Document:

<PAGE>
                                                                   EXHIBIT 10.12

                                    SUBLEASE

          This Sublease is made as of July 30, 2004 ("SUBLEASE"), by and between
DEWEY BALLANTINE LLP, a New York limited liability partnership ("SUBLANDLORD"),
and THOMAS WEISEL PARTNERS GROUP LLC, a Delaware limited liability company
("SUBTENANT").

                                   WITNESSETH:

          WHEREAS, pursuant to that certain University Circle Office Lease dated
as of December 30, 2002, as amended by Amendment No.1 to University Circle
Office Lease dated as of February 1, 2003, and Amendment No.2 to University
Circle Office Lease dated as of July 1, 2003 (as so amended, the "MASTER
LEASE"), Sublandlord is leasing from University Circle Investors, LLC, a
Delaware limited liability company ("MASTER LANDLORD"), certain premises located
on the fifth and sixth floors of 1950 University Avenue, East Palo Alto,
California (as more fully described in the Master Lease, the "MASTER PREMISES");
and

          WHEREAS, Subtenant desires to sublease from Sublandlord, and
Sublandlord desires to lease to Subtenant, upon the terms and conditions of this
Sublease, that portion of the Premises located on the fifth floor, which the
parties agree has an area equal to 6,269 rentable square feet ("RSF") and the
boundaries of which are approximately depicted by cross-hatch marks on the Floor
Plan attached hereto as Exhibit A (such portion is the "SPACE").

          NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Sublandlord and Subtenant agree as follows:

               1. Master Lease. A copy of the Master Lease is attached hereto as
Exhibit C. Except as otherwise set forth to the contrary in this Sublease, the
terms of the Master Lease are hereby incorporated herein as if fully set forth
in this Sublease. All initially capitalized terms used herein without definition
are being used as defined in the Master Lease.

               2. Sublease. Sublandlord hereby leases to Subtenant, and
Subtenant hereby leases from Sublandlord, the Space, upon the terms and
conditions of this Sublease.

               3. Term. The term of this Sublease (the "TERM") shall commence on
the date (the "COMMENCEMENT DATE") that is the earlier to occur of:

                    (i) the date Subtenant opens for, or otherwise conducts,
business on or from any portion of the Space, and

                    (ii) the date that is the later to occur of: (a) September
1, 2004, and (b) the earliest date on which the following conditions have been
satisfied: (x) this Sublease has been signed and delivered by Sublandlord and
Subtenant, (y) the Master Landlord's consent to this Sublease has been obtained
as contemplated by Paragraph 18 of this Sublease, and (z) the Sublandlord Work
(as defined below) is Substantially Complete(as defined below).

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Unless earlier terminated under any provision of the Master Lease or this
Sublease, the Term shall expire at midnight on the date which is one day
preceding the fifth annual anniversary of the Commencement Date. Promptly after
written request by Sublandlord, the parties shall execute and deliver a
verification memorandum which confirms the Commencement Date and the expiration
date of the initial Term.

                         (a) Early Entry. Notwithstanding that the Commencement
Date may not have yet occurred, Subtenant shall, from and after the date the
Master Landlord's consent to this Sublease has been obtained as contemplated by
Paragraph 18 of this Sublease, have the right to enter the Space solely for the
purpose of installing furniture, trade fixtures and equipment. Such early entry
and use shall be subject to all of the terms of this Sublease other than the
obligation to pay Base Rental (as hereinafter defined).

                         (b) Sublandlord shall use good faith efforts to
endeavor to complete the Sublandlord Work (as defined below) by September 15,
2004. Sublandlord shall have no liability to Subtenant of any kind whatsoever by
Sublandlord's failure to Substantially Complete the Sublandlord Work by
September 15, 2004; provided, however, that should Sublandlord fail for any
reason to Substantially Complete the Sublandlord Work by October 15, 2004 (as
such date is and shall be subject to extension for (x) the time it takes to
obtain Master Landlord's consent under paragraph 18 hereof, the "OUTSIDE
COMPLETION DATE"), then Subtenant shall, as Subtenant's sole remedy hereunder,
at law or in equity with respect to such failure, have the right to terminate
this Sublease by giving written notice of termination to Sublandlord before the
earlier to occur of (a) ten (10) business days after the Outside Completion
Date, and (b) the date Sublandlord actually delivers the Space to Subtenant with
the Sublandlord Work substantially completed. Upon such termination, neither
party shall have any further rights or obligations hereunder (except for any
obligations that are expressly provided hereunder to survive the termination of
this Sublease) and Sublandlord promptly shall refund to Subtenant all sums paid
by Subtenant to Sublandlord in connection with its execution hereof.
"Sublandlord Work" means those improvements described on Exhibit B hereto, as
more particularly described pursuant to plans and specifications that have been
approved by Sublandlord and Subtenant prior to the date hereof. The parties
agree that the costs of completing the Sublandlord Work (up to a maximum of
$38,423.00) shall be initially advanced by Sublandlord, but shall be subject to
reimbursement (together with interest charged by Sublandlord)through Subtenant's
payment of the Amortized TI Rent (as defined below). All costs to complete the
Sublandlord Work as a result of change orders initiated by Subtenant and that
result in a cost in excess of $38,423.00 shall be paid by Subtenant no later
than ten (10) business days after demand from Sublandlord. After the Sublandlord
Work has been Substantially Completed, Sublandlord shall use commercially
reasonable efforts to complete any "punchlist" items within thirty (30) days
thereafter.

               4. Rent. From the Commencement Date until the end of the Term,
Subtenant shall pay base rental ("BASE RENTAL") monthly in advance, without
notice, demand or setoff, on the first day of each and every calendar month
during the Term according to following schedule:

<TABLE>
<CAPTION>
       PERIOD OF TERM            BASE RENTAL RATE     MONTHLY RENT
       --------------            ----------------     ------------
<S>                            <C>                    <C>
Commencement Date - Month 12   $ 3.10 per RSF/month    $19,433.90
     Month 13 - Month 24       $3.193 per RSF/month    $20,016.92
</TABLE>

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<TABLE>
<S>                            <C>                    <C>
     Month 25 - Month 36       $3.289 per RSF/month    $20,618.74
     Month 37 - Month 48       $3.388 per RSF/month    $21,239.37
     Month 49 - Month 60       $3.489 per RSF/month    $21,872.54
</TABLE>

In addition to Base Rental, Subtenant shall pay additional rental in the amount
of $752.28 per month (the "AMORTIZED TI RENT") monthly in advance, without
notice, demand or setoff, on the first day of each and every calendar month
during the Term.

Nothing in this paragraph 4, however, shall limit or affect Subtenant's
obligation to pay any amounts (other than Base Rental and Amortized TI Rent and
any payments pursuant to paragraph 5(a) below) which are due and payable by
Subtenant under this Sublease or the Master Lease as incorporated hereby. All
payments of Base Rental, Amortized TI Rent and all other sums and charges
payable by Subtenant pursuant to this Sublease, including, without limitation,
the sums payable pursuant to paragraph 5(a) below (collectively, "RENT"), shall
be sent to the address of Sublandlord provided in paragraph 15 below.

