 feet to a point; thence north
41(degree)35'00" west a distance of 89.94 feet to a point in the easterly line
of Embassy Drive, as proposed; thence easterly and northerly on a curve to the
left with a radius of 70.00 feet a distance of 20.48 feet along the easterly
line of said Embassy Drive to the point of beginning.

Tax Map No. 026.-4-21.0

                                      -2-
<PAGE>

                                   EXHIBIT B-1

                           DAYTON PERMITTED EXCEPTIONS

1.    Real estate taxes and assessments for the year 2003, and all subsequent
      years, not yet due and payable.

2.    Restrictions appearing of record in Limited Warranty Deed dated January
      30, 1987, to Frisch's Restaurant, Inc., filed and recorded in Deed
      Microfiche No. 87-0055-D12, Montgomery County Recorder's Office. (As to
      Parcel III).

3.    Easement for underground pipeline granted to The Ohio Fuel Gas Company by
      instrument dated May 23, 1960, filed and recorded in Deed Book 1990, Page
      155, Montgomery County Recorder's Office, and as shown on survey of the
      land prepared by Bradley J. Judge, RAPS No. 7150, Job No. 286-3, dated
      December 8, 2003.

4.    Right-of-Way and Easement for the transmission and/or distribution of
      electric energy, including underground facilities, if any, granted to The
      Dayton Power and Light Company by instrument dated May 1, 1968, filed and
      recorded in Deed Book 2411, Page 742, Montgomery County Recorder's Office,
      and as shown on survey of the land prepared by Bradley J. Judge, RAPS No.
      7150, Job No. 286-3, dated December 8, 2003.

5.    Right-of-Way and Easement for waterline, together with underground
      facilities if any, granted to The Board of County Commissioners of
      Montgomery County, Ohio by instrument dated April 10, 1987, filed June 26,
      1987 at 8:47 A.M., and recorded in Deed Microfiche No. 87-0362-B01,
      Montgomery County Recorder's Office, and as shown on survey of the land
      prepared by Bradley J. Judge, RAPS No. 7150, Job No. 286-3, dated December
      8, 2003.

6.    Right-of-Way and Easement for gas, electric and/or utility lines or
      facilities, for the transmission and/or distribution of electric energy,
      for the distribution of liquefied and/or gaseous substance; and/or for
      other utility purpose(s); and for any and all purposes for which gas
      and/or electric energy and/or the distribution of liquefied and/or gaseous
      substances, together with underground facilities, if any, granted The
      Dayton Power and Light Company by instrument dated June 18, 1987, filed
      September 17, 1987 at 9:33 A.M., and recorded in Deed Microfiche No.
      87-0549-E09, Montgomery County Recorder's Office, and as shown on survey
      of the land prepared by Bradley J. Judge, RAPS No. 7150, Job No. 286-3,
      dated December 8, 2003 (As to Parcel III).

7.    Terms, covenants and conditions deed of easement granted to PC Development
      Limited Partnership, an Ohio limited partnership by instrument dated
      January 30, 1987, filed January 30, 1987 at 12:34 P.M., and recorded at
      Deed microfiche No. 87-0055-E04, Montgomery County Recorder's Office, and
      as shown on survey of the land prepared by Bradley J. Judge, RAPS No.
      7150, Job No. 286-3, dated December 8, 2003.

8.    Limited access notations together with Easements for the construction,
      operation, maintenance, repair, replacement, or removal of water, sewer,
      gas, electric, telephone, or other utility line or services and for the
      express privilege of removing any and all trees or other obstructions to
      the free use of said utilities and for providing of ingress and egress

<PAGE>

      to the property for said purposes as shown on the plat of Frisch's Replat
      as recorded in Plat Book "154," Page 36, and Reservation of easement(s),
      as shown on the recorded plat of subdivision unto the respective utility
      company(s) to install, construct, reconstruct, operate, maintain, repair,
      supplement and remove at any time underground communications and/or
      electric power cable facilities in, under, and upon a strip of land three
      (3) feet in width extending from rear or side lot lines to the building
      site of said lot. Said grant includes the right at all times of ingress to
      and egress from said strip. The right to use the premises parallel to and
      adjoining the boundaries of said strip for the operation of apparatus,
      appliances and equipment for any of the purposes herein specified and the
      right to clear and keep cleared and strip of all shrubbery, trees, roots,
      undergrowth and obstructions so as to keep facilities clear thereof. The
      utility company shall promptly restore the surface of said strip to its
      former state of usefulness as shown in Frisch's Plat as recorded in Plat
      Book 130, Page 10 and Frisch's Plat Replat as recorded in Plat Book 154,
      Page 36, Montgomery County Recorder's Office, and as shown on survey of
      the land prepared by Bradley J. Judge, RAPS No. 7150, Job No. 286-3, dated
      December 8, 2003.

                                      -2-
<PAGE>

                                   EXHIBIT B-2

                          COLUMBUS PERMITTED EXCEPTIONS

1.    Real estate taxes and assessments for the year 2003, and all subsequent
      years, not yet due and payable.

2.    Terms and conditions of the Memorandum of Air Space and Air Rights Lease
      executed by Huntington Center Associates, an Ohio general partnership,
      Lessor, and Columbus/Front Ltd., an Ohio limited partnership, Lessee,
      dated March 28, 1984, recorded in Official Records Volume 04149, Page H-16
      and the Memorandum of Amended and Restated Air Space and Air Rights Lease
      and Agreement dated March 23, 1995, recorded April 11, 1995 in Official
      Records Volume 28829, Page I-08, and Assignment of Amended and Restated
      Air Space and Air Rights Lease and Agreement dated February 6, 1998,
      recorded February 20, 1998 in Instrument Number 19980220038452, Recorder's
      Office, and Assignment and Assumption of Air Rights Lease Agreement dated
      October 8, 2003, recorded October 10, 2003, in 200310100327318, Franklin
      County, Ohio.

3.    Terms and conditions of those certain easements recorded in Official
      Records Volume 01598, Page A-20, Official Records Volume 04529, Page H-14;
      and Official Records Volume 04104, Page D-18, Recorder's Office, Franklin
      County, Ohio, and as shown on survey of the and prepared by Albert J.
      Meyers, RPS No. 6579, Job No. 6-12-29-94, last updated October 3, 2003.

4.    Easements reserved by the City of Columbus to operate and maintain any and
      all sewers, waterlines and any other public utilities owned by the City
      and any other public utilities existing on or in the alley vacated by
      ordinance No. 15-81, together with the right of entry at any time for the
      purpose of constructing, installing, replacing, operating and maintaining
      same.

<PAGE>

                                   EXHIBIT B-3

                         FLAGSTAFF PERMITTED EXCEPTIONS

All recording data refer to records in the office of the County Recorder of
Coconino County, Arizona.

1.    Taxes and assessments collectible by the County Treasurer a lien payable
      but not yet due for the second half of 2003.

2.    Reservations or exceptions in Patents or in Acts authorizing the issuance
      thereof.

3.    Easements and rights incident thereto, as set forth in instrument recorded
      in Document 76 of Official Records, Page 408.

4.    Easement and rights incident thereto, as set forth in instrument recorded
      in Docket 900, Page 185.

5.    Reciprocal Easement for Ingress and Egress and rights incident thereto, as
      set forth in instrument recorded in Document No. 86-07886, recorded in
      Docket 1083, Page 339, re-recorded in Docket 1084, Page 595, as amended by
      that certain Modification of Reciprocal Easement for Ingress and Egress
      dated as of December __, 2003, recorded in the office of the County
      Recorder of Coconino County, Arizona.

