Document:

exv10w26w4

Exhibit 10.26.4

LIMITED LIABILITY COMPANY AGREEMENT

OF

PIM HIGHLAND HOLDING LLC

(a Delaware Limited Liability Company)

as of March 10, 2011

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED (1) ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER THE SECURITIES ACT, OR (2) EXCEPT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT

 

TABLE OF CONTENTS

	 	 	 	 	 
	Article	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	Section 1.1 Definitions
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II ORGANIZATION AND PURPOSE
	 	 	16	 
	 
	 	 	 	 
	Section 2.1 Formation
	 	 	16	 
	Section 2.2 Name
	 	 	16	 
	Section 2.3 Places of Business
	 	 	16	 
	Section 2.4 Registered Office and Agent
	 	 	16	 
	Section 2.5 Term
	 	 	16	 
	Section 2.6 Purpose
	 	 	16	 
	Section 2.7 Member Information
	 	 	17	 
	Section 2.8 Ownership and Waiver of Partition
	 	 	17	 
	Section 2.9 Qualifications in Other Jurisdictions
	 	 	17	 
	Section 2.10 Management of the Company
	 	 	17	 
	 
	 	 	 	 
	ARTICLE III MEMBERS
	 	 	17	 
	 
	 	 	 	 
	Section 3.1 Members
	 	 	17	 
	Section 3.2 Voting Rights of Members
	 	 	17	 
	Section 3.3 No Liability to the Members or the Company
	 	 	17	 
	Section 3.4 Other Business Activities of PRISA III
	 	 	18	 
	Section 3.5 Other Business Activities of Ashford
	 	 	19	 
	 
	 	 	 	 
	ARTICLE IV DISTRIBUTIONS/ALLOCATIONS
	 	 	19	 
	 
	 	 	 	 
	Section 4.1 Percentage Interests in Company
	 	 	19	 
	Section 4.2 Distributions
	 	 	19	 
	Section 4.3 Allocations
	 	 	21	 
	Section 4.4 Other Allocations and Profits
	 	 	23	 
	Section 4.5 Tax Allocations
	 	 	23	 
	Section 4.6 Withholding
	 	 	24	 
	Section 4.7 Code Section 83 Safe Harbor Election
	 	 	25	 
	 
	 	 	 	 
	ARTICLE V CAPITAL CONTRIBUTIONS
	 	 	25	 
	 
	 	 	 	 
	Section 5.1 Members’ Initial Capital Contributions
	 	 	26	 
	Section 5.2 Additional Capital Contributions
	 	 	26	 
	Section 5.3 Capital Call Notices
	 	 	27	 
	Section 5.4 Failure to Fund Capital Contributions
	 	 	27	 
	Section 5.5 Records to Reflect Capital Contributions and Capital Commitments
	 	 	28	 
	Section 5.6 Further Capital Contributions
	 	 	29	 
	Section 5.7 Resignations; Withdrawals of Capital
	 	 	29	 
	Section 5.8 Restoration of Negative Capital Accounts
	 	 	29	 
	 
	 	 	 	 
	ARTICLE VI MANAGEMENT; INDEMNIFICATION
	 	 	29	 

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	Article	 	Page	 
	Section 6.1 Management by the Executive Committee
	 	 	29	 
	Section 6.2 Executive Committee
	 	 	29	 
	Section 6.3 Property Management
	 	 	30	 
	Section 6.4 Administrative Member
	 	 	31	 
	Section 6.5 Affiliate Transactions
	 	 	32	 
	Section 6.6 Annual Budgets
	 	 	32	 
	Section 6.7 Meetings of the Executive Committee
	 	 	33	 
	Section 6.8 Compensation
	 	 	33	 
	Section 6.9 Ashford’s Advisory Duties
	 	 	33	 
	Section 6.10 Indemnification
	 	 	37	 
	Section 6.11 Consulting Agreement
	 	 	39	 
	 
	 	 	 	 
	ARTICLE VII TRANSFER RIGHTS OF MEMBERS
	 	 	40	 
	 
	 	 	 	 
	Section 7.1 Transfers
	 	 	40	 
	Section 7.2 Sales of Company Interests to Third Parties
	 	 	41	 
	Section 7.3 Buy/Sell: Sale of Entire Interest to Other Member
	 	 	43	 
	Section 7.4 Right to Sell Portfolio; Right of First Offer
	 	 	44	 
	Section 7.5 Right to Sell Partial Portfolio
	 	 	47	 
	Section 7.6 Assumption by Assignee
	 	 	50	 
	Section 7.7 Amendment of Certificate of Formation
	 	 	51	 
	Section 7.8 General Transfer Provisions
	 	 	51	 
	Section 7.9 Indemnification for Securities Laws Violations
	 	 	54	 
	Section 7.10 Compliance with ERISA and State Statutes on Governmental
Plans
	 	 	55	 
	 
	 	 	 	 
	ARTICLE VIII COMPANY BOOKS AND RECORDS
	 	 	56	 
	 
	 	 	 	 
	Section 8.1 Books, Records, Accounting and Reports
	 	 	56	 
	Section 8.2 Tax Returns
	 	 	57	 
	Section 8.3 Reports
	 	 	57	 
	Section 8.4 Bank Accounts
	 	 	58	 
	Section 8.5 Tax Elections
	 	 	59	 
	Section 8.6 Tax Matters Member
	 	 	59	 
	 