               5. Pass-Through Expenses; Nonstandard Utilities.

                    (a) Subtenant be responsible for, and shall pay to
Sublandlord in accordance with the other provisions of this paragraph 5, an
amount equal to 11.11% of the aggregate amount payable by Sublandlord under the
Master Lease for Sublandlord's share of Property Taxes and Operating Expenses
with respect to the Term. Sublandlord shall provide Subtenant with copies of all
statements received by Sublandlord from Master Landlord with respect to the
payment of Property Taxes and Operating Expenses under the Master Lease promptly
following Sublandlord's receipt thereof. Within thirty (30) days following
Sublandlord's receipt from Master Landlord of the final reconciliation of the
annual Property Taxes and Operating Expenses payable by Sublandlord pursuant to
the Master Lease for each year during the Term, Sublandlord and Subtenant shall
likewise reconcile the additional rental payable by Subtenant pursuant to this
paragraph 5 (i.e., Subtenant shall pay Subtenant's proportionate share of any
payment required to be made by Sublandlord to Master Landlord, or if a refund is
due Sublandlord from Master Landlord, Sublandlord shall refund or provide a
credit in the amount of Subtenant's proportionate share of Sublandlord's refund
against Base Rental next payable hereunder, as applicable). In any event, all
sums payable by Subtenant under this paragraph 5 shall be paid by Subtenant to
Sublandlord in accordance with Section 4(d) of the Master Lease to the extent
not inconsistent with the provisions of this paragraph 5, or, at the election of
Sublandlord, within ten (10) days after Subtenant's receipt of Sublandlord's
invoice therefor.

                    (b) Subtenant shall be responsible for the payment of all
cost recovery charges imposed on Sublandlord by Master Landlord pursuant to
Section 7(a) of the Master Lease as a result of any (i) utilities consumed by
Subtenant during Non-Service Hours or otherwise outside of Normal Office Hours,
(ii) labor or other direct costs incurred by Master Landlord for providing
utilities during Non-Service Hours or otherwise outside of Normal Office Hours,
and (iii) utilities consumed by Subtenant's auxiliary cooling unit in its Server
Room. Subtenant shall be responsible for providing and paying for all utilities
and services to the Space other than those utilities that Master Landlord is
required to provide pursuant to Section 7(a) of the Master Lease.

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               6. Intentionally Deleted.

               7. Alterations. All tenant improvements and other alterations
desired by Subtenant for the Space shall be subject to the prior written
approval of Sublandlord, which shall not be unreasonably withheld and delayed,
and the prior written approval of Master Landlord. Subject to the foregoing,
Subtenant shall have the right to construct and install leasehold improvements
and other alterations desired by Subtenant in the Space in accordance with, and
subject to the limitations and conditions set forth in, this Sublease and the
Master Lease. Subtenant acknowledges that it is not entitled to receive any
tenant improvement allowance or similar sum under the Master Lease or this
Sublease.

               8. Parking. Effective as of the Commencement Date, Sublandlord
hereby assigns to Subtenant for the Term all of Sublandlord's right to use, at
no additional rent, twenty-one (21) parking spaces located in the Common Area in
accordance with and subject to the terms of the Master Lease. Except as provided
for in the preceding sentence, Subtenant shall have no parking rights or
privileges.

               9. Condition of Space. Sublandlord agrees to deliver possession
of the Space to Subtenant on the Commencement Date in its then current
condition, i.e., "AS IS" and "WITH ALL FAULTS"; provided, however, that subject
to the terms of Paragraph 3 of this Sublease, Sublandlord represents that all
Substantially Completed Sublandlord Work will be in good and workmanlike
condition as of the date delivered to Subtenant. Sublandlord further represents
to Subtenant that, to Sublandlord's actual knowledge, the heating, ventilating
and air conditioning system, and the electrical, mechanical, plumbing, sewer,
and life safety systems serving the Space are in good working order as of the
date of this Sublease. Sublandlord and Subtenant each agree that this Sublease
(together with the Master Lease as incorporated hereby) constitutes the entire
agreement of the parties hereto regarding the Space and that Sublandlord has not
made and is not making any representations or warranties, nor have the parties
made any understandings of any kind, pertaining to this Sublease or the Space
other than as expressly set forth in this Sublease (without incorporation of the
terms of the Master Lease). SUBTENANT FURTHER ACKNOWLEDGES AND AGREES THAT,
EXCEPT FOR ANY REPRESENTATIONS AND WARRANTIES EXPRESSLY MADE BY SUBLANDLORD IN
THIS SUBLEASE, SUBLANDLORD DOES HEREBY DISCLAIM ANY AND ALL WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO THOSE OF FITNESS FOR A PARTICULAR
PURPOSE, WITH RESPECT TO THE SPACE AND/OR THE IMPROVEMENTS LOCATED OR TO BE
LOCATED THEREIN. Subtenant acknowledges that it has investigated the Space and
the physical condition thereof to the extent it would, in Subtenant's judgment,
affect or influence Subtenant's use of the Space and Subtenant's willingness to
enter into this Sublease. Except as expressly set forth in this Sublease,
Subtenant hereby agrees to accept possession of the Space "as is" and "with all
faults" (it being understood and agreed that Sublandlord is not and shall not be
required to perform work of any kind or nature in connection with the delivery
to Subtenant of possession to the Space except as provided in Paragraph 3 of
this Sublease with respect to the Sublandlord Work).

               10. Performance by Sublandlord; Status of Master Lease.

                    (a) Subtenant recognizes that Sublandlord is not in a
position to render or furnish the services set forth in the Master Lease, obtain
an agreement of non-disturbance or to perform certain other obligations which
are not within the control of

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Sublandlord, such as, without limitation, maintenance, repairs and replacements
by Master Landlord to the Space, compliance with laws, and restoration of the
Space after casualty or condemnation (collectively, the "MASTER LANDLORD
SERVICES"). Therefore, despite anything that may be construed to the contrary in
this Sublease or the Master Lease, Subtenant agrees that Sublandlord's sole
obligation with respect to the Master Landlord Services shall be to use
commercially reasonable good faith efforts, at the request of Subtenant, to
enforce Sublandlord's rights and remedies under the Master Lease for the purpose
of obtaining performance by Master Landlord of the Master Landlord Services (the
"ENFORCEMENT OBLIGATION"). Prior to making such request upon Sublandlord,
Subtenant shall diligently and in good faith endeavor to resolve with Master
Landlord any dispute or non-performance regarding Master Landlord Services (it
being acknowledged by Subtenant that it shall look first and only to Master
Landlord to furnish Master Landlord Services). Subtenant acknowledges that
Sublandlord shall have no obligation to provide any services to Subtenant, or to
perform any repair or maintenance of the Space. To the extent the Master Lease
obligates Master Landlord to provide such services or perform such work, such
obligation shall remain exclusively with Master Landlord, and shall not become
the obligation of Sublandlord. In any event, Subtenant will not have any claim
against Sublandlord based on the Master Landlord's failure or refusal to comply
with any of the provisions of the Master Lease unless that failure or refusal is
a result of Sublandlord's default under the Master Lease or Sublandlord's
default hereunder with respect to the Enforcement Obligation. So long as
Sublandlord materially performs its Enforcement Obligation, then, despite Master
Landlord's failure or refusal to comply with any of those provisions of the
Master Lease, this Sublease will remain in full force and effect and Subtenant
will pay the Base Rental and all other rent, sums and charges provided for in
this Sublease without any abatement, deduction or setoff; provided, however that
to the extent Sublandlord actually receives an abatement, deduction or setoff of
Base Rental or such other rent, sums and charges under the Master Lease, then
Subtenant shall receive an abatement on its rental obligations in the same
proportion as the abatement received by Sublandlord (i.e., if Sublandlord
receives a 50% abatement for 10 days on its rental obligations under the Master
Lease, then Subtenant shall receive a 50% abatement for 10 days on its rental
obligations hereunder). Notwithstanding the foregoing, Subtenant shall not be
entitled to any abatement on its obligation to pay the Amortized TI Rent.

                    (b) Prior to taking any action with respect to the Space
that would require the Sublandlord to obtain the Master Landlord's approval
under the Master Lease, Subtenant must first obtain approval from both the
Sublandlord (which approval Subtenant agrees is further contingent upon receipt
of the Master Landlord's approval).