6.    Easement for waterline and rights incident thereto, as set forth in
      instrument recorded in Docket 1216, Page 639.

7.    Pedestrian Access Easement and rights incident thereto as set forth in
      instrument recorded in Document No. 96-22987, Recorded in Docket 1898,
      Page 819.

8.    Public Utility Easement and rights incident thereto as set forth in
      instrument recorded in Document No. 96-25429, recorded in Docket 1905,
      page 651.

9.    The following matter(s) disclosed by survey of said land by Northland
      Exploration Surveys, Job Number 03-082, dated December 18, 2003:

      a.    Encroachment of an improvement consisting of a concrete block wall
            surrounding the air conditioning unit onto land adjoining on the
            Southeast approximately .5 feet to .85 feet.

      b.    Right of Way for parking spaces over the Northeasterly portion of
            said land.

      c.    Right of Way for an electric box along the Southeasterly line of
            said land.

      d.    Right of Way for an electric box on the Northwesterly line of said
            land.

      e.    Right of Way for catch basins and concrete drainage wall along the
            northeasterly portion of said land.

      f.    Right of Way for a water meter on the Northeasterly line of said
            land.

      g.    Right of Way for a telephone junction box on the Northwesterly line
            of said land.

      h.    Encroachment of an improvement consisting of a Wall onto subject
            property on Southwesterly boundary of approximately 1.76 to 1.23
            feet.

<PAGE>

      i.    Encroachment of an improvement consisting of a Curbing and Sign onto
            street adjoining on the Northwest.

      j.    Encroachment of a pedestrian easement, which lies outside of
            recorded Easement shown on Exception 12.

10.   Declaration of Restriction of Use of Real Property dated February 17,
      1995, recorded on February 28, 1995, in Docket (Book) 1749, Page 157, as
      reinstated and modified by Reinstatement and Modification of Declaration
      of Restriction of Use of Real Property dated as of January 22, 2003,
      recorded in the Official Records.

                                       -2-
<PAGE>

                                   EXHIBIT B-4

                          PHOENIX PERMITTED EXCEPTIONS

1.    Taxes and assessments collectible by the County Treasurer, a lien payable
      but not yet due for the year 2003, second half..

2.    Easement for downguys and rights incident thereto, as set forth in
      instrument recorded in Docket 2359, page 238 and, as shown on survey of
      the land prepared by Leonard J. Earle, II, P.E., L.S., RPS No. 16529, Job
      No. 1033.05, dated December 18, 2003.

3.    Easement for electrical facilities and rights incident thereto, as set
      forth in instrument recorded in Docket 15773, page 339 and, as shown on
      survey of the land prepared by Leonard J. Earle, II, P.E., L.S., RPS No.
      16529, Job No. 1033.05, dated December 18, 2003.

4.    Easement for electrical facilities and rights incident thereto, as set
      forth in instrument recorded in Document No. 98-0750097 and, as shown on
      survey of the land prepared by Leonard J. Earle, II, P.E., L.S., RPS No.
      16529, Job No. 1033.05, dated December 18, 2003.

5.    Reservations or exceptions in Patents or in Acts authorizing the issuance
      thereof.

6.    Water rights, claims or title to water, and agreements, covenants,
      conditions or rights incident thereto, whether or not shown by the public
      records.

<PAGE>

                                   EXHIBIT B-5

                          SYRACUSE PERMITTED EXCEPTIONS

1.    Survey prepared by Jack W. Cottrell, NYS-RLS #21368, Job No. ROLL25-4,
      dated November 21, 2003 shows: (a) location steel storage sheds labeled
      "A" to the east of insured premises noted as possible encroachment; (b)
      North line being the south line of N.Y.S. Thruway (variable widths open -
      no access); (c) location of Easement 1 Proposed Embassy Drive [not open]
      no ingress/egress; location of 8" sewer and water lines within said
      easement; (d) no other violations or encroachments.

2.    10' underground Line Easement given by Embassy/Shaw Syracuse Venture Co.
      to Niagara Mohawk Power Corporation dated February 9, 1990 and recorded
      February 28, 1990 in the Onondaga County Clerk's Office in Book 3602 of
      Deeds Page 96 as shown on survey of the land prepared by Jack W. Cottrell,
      NYS-RLS #21368, Job No. ROLL25-4, dated November 21, 2003.

3.    Terms of an easement included in a Bargain & Sale Deed given by Cal-Tran
      Associates to Embassy/Shaw Syracuse Venture, dated April 12, 1989 and
      recorded April 20, 1989 in the Onondaga County Clerk's Office in Book 3524
      of Deeds Page 305.

<PAGE>
\
                                    EXHIBIT C

                                   LITIGATION

                       EMBASSY SUITES, SYRACUSE, NEW YORK

Maynard Dennis v. Embassy Suites Hotel (No. 03-0020)

      Type of Claim:   Slip and Fall (Plaintiff employee of Premier Restaurant
                       Operations)
      Property:        Syracuse, NY/Embassy Suites
      DOL/Date Served: December 23, 2001/January 24, 2003 (date faxed to FelCor)
      Plaintiff's Attorney:        James B. Fleckenstein
                                   117 South State Street
                                   Syracuse, NY 13202
                                   (315) 475-3012
      Defendant's Attorney:        Craig P. Curcio
                                   Law Offices of Craig P. Curcio
                                   One Edgewater Drive
                                   Middletown, NY 10940
                                   (845) 344-2524
                                   f - (845) 344-2528
      Claim Adjuster:              Cassandra Malanga
      Claim No.:                   231LU 169726N
      Forwarded to us from Hotel.  Forwarded to Craig Manning at Marsh
      (February 24, 2003)          on 1-24-03.

Angela F. Ormond and Edmond J. Ormond v. FelCor Lodging Trust Incorporated (No.
114631)

      Type of Claim:               Personal Injury (involving treadmill)
      Property:                    Syracuse, NY/Embassy Suites
      DOL/Date Served:             August 30, 2002/August 28, 2003
      Plaintiff's Attorney:        Robert J. Sassone
                                   40 South Main Street
                                   Norwood, NY 13668
                                   (315) 353-7398
      Claim No.:                   231 LN 161873
      Claim Adjustor:              Cassandra Malanga
      Forwarded to Barbara Sluke at Kemper 8-28-03.  Received confirmation of
      receipt 8-28-03.

      Both plaintiffs are asking for $1,000,000 in damages.

Pasquale Popolizio and Lisa Stadtlander, as parent & natural guardian of Teodoro
J. Popolizio, a minor v. FelCor Lodging Trust Incorporated, FelCor Lodging
Limited Partnership, Hilton Hotels Corporation

Type of Claim: Personal Injury (electrical shock due to faulty lamp)

<PAGE>

                                    EXHIBIT D

                                    RENT ROLL

1.    Restaurant Lease Agreement dated July 14, 1997, executed between DJONT
      Leasing, L.L.C. and Premier Restaurant Operations, L.L.C., as amended by
      First Amendment dated May 3, 2000, Second Amendment dated July 18, 2001,
      and Letter Agreement (with renewal) dated May 13, 2002, and as further
      amended and assigned by DJONT Leasing, L.L.C. to Ashford Syracuse LP
      pursuant to Assignment, Assumption and Amendment of Restaurant Lease dated
      October 8, 2003.