	 	 	 	 
	ARTICLE IX COVENANTS
	 	 	59	 
	Section 9.1 Preservation of Company’s Existence and Compliance with Laws and
Regulations
	 	 	59	 
	Section 9.2 Confidentiality
	 	 	59	 
	 
	 	 	 	 
	ARTICLE X REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
	 	 	60	 
	 
	 	 	 	 
	Section 10.1 Member Representations
	 	 	60	 
	Section 10.2 Ashford Representations
	 	 	62	 
	 
	 	 	 	 
	ARTICLE XI DISSOLUTION AND TERMINATION
	 	 	62	 
	 
	 	 	 	 
	Section 11.1 Dissolution
	 	 	62	 
	Section 11.2 Winding Up, Liquidation and Distribution of Assets
	 	 	63	 
	Section 11.3 Certificate of Cancellation
	 	 	63	 
	Section 11.4 Return of Contribution Nonrecourse to Other Members
	 	 	64	 

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	Article	 	Page	 
	ARTICLE XII MISCELLANEOUS
	 	 	64	 
	 
	 	 	 	 
	Section 12.1 Specific Performance; Other Rights
	 	 	64	 
	Section 12.2 Notices
	 	 	64	 
	Section 12.3 Prior Agreements; Construction; Entire Agreement
	 	 	65	 
	Section 12.4 No Waiver
	 	 	65	 
	Section 12.5 Amendments
	 	 	65	 
	Section 12.6 Severability
	 	 	66	 
	Section 12.7 Counterparts
	 	 	66	 
	Section 12.8 Applicable Law; Jurisdiction
	 	 	66	 
	Section 12.9 Waiver Of Jury Trial
	 	 	66	 
	Section 12.10 [Reserved]
	 	 	66	 
	Section 12.11 No Rights of Third Parties
	 	 	66	 
	Section 12.12 Further Assurances
	 	 	66	 
	Section 12.13 Survival
	 	 	66	 
	Section 12.14 Headings
	 	 	67	 
	Section 12.15 No Broker
	 	 	67	 
	Section 12.16 Services to Members
	 	 	67	 
	Section 12.17 Currency
	 	 	67	 
	Section 12.18 Attorneys’ Fees
	 	 	67	 
	Section 12.19 Compliance with ERISA
	 	 	67	 
	 
	 	 	 	 
	ARTICLE XIII REIT COMPLIANCE
	 	 	68	 
	 
	 	 	 	 
	Section 13.1 REIT Compliance
	 	 	68	 

- iii -

 

	 	 	 
	EXHIBITS	 	 
	Exhibit A

	 	List of Members, Initial Capital Contributions, Initial Capital
Accounts, Percentage Interests and Investments
	 
	 	 
	Exhibit B

	 	Structure Chart
	 
	 	 
	Exhibit C

	 	List of License Agreements
	 
	 	 
	Exhibit D

	 	List of Management Agreements
	 
	 	 
	Exhibit E

	 	Approved Loans
	 
	 	 
	Exhibit F

	 	ERISA Certification From Ashford
	 
	 	 
	Exhibit G

	 	ERISA Certification From PRISA III
	 
	 	 
	Exhibit H

	 	Advisory Duties
	 
	 	 
	Exhibit I

	 	Example of Section 4.2 Distributions

- i -

 

LIMITED LIABILITY COMPANY AGREEMENT

This LIMITED LIABILITY COMPANY AGREEMENT of PIM HIGHLAND HOLDING LLC, a Delaware limited liability
company (the “Company”), is made and entered into to be effective for all purposes as of March 10,
2011, by and between PRISA III Investments, LLC, a Delaware limited liability company (“PRISA
III”), and Ashford Hospitality Limited Partnership, a Delaware limited partnership (“Ashford”),
whose signatures appear below as Members of the Company and each Person admitted as a Member of the
Company after the date hereof pursuant to the provisions of this Agreement. All capitalized terms
used in this Agreement which are not otherwise defined have the meanings set forth in Article I.

W I T N E S S E T H:

WHEREAS, Ashford and PRISA III agreed to form the Company as a limited liability company to own,
hold and invest in the Investments through Subsidiaries in accordance with the terms hereof; and

WHEREAS, this Agreement is being entered into by the Members to govern their affairs as a limited
liability company under the Act.

NOW, THEREFORE, in consideration of the premises and the mutual promises and covenants contained in
this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.1 Definitions. As used in this Agreement, the following terms shall have
the following meanings:

     “1933 Act” shall mean the Securities Act of 1933, as amended, or any successor federal
statute, and the rules and regulations thereunder, all as the same shall be in effect at the time.

     “1934 Act” shall mean the Securities Exchange Act of 1934, as amended, or any successor
federal statute, and the rules and regulations thereunder, all as the same shall be in effect at
the time.