                    (c) To the extent not inconsistent with the terms of this
Sublease, Subtenant agrees to perform all of the covenants, agreements, terms,
provisions, and conditions of the Master Lease, as though Subtenant was the
tenant under the Master Lease (including, without limitation, all use
restrictions, repair and maintenance obligations, indemnity provisions,
insurance requirements, surrender provisions, and interest and late charge
provisions), but in no event will Subtenant have any obligation to remove any
Sublandlord Work or restore improvements removed in connection with the
installation of Sublandlord Work. Subtenant shall not violate any provisions of
the Master Lease. Wherever in the Master Lease the word "Tenant" is used, for
the purposes of this Sublease, the word "Subtenant" shall be substituted, and
wherever the word "Landlord" is used, for the purposes of this Sublease, the
word "Sublandlord" shall be substituted; and that upon the breach of any of said
terms, conditions or covenants of the Master Lease by Subtenant or upon the
failure of Subtenant to pay Rent payable under this Sublease or comply with any
of the provisions of this Sublease,

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<PAGE>
Sublandlord may (following the notice and cure periods set forth in the Master
Lease) exercise any and all rights and remedies available to Master Landlord. In
the event of any conflict between this Sublease and the Master Lease, as between
Sublandlord and Subtenant the terms of this Sublease shall control. Whenever the
provisions of the Master Lease require the written consent of "Landlord", said
provisions shall be construed to require the written consent of both Master
Landlord and Sublandlord.

                    (d) Notwithstanding the foregoing provisions of this
paragraph 10, the following provisions of the Master Lease hereby do not apply
to this Sublease: Sections 1(b) 1(c), and 1(d); Section 2; Section 3(a); Section
4(d)(2); Section 5(b); Sections 6(c)(ii) and 6(d); Section 7(a), Section 8(a);
Section 10 (but only to the extent of any restoration obligations on the part of
the landlord); Section 15, Section 16(b); Sections 19(c) and 19(d); Section 20;
Section 21; Section 24(e); Exhibit A; Exhibit C; Exhibit D, Amendment No. 1 and
Amendment No. 2.

                    (e) Sublandlord agrees to perform its obligations under this
Sublease and its obligations under the Master Lease to the extent not made the
obligations of Subtenant hereunder. Sublandlord shall deliver to Subtenant a
copy of each notice of default received by Sublandlord from Master Landlord
pursuant to the Master Lease within five (5) business days after Sublandlord's
receipt thereof.

               11. Insurance. Sublandlord shall not be required to obtain and
maintain any insurance required of Master Landlord under the Master Lease.
Subtenant agrees to name both Master Landlord and Sublandlord as additional
insureds under the insurance policies which Subtenant is required to obtain and
maintain under the Master Lease.

               12. Signage. Subject to Master Landlord's consent and the
satisfaction of any applicable terms and conditions set forth in the Master
Lease, Subtenant shall have the right to, at Subtenant's cost and expense, (i)
display Subtenant's company name on the fifth (5th) floor sign directory, and
(ii) display Subtenant's company name as part of the directory for the building
in which the Space is located.

               13. Assignment and Subletting. Subtenant shall not assign,
mortgage, encumber or otherwise transfer this Sublease, nor sublease all or any
part of the Space, without in each case first obtaining the prior written
consent of (i) Sublandlord, which shall not be unreasonably withheld or delayed,
and (ii) Master Landlord. No later than 30 days prior to any proposed assignment
or sublease, Subtenant shall submit to Sublandlord such information as may be
reasonably required by Sublandlord with respect to the proposed assignee or
sublessee (collectively, the "TRANSFER INFORMATION"). In any event, no
assignment, subletting or other transfer shall relieve Subtenant of any
liability under this Sublease. Consent to any such assignment, subletting or
transfer shall not operate as a waiver of the necessity for consent to any
subsequent assignment, subletting or transfer. In connection with each request
for an assignment or subletting, Subtenant shall pay the actual and reasonable
out of pocket cost incurred by Sublandlord in connection with or as a result of
such assignment or subletting, including, without limitation, attorneys fees
(not to exceed $5,000), within fifteen (15) days after receipt of demand of
Sublandlord. In the event Subtenant proposes to assign or sublease all or any
portion of the Space for the remainder of the Term, then Sublandlord shall have
the right to recapture the Space and terminate this Sublease upon notice to
Subtenant given, if at all, within ten (10) business days of the date Subtenant
delivers the following: (a) all Transfer Information related to such

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assignment or sublease, and (b) written request for Sublandlord's consent to
such assignment or sublease. With respect to all subleases, Subtenant will share
equally with Sublandlord any rents paid by such any sublessee that are in excess
of the Rents payable under this Sublease (after deduction for any costs
incurred by Subtenant directly related to such sublease). Sublandlord shall have
the right to assign, mortgage, encumber or otherwise transfer its interest in
this Sublease without the consent of Subtenant. Subject to the foregoing
provisions of this paragraph, this Sublease shall be binding upon and inure to
the benefit of Sublandlord and Sublandlord's successors and assigns, and
Subtenant and Subtenant's successors and permitted assigns.

               14. No Options. Subtenant acknowledges and agrees that it has no
rights to extend the Term. In any event and notwithstanding anything in this
Sublease that may be construed to the contrary, nothing herein shall be
construed as permitting Subtenant hereunder to exercise any extension or renewal
rights or to exercise any rights (whether rights of first refusal, first offer
or otherwise) to lease additional space or purchase the Space or expand the
Space, if any such rights exist, under the Master Lease (collectively,
"PREFERENTIAL RIGHTS"), and in no event shall Sublandlord be obligated to: (i)
extend the term of the Master Lease for any reason, and/or (ii) exercise any
such Preferential Rights.

               15. Notices. Any notice required or desired to be given under
this Sublease shall be in writing and made pursuant to Section 37 of the Master
Lease and shall be addressed to the address of the party to be served, at the
address provided in this section (or to such other addresses as any party hereto
may, from time to time, designate in writing to the others in accordance
herewith), as follows:

If to Sublandlord:       Dewey Ballantine LLP
                         1301 Avenue of the Americas
                         New York, New York 10019
                         Attn: Managing Partner

                         With a copy to:

                         Dewey Ballantine LLP
                         1301 Avenue of the Americas
                         New York, New York 10019
                         Attn: Tom VanBuskirk

If to Subtenant:         Thomas Weisel Partners Group
                         One Montgomery Street, 37th Floor
                         San Francisco, California 94104
                         Attention: Corporate Real Estate Department

If to Master Landlord:   To the address specified in the Master Lease.

          16. Broker's Fees. Sublandlord and Subtenant each represents and
warrants to the other that it has dealt with no broker or other intermediary in
connection with this transaction other than Cushman & Wakefield of California,
Inc., as Sublandlord's broker, and Roger Fields of Cornish & Carey, as
Subtenant's exclusive broker (collectively, the "DISCLOSED BROKERS").
Sublandlord agrees to pay, pursuant to a separate agreement between Sublandlord
and Disclosed

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Brokers, any commission payable to Disclosed Brokers in connection herewith, and
shall indemnify, defend and hold harmless Subtenant with respect thereto.
Notwithstanding the foregoing, if any broker, finder or other intermediary other
than the Disclosed Brokers claims to be entitled to a fee or commission by
reason of having dealt with Sublandlord or Subtenant in connection with this
transaction, or having introduced the Space to Subtenant for lease, or having
been the inducing or procuring cause to this Sublease, the party with whom such
broker, finder or other intermediary claims to have dealt with shall indemnify,
defend and hold harmless the other party of and from any claim for commission or
other compensation by such broker, finder or other intermediary. The provisions
of this paragraph 16 shall survive the expiration of the Term hereof or any
earlier termination of this Sublease.