<PAGE>

                                    EXHIBIT E

      MERRILL LYNCH CAPITAL REAL ESTATE INSURANCE REQUIREMENTS - HOTELS

BORROWER NAME:____________________
PROJECT NAME:_____________________

THE FOLLOWING REQUIREMENTS FOR INSURANCE ARE EFFECTIVE AS OF THE CLOSING DATE.
LENDER RESERVES THE ABSOLUTE RIGHT TO MODIFY, AMEND OR SUPPLEMENT THESE
REQUIREMENTS AT ANY TIME AND FROM TIME TO TIME DURING THE TERM OF THE LOAN AND
BORROWER WILL BE REQUIRED TO SATISFY ANY SUCH MODIFIED, AMENDED OR SUPPLEMENTED
REQUIREMENTS AFTER COMMERCIALLY REASONABLE NOTICE TO BORROWER FROM LENDER OF
SUCH MODIFICATION, AMENDMENT OR SUPPLEMENT.

PROPERTY INSURANCE (MUST SHOW THE FOLLOWING):

1.    Issued on Acord 27 form (Evidence of Insurance), signed by authorized
      agent

2.    Insurance carrier(s) rated A- VII or better (by A.M. Best)

3.    Current policy term

4.    Annual premium for the coverages shown

5.    Premiums that remain unpaid for the term of the policy, if any

6.    All risk/special perils coverage form

7.    Replacement cost coverage with waiver of coinsurance or agreed amount
      endorsement

8.    Bailee coverage covering property in insured's care, custody, and control

9.    Waiver of terrorism exclusion (or indicate "no terrorism exclusion")

10.   Deductible not greater than $25,000

      -     If the deductible is subject to an overall aggregate deductible,
            this must be disclosed with a copy of the specific aggregate
            deductible agreement provided.

11.   Building coverage greater than or equal to replacement cost valued by
      Merrill Lynch Capital or its representatives (if blanket limit or loss
      limit is indicated on the policy, declared building value must be shown on
      the evidence of insurance). Renewal amount shall be adjusted by Borrower,
      subject to Lender's approval, to maintain proper insurable values.

12.   Business Interruption, Extra Expense, and Contingent Business Interruption
      for Property and Boiler and Machinery risks in an amount equal to 12
      months projected net profits, and continuing expense

13.   Boiler & Machinery coverage

14.   Broad form Crime Insurance insuring against the loss of hotel and/or guest
      property due to criminal actions

15.   Building Law and Ordinance coverage

16.   Windstorm coverage, if applicable (For Florida/Coastal properties)

17.   Flood coverage, if applicable (For properties in FEMA flood zones A, B, V,
      and X-Shaded)

18.   Earthquake coverage, if applicable (For properties located in Seismic
      Zones 3 and 4)

19.   Merrill Lynch Capital included as Mortgagee and Loss Payee (as applicable)
      and Certificate Holder (see below)

20.   30 days (10 days for non-payment) notice of cancellation or any material
      change in the policy to Merrill Lynch Capital deleting "endeavor to" and
      "but failure to mail such notice shall impose no obligation or liability
      of any kind upon the company, its agents or representatives" language

21.   Waiver of Subrogation endorsement in favor of Merrill Lynch Capital (see
      below)

22.   Higher limits and special coverages in addition to those indicated above
      may be required depending upon the property size and nature of operations
      (if a joint venture)

                                      -1-
<PAGE>

      MERRILL LYNCH CAPITAL REAL ESTATE INSURANCE REQUIREMENTS - HOTELS (CONTD.)

BORROWER NAME:____________________
PROJECT NAME:_____________________

GENERAL LIABILITY INSURANCE (MUST SHOW THE FOLLOWING):

1.    Issued on Acord 25 form (Certificate of Insurance), signed by authorized
      agent

2.    Insurance carrier (s) rated A- VII or better (by A.M. Best)

3.    Current policy term

4.    Annual premium for the coverages shown

5.    Premiums that remain unpaid for the term of the policy, if any

6.    Include coverage for Contractual Liability

7.    Include coverage for Liquor Liability if restaurants, bars, and/or room
      service provides the sale of alcoholic beverages

8.    Include waterborne and watercraft coverage if hotel is on a waterfront
      and/or provides boating and/or marina services

9.    Waiver of terrorism exclusion (or indicate "no terrorism exclusion")

10.   Deductible not greater than $5,000

      -     If the deductible is subject to an overall aggregate deductible,
            this must be disclosed with a copy of the specific aggregate
            deductible agreement provided.

11.   Minimum $2,000,000 per occurrence limit (primary and umbrella/excess can
      be combined to achieve minimum limit)

12.   30 days (10 days for non-payment) notice of cancellation or any material
      change in the policy to Merrill Lynch Capital deleting "endeavor to" and
      "but failure to mail such notice shall impose no obligation or liability
      of any kind upon the company, its agents or representatives" language

13.   Merrill Lynch Capital included as Additional Insured (see below)

14.   Waiver of Subrogation endorsement in favor of Merrill Lynch Capital (see
      below)

15.   Separation of Insureds/Cross Liability included

16.   Insurance shall be noted as being primary without right of contribution of
      any other insurance carried by or on behalf of Lessor

17.   Higher limits and special coverages in addition to those indicated above
      may be required depending upon the property size and nature of operations
      (if a joint venture)

AUTOMOBILE LIABILITY INSURANCE (MUST SHOW THE FOLLOWING):

1.    Issued on Acord 25 form (Certificate of Insurance), signed by authorized
      agent

2.    Insurance carrier (s) rated A- VII or better (by A.M. Best)

3.    Current policy term

4.    Coverage for Owned, Non-Owned, and Hired autos

5.    Coverage for Garage Liability and Garagekeepers Legal Liability

6.    Annual premium for the coverages shown

7.    Premiums that remain unpaid for the policy term, if any

8.    Waiver of terrorism exclusion (or indicate "no terrorism exclusion")

9.    Liability deductible not greater than $5,000

      -     If the deductible is subject to an overall aggregate deductible,
            this must be disclosed with a copy of the specific aggregate
            deductible agreement provided.

10.   Minimum $2,000,000 per occurrence limit (primary and umbrella/excess can
      be combined to achieve minimum limit

11.   30 days (10 days for non-payment) notice of cancellation or any material
      change in the policy to Merrill Lynch Capital deleting "endeavor to" and
      "but failure to mail such notice shall impose no obligation or liability
      of any kind upon the company, its agents or representatives" language

                                      -2-
<PAGE>

      MERRILL LYNCH CAPITAL REAL ESTATE INSURANCE REQUIREMENTS - HOTELS (CONTD.)

BORROWER NAME:____________________
PROJECT NAME:_____________________

12.   Merrill Lynch Capital included as Additional Insured (see below)

13.   Waiver of Subrogation endorsement in favor of Merrill Lynch Capital (see
      below)

14.   Separation of Insureds/Cross Liability included

15.   Insurance shall be noted as being primary without right of contribution of
      any other insurance carried by or on behalf of Lessor

16.   Higher limits and special coverages in addition to those indicated above
      may be required depending upon the property size and nature of operations
      (if a joint venture)

PROFESSIONAL LIABILITY INSURANCE (MUST SHOW THE FOLLOWING):

1.    Issued on Acord 25 form (Certificate of Insurance), signed by authorized
      agent

2.    Insurance carrier(s) rated A- VII or better (by A.M. Best)

3.    Current policy term

4.    Annual premium for the coverages shown

5.    Premiums that remain unpaid for the policy term, if any

6.    Waiver of terrorism exclusion (or indicate "no terrorism exclusion")

7.    Liability deductible not greater than $25,000

      -     If the deductible is subject to an overall aggregate deductible,
            this must be disclosed with a copy of the specific aggregate
            deductible agreement provided.