     “1940 Act” shall mean the Investment Company Act of 1940, as amended, or any successor federal
statute, and the rules and regulations thereunder, all as the same shall be in effect at the time.

     “Act” shall mean the Delaware Limited Liability Company Act, 6 Del. C. § 18 101 et
seq., as amended, and any successor to such statute.

     “Additional Capital Contributions” means, for each Member, the amount of Capital Contributions
made by that Member, in excess of that Member’s Initial Capital Contribution.

 

     “Adjusted Capital Account Deficit” shall mean with respect to any Member, the deficit balance,
if any, in such Member’s Capital Account as of the end of the relevant Company Year, after giving
effect to the following adjustments:

     (i) Credit to such Capital Account any amounts which such Member is deemed to be
obligated to restore to the Company pursuant to the second to last sentence of Regulations
§§ 1.704-2(g)(1) and 1.704-2(i)(5).

     (ii) Debit to such Capital Account the items described in Regulations §§
1.704-1(b)(2)(ii)(d)(4), (5) and (6).

     Except as otherwise modified herein, the foregoing definition of Adjusted Capital Account
Deficit is intended to comply with the provisions of Regulation § 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.

     “Administrative Member” shall have the meaning set forth in Section 6.4.

     “Advisor” shall have the meaning set forth in Section 6.9.

     “Affiliate” shall mean, when used with reference to a specified Person, (i) any Person that
directly or indirectly, through one or more intermediaries, Controls or is Controlled by or is
under common Control with the specified Person; (ii) any Person who, from time to time, is a spouse
or immediate relative of a specified Person; (iii) any Person who, directly or indirectly, is the
beneficial owner of ten percent (10%) or more of any class of equity securities or other ownership
interests of the specified Person, or of which the specified Person is directly or indirectly the
owner of ten percent (10%) or more of any class of equity securities or other ownership interests
in each case excluding any Person in its capacity as a shareholder and (iv) as to Ashford,
executive officers and directors of Ashford and Persons Controlled by such Persons shall be
Affiliates of Ashford.

     “Agreement” shall mean this Limited Liability Company Agreement as originally executed and as
amended, supplemented or restated from time to time.

     “Alternative Offer” shall have the meaning set forth in Section 7.4(c) herein.

     “Annual Budget” with respect to any fiscal year shall mean the Capital Expenditure Budget, the
G&A Budget and the Operating Budget for such fiscal year, collectively.

     “Approved Loans” shall mean loans made to the Company or any Subsidiary which are approved in
writing by the Executive Committee. Each of the Wells Loan, the Cigna Loan and the Mezzanine Loans
described on Exhibit E attached to this Agreement shall be deemed to be an Approved Loan
hereunder.

     “Ashford” shall have the meaning set forth in the introductory paragraph herein.

     “Ashford Credit Agreement” shall mean that certain Credit Agreement, dated as of April 10,
2007, by and among, inter alia, Ashford, as borrower, Ashford REIT, as parent, Wachovia Capital
Markets, LLC, as Arranger, each of Mortgage Stanley Senior Funding, Inc.

2

 

and Merrill Lynch Bank USA (now known as Bank of America, N.A.), as Co-Syndication Agents,
each of Bank of America, N.A. and Calyon New York Branch, as Co-Documentation Agents, Ashford
Credit Facility Agent, and the lenders from time to time party thereto, as amended by that certain
First Amendment to Credit Agreement, dated as of May 22, 2007, by and among Ashford, Ashford Credit
Facility Agent and the lenders party thereto, as further amended by that certain Second Amendment
to Credit Agreement and First Amendment to Security Agreement, dated as of June 23, 2008, by and
among Ashford, Ashford REIT, Ashford Credit Facility Agent and the lenders party thereto, and by
that certain Third Amendment to Credit Agreement dated as of December 24, 2008, by and among
Ashford, Ashford REIT, and Ashford Credit Facility Agent and the grantors party thereto, and by the
Ashford Credit Facility Agent Replacement Agreement.

     “Ashford Credit Facility Agent” shall mean Bank of America, N.A., successor in interest to
Wachovia Bank, National Association, as Agent on behalf of the lenders party to the Ashford Credit
Agreement, its successors and assigns.

     “Ashford Credit Facility Agent Replacement Agreement” shall mean that certain Resignation,
Waiver, Consent and Appointment and Amendment Agreement dated as of February 1, 2010, by and among
Wachovia Bank, National Association, as existing agent, Bank of America, N.A., as successor agent,
the lenders party thereto, Ashford, Ashford Hospitality Trust, and each of the affiliated loan
parties signatory thereto.

     “Ashford Credit Facility Loan Documents” shall mean the “Loan Documents” as defined in the
Ashford Credit Agreement.

     “Ashford REIT” means Ashford Hospitality Trust, Inc.

     “Ashford Representative” shall have the meaning set forth in Section 6.2 herein.

     “Available Promote Amount” with respect to any clause of Section 4.2, means the Hypothetical
Percentage Interest of Hypothetical Investor multiplied by the cash to be distributed pursuant to
such clause.

     “Business Day” shall mean each day other than a Saturday, Sunday or any other day on which
banking institutions in the State of New York are authorized or obligated by law or executive order
to be closed.