          17. Default By Sublandlord Under Master Lease; Casualty and
Condemnation.

               (a) In the event of a default by Sublandlord under the Master
Lease which results in termination of the Master Lease, this Sublease shall, at
the sole and absolute option and discretion of the Master Landlord, remain in
full force and effect as a direct lease between Master Landlord and Subtenant
upon and subject to all of the terms hereof, and the Subtenant shall attorn to
and recognize Master Landlord as Sublandlord hereunder and shall promptly upon
such Master Landlord's request, execute and deliver all instruments necessary or
appropriate to confirm such attornment and recognition. The Subtenant hereunder
hereby waives all rights under any present or future law or otherwise to elect,
by reason of the termination of the Master Lease, to terminate this Sublease or
surrender possession of the premises demised hereby. Subject to subparagraph (b)
below, for so long as Master Landlord is not in default under the Master Lease,
Sublandlord shall not voluntarily terminate the Master Lease during the Term
unless and until Master Landlord has agreed in writing to continue this Sublease
in full force and effect as a direct lease between Master Landlord and Subtenant
upon and subject to all of the terms, covenants and conditions of this Sublease
for the balance of the Term hereof. If Master Landlord so consents, Subtenant
shall attorn to and recognize Master Landlord as Landlord hereunder and shall
promptly upon such Master Landlord's request, execute and deliver all
instruments necessary or appropriate to confirm such attornment and recognition.

               (b) Nothing in this Sublease shall restrict or preclude
Sublandlord from exercising any right to terminate the Master Lease (i) by
reason of any default of Master Landlord thereunder, or (ii) pursuant to the
provisions of the Master Lease relating to fire or other casualty, or
condemnation

          18. Landlord's Consent. This Sublease is subject to and contingent
upon Master Landlord's execution and delivery of its written consent to this
Sublease on or before the date which is fifteen (15) business days after the
date hereof . In the event Master Landlord does not execute and deliver such
consent within such time, then either Sublandlord or Subtenant may terminate
this Sublease by giving the other party ten (10) days' prior written notice, in
which case this Sublease shall terminate on the day following the last day of
the ten (10)-day notice period (unless Master Landlord's consent is obtained
during such ten (10)-day period, in which case this Sublease shall remain in
full force and effect), neither party shall have any further rights or
obligations (hereunder except for any liability or obligation that is expressly
provided hereunder to survive the expiration of the Term hereof of or
termination of this Sublease), and Sublandlord shall return to Subtenant all
sums paid by Subtenant to Sublandlord in connection with Subtenant's execution
hereof.

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          19. Miscellaneous Representations. Subtenant warrants and represents,
for the benefit of Sublandlord only, that (i) Subtenant is a duly organized and
existing limited liability company under the laws of the State of Delaware and
is authorized to transact business in the State of California; (ii) Subtenant
has full right and authority to execute, deliver and perform under this
Sublease; and (iii) the persons executing this Sublease were authorized to do
so. Sublandlord warrants and represents, for the benefit of Subtenant only, that
(i) Sublandlord is a duly organized and existing limited liability partnership
under the laws of the State of New York, and is authorized to transact business
in the State of California; (ii) Sublandlord has full right and authority to
execute, deliver and perform under this Sublease; (iii) the persons executing
this Sublease on behalf of Sublandlord were authorized to do so, and (iv) there
exists under the Master Lease no uncured default or event of default on the part
of Sublandlord or, to Sublandlord's actual knowledge, on the part of Master
Landlord, nor to Sublandlord's actual knowledge has there occurred any event
which, with the giving of notice or passage of time or both, would constitute
such a default or event of default.

20. Governing Law. This Sublease shall be governed by and construed in
accordance with the laws of the State of California. If any provision of this
Sublease is held to be or rendered unenforceable for any reason whatsoever, all
other provisions hereof shall remain in full force and effect.

          21. Entire Agreement. This Sublease sets forth all covenants,
agreements and understandings between Sublandlord and Subtenant with respect to
the specific subject matter hereof and there are no other covenants, conditions
or understandings, either written or oral, between the parties hereto except as
set forth in this Sublease. Subtenant is not a third party beneficiary of the
Master Lease.

          22. Counterparts. This Sublease may be executed in multiple
counterparts, and each counterpart when fully executed and delivered shall
constitute an original instrument, and all such multiple counterparts shall
constitute but one and the same instrument.

          23. Holdover. If Subtenant holds over in the Space after the
expiration of the term of this Sublease (or the termination of this Sublease)
without the prior written consent of Sublandlord and Master Landlord, Subtenant
shall be deemed to be occupying the Space as a tenant at sufferance at a daily
rental equal to one thirtieth (1/30th) of one hundred twenty five percent (125%)
of the Base Rental in effect during the last month of the Term, as may be
extended hereby, and otherwise subject to all the conditions, provisions and
obligations of this Sublease insofar as the same are applicable to a tenancy at
sufferance. In addition, Subtenant shall: (i) indemnify Sublandlord against all
costs or claims for damages Sublandlord may incur from Master Landlord by reason
of such holdover; and (ii) indemnify Sublandlord against all claims for damages
by any other tenant or person to whom Sublandlord may have leased all or any
part of the Space covered hereby and being held over by Subtenant from and after
the expiration of this Sublease; provided, however, that Sublandlord agrees to
promptly notify and inform Subtenant about any proposed leasing or other
occupancy transactions with respect to all or any part of the Space, whether
initiated by Master Landlord, Sublandlord or any other person. The inclusion of
this Section shall not be deemed Sublandlord's or Master Landlord's consent to
any holding over.

                                        9
<PAGE>
          24. Cure Right. If Subtenant shall at any time fail to make any
payment or perform any other obligation of Subtenant hereunder, then Sublandlord
shall have the right, but not the obligation, after the lesser of five (5)
business days' notice to Subtenant or the time within which Master Landlord may
act on Sublandlord's behalf under the Master Lease, or without notice to
Subtenant in the case of any emergency, and without waiving or releasing
Subtenant from any obligations of Subtenant hereunder, to make such payment or
perform such other obligation of Subtenant in such manner and to such extent as
Sublandlord shall deem necessary, and in exercising any such right, to pay any
incidental costs and expenses, employ attorneys and other professionals, and
incur and pay reasonable attorneys' fees and other costs reasonably required in
connection therewith. Subtenant shall pay to Sublandlord upon demand all sums so
paid by Sublandlord and all incidental costs and expenses of Sublandlord in
connection therewith, together with interest thereon at the interest rate
provided in Section 3(d) of the Master Lease.

          25. Access. Sublandlord reserves the right to enter the Space upon
reasonable advance notice to Subtenant (except that in case of emergency no
notice shall be necessary) in order to (i) inspect the Space and/or the
performance by Subtenant of the terms of this Sublease, and (ii) during the last
thirty (30) days of the Term, to perform Sublandlord's restoration obligations
under the Master Lease, if any. Except in case of an emergency, Subtenant shall
have the right to require that a representative of Subtenant be present during
Sublandlord's entry into the Space pursuant to this paragraph.

                            [Signatures on next page]

                                       10
<PAGE>
          IN WITNESS WHEREOF, the undersigned have executed this Sublease as of
the day and date first written above.