8.    Minimum $2,000,000 per claim limit

9.    30 days notice of cancellation (10 days for non-payment) to Merrill Lynch
      Capital deleting "endeavor to" and "but failure to mail such notice shall
      impose no obligation or liability of any kid upon the company, its agents
      or representatives" language

10.   Waiver of Subrogation endorsement in favor of Merrill Lynch Capital (see
      below)

11.   Insurance shall be noted as being primary without right of contribution of
      any other insurance carried by or on behalf of Lessor

12.   Higher limits and special coverages in addition to those indicated above
      may be required depending upon the property size and nature of operations
      (if a joint venture)

13.   This coverage would be required in the event the hotel employs or
      contracts with services including, but not limited to, barbers, medical
      doctors, nurses, masseuse, personal trainers, etc.

                                      -3-
<PAGE>

      MERRILL LYNCH CAPITAL REAL ESTATE INSURANCE REQUIREMENTS - HOTELS (CONTD.)

BORROWER NAME:____________________
PROJECT NAME:_____________________

CERTIFICATE HOLDER AND ENTITY TO BE SHOWN ON REQUIRED ENDORSEMENTS:

Merrill Lynch Capital,
a division of Merrill Lynch Business Financial Services Inc.,
and its successors and assigns
222 N. La Salle Street - 16th Floor
Chicago, IL 60601

INSURANCE CONSULTANT FOR MERRILL LYNCH CAPITAL:

Lockton Companies, Inc.
5847 San Felipe, Suite 320
Houston, TX 77057

<TABLE>
<CAPTION>
            PRIMARY CONTACT:                            SECONDARY CONTACT:
            ----------------                            ------------------
<S>                                         <C>
Eileen M. Stulak, CPCU                      Debra Golafshan
Vice President, Risk Management Services    Assistant Vice President, Account Manager
713.458.5200 (Main)                         713.458.5200 (Main)
713.458.5281 (Direct)                       713.458.5454 (Direct)
713.724.1541 (Mobile)                       832.656.5641 (Mobile)
713.458.5299 (Fax)                          713.458.5299 (Fax)
estulak@lockton.com (E-mail)                dgolafshan@lockton.com (E-mail)
</TABLE>

                                      -4-
<PAGE>

                                    EXHIBIT F

                  DESCRIPTION OF ENVIRONMENTAL SITE ASSESSMENTS

1.    Phase I Environmental Site Assessment of Embassy Suites, 6646 Old Collamer
      Road, Syracuse, New York, ATC Project No. 34.75003.0036 dated August 18,
      2003, prepared by ATC Associates Inc.

2.    Phase I Environmental Site Assessment of Embassy Suites, 1515 North 44th
      Street, Phoenix, Arizona, ATC Project No. 34.75003.0036 dated August 25,
      2003, prepared by ATC Associates Inc. ("PHOENIX REPORT")

3.    Phase I Environmental Site Assessment of Embassy Suites, 706 South Milton
      Road, Flagstaff, Arizona, ATC Project No. 34.75003.0036 dated August 25,
      2003, prepared by ATC Associates Inc.

4.    Phase I Environmental Site Assessment of Doubletree Guest Suites, 300
      Prestige Place, Dayton, Ohio 45342, ATC Project No. 34.75003.0036 dated
      August 25, 2003, prepared by ATC Associates Inc.

5.    Phase I Environmental Site Assessment of Doubletree Guest Suites, 50 South
      Front Street, Columbus, Ohio 43215, ATC Project No. 34.75003.0036 dated
      August 25, 2003, prepared by ATC Associates Inc. ("COLUMBUS REPORT")

<PAGE>

                                    EXHIBIT G

                           FF&E NOT OWNED BY BORROWER

1.    Incidental computer terminals and related equipment owned by Manager

<PAGE>

                                    EXHIBIT H

                              INTELLECTUAL PROPERTY

                                      None.

<PAGE>

                                    EXHIBIT I

                        DIRECT AND INDIRECT OWNERSHIP OF
                     BORROWERS, PROJECT LESSEE AND PRINCIPAL

                              STRUCTURE OF BORROWER

The following chart shows the structure of Borrower company following completion
of the offering and the formation transactions:

                                  [FLOW CHART]

(1)   Certain of the executive officers and employees own restricted shares,
      representing approximately 0.96% of our outstanding common stock, subject
      to vesting requirements; the independent directors own restricted shares,
      representing approximately 0.10% of the outstanding common stock; and
      Friedman Billings Ramsey beneficially owns restricted shares representing
      0.25% of the outstanding common stock. The actual number of restricted
      shares issued to the executive officers and employees is equal, in the
      aggregate, to 2.25% of the fully-diluted shares of common stock
      outstanding after completion of this offering, excluding the 65,024 shares
      issued to the underwriters.

(2)   Messrs. Archie and Montgomery Bennett beneficially own 15.85% of Ashford
      Hospitality Limited Partnership (3.27% through their 100% ownership of
      Ashford Financial Corporation). Mr. Marty Edelman and certain family
      members beneficially own 0.70%. Mr. David Brooks beneficially owns 0.70%.
      Mr. Mark Nunneley beneficially owns 0.28%. Two employees of Remington
      Hotel Corporation beneficially own 0.49%.

(3)   The general partner has no economic interest in the partnership (as
      permitted under Delaware law).

<PAGE>

                                    EXHIBIT J

                               FRANCHISE LICENSES

      1.    Franchise License Agreement dated October 8, 2003, executed by
Doubletree Hotel Systems, Inc., as franchisor, and Ashford Dayton LP, a Delaware
limited partnership, and Ashford TRS Corporation, a Delaware corporation, as
franchisee, covering the Doubletree Guest Suites located at 300 Prestige Place,
Dayton, Ohio.

      2.    Franchise License Agreement dated October 8, 2003, executed by
Doubletree Hotel Systems, Inc., as franchisor, and Ashford Columbus LP, a
Delaware limited partnership, and Ashford TRS Corporation, a Delaware
corporation, as franchisee, covering the Doubletree Guest Suites located at 50
S. Front Street, Columbus, Ohio.

      3.    Franchise License Agreement dated October 8, 2003, executed by
Promus Hotels, Inc., as franchisor, and Ashford Flagstaff LP, a Delaware limited
partnership, and Ashford TRS Corporation, a Delaware corporation, as franchisee,
covering the Embassy Suites located at 706 South Milton Road, Flagstaff,
Arizona.

      4.    Franchise License Agreement dated October 8, 2003, executed by
Promus Hotels, Inc., as franchisor, and Ashford Phoenix LP, a Delaware limited
partnership, and Ashford TRS Corporation, a Delaware corporation, as franchisee,
covering the Embassy Suites located at 1515 N. 44th Street, Phoenix, Arizona.

      5.    Franchise License Agreement dated October 8, 2003, executed by
Promus Hotels, Inc., as franchisor, and Ashford Syracuse LP, a Delaware limited
partnership, and Ashford TRS Corporation, a Delaware corporation, as franchisee,
covering the Doubletree Guest Suites located at 6646 Old Collamer Road, Dewitt,
New York.