     “Buy Notice” shall have the meaning set forth in Section 7.5(b) herein.

     “Buy/Sell Company Asset Value” shall mean the amount specified in a Buy/Sell Notice and
designated by the Buy/Sell Initiator, equal to the price for which all assets of the Company would
be sold in order to determine the Buy/Sell Selling Price and Buy/Sell Purchase Price using the
procedures set forth in Section 7.3(b).

     “Buy/Sell Deposit” shall mean either the Buy/Sell Initiator’s Deposit or the Buy/Sell
Receiving Member’s Deposit, as applicable depending on which Member is the purchasing Member.

3

 

     “Buy/Sell Initiator” shall mean a Member who initiates a buy/sell under Section 7.3.

     “Buy/Sell Initiator’s Deposit” shall mean an earnest money deposit, which must consist wholly
of cash, in an amount equal to ten percent (10%) of the Buy/Sell Purchase Price as set forth in the
Buy/Sell Notice, and which must accompany any Buy/Sell Notice as set forth in Section 7.3.

     “Buy/Sell Notice” shall mean for purposes of Section 7.3, a written notice setting forth (a)
the Buy/Sell Company Asset Value, (b) the Buy/Sell Selling Price for the Buy/Sell Initiating
Member’s Entire Interest, and (c) the Buy/Sell Purchase Price, each as designated by the Buy/Sell
Initiator.

     “Buy/Sell Purchase Price” shall mean the purchase price, which must consist wholly of cash,
for the Buy/Sell Receiving Member’s Entire Interest in the Company

     “Buy/Sell Receiving Member” shall mean a Member who receives a Buy/Sell Notice under Section
7.3.

     “Buy/Sell Receiving Member’s Deposit” shall mean an earnest money deposit, which must consist
wholly of cash, in an amount equal to ten percent (10%) of the Buy/Sell Selling Price, and which
must accompany the Buy/Sell Receiving Member’s written response to the Buy/Sell Notice as set forth
in Section 7.3.

     “Buy/Sell Selling Price” shall mean the selling price, which must consist wholly of cash, for
the Buy/Sell Initiator’s Entire Interest.

     “Capital Account” shall mean, with respect to each Member, a book account maintained in
accordance with the following provisions:

     (i) To each Member’s Capital Account there shall be credited such Member’s Capital
Contributions, such Member’s distributive share of Profits and any items in the nature of
income or gain which are allocated to such Member pursuant to Section 4.3, and the amount of
any Company liabilities that are assumed by such Member (to the extent not taken into
account under clause (ii) below).

     (ii) To each Member’s Capital Account there shall be debited the amount of cash and the
Gross Asset Value of any Company Asset distributed to such Member pursuant to any provision
of this Agreement (net of liabilities secured by such distributed property or asset that
such Member assumes or takes subject to), such Member’s distributive share of Losses and any
items in the nature of expenses and losses which are allocated to such Member pursuant to
Section 4.3, and the amount of any liabilities of such Member that are assumed by the
Company or which are secured by any property contributed to the Company by such Member
(except to the extent already reflected in the amount of such Member’s Capital
Contributions).

     The foregoing definition and other provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Code § 704(b) and the Regulations thereunder, and
shall be interpreted and applied in a manner consistent with such Regulations.

4

 

Notwithstanding anything to the contrary contained in this Agreement, the Executive Committee
may modify the manner in which Capital Accounts or any debits or credits thereto are computed in
order to comply with such Regulations, provided, that any such modifications do not have a material
effect on the amount distributable to any Member pursuant to Section 11.2 upon the liquidation of
the Company. Any questions with respect to a Member’s Capital Account shall be reasonably resolved
by the Executive Committee, applying principles consistent with this Agreement. The adjustments to
the Capital Accounts shall include increases or decreases to reflect a revaluation of any Company
Asset pursuant to paragraph (ii) of the definition of Gross Asset Value.

     Any Transferee of Company Interests shall succeed to the Capital Account relating to the
Company Interests transferred or the corresponding portion thereof.

     “Capital Call” shall have the meaning set forth in Section 5.3 herein.

     “Capital Call Notice” shall have the meaning set forth in Section 5.3 herein.

     “Capital Contribution” shall mean, with respect to a Member, the amount of cash and the
initial Gross Asset Value of any other property contributed to the capital of the Company by such
Member reduced, in the case of any property contributed, by the amount of any liability assumed by
the Company relating to the property and any liability to which such property is subject. Any
reference in this Agreement to the Capital Contribution of a Member shall include a Capital
Contribution of its predecessors in interest.

     “Capital Expenditure Budget” shall mean with respect to any fiscal year, the annual capital
expenditure budget for the operation of the Investments prepared by Ashford and approved by the
Executive Committee, which shall include a twelve (12) month projection for such fiscal year of
capital expenditure reserves and estimated Capital Expenditures.

     “Capital Expenditures” shall mean all expenditures which are defined as capital expenditures
under generally accepted accounting principles.