Sublandlord:

DEWEY BALLANTINE LLP,
a New York limited liability partnership

By: /s/ Richard Shutran
    ---------------------------------
Name: Richard Shutran
Title: Co-Managing Partner

Subtenant:

THOMAS WEISEL PARTNERS GROUP LLC,
a Delaware limited liability company

By: /s/ Robert West
    ---------------------------------
Name: Robert West
Title: Chief Financial Officer

                                       11exv10w24w8

 

Exhibit 10.24.8

COMMITMENT LETTER

October 5, 2005

This commitment letter (the “Commitment Letter”) is intended to set forth the results of
discussions between Merrill Lynch Mortgage Lending, Inc. (“MLML”), and Ashford Hospitality Trust,
Inc., and Ashford Hospitality Limited Partnership (collectively, “Sponsor”), relating to the
financing of the Properties (as defined herein), as more particularly set forth below. We are
pleased to inform you that MLML (including all required credit committees) has approved a loan to
Borrower (as defined below) up to a maximum principal amount of $210,800,000.00, subject to the
terms and conditions that follow. The following sets forth the terms and conditions upon which
Lender will make the Loan:

	 	 	 
	Loan Amount:

	 	Up to $210,800,000. At Lender’s discretion, all or a portion of the Loan Amount will be added to three of the
loans advanced in connection with the $370 million acquisition financing of the CNL portfolio funded by Merrill
Lynch to affiliates of Sponsor on June 17, 2005 (the “Prior Financing”), it being understood that only the Prior
Financing loans secured by pools 1, 2, and 3 (the “Remaining CNL Pools”) will be so increased. Lender, in its
discretion, may divide the Loan Amount and the outstanding balance of the loans secured by the Remaining CNL
Pools among four or more Loans.
	 
	 	 
	Lender:

	 	MLML, or an affiliate (“Merrill Lynch”), its successors, transferees and assigns.
	 
	 	 
	Borrower:

	 	Each Borrower shall be a single purpose, bankruptcy remote entity organized under United States law acceptable
to Merrill Lynch and meeting rating agency criteria (collectively, “Borrower”), controlled directly or
indirectly by Sponsor.
	 
	 	 
	Properties:

	 	10 hotel properties (excluding the office building located on the site of the Embassy Suites Palm Beach) located
in various cities and states as set forth on Exhibit A (the “New Properties”) and the properties in the
Remaining CNL Pools (collectively, the “Properties”). It is currently anticipated that loans resulting from
the advance of the Loan Amount and the reconfiguration of the Remaining CNL Pools will be configured as set
forth on Exhibit B (the “Loans”).
	 
	 	 
	Loan Term:

	 	The term of Loans in the amount of approximately $192,485,000 (expected to be Loans 1 and 6 as set forth on
Exhibit B) shall be coterminous with the Prior Financing (i.e., the maturity date shall be July 1, 2015), and
approximately $294,625,000 of Loans (which are expected to be Loans 2, 3, and 7 as set forth on Exhibit B and
are hereinafter referred to as the “Extended Loans”) shall have a term expiring on February 1, 2016. In other
words, all of the Loan Amount is expected to have a maturity date of February 1, 2016, and approximately
$83,825,000 of the Prior Financing will be extended from July 1,
2015 to February 1, 2016. All hedge breakage
costs and other costs and expenses incurred by Merrill Lynch in connection with extending the term on the
Extended Loans shall be borne by Borrower, provided that Borrower may compensate Merrill Lynch for such breakage
costs by accepting an increase in the Interest Rate on the Extended Loans.
	 
	 	 
	Interest Rate:

	 	Interest on the Loan Amount shall be calculated by adding 72 basis points (the “Spread”) to the sum of the bid
side yield of the on-the-run 10-year Treasury bond plus the mid-market Swap Spread interpolated to the maturity
of the Loan at the time Borrower locks the coupon with Merrill Lynch in accordance with the Rate Lock section
below.
	 
	 	 
	 

	 	Interest will be calculated on an actual/360 basis. The Interest Rate shall be subject to change, based on
variations in, among other things, treasury rates, swap rates,

 

 

	 	 	 
	 

	 	swap spreads, and spreads in the generic CMBS fixed rate markets, until the
earlier to occur of (i) the date on which the Borrower locks the coupon with
Merrill Lynch in accordance with the “Rate Lock” section below and (ii) the
funding of the applicable portion of the Loan Amount.
	 
	 	 
	 

	 	With respect to any loans currently secured by the
Remaining CNL Pools that Lender elects to increase in
accordance herewith, the amended and restated Loans
will have an interest rate equal to the weighted
average of the existing interest rates on the
principal balances of such loans prior to being
increased (as adjusted pursuant to the Early Rate
Lock Agreement to account for the extension of the
maturity date thereon, if applicable) and the
Interest Rate locked in accordance herewith on the
applicable portion of the Loan Amount. In addition,
the Interest Rate on the Extended Loans shall be
increased in order to compensate Merrill Lynch for
all breakage costs incurred Merrill Lynch in
connection with the extension of the term on the
Extended Loans, as set forth above (unless Borrower
elects to reimburse Merrill Lynch for such costs in
cash at closing) as well as for the higher yield on
longer term debt instruments. ML reserves the right
to re-allocate coupon among the Loans.
	 
	 	 
	Rate Lock:

	 	Lender will lock the Interest Rate on the Loan Amount
(or a lesser amount at Borrower’s option) upon
receipt by Lender of a good faith deposit equal to 2%
of the Loan Amount and the execution by Sponsor of
Lender’s standard rate lock agreement, as modified to
reflect the reconfiguration of the Loans and
extension of the Extended Loans. Upon receipt of such
good faith deposit and rate lock agreement, Lender
will hedge the Loan. Sponsor shall be responsible for
all hedge carrying costs. The good faith deposit,
less the cost of the hedge, shall be refunded to the
Borrower at closing.
	 
	 	 
	Amortization:

	 	Interest only period co-termininous with Prior
Financing interest only period (i.e., 5 years from
the closing of the Prior Financing), 25 year
amortization schedule thereafter.
	 
	 	 
	Anticipated

Closing Date:

	 	Borrower and Lender shall use commercially reasonable
efforts to fund the full Loan Amount on or about
October 12, 2005, provided that Lender agrees that it
will fund the Loan Amount in up to three stages as
Sponsor obtains the release of the New Properties
from the liens of certain existing mortgages.
Notwithstanding the foregoing, Sponsor agrees that at
least Loans 1 and 6 (as described on Exhibit B) must
close no later than October 12, 2005, in order to
accommodate Lender’s securitization schedule.
	 
	 	 
	Fees and
Expenses:

	 	Borrower will be required to pay
no origination fee.
	 
	 	 
	 

	 	Merrill Lynch will be entitled to: (i) the Initial Deposit (as defined
below), (ii) a Loan Underwriting Fee of $25,000, and (iii) reimbursement
of its out-of-pocket expenses (including without limitation reasonable
fees and expenses of third party due diligence consultants and legal
counsel), incurred in connection with this transaction whether or not it
actually closes (the “Lender Expenses”).
	 
	 	 
	 

	 	Borrower will be directly responsible for payment of any additional fees
incurred by Borrower in connection with the origination of the Loan
(e.g., Borrower’s counsel, transfer and mortgage recording taxes,
brokers’ fees, title, survey, etc.).

2

 

	 	 	 
	 

	 	“Initial Deposit” shall be equal to $450,000. The Initial Deposit shall
not impose any obligation on the Lender, except that the Initial Deposit,
less any Lender Expenses, shall be returned to the Borrower upon closing
or if the closing of the Loans fails to occur for reasons beyond
Borrower’s control. Lender acknowledges receipt of the Initial Deposit.
	 
	 	 
	Initial

Underwritable

Cash Flow/Minimum

DSCR:

	 	At closing, the New Properties shall provide an
Initial Underwritable Cash Flow (the “Initial UCF”),
as determined by Lender and using applicable rating
agency criteria, of at least $21.58 million
(assuming a Loan Amount of $210,800,000) and the New
Properties shall provide a minimum DSCR of 1.40x.
Based on information provided to date, Merrill Lynch
confirms that Initial UCF is equal to $21.58
million.
	 