<PAGE>

                                    EXHIBIT K

                                  RELEASE PRICE

<TABLE>
<CAPTION>
                      ASHFORD             ASHFORD               ASHFORD              ASHFORD             ASHFORD
                     DAYTON LP          COLUMBUS LP           FLAGSTAFF LP          PHOENIX LP         SYRACUSE LP
-------------------------------------------------------------------------------------------------------------------------
<S>              <C>                 <C>                 <C>                    <C>                <C>
Name:            Doubletree Guest    Doubletree Guest    Embassy Suites         Embassy Suites     Embassy Suites
                 Suites              Suites

Address:         300 Prestige Place  505 Front Street    706 South Milton Road  1515 N. 44th St    6646 Old Collamer Road
                 Dayton, OH 45342    Columbus, OH 43215  Flagstaff, AZ 86001    Phoenix, AZ 85008  Dewitt, NY 13057

Release Price:        4,320,000          9,720,000             4,320,000           13,680,000            12,600,000
</TABLE>

<PAGE>

                                    EXHIBIT L

                                  ENCROACHMENTS

A.    Dayton, Ohio, Double Tree Guest Suites - None

B.    Flagstaff, Arizona, Embassy Suites

      1.    Northerly face of wall is 1.90' Northerly.

      2.    Fence is 1.23' Northerly.

      3.    Fence corner is 0.8' Northerly and 1.2' Easterly, all located on the
            Southerly Property line.

      4.    Northerly face of wall is 1.76' Northerly on Northwesterly Property
            line; and fence is .8' Easterly on Southeasterly Property Line.

      5.    On the property line abutting Milton Avenue, there is a sign in
            Brick Planter that encroaches onto Milton Avenue.

      6.    Encroachment of an improvement consisting of a concrete block wall
            surrounding the air conditioning unit onto land adjoining on the
            Southeast approximately .5 feet to .85 feet.

      7.    Right of Way for parking spaces over the Northeasterly portion of
            said land.

      8.    Right of Way for an electric box along the Southeasterly line of
            said land.

      9.    Right of Way for an electric box on the Northwesterly line of said
            land.

      10.   Right of Way for catch basins and concrete drainage wall along the
            northeasterly portion of said land.

      11.   Right of Way for a water meter on the Northeasterly line of said
            land.

      12.   Right of Way for a telephone junction box on the Northwesterly line
            of said land.

C.    Phoenix, Arizona, Embassy Suites

      1.    Power lines encroach on East side of insured premises by 1.5' and
            .5'.

      2.    2' curb and gutter on Parcel 4 on survey encroach 5' onto 44th
            Street.

      3.    Portion of trees encroach onto 44th Street and trees and utilities
            encroach onto Willetta Street.

D.    Syracuse, New York, Embassy Suites

      1.    Location steel storage sheds labeled "A" to the east of insured
            premises noted as possible encroachment

      2.    North line being the south line of N.Y.S. Thruway (variable widths
            open - no access).

      3.    Location of Easement 1 Proposed Embassy Drive [not open] no
            ingress/egress.

      4.    Location of 8" sewer and water lines within said easement.

E.    Columbus, Ohio, Double Tree Guest Suites - None

<PAGE>

                                   SCHEDULE I

                                   DEFINITIONS

DEFINED TERMS.

      The following terms as used herein shall have the following meanings:

      AFFILIATE: With respect to a specified person or entity, any individual,
partnership, corporation, limited liability company, trust, unincorporated
organization, association or other entity which, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with such person or entity, including, without limitation, any general
or limited partnership in which such person or entity is a partner.

      AGREEMENT: This Loan Agreement.

      ANNUAL BUDGET: As such term is defined in Section 3.1(d).

      APPRAISAL: An appraisal of a Project performed in accordance with FIRREA
and Lender's appraisal requirements by an independent appraiser licensed in the
state in which such Project is located and selected and retained by Lender.
Borrower may provide to Lender a copy of any FIRREA appraisal prepared for
another lender within the past six (6) months. Lender may, in its sole
discretion: (a) accept such appraisal; (b) request an update of such appraisal;
and (c) retain a state licensed appraiser to perform a new appraisal.

      AUTHORIZED REPRESENTATIVE: David A. Brooks as described in Section 4.3.

      BASE RATE: The London Interbank Offered Rate (LIBOR) rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to the
rate of interest which is identified and normally published by Bloomberg
Professional service Page BBAM 1 (the "PAGE") as the offered rate for loans in
U.S. Dollars under the caption British Bankers Association LIBOR Rates at 11:00
A.M. London time. For the calendar month of the initial funding of the Loan, the
Base Rate will float daily and be determined two (2) Business Days prior to each
day of such calendar month utilizing the one (1) month LIBOR rate set forth on
the Page. The Base Rate for each calendar month subsequent to the initial
calendar month of the funding of the Loan shall be fixed for such calendar month
based on the one (1) month LIBOR rate set forth on the Page two (2) Business
Days prior to the first (1st) day of such calendar month. If Bloomberg
Professional service no longer reports the Base Rent or Lender determines in
good faith that the rate so reported no longer accurately reflects the rate
available to Lender in the London Interbank Market or if such index no longer
exists or if Page BBAM 1 no longer exists or accurately reflects the rate
available to Lender in the London Interbank Market, Lender may select a
replacement index or replacement page, as the case may be.

      BORROWER: As such term is defined in the opening paragraph of this
Agreement, and including any successor obligor on the Loan from time to time.

<PAGE>

      BUSINESS DAY: A day of the year on which banks are not required or
authorized to close in Chicago, Illinois.

      CAPITAL BUDGET: As such term is defined in Section 3.1(d).

      CLOSING DATE: The date of the disbursement of the Initial Funding Amount
of the Loan.

      COMMERCIAL LEASE: Any lease, sublease and occupancy agreement affecting
any retail or office portion of a Project now existing or hereafter executed and
all amendments, modifications or supplements thereto approved in writing by
Lender, but specifically excluding any agreement affecting any guestroom or
meeting/conference portion of such Project.

      CONTROL: As such term is used with respect to any person or entity,
including the correlative meanings of the terms "controlled by" and "under
common control with", shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of such person
or entity, whether through the ownership of voting securities, by contract or
otherwise.

      CREDIT CARD ISSUERS: As such term is defined in Section 5.1(t).

      DEBT SERVICE COVERAGE RATIO: The ratio of (i) Net Operating Income for the
immediately preceding twelve (12) months, as determined by Lender's audit, at
Borrowers' expense, to (ii) Total Annual Debt Service.

      DEFAULT OR DEFAULT: Any event, circumstance or condition, which, if it
were to continue uncured, would, with notice or lapse of time or both,
constitute an Event of Default hereunder.

      DEFAULT RATE: As such term is defined in Section 2.9(a).

      DEPOSITORY ACCOUNT: As such term is defined in Section 4.2(u).

      ENVIRONMENTAL DOCUMENTS: As such term is defined in Section 6.1.

      ENVIRONMENTAL INDEMNITOR: Individually, each Borrower and Principal,
collectively referred to as Environmental Indemnitors.

      ENVIRONMENTAL OBLIGATIONS: As such term is defined in Section 6.7.

      ENVIRONMENTAL PROCEEDINGS: Any environmental proceedings, whether civil
(including actions by private parties), criminal, or administrative proceedings,
relating to any Project.

      ENVIRONMENTAL REPORTS: As such term is defined in Section 6.3.

                                      -2-
<PAGE>

      ERISA: The Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder from time to time.

      EVENT OF DEFAULT: As such term is defined in Section 8.1.

      EXCESS INTEREST: As such term is defined in Section 11.5.

      EXIT FEE: As such term is defined in Section 2.8.

      EXPENSES: All losses, fines, penalties, judgments, awards, costs and
expenses (including, without limitation, reasonable fees and costs of in-house
counsel or outside counsel (but not both), and reasonable expenses of
investigation).

      EXTENDED MATURITY DATE: As such term is defined in Section 2.4(a).

      EXTENSION OPTION: As such term is defined in Section 2.4(a).

      EXTENSION TERM: As such term is defined in Section 2.4(a).