     “Cash Flow” shall mean the aggregate of all cash on hand at the date of determination
permitted to be disbursed by the Company under the Approved Loans, less such reasonable reserves
for actual and contingent obligations as determined by the Executive Committee. In the event of a
disagreement among the Committee Representatives as to the amount of reserves, the amount in
dispute shall not constitute Cash Flow pending resolution of such dispute.

     “Cash Value” shall have the meaning set forth in Section 7.2 herein.

     “Certificate of Formation” shall mean the Certificate of Formation of the Company as filed
with the Secretary of State of Delaware pursuant to the Act and as may be amended from time to
time.

     “Cigna Loan” shall mean the loan made by Connecticut General Life Insurance Company described
on Exhibit E to this Agreement.

5

 

     “Code” shall mean the Internal Revenue Code of 1986, as amended (or any corresponding
provision of succeeding law).

     “Commission” means the United States Securities and Exchange Commission and any successor
thereto.

     “Committee Representative” shall have the meaning set forth in Section 6.3 herein.

     “Company” shall have the meaning set forth in the introductory paragraph herein.

     “Company Assets” shall mean the assets and property, whether tangible or intangible and
whether real, personal, or mixed, at any time owned by or held, directly or indirectly, for the
benefit of the Company, and all right, title, and interest, if any, held and owned, directly or
indirectly, by the Company in other entities, including any Subsidiaries, but, excluding any and
all rights to the name “Ashford,” and all variations thereof and all associated goodwill, which is
and shall be the exclusive property of Ashford.

     “Company Interest” shall mean, as to any Member, all of the interest of that Member in the
Company including such Member’s (i) right to a distributive share of the Profits and Losses and
distributions of Cash Flow, including Default Capital Contributions and the right to receive
distributions from the Default Capital Contribution Account and Default Capital Contribution
Preferred Return Account, (ii) right to a distributive share of Company Assets, (iii) rights, if
any, to participate in the management of the Company and (iv) obligations to comply with all the
terms and provisions of this Agreement and of the Act, but shall not include Member Loans.

     “Company Minimum Gain” shall mean partnership minimum gain as defined in Regulation §
1.704-2(d).

     “Company Year” shall mean the taxable year of the Company for federal income tax purposes.

     “Contribution Option” shall have the meaning set forth in Section 5.4 herein.

     “Control” (including the terms “Controlling,” “Controlled by” and “under common Control with”)
shall mean the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

     “Decision Notice” shall have the meaning set forth in Section 6.2 herein.

     “Default Capital Contribution” shall have the meaning set forth in Section 5.4 herein.

     “Default Capital Contribution Account” means, for each Member, the cumulative Default Capital
Contributions of that Member, less the cumulative distributions to that Member in return thereof
pursuant to Section 4.2(b).

6

 

     “Default Capital Contribution Preferred Return Account” means, for each Member, the cumulative
accrued Default Preferred Return of that Member less all amounts distributed by the Company to that
Member in payment thereof pursuant to Section 4.2(a).

     “Default Preferred Return” means, for each Member, the cumulative amount that accrues on the
balance of its Default Capital Contribution Account at a rate equal to the greater of (a) 18% per
annum and (b) the sum of the Prime Rate plus 5% per annum (in either case, compounded
semi-annually).

     “Depreciation” shall mean for each Company Year or other period, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable for federal income tax
purposes with respect to an asset for such Company Year or other period; provided, however, that if
the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes
at the beginning of such Company Year or other period, Depreciation shall be an amount which bears
the same ratio to such beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such Company Year or other period bears to such
beginning adjusted tax basis; provided, further, that if the federal income tax depreciation,
amortization, or other cost recovery deduction for such Company Year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any reasonable method selected
by the Executive Committee.

     “Divesting Member” shall have the meaning set forth in Section 7.5(a) herein.

     “Duty Breach” shall mean a breach of any material obligation under this Agreement (except for
(i) failures to fund a Capital Call pursuant to Section 5.3 remedies for which are governed by
Section 5.4, (ii) breaches by Ashford as Advisor which breaches are governed by Section 6.9, and
(iii) breaches in the sale or purchase of an Entire Interest by one Member to another which
breaches are governed by Section 7.8) which remains uncured for a period of at least thirty (30)
days after receipt of notice of such breach, provided, that if such breach can be cured but is not
reasonably capable of being cured within such thirty (30)-day period, such longer period of time as
is necessary to cure such breach but in no event in excess of a total of one hundred five (105)
days.

     “Economic Interest” with respect to any Member shall mean the right of that Member to receive
its share of the distributions of Cash Flow pursuant to Section 4.2(e) through (h) but shall
specifically exclude all other rights of such Member set forth in this Agreement and any statutory
rights of a Member under the Act including the rights of such Member, if any, to participate in the
management of the Company or to be admitted as a member of the Company.

     “Entire Interest” shall have the meaning set forth in Section 7.1(a)(1) herein.

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended (or any
corresponding provision of succeeding law).

     “Executive Committee” shall have the meaning set forth in Section 6.2 herein.

     “Election Notice” shall have the meaning set forth in Section 7.4(b) herein.

7

 

     “Failing Member” shall have the meaning set forth in Section 5.4 herein.

     “First Member” shall have the meaning set forth in Section 6.10(e) herein.