	 	 
	 

	 	“DSCR” shall be defined as the ratio of (i) Net Cash
Flow (defined below) divided by (ii) annual debt
service due on a Loan assuming a 25-year
amortization period.
	 
	 	 
	 

	 	“Net Cash Flow” shall be defined as the trailing 12-month net operating
income from the applicable Properties, adjusted as determined by Lender
for stabilized occupancy and average daily rates and for projected fixed
costs (“NOI”), less (i) management fees equal to the greater of 3% of
gross revenues per annum and the actual in place management fees payable
under the applicable management agreements, (ii) FF&E reserves equal to
greater of 4% of gross revenues per annum and the amount required to be
reserved under the applicable management agreements, and (iii) actual in
place franchise fees payable under the applicable franchise agreements.
The calculation of NOI and Net Cash Flow shall be determined by Lender in
its reasonable discretion.
	 
	 	 
	Security:

	 	Each Loan will be secured by a pool of the Properties selected by Lender and reasonably
acceptable to Sponsor. Prior to Securitization Lender may require a reallocation of Properties
and/or principal balances among the Loans and/or a bifurcation of the Loans into smaller Loans
secured by sub-pools of the Properties. The Loans may or may not be cross-collateralized with
each other at Lender’s option prior to Securitization and Loans securitized in the same
Securization may remain crossed at Lender’s option. The collateral pools will be selected by
Lender, based upon diversification of geography, flag and performance. Security for each Loan
will include, but not be limited to, the following:

	 	1.	 	Perfected first priority mortgage liens
on the Borrower’s fee and leasehold interests in the Properties;
	 
	 	2.	 	A pledge of 100% of the equity ownership
interest in the owner(s) of the Properties (only if required by
Lender in connection with the creation of a mezzanine loan at the
time of a Securitization);
	 
	 	3.	 	A perfected first priority security
interest in any reserve accounts, including the tax and insurance
escrow account, FF&E Account and Cash Management Account;
	 
	 	4.	 	Assignment of all leases and rents.

	 	 	 
	Nonconsolidation

Opinion:

	 	A Nonconsolidation Opinion acceptable to Lender from an
independent counsel reasonably acceptable to Lender will
be required.
	 
	 	 
	Management:

	 	Management of each New Property shall be conducted
pursuant to a management agreement with Remington Lodging
& Hospitality LP (“Manager”). Manager

3

 

	 	 	 
	 

	 	shall enter into a subordination agreement acceptable to Lender and shall
deliver to Lender an estoppel certificate satisfactory to Lender. Lender
reserves the right to remove management of the Properties if the
following events occur:

	 	1.	 	Upon a continuing event of default under
the Loan documents, an event of default or failure to achieve
performance hurdles set forth in the management agreement (after
notice and cure rights to the extent provided in the management
agreements) and/or any franchise agreements;
	 
	 	2.	 	For items including, but not limited to,
fraud, gross negligence, willful misconduct or misappropriation of
funds; or
	 
	 	3.	 	If Borrower changes the property manager
or franchise affiliate without Lender’s prior approval.

	 	 	 
	 

	 	Notwithstanding the foregoing, the properties currently in the Remaining
CNL Pools shall continue to be managed by affiliates of Marriott in
accordance with the management agreements and subordination agreements
currently in place.
	 
	 	 
	Cash Management

Account:

	 	Borrower shall deposit all cash receipts into local bank
accounts acceptable to Lender (the “Local Accounts”), and
shall direct all rent, credit card and other
payments/revenues other than cash receipts directly into a
lockbox account at a bank acceptable to Lender, which may
be JP Morgan-Dallas (the “Lockbox Account”). All amounts
in the Local Accounts shall be swept twice per week to the
Lockbox Account. All amounts in the Lockbox Account shall
be swept daily to a cash management account selected by
Lender (the “Cash Management Account”). Lender will
control the Lockbox Account and the Cash Management
Account and monies in the account shall be applied by
Lender with the following priority: (i) monthly interest
payment and any required reserve account deposits due to
Lender pursuant to the Loan Documents, (ii) other amounts,
if any, due Lender under the Loan documents, and (iii)
prior to a Loan default, the balance to be paid to
Borrower. Lender will receive a first priority pledge of
the Lockbox Account and the Cash Management Account as
additional security for the Loan.
	 
	 	 
	 

	 	Notwithstanding the foregoing, cash management with respect to the
Properties currently in the Remaining CNL Pools shall continue under the
cash management procedures agreed upon at the time of the Prior
Financing.
	 
	 	 
	Prepayment:

	 	The Loans will be locked out from prepayment, except
during the 60 days prior to maturity, when the Loans
may be prepaid in full without penalty.
Notwithstanding the foregoing, as provided for in the
Prior Financing, after the second anniversary of
Securitization (as defined below) of each Loan (the
“Defeasance Lockout Period”), Borrower may defease the
Loan in whole (or in part as set forth below); prior
to the Defeasance Lockout Period Borrower may prepay
each Loan in whole subject to payment of a prepayment
premium equal to the greater of yield maintenance or
1%.
	 
	 	 
	Partial

Defeasance:

	 	After the Defeasance Lockout Period, each Loan may be
defeased in part and any one or more of the underlying
Properties may be released and replaced with U.S.
treasury securities in the amount of 125% of the
aggregate allocated loan amounts of the Property(ies)
to be released (which allocated loan amounts shall be
agreed upon by Sponsor and Merrill Lynch prior to
closing), provided that Borrower complies with
standard defeasance provisions for loans of this type,
including the requirement that after such partial
defeasance the DSCR on the applicable Loan is equal to
or greater than the DSCR at the time of closing and
immediately prior to

4

 

	 	 	 
	 

	 	such partial defeasance and the requirement that after such partial
defeasance the RevPAR penetration for the Properties secured by the
applicable Loan is equal to or greater than the RevPAR penetration at the
time of closing and immediately prior to such partial defeasance
(“Standard Defeasance Provisions”).
	 
	 	 
	Property

Substitutions:

	 	Borrower shall be permitted to substitute up to 50% of the Properties (by allocated loan amount)
securing each Loan provided that, among other things, (1) no event of default exists, (2) the market
value and net operating income of each substitute Property are equal to or greater than that of the
replaced Property, (3) after the substitution the DSCR on the applicable Loan is equal to or greater
than the DSCR at the time of closing and immediately prior to such substitution, (4) Borrower obtains
Lender consent not to be unreasonably withheld or delayed prior to a Securitization and a rating agency
confirmation letter after Securitization, and (5) Borrower delivers an acceptable REMIC opinion.
	 
	 	 
	 

	 	Merrill Lynch has agreed to Borrower’s request to permit the release of the East Tower of the Radisson
Fort Worth from the collateral upon satisfaction of the certain conditions to be contained in the Loan
documents, including without limitation (i) the successful conversion of the West Tower to a Hilton
having an appraised value greater than $28.9 million (or Borrower has posted cash collateral for the
difference up to $5 million), (ii) the achievement by the Loan secured by such Hilton of a DSCR equal
to at least the greater of (a) the DSCR of such Loan immediately prior to such conversion and (b)1.40x,
and (iii) if such Loan has been Securitized, a rating agency confirmation letter. Borrower will be
permitted to undertake such conversion provided that Borrower presents satisfactory evidence that the
conversion process will not adversely affect the annual DSCR of the Loan secured by such Property or
posts a cash reserve or letter of credit satisfactory to the Lender.
	 