      FF&E: means, with respect to each Project, all fixtures, furnishings,
equipment, furniture and other items of tangible personal property now or
hereafter located in or on such Project or used in connection with the use,
occupancy, operation and maintenance of all or any part of such Project,
including, without limitation, appliances, machinery, equipment, signs, artwork,
office furnishings and equipment, guest room furnishings, and specialized
equipment for kitchens, laundries, bars, restaurants, public rooms, health and
recreational facilities, linens, dishware, all partitions, screens, awnings,
shades, blinds, floor coverings, hall and lobby equipment, heating, lighting,
plumbing, ventilating, refrigerating, incinerating, elevators, escalators, air
conditioning and communication plants or systems with appurtenant fixtures,
vacuum cleaning systems, call or beeper systems, security systems, sprinkler
systems and other fire prevention and extinguishing apparatus and materials,
reservation system computer and related equipment, all equipment, manual,
mechanical or motorized, for the construction, maintenance, repair and cleaning
of such Project and any vehicles owned or acquired by the applicable Borrower,
other than personal property owned by hotel guests and Tenants under Commercial
Leases.

      FF&E FUNDS: As such term is defined in Section 4.1(n).

      FF&E RESERVE: As such term is defined in Section 4.1(n).

      FIRREA: The Financial Institutions Reform, Recovery And Enforcement Act of
1989, as amended from time to time.

      GENERAL PARTNER: Ashford Properties General Partner LLC, a Delaware
limited liability company, the sole general partner of Borrower.

                                      -3-
<PAGE>

      GOVERNMENTAL APPROVALS: Collectively, all consents, licenses, and permits
and all other authorizations or approvals required from any Governmental
Authority to operate the Projects.

      GOVERNMENTAL AUTHORITY: Any federal, state, county or municipal
government, or political subdivision thereof, any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality, or public body, or any court, administrative tribunal, or
public utility.

      GROSS REVENUE: For any period, all receipts, revenues, income and proceeds
of sales or services of every kind received by Borrowers or Manager (on behalf
of any Borrower), directly or indirectly, from operating the Projects for the
applicable period, calculated on a cash basis, whether in cash or on credit.
Gross Revenue shall include: (i) all revenues from rentals, expense
pass-throughs, fees and service charges to tenants, subtenants, licensees or
other occupants of commercial or retail space in any Project including lease
termination fees, revenues from the use or rental of guest rooms and suites and
conference and banquet rooms, revenues from food and beverage service and
facilities, including off-site catering, telephone services, guest laundry
services, vending, including mini-bars, television, recreational and health club
facilities and parking in any Project and other fees and charges resulting from
the operations of the Projects by Borrowers or Manager in the ordinary course of
business; (ii) proceeds of insurance or other money or credits received in
settlement for loss, theft, or damage to property relating to or used in any
Project except to the extent such proceeds, money or credits are paid directly
to third parties or to reimburse any Borrower for the actual cost of repairs or
replacements with respect to which such proceeds, money or credits were
obtained; (iii) proceeds from any financing or refinancing of any Project; (iv)
condemnation awards except to the extent such awards are paid directly to third
parties or to reimburse any Borrower for the actual cost of repairs or
replacements related to such condemnation; (v) proceeds of insurance received by
any Borrower or Manager with respect to rent loss, use and occupancy or business
interruption insurance; (vi) deposits forfeited and not refunded; (vii) any
amounts recovered in any legal actions or proceedings, or settlements thereof,
arising out of the operation of any Project; (viii) receipts arising from the
sale or other disposition of furniture, fixtures or equipment; and (ix) interest
income. Gross Revenue shall not include: (a) gratuities, services charges or
similar receipts collected by any Borrower or Manager to the extent paid over to
Project employees or persons occupying similar positions for performing similar
services, and (b) excise taxes, sales taxes, use taxes, bed taxes, admission
taxes, tourist taxes, gross receipts taxes, value added taxes, entertainment
taxes or other similar charges collected by any applicable Borrower or Manager
to the extent paid to governmental authorities.

      GROSS ROOM REVENUE: For any period, all receipts, revenues, income and
proceeds derived in any way from the use or rental of guestrooms at the
Projects.

      HAZARDOUS MATERIAL: Means and includes gasoline, petroleum, asbestos
containing materials, explosives, radioactive materials or any hazardous or
toxic material, substance or waste which is defined by those or similar terms or
is regulated as such under any Law of any Governmental Authority having
jurisdiction over the applicable Project or any portion

                                      -4-
<PAGE>

thereof or its use, including: (i) any "hazardous substance" defined as such in
(or for purposes of) the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C.A. Section 9601(14) as may be amended from time to time,
or any so-called "superfund" or "superlien" Law, including the judicial
interpretation thereof; (ii) any "pollutant or contaminant" as such term is
defined in 42 U.S.C.A. Sections 9601(33); (iii) any material now defined as
"hazardous waste" pursuant to 40 C.F.R. Part 260; (iv) any petroleum, including
crude oil or any fraction thereof; (v) natural gas, natural gas liquids,
liquefied natural gas, or synthetic gas usable for fuel; (vi) any "hazardous
chemical" as defined pursuant to 29 C.F.R. Part 1910; and (vii) any other toxic
substance or contaminant that is subject to any other Law or other past or
present requirement of any Governmental Authority. Any reference above to a Law,
includes the same as it may be amended from time to time, including the judicial
interpretation thereof.

      HOLDBACK: As such term is defined in Section 2.3(b).

      INCLUDE OR INCLUDING: Including, but not limited to.

      INDEBTEDNESS: As such term is defined in Section 8.1(a).

      INDEMNIFIED PARTY: As such term is defined in Section 4.2(k).

      INITIAL FUNDING AMOUNT: Is the amount set forth in Section 2.3(a) and
initially disbursed on the Closing Date.

      INITIAL MATURITY DATE: As such term is defined in Section 2.4(a).

      INSURANCE PROCEEDS: As such term is defined in Section 7.1(a).

      INSURANCE REQUIREMENTS: As such term is defined in Section 4.2(c)

      INTEREST RATE: As such term is defined in Section 2.6.

      INTERNAL REVENUE CODE: The Internal Revenue Code of 1986, as amended from
time to time.

      LATE CHARGE: As such term is defined in Section 2.9(b).

      LAWS: Collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or
presidential authority in the applicable jurisdiction.

      LENDER: As such term is defined in the opening paragraph of this
Agreement, and including any successor holder of the Loan from time to time.

      LENDER'S CONSULTANT: An independent consulting architect, inspector,
and/or engineer designated by Lender in Lender's sole discretion.

                                      -5-
<PAGE>

      LICENSE AGREEMENT: The franchise license agreement relating to a Project
listed opposite such franchise license on Exhibit L.

      LICENSOR: The licensor under a License Agreement.

      LOAN: As such term is defined in Recital B.

      LOAN AMOUNT: The maximum amount of the Loan as initially set forth in
Recital B.

      LOAN APPLICATION: As such term is defined in Section 2.1.

      LOAN DOCUMENTS: The collective reference to this Agreement, the documents
and instruments described in Recital C and Section 2.1, and all the other
documents and instruments entered into from time to time, evidencing or securing
the Loan or any obligation of payment thereof or performance of Borrower's or
Principal's obligations in connection with the transaction contemplated
hereunder, each as amended.

      LOAN YEAR: The period from the Closing Date through the last day of the
same month in the following year and thereafter each successive twelve (12)
month period.

      LOCKOUT PERIOD: As such term is defined in Section 2.5.

      MANAGEMENT AGREEMENT: The Master Management Agreement by and between each
Borrower and Manager or any replacement management agreement approved by Lender.