     “Funding Date” shall have the meaning set forth in Section 5.3 herein.

     “G&A Budget” shall mean with respect to any fiscal year, the annual general and administrative
expense budget for the operation of the Investments prepared by Ashford and approved by the
Executive Committee.

     “Gross Asset Value” shall mean with respect to any asset, the asset’s adjusted basis for
federal income tax purposes, except as follows:

     (i) The initial Gross Asset Value of any asset contributed by a Member to the Company
shall be the gross fair market value of such asset at the time of contribution, as
reasonably determined by the Executive Committee;

     (ii) The Gross Asset Values of all Company Assets shall be adjusted to equal their
respective gross fair market values, as reasonably determined by the Executive Committee as
of the following times: (a) the acquisition of an additional Company Interest by any new or
existing Member; (b) the distribution by the Company to a Member of more than a de minimis
amount of property or assets as consideration for a Company Interest; (c) the grant of an
interest in the Company as consideration for the provision of services to or for the benefit
of the Company; and (d) the liquidation of the Company within the meaning of Regulation §
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses (a), (b) and
(c) above shall be made only if the Executive Committee reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic interests of the
Members in the Company;

     (iii) The Gross Asset Value of any Company Asset distributed to any Member shall be the
gross fair market value of such asset on the date of distribution, as reasonably determined
by the Executive Committee; and

     (iv) The Gross Asset Values of Company Assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis of such assets pursuant to Code §§ 734(b) or
743(b), but only to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulation § 1.704-1(b)(2)(iv)(m).

     If the Gross Asset Value of an asset has been determined or adjusted pursuant to this
provision, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Profits and Losses. Any adjustment to
the Gross Asset Values of Company Assets shall require an adjustment to the Member’s Capital
Account as provided in the definition of Profits and Losses.

     “Hold Member” shall have the meaning set forth in Section 7.4(a) herein.

8

 

     “Hypothetical Investor” means a hypothetical investor in the Company assuming such
hypothetical investor had become a member of the Company as of the date of this Agreement with a
21.74% initial Percentage Interest.

     “Hypothetical Percentage Interest” means (a) with respect to Hypothetical Investor, 21.74%;
(b) with respect to PRISA III, its Percentage Interest; and (c) with respect to Ashford, 1 minus
the sum of (a) and (b).

     “including” shall mean “including, without limitation,”.

     “Indemnified Person” shall have the meaning set forth in Section 6.10.

     “Indemnity and Contribution Agreement” shall mean that certain Indemnity and Contribution
Agreement effective the date hereof between Ashford and Operating Partner and joined in by PRISA
III.

     “Independent Accountants” shall mean Ernst & Young LLP or one of the other so-called “big
four” certified public accounting firms selected by the Executive Committee pursuant to Section
8.2.

     “Initial Capital Contribution” shall have the meaning set forth in Section 5.1.

     “Institutional Investor” shall mean an Affiliate of PRISA III or Ashford, as the case may be,
or:

     (b) one or more of the following:

     (i) an insurance company, bank, savings and loan association, investment bank, trust
company, commercial credit corporation, pension plan, pension fund, pension fund advisory
firm, mutual fund, real estate investment trust, governmental entity or plan;

     (ii) an investment company, money management firm or a “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act of 1933, as amended, or an
institutional “accredited investor” within the meaning of Regulation D under the Securities
Act of 1933, as amended, which regularly engages in the business of making or owning
investments of types similar to the Investments;

     (iii) an investment fund, limited liability company, limited partnership or general
partnership in which a Permitted Fund Manager which is investing through a fund with
committed capital of at least $250,000,000.00, acts as the general partner, managing member,
or the fund manager responsible for the day to day management and operation of such
investment vehicle; or

     (iv) an institution substantially similar to any of the foregoing;

     that has, in the case of entities referred to in clauses (a)(i), (ii) or (iv) of this
definition or, except as otherwise provided therein, in the case of entities referred to in clause
(iii) of this definition, at least $250,000,000 in capital/statutory surplus or shareholders’
equity (except with

9

 

respect to a pension advisory firm or similar fiduciary) and at least $600,000,000 in total
assets (in name or under management), and is regularly engaged in the business of making or owning
commercial real estate loans or commercial loans (or interests therein) similar to the Investments;
or

          (c) any entity Controlled by, or under common Control with, any of the entities described in
clause (a) above.

     “Interest Purchase Deposit” shall have the meaning set forth in Section 7.4(b)(1) herein.

     “Interest Purchase Price” shall have the meaning set forth in Section 7.4(b)(1) herein.

     “Internal Rate of Return” means with respect to each Member, the discount rate, expressed as
an annual rate but compounded quarterly, at which (i) the net present value of all Capital
Contributions of such Member paid to the Company, equals (ii) the net present value of all
distributions, other than with respect to Member Loans, paid by the Company to such Member pursuant
to Section 4.2. For purposes of calculating a Member’s IRR, Capital Contributions made by such
Member shall be deemed contributed on the actual date of contribution, and distributions and other
payments shall be deemed paid to such Member on the actual date of payment. The Members
acknowledge and agree that, as a result of the calculation and compounding of the Internal Rate of
Return under this Agreement on a quarterly basis, the actual annual yield of a stated Internal Rate
of Return will exceed the stated rate on a per annum basis.