	 	 
	Permitted

Transfers:

	 	The Properties securing a Loan, and/or direct or indirect equity interests in the applicable Borrower,
may be transferred without payment of an assumption fee, provided that, among other things, (1) a new
non-consolidation opinion is delivered to Lender, and such non-consolidation is in substantially the
same form and has substantially the same substance as the non-consolidation opinion delivered at
closing, (2) all entities required to be single-purpose entities at closing remain single-purposes
entities under criteria established by the rating agencies, (3) Borrower provides 30 days advance
written notice to Lender of such transfer, (4) Borrower obtains Lender consent not to be unreasonably
withheld or delayed and, after a Securitization, a rating agency confirmation letter, and (5) no event
of default exists.
	 
	 	 
	Borrower

Requests:

	 	In the instance a Borrower intends to effectuate a transaction that is not permitted under the Loan
documents, Borrower shall be required to pay a maximum fee of $10,000 plus any reasonable out-of-pocket
expenses to Lender or any loan servicer in connection with obtaining the consent of Lender or such
servicer.

5

 

	 	 	 
	Replacement

Reserve:

	 	An initial amount will be deposited into a reserve account equal to 125% of any deferred maintenance or
environmental remediation costs as determined by new third party studies, provided that all amounts so
deposited will be returned to Borrower upon completion of the required deferred maintenance work and/or
environmental remediation. A replacement reserve equal to the greater of 4% of gross revenues per
annum and the amount required to be reserved under the applicable management agreements (the
“Replacement Reserve Account”) will be established and funded monthly from excess cash flow. The
Replacement Reserve will be available to Borrower for reimbursement of FF&E and capital expenditures
incurred. In addition to the Replacement Reserve, Ashford Hospitality Limited Partnership shall
provide a payment and completion guaranty, in form and substance acceptable to Lender, for any items
identified in property improvement plans.
	 
	 	 
	Ground Rent,
Taxes and
Insurance Escrow:

	 	Borrower will be required to reserve, on a monthly basis, an amount equal to one-twelfth of (i) all
annual ground rent, (ii) all annual tax bills and (iii) the annual insurance premium(s) for the
Properties.
	 
	 	 
	Recourse

Carveouts:

	 	Borrower will execute Lender’s standard non-recourse carveout guaranty consistent with the Prior
Financing.
	 
	 	 
	Loan Recourse:

	 	Consistent with the Prior Financing, Lender’s recourse in the event of a default will be limited to
Lender’s security interest in the Properties and to
Borrower’s interest therein; provided, however,
that Borrower shall be personally liable for all standard carveouts, including without limitation,
damages arising from (i) any fraud or willful misrepresentation, (ii) misapplication or
misappropriation of insurance proceeds, condemnation proceeds, tenant security deposits, rents and any
other funds due Lender under the Loan documents, (iii) damage to any Property resulting from gross
negligence or intentional acts, (iv) if sufficient cash flow exists, failure to pay taxes or other
Property related liens. In addition, the Loan will become fully recourse to Borrower if (a) Borrower or
any related entity interferes with Lender’s pursuit of any remedy provided under any of the Loan
documents, (b) any or all of the Properties become an asset in a voluntary bankruptcy or insolvency
proceeding, (c) all or any part of any Property (including the removal of any equipment) or ownership
interest in all or any part of any Property or Borrower is transferred in violation of the Loan
documents or (d) violation of the single-purpose bankruptcy remote status of Borrower.
	 
	 	 
	 

	 	In addition, Borrower will execute a hazardous waste indemnity.
	 
	 	 
	Insurance: 

	 	Borrower will be required to maintain “all-risk” perils insurance (including terrorism coverage),
business interruption and liability insurance including flood, windstorm and earthquake insurance if a
Property is located in a flood, hurricane or earthquake zone, as applicable, acceptable to Lender.
	 
	Third Party

Reports:

	 	In addition to other customary closing items, Lender must receive a satisfactory MAI appraisal (in
accordance with FIRREA standards) demonstrating a loan-to- value ratio of 75% for the New Properties,
and environmental and engineering reports, or acceptable updates to existing reports (all commissioned
by Lender in the name of Lender, its respective successors, transferees and assigns) for the New
Properties prior to closing of the Loans.

6

 

	 	 	 
	Additional

Encumbrances:

	 	Borrower will not be permitted to further encumber the Properties while the Loan is outstanding, except
as approved by Lender.
	 
	 	 
	No Additional

Indebtedness:

	 	Borrower may not incur any indebtedness other than the Loans during the term thereof and the owner of
Borrower may not pledge any direct or indirect interest in Borrower to secure any financing during the
term of the Loans. Notwithstanding the foregoing, provided that the DSCR on a Loan is greater than 1.5x
and the Loan-to-value ratio on such Loan based on new appraisals is not more than 70%, then the owner
of the applicable Borrower may incur mezzanine indebtedness such that the ratio of total indebtedness
(i.e., Loan plus mezzanine loan) does not exceed 75% and the all-in DSCR does not exceed 1.40x, subject
to receipt of a rating agency confirmation letter; provided further that in connection with the sale of
any Property or Properties where the purchaser assumes the applicable Loan in accordance with the
“Permitted Transfers” section above, the applicable Borrower or Sponsor may provide mezzanine financing
to the purchaser in an amount which, when taken together with any other financing obtained by such
purchaser, does not exceed 90% of the sale price, subject to receipt of Lender consent prior to a
Securitization and a rating agency confirmation letter after a Securitization.
	 
	 	 
	Ground Lease:

	 	With respect to all or any part of any Property owned by Borrower in leasehold, the relevant ground
lease(s) shall be acceptable to Lender and shall be in compliance with rating agency underwriting
standards and guidelines. Borrower shall be required to obtain an estoppel certificate acceptable to
Lender from the applicable ground lessor(s).
	 
	 	 
	Other Covenants:

	 	The Loan documents will include standard covenants for secured loans of this
type, as Lender may require, including, without limitation, financial reporting covenants,
covenants regarding insurance, due on sale and due on encumbrance covenants, covenants
prohibiting changes to the governing documents of Borrower, budget approval covenants,
covenants prohibiting amendments to the Property management agreement without Lender’s
consent, standard provisions and reserves for loans secured by office buildings with respect
to the office building located on the site of the Embassy Suites Palm Beach and covenants
regarding the bankruptcy remote special purpose status of Borrower. The Loan documents will be
based on the documents executed in connection with the Prior Financing, and three of the Loans
will be evidenced by amended and restated Prior Financing documents.
	 
	 	 
	Cooperation:

	 	Lender intends to sell all or a portion of the Loans by certificates, participations,
securities or pari passu notes evidencing whole or component interests therein, through one or
more public or private offerings (each a “Securitization”). Borrower and Sponsor shall
cooperate with Lender and its affiliates in connection with any such transaction, including,
without limitation:

	 	1.	 	Separating any of the Loans into two or
more separate notes and/or participation interests including, but
not limited to, pari passu notes or separate senior and junior
notes, participations or components. Such notes or components may
be assigned different interests rates, so long as the initial
weighted average of such rates equals the Interest Rate as of the
closing of the Loan.

7

 

	 	2.	 	Entering into any amendments or
modifications to the Loan documents (including to re-allocate the
principal amounts among one or more of the Loans and/or to
re-arrange the pools serving as collateral for the Loans and/or to
split the Loans into smaller Loans secured by sub-pools of the
collateral) which may be requested by Lender or any rating agency
provided same do not modify: (i) the Interest Rate; (ii) the stated
maturity date of the Loan; (iii) the amortization of the principal
amount; (iv) any other material economic terms of the Loan; and (v)
any other provision, the effect of which would increase Borrower’s
obligations or decrease Borrower’s rights under the Loan documents.
	 
	 	3.	 	Borrower will provide such legal
opinions, cooperate in good faith with Lender in effecting
securitization of a portion of or the entire Loan and provide other
information necessary for Lender to make the offered certificates
saleable in the secondary market and to obtain ratings from two or
more rating agencies selected by Lender.