      MANAGER: Means Remington Lodging & Hospitality, L.P., a Delaware limited
partnership, the manager of the Projects approved by Lender and any successor
manager approved by Lender managing the Projects pursuant to a management
agreement approved by Lender.

      MATERIAL ADVERSE CHANGE OR MATERIAL ADVERSE CHANGE: If, in Lender's
reasonable discretion, the business prospects, operations or financial condition
of a person, entity or property has changed in a manner which would likely
prevent timely repayment of the Loan or otherwise prevent the applicable person
or entity from timely performing any of its material obligations under the Loan
Documents.

      MATURITY DATE: The Initial Maturity Date, or, if Borrower satisfies the
conditions to extend the term of the Loan pursuant to Section 2.4(a), the
Extended Maturity Date.

      MORTGAGE: The Mortgage, Leasehold Mortgage or Deed of Trust Assignment,
Assignment of Leases and Rents and Fixture Filing executed by a Borrower in
favor of Lender and encumbering a Project, collectively, the "MORTGAGES."

      NET OPERATING INCOME: For any period, Operating Revenue for such period
less Operating Expenses for such period. Net Operating Income shall be
determined on a combined basis for purposes of determining Project Yield and
Debt Service Coverage Ratio.

                                      -6-
<PAGE>

For all other purposes, Net Operating Income shall be determined on a
Project-by-Project basis.

      NOTE: As such term is defined in Recital B.

      OFAC LISTS: As such term is defined in Section 4.2(r).

      OPERATING BUDGET: As such term is defined in Section 3.1(d)

      OPERATING EXPENSES: For any period, the actual and customary expenses of
owning, operating and maintaining the Project or Projects during such period
which Borrower or Borrowers are obligated to pay under the terms of the Project
Lease, determined on a combined basis for purposes of determining Project Yield
and Debt Service Coverage Ratio, determined on a cash basis, except for real and
personal property taxes and insurance premiums, which shall be determined on an
accrual basis, including (whether or not paid) a franchise fee equal to four
percent (4.0%) of Gross Room Revenue, an assumed FF&E structural reserve equal
to four percent (4.0%) of Operating Revenue and a management fee equal to three
percent (3.0%) of Operating Revenue. Operating Expenses shall not include (i)
interest or principal due on the Loan or (ii) capital expenditures.

         OPERATING REVENUE: For any period, Gross Revenue for such period less
the items described in clauses (ii), (iii), (iv), (v), (vii), (viii) and (ix) of
the definition of Gross Revenue. For purposes of determining Debt Service
Coverage Ratio or Project Yield, Operating Revenue shall be calculated on a
combined basis and on the basis of the lesser of (a) actual occupancy for the
immediately preceding twelve (12) month period or (b) an assumed average annual
seventy-five percent (75%) occupancy rate.

      ORGANIZATIONAL DOCUMENTS: As such term is defined in Section 5.1(e).

      PERMITTED EXCEPTIONS: Those matters listed on Exhibit B to the Title
Policy which title to a Project may be subject at the closing and thereafter
such other title exceptions as Lender may reasonably approve in writing.

      PERSONS: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, trustee, estate, limited liability
company, unincorporated organization, real estate investment trust, government
or any agency or political subdivision thereof, or any other form of entity.

      PRELIMINARY HOLDBACK BUDGET: As such term is defined in Section 2.3(b).

      PRELIMINARY HOLDBACK COMPLETION SCHEDULE: As such term is defined in
Section 2.3(b).

      PRINCIPAL: Ashford Hospitality Limited Partnership, a Delaware limited
partnership.

      PROCEEDING: As such term is defined in Section 11.3.

                                      -7-
<PAGE>

      PROJECT: The reference to each hotel project described on Exhibit A
consisting of (i) the land, leasehold estate or air rights, together with all
buildings, structures and improvements located or to be located thereon, (ii)
all rights, privileges, easements and hereditaments relating or appertaining
thereto, and (iii) the FF&E contained therein.

      PROJECT CONSTRUCTION DOCUMENTS: As such term is defined in Section 4.2(v).

      PROJECT HOLDBACK BUDGET: As such term is defined in Section 4.2(v).

      PROJECT HOLDBACK COMPLETION SCHEDULE: As such term is defined in Section
4.2(v).

      PROJECT LEASE: As such term is defined in Recital D.

      PROJECT LESSEE: As such term is defined in Recital D.

      PROJECT YIELD: The quotient of (i) Net Operating Income from the
Project[S] for the immediately preceding twelve (12) months, as determined by
Lender's audit, at Borrowers' expense, at such time, divided by (i) the sum of
the then current outstanding principal balance of the Loan plus any anticipated
future fundings on the Loan during the Extension Term plus accrued and unpaid
interest thereon.

      PROJECTED OPERATING REVENUE: Annual Operating Revenue as reflected in the
most current Operating Budget.

      PROPERTY TAX AND INSURANCE DEPOSIT: As such term is defined in Section
4.2(f).

      RELEASE PRICE: As set forth on Exhibit K.

      REMEDIAL WORK: As such term is defined in Section 6.4.

      RETAINED LIABILITIES: As such term is defined in Paragraph 1 of the
Limited Joinder.

      SECURITY AGREEMENT: As such term is defined in Recital C.

      SINGLE PURPOSE ENTITY: An entity which (i) exists solely for the purpose
of owning and operating a Project, (ii) conducts business only in its own name,
(iii) does not engage in any business other than the ownership, management and
operation of a Project, (iv) does not hold, directly or indirectly, any
ownership interest (legal or equitable) in any entity or any real or personal
property other than the interest which it owns in a Project, (v) does not have
any assets other than those related to its interest in a Project and does not
have any debt other than as permitted by this Agreement and does not guarantee
or otherwise obligate itself with respect to the debts of any other person or
entity, (vi) has its own separate books, records, accounts, financial statements
and tax returns (with no commingling of funds or assets), (vii) holds itself out
as being a company separate and apart from any other entity, (viii) observes
limited liability company/partnership/corporate formalities, as the case may be,
independent of any other entity.

                                      -8-
<PAGE>

      TENANT: Any tenant under any Commercial Lease.

      TITLE INSURER: Stewart Title Insurance Company or such other title
insurance company licensed in the States of Ohio, New York and Arizona as may be
approved in writing by Lender in Lender's sole discretion.

      TITLE POLICY: An ALTA Mortgagee's Loan Title Insurance Policy with
extended coverage issued by the Title Insurer insuring the lien of the Mortgage
as a valid first, prior and paramount lien upon the applicable Project (or
leasehold interest therein, with respect to the property and improvements
located in Columbus, Ohio, and more particularly described in Exhibit A-2) and
all appurtenant easements, and subject to no other exceptions other than the
Permitted Exceptions and otherwise satisfying the requirements of Lender.

      FOR OPTIONAL EXTENSION DEALS: Total Annual Debt Service: The annualized
debt service payments on then outstanding principal balance of the Loan plus any
anticipated future fundings on the Loan during the Extension Term assuming (i) a
per annum interest rate equal to the Interest Rate as of the close of business
on the day preceding the date of calculation and (ii) monthly payments of
principal equal to $57,000.