     “IRR” means the annual discount rate, compounded quarterly, that, when subtracting the present
value of $50,000,000.00 from the sum of the present values of each amount that would have been
distributable to Hypothetical Member in accordance with its Hypothetical Percentage Interest under
(or by reference to) Section 4.2(e), Section 4.2(f), Section 4.2(g) and Section 4.2(h) the result
is equal to zero.

     “Investments” shall mean the assets listed on Exhibit A attached hereto, which exhibit
shall be updated from time to time to reflect other significant assets acquired by the Company or
any Subsidiary.

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

     “License Agreements” shall mean the hotel license agreements listed on Exhibit C
hereto.

     “Losses” shall have the meaning set forth in the definition of Profits.

     “Management Agreements” shall mean the hotel management agreements listed on Exhibit D
hereto and any replacements thereof approved in accordance with the terms of this Agreement.

     “Member” shall mean PRISA III and Ashford and any Person subsequently admitted as a member of
the Company pursuant to the provisions of this Agreement for the period for which such Person shall
remain a Member. Exhibit A shall be revised from time to time by the

10

 

Executive Committee to reflect the admission or permitted withdrawal of Members and/or the
Transfer of Company Interests by Members pursuant to the provisions of this Agreement.

     “Member Information” shall have the meaning set forth in Section 2.7 herein.

     “Member Minimum Gain” shall mean an amount, with respect to each Member Nonrecourse Debt,
equal to the Company Minimum Gain that would result if such Member Nonrecourse Debt were treated as
a Nonrecourse Liability, determined in accordance with Regulation § 1.704-2(i)(3).

     “Member Loan” shall mean a loan made by any Member or any Affiliate of a Member to another
Member pursuant to Article V.

     “Member Nonrecourse Debt” shall have the meaning as defined in Regulation § 1.704-2(b)(4).

     “Member Nonrecourse Deductions” shall have the meaning as defined in Regulation §
1.704-2(i)(2). The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse
Debt for a Company Year equals the net increase, if any, in the amount of Member Minimum Gain
during such Company Year attributable to such Member Nonrecourse Debt, reduced by any distributions
during that Company Year to the Member that bears the economic risk of loss for such Member
Nonrecourse Debt to the extent that such distributions are from the proceeds of such Member
Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such
Member Nonrecourse Debt, determined according to the provisions of Regulations §§ 1.704-2(h) and
1.704-2(i).

     “Mezzanine Loans” shall mean the loans described under the heading Mezzanine Loans on
Exhibit E attached hereto.

     “Mortgage Loan” shall mean a loan secured by, or to finance, the real property of the Company
or any Subsidiary, including, the Wells Loan, and excluding any Member Loan.

     “No Transfer Agreement” shall mean the No Transfer Agreement entered effective the date hereof
by and between Ashford, PRISA III, and Operating Partner.

     “Non Failing Member” shall have the meaning set forth in Section 5.4 herein.

     “Nonrecourse Deductions” shall have the meaning set forth in Regulations §1.704-2(b)(1). The
amount of Nonrecourse Deductions for a Company Year equals the net increase, if any, in the amount
of Company Minimum Gain during such Company Year reduced by any distributions during such Company
Year of proceeds of a Nonrecourse Liability that are allocable to an increase in Company Minimum
Gain, determined according to the provisions of Regulations §§ 1.704-2(c) and 1.704-2(h).

     “Nonrecourse Liability” shall have the meaning as defined in Regulation § 1.704-2(b)(3).

     “Notice of Intention” shall have the meaning set forth in Section 5.4 herein.

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     “Offer” shall have the meaning set forth in Section 7.2 herein.

     “Offeree” shall have the meaning set forth in Section 7.2 herein.

     “Offeror” shall have the meaning set forth in Section 7.2 herein.

     “Operating Budget” shall mean with respect to any fiscal year, the annual operating budget for
the operation of the Investments prepared by Ashford and approved by the Executive Committee, which
shall include a twelve (12) month projection for such fiscal year of Company income for all sources
and an estimate of Company expenses.

     “Operating Partner” means PRISA III REIT Operating LP, a Delaware limited partnership, in
which PRISA III REIT is a limited partner.

     “Partial Portfolio” shall have the meaning set forth in Section 7.5(a) herein.

     “Partial Sale Deposit” shall have the meaning set forth in Section 7.5(b)(1) herein.

     “Partial Sale Notice” shall have the meaning set forth in Section 7.5(a) herein.

     “Partial Sale Period” shall have the meaning set forth in Section 7.5(c) herein.

     “Partial Sale Price” shall have the meaning set forth in Section 7.5(a) herein.

     “Percentage Interests” shall have the meaning provided in Section 4.1 herein.

     “Permitted Fund Manager” means (A) The Prudential Insurance Company of America or Prudential
Investment Management, Inc. or any Affiliate of The Prudential Insurance Company of America or
Prudential Investment Management, Inc. that is not subject to any case, proceeding or other action
under any existing or future law of any jurisdiction relating to bankruptcy, insolvency,
reorganization or relief of debtors, and (B) any Person that on the date of determination is (i) a
nationally-recognized manager of investment funds investing in debt or equity interests relating to
commercial real estate, (ii) investing through a fund with committed capital of at least
$100,000,000, and (iii) not subject to any case, proceeding or other action under any existing or
future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of
debtors.

     “Person” shall mean any individual, partnership, corporation, limited liability company, joint
venture, association, trust, unincorporated organization or other governmental or legal entity.

     “PIM” shall mean Prudential Investment Management, Inc., a Delaware corporation.

     “Plan Assets Regulation” shall have the meaning set forth in Section 2.10 herein.

     “Plan Violation” means a transaction, condition or event that would constitute a nonexempt
prohibited transaction under ERISA and/or Code § 4975.

     “Portfolio” shall have the meaning set forth in Section 7.4(a) herein.

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     “Preferred Equity Account” means, for each Member, the cumulative Preferred Equity
Contributions of that Member, less the cumulative distributions to that Member in return thereof
pursuant to Section 4.2(d).

     “Preferred Equity Contributions” means the agreed value of that portion of each Member’s
interest in the Mezz 4 Debt contributed to the Company on the date hereof for the preferred equity,
which in the case of PRISA III is $25,000,000 and in the case of Ashford is $25,000,000.

     “Preferred Equity Return” means, for each Member, the cumulative amount that accrues on the
balance of its Preferred Equity Account at a rate equal to 15% per annum (compounded
semi-annually).

     “Preferred Equity Return Account” means, for each Member, the cumulative accrued Preferred
Equity Return of that Member less all amounts distributed by the Company to that Member in payment
thereof pursuant to Section 4.2(c).

     “Preferred Interest” shall have the meaning set forth in Section 7.1(a)(2) herein.

     “Proffered Interest” shall have the meaning set forth in Section 7.2(a)(i) herein.

     “Prime Rate” shall mean the rate of interest published from time to time by The Wall Street
Journal, as the “prime rate.”

     “PRISA III” shall have the meaning set forth in the introductory paragraph herein.

     “PRISA III REIT” means PRISA III Fund REIT, Inc., a real estate investment trust, or REIT,
that has an ownership interest in PRISA III.

     “PRISA III Representative” shall have the meaning set forth in Section 6.2 herein.

     “Profits” and “Losses” shall mean for each Company Year or other period, an amount equal to
the Company’s taxable income or loss for such Company Year or period, determined in accordance with
Code § 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code § 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:

     (i) Any income of the Company that is exempt from federal income tax or excluded from
federal gross income and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;

     (ii) Any expenditures of the Company described in Code § 705(a)(2)(B) or treated as
Code § 705(a)(2)(B) expenditures pursuant to Regulation § 1.704-1 1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses pursuant to this definition,
shall be subtracted from such taxable income or loss;

     (iii) In the event the Gross Asset Value of any Company Asset is adjusted pursuant to
any provision of this Agreement in accordance with the definition of Gross

13

 

Asset Value, the
amount of such adjustment shall be taken into account as gain or loss from the disposition
of such asset for purposes of computing Profits or Losses;

     (iv) Gain or loss resulting from any disposition of any Company Asset with respect to
which gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the property disposed of, notwithstanding that the
adjusted tax basis of such asset differs from its Gross Asset Value;

     (v) In lieu of the depreciation, amortization, and other cost recovery deductions taken
into account in computing such taxable income or loss, there shall be taken into account
Depreciation for such Company Year or other period, computed in accordance with the
definition of Depreciation;

     (vi) To the extent an adjustment to the adjusted tax basis of any asset pursuant to
Code § 734(b) is required, pursuant to Regulation § 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Account balances as a result of a distribution other
than in liquidation of a Member’s interest in the Company, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of the asset) or
an item of loss (if the adjustment decreases such basis) from the disposition of such asset
and shall be taken into account for purposes of computing Profits or Losses;

     (vii) Notwithstanding any other provision herein, any items which are specially
allocated pursuant to Section 4.3(b), (c), (d), (e), (f), (g), (h) and (k) shall not be
taken into account in computing Profits or Losses and the allocation of Profits or Losses
and specially allocated items to a Member shall be treated as an allocation to such Member
of the same share of each item of income, gain, loss, deduction and Code § 705(a)(2)(B)
expenditure that has been taken into account in computing Profits and Losses; and

     Profits and Losses shall be further determined and adjusted in accordance with the Regulations
issued under § 704 of the Code.

     “Proprietary Information” shall have the meaning set forth in Section 9.2(a) herein.

     “Qualified Property Manager” shall mean a nationally recognized hotel property manager (i)
with at least 8,000 rooms under management in hotels comparable to the Investments, (ii) that is
not an Affiliate of Ashford or Remington, and (iii) which qualifies as an “eligible independent
contractor” for purposes of Code Section 856(d)(9) with respect to PRISA III REIT and Ashford REIT.

     “Regulations” shall mean the Income Tax Regulations of the IRS as such Regulations may be
amended from time to time (including Temporary Regulations