	 	 	 
	Conditions

Precedent:

	 	Funding of the Loan would be subject to, among other
things: (i) satisfactory completion of due diligence
on the Properties, Borrower and Sponsor (ii) no
material adverse change in the fair market value of
the Properties or the financial condition of
Borrower and Sponsor prior to closing, (iii)
completion and execution of acceptable Loan
documentation, consistent with the terms hereof and
materially consistent, to the extent applicable,
with the Prior Financing, and (iv) the absence of
any material disruption or material adverse change
in current financial, banking or capital market
conditions that, in the sole reasonable judgment of
Lender could materially impair the satisfactory
syndication of the Loan. Lender has received final
approval by Lender’s loan committee.
	 
	 	 
	Acceptance:

	 	By signing below, Sponsor acknowledges that Merrill
Lynch is issuing this Commitment Letter at the
request of Sponsor and Sponsor commits to use its
best efforts to cause Borrower to consummate the
Loan in accordance herewith. Notwithstanding
anything contained herein to the contrary, it is
agreed that this Commitment Letter is subject to the
terms and conditions set forth herein and that
Merrill Lynch shall have no obligation to fund the
Loan unless all of the terms and conditions
contained herein are fully satisfied as determined
by Merrill Lynch. This commitment shall
automatically expire if the closing of at least one
of the Loans in the amount of not less than
$160,490,000 (including debt supported by at least 3
New Properties) has not closed by October 12, 2005,
and the remainder of the Loans have not occurred by
December 15, 2005, unless extended in writing by
Merrill in its sole discretion. Time is of the
essence with respect to all dates set forth herein.
This Commitment Letter shall be kept confidential,
shall not be reproduced or disclosed, and shall not
be used by Sponsor or Borrower other than in
connection with the transaction described herein.

	 	 	 	 	 	 
	 	 	MERRILL LYNCH MORTGAGE LENDING, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/S/ ROBERT J. SPINNA, JR.
	 

	 	 	 	 
	 	 	Name: Robert J.
Spinna, Jr.
	 

	 	Title:	 	 
	 

	 	 	 	 

8

 

	 	 	 	 	 
	ACCEPTED AND AGREED TO AS OF THIS

13th DAY OF OCTOBER, 2005:	 	 
	 
	 	 	 	 
	ASHFORD HOSPITALITY TRUST, INC.	 	 
	 
	 	 	 	 
	By:

	 	/S/ DAVID A. BROOKS	 	 
	 	 	 	 	 
	Name: David A. Brooks	 	 
	Title: Chief Legal Officer	 	 
	 
	 	 	 	 
	ASHFORD HOSPITALITY LIMITED PARTNERSHIP	 	 
	 
	 	 	 	 
	By: Ashford OP General Partner LLC	 	 
	 
	 	 	 	 
	By:

	 	/S/ DAVID A. BROOKS	 	 
	 	 	 	 	 
	Name: David A. Brooks	 	 
	Title: Chief Legal Officer	 	 

9

 

Exhibit A – The New Properties

	 	 	 	 	 
	1

	 	Historic Inns Annapolis
	 	MD
	2

	 	Crowne Plaza Beverly Hills
	 	CA
	3

	 	Radisson Ft. Worth
	 	TX
	4

	 	Embassy Suites Houston
	 	TX
	5

	 	Radisson Indianapolis Downtown
	 	IN
	6

	 	Crowne Plaza Key West
	 	FL
	7

	 	Sheraton Minneapolis
	 	MN
	8

	 	Hilton Nassau – Houston
	 	TX
	9

	 	Hilton St. Petersburg
	 	FL
	10

	 	Embassy Suites Palm Beach (excluding office building)
	 	FL

10

 

Exhibit B – Loan Pools

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Loan	 
	Property Name	 	City	 	State	 	Amount	 
	Pool 1
	 	 	 	 	 	 	 	 
	Residence Inn Orlando Sea World
	 	Orlando	 	FL	 	$	36,470,000	 
	Crowne Plaza Key West
	 	Key West	 	FL	 	$	29,475,000	 
	Sheraton Minneapolis
	 	Minnetonka	 	MN	 	$	19,575,000	 
	Residence Inn Cottonwood
	 	Salt Lake City	 	UT	 	$	14,700,000	 
	Courtyard Overland Park
	 	Overland Park	 	KS	 	$	12,620,000	 
	Historic Inns Annapolis
	 	Annapolis	 	MD	 	$	12,850,000	 
	Courtyard Palm Desert
	 	Palm Desert	 	CA	 	$	11,350,000	 
	Residence Inn Palm Desert
	 	Palm Desert	 	CA	 	$	11,750,000	 
	SpringHill Suites University Research Park
	 	Charlotte	 	NC	 	$	6,300,000	 
	SpringHill Suites Durham Airport
	 	Durham	 	NC	 	$	5,400,000	 
	 
	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	$	160,490,000	 
	Pool 6
	 	 	 	 	 	 	 	 
	TownePlace Suites Mt. Laurel
	 	Gaithersburg	 	NJ	 	$	5,640,000	 
	TownePlace Suites Silicon Valley
	 	Gaithersburg	 	CA	 	$	4,075,000	 
	TownePlace Suites Portland
	 	Gaithersburg	 	ME	 	$	4,950,000	 
	TownePlace Suites Boston
	 	Gaithersburg	 	MA	 	$	2,325,000	 
	TownePlace Suites Ft. Worth
	 	Gaithersburg	 	TX	 	$	4,625,000	 
	TownePlace Suites Miami Airport
	 	Gaithersburg	 	FL	 	$	4,778,000	 
	TownePlace Suites Miami Lakes
	 	Gaithersburg	 	FL	 	$	5,602,000	 
	 
	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	$	31,995,000	 
	Pool 2
	 	 	 	 	 	 	 	 
	Courtyard Reagan Airport
	 	Crystal City	 	VA	 	$	34,505,000	 
	Radisson Indianapolis Downtown
	 	Indianapolis	 	IN	 	$	27,225,000	 
	Embassy Suites Palm Beach
	 	Palm Beach Gardens	 	FL	 	$	18,525,000	 
	Hilton St. Petersburg
	 	St Petersburg	 	FL	 	$	19,565,000	 
	Hilton Nassau — Houston
	 	Houston	 	TX	 	$	15,825,000	 
	 
	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	$	115,645,000	 
	Pool 3
	 	 	 	 	 	 	 	 
	Crowne Plaza Beverly Hills
	 	Los Angeles	 	CA	 	$	32,025,000	 
	Radisson Ft. Worth
	 	Fort Worth	 	TX	 	$	24,050,000	 
	SpringHill Suites Gaithersburg
	 	Gaithersburg	 	MD	 	$	15,680,000	 
	Courtyard Ft. Lauderdale
	 	Ft. Lauderdale	 	FL	 	$	15,000,000	 
	SpringHill Suites Centreville
	 	Centerville	 	VA	 	$	9,150,000	 
	 
	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	$	95,905,000	 
	Pool 7
	 	 	 	 	 	 	 	 
	Residence Inn Fairfax
	 	Falls Church	 	VA	 	$	23,850,000	 
	Residence Inn Sorrento Mesa
	 	San Diego	 	CA	 	$	21,375,000	 
	Courtyard Irvine Spectrum
	 	Foothill Ranch	 	CA	 	$	14,000,000	 
	Embassy Suites Houston
	 	Houston	 	TX	 	$	13,050,000	 
	Courtyard Alpharetta
	 	Alpharetta	 	GA	 	$	10,800,000	 
	 
	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	$	83,075,000	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	Hotel Portfolio Total
	 	 	 	 	 	$	487,110,000	 

11

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