      TRANSFER: Any sale, transfer, lease (other than a Lease approved by
Lender), conveyance, alienation, pledge, assignment, mortgage, encumbrance
hypothecation or other disposition of (a) all or any portion of any Project or
any portion of any other security for the Loan, (b) all or any portion of any
Borrower's right, title and interest (legal or equitable) in and to a Project or
any portion of any other security for the Loan, (c) any interest in any
Borrower, General Partner or Principal or any interest in any entity which holds
an interest in, or directly or indirectly controls, any Borrower, General
Partner, Project Lessee or Principal; provided that transfers of (A)
non-controlling interests in Principal, General Partner or any entity which
holds an interest in, or directly or indirectly Controls, Borrower, General
Partner, Project Lessee or Principal which either individually or as part of a
series of transfers do not result in a change of Control of any Borrower,
General Partner, Project Lessee or Principal or (B) publicly traded capital
stock in Ashford Hospitality Trust, Inc., a Maryland corporation, shall not
constitute a Transfer or (d) any assignment or other disposition (including any
pledge) by any Borrower of any of its interest in a Project Lease, other than
pursuant to the Loan Documents.

                                      -9-
<PAGE>

                                PROMISSORY NOTE

U.S. $36,000,000.00                                     As of December 24, 2003

                                    RECITALS

      A.    ASHFORD COLUMBUS LP, ASHFORD DAYTON LP, ASHFORD FLAGSTAFF LP,
ASHFORD PHOENIX LP, and ASHFORD SYRACUSE LP, each a Delaware limited partnership
(collectively, "BORROWER"), having an address at c/o Ashford Hospitality Limited
Partnership, 14180 Dallas Parkway, Pacific Center I, Suite 900, Dallas, Texas
75254, and MERRILL LYNCH CAPITAL, a Division of Merrill Lynch Business Financial
Services Inc., a Delaware corporation, and its successors and assigns
(collectively, "LENDER") entered into that certain Loan Agreement of even date
herewith (the "LOAN AGREEMENT").

      B.    This Promissory Note (this "NOTE") is made by Borrower to evidence
the Loan and is secured by, among other things, those certain Mortgages
encumbering, among other things, the Projects more particularly described on
Exhibit A to the Loan Agreement. Except as otherwise set forth herein, payment
of this Note is governed by the Loan Agreement, the terms of which are
incorporated herein by express reference as if fully set forth herein.
Capitalized terms used and not otherwise defined herein shall have the meanings
given to them in the Loan Agreement.

            THEREFORE, FOR VALUE RECEIVED, Borrower hereby promises to pay to
the order of Lender the original principal amount of Thirty-Six Million and
No/100ths Dollars ($36,000,000.00) or so much thereof as may be advanced from
time to time, together with all other amounts added thereto pursuant to this
Note or otherwise payable to Lender under the Loan Documents, including any Exit
Fee, together with interest from the date hereof on the balance of principal
from time to time outstanding, in United States currency, at the rates and at
the times hereinafter described. Payments shall be made to Lender, c/o LaSalle
Bank National Association, P.O. Box 4671, Chicago, IL 60674-4671 (or such other
address as Lender may hereinafter designate in writing to Borrower).

      1.    INTEREST AND MONTHLY PAYMENTS. All interest and principal shall be
paid at the times and in the amounts as required by the Loan Agreement. If not
sooner due and payable, the entire indebtedness evidenced by this Note shall be
due and payable on December 31, 2007, (subject to extension(s) pursuant to
Section 2.4 of the Loan Agreement), or any earlier date on which such
indebtedness may become due, whether by acceleration or otherwise. Borrower
agrees to an effective rate of interest that is the rate stated in the Loan
Agreement, plus any additional rate of interest resulting from any other sums,
amounts, and charges in the nature of interest paid or to be paid by or on
behalf of Borrower, or any benefit or value received or to be received by the
holder of this Note, in connection with this Note.

      2.    PREPAYMENT. This Note may be prepaid as provided in Section 2.5 of
the Loan Agreement.

<PAGE>

      3.    DEFAULT. Upon the occurrence of an Event of Default the unpaid
balance of the principal amount of this Note, together with all accrued and
unpaid interest thereon, may become, or may be declared to be, due and payable
in the manner, upon the conditions and with the effect provided in the Loan
Agreement.

      4.    GENERAL PROVISIONS.

            (a)   Writing. This Note may not be terminated or amended orally,
but only by a termination signed by a Lender or amendment in writing signed by
Borrower.

            (b)   Security, Application of Payments. This Note is secured by the
liens, encumbrances and obligations created hereby and by the other Loan
Documents and the terms and provisions of the other Loan Documents are hereby
incorporated herein. Payments will be applied, at Lender's option, first to any
fees, expenses or other costs Borrower is obligated to pay under this Note or
the other Loan Documents, second to interest due on this Note, third to the
outstanding principal balance of this Note and fourth to the Exit Fee.

            (c)   Binding on Successors; Joint and Several. This Note and all
provisions hereof shall be binding upon Borrower and its successors and assigns,
and shall inure to the benefit of Lender, together with its successors and
assigns, including each owner and holder from time to time of this Note. The
obligations of Borrower under the Note shall be joint and several obligations of
Borrower and of each Borrower, if more than one, and of each Borrower's
successors and assigns.

            (d)   Time of Essence. Time is of the essence as to all dates set
forth herein.

            (e)   Costs and Expenses. Borrower promises and agrees to pay, in
addition to the principal, interest and other sums due and payable hereon, all
costs of collecting or attempting to collect this Note, including all reasonable
attorneys' fees and disbursements, as described in Article 9 of the Loan
Agreement.

            (f)   Governing Law; Severability. THIS NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
ILLINOIS (WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES), AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. THE INVALIDITY, ILLEGALITY OR
UNENFORCEABILITY OF ANY PROVISION OF THIS NOTE SHALL NOT AFFECT OR IMPAIR THE
VALIDITY, LEGALITY OR ENFORCEABILITY OF THE REMAINDER OF THIS NOTE, AND TO THIS
END, THE PROVISION OF THIS NOTE ARE DECLARED TO BE SEVERABLE.

            (g)   Notices. Notices shall be given under this Note in conformity
with the terms and conditions of the Loan Agreement.

                            SIGNATURE PAGE TO FOLLOW

                                       -2-
<PAGE>

            Borrower has delivered this Note as of the day and year first set
forth above.

                           BORROWER:

                           ASHFORD COLUMBUS LP, a Delaware limited
                           partnership

                           By: Ashford Properties General Partner LLC, a
                               Delaware limited liability company, its sole
                               general partner

                               By: /s/ David A. Brooks
                                  ---------------------------------------------
                               Name:  David A. Brooks
                               Title: Vice President

                           ASHFORD FLAGSTAFF LP, a Delaware limited
                           partnership

                           By: Ashford Properties General Partner LLC, a
                               Delaware limited liability company, its sole
                               general partner

                               By: /s/ David A. Brooks
                                  ---------------------------------------------
                               Name:  David A. Brooks
                               Title: Vice President

                                       -3-
<PAGE>

                           ASHFORD DAYTON LP, a Delaware limited
                           partnership

                           By: Ashford Properties General Partner LLC, a
                               Delaware limited liability company, its sole
                               general partner

                               By: /s/ David A. Brooks
                                  ---------------------------------------------
                               Name:  David A. Brooks
                               Title: Vice President

                           ASHFORD PHOENIX LP, a Delaware limited
                           partnership

                           By: Ashford Properties General Partner LLC, a
                               Delaware limited liability company, its sole
                               general partner

                               By: /s/ David A. Brooks
                                  ---------------------------------------------
                               Name:  David A. Brooks
                               Title: Vice President

                           ASHFORD SYRACUSE LP, a Delaware limited
                           partnership

                           By: Ashford Properties General Partner LLC, a
                               Delaware limited liability company, its sole
                               general partner

                               By: /s/ David A. Brooks
                                  ---------------------------------------------
                               Name:  David A. Brooks
                               Title: Vice President

                                       -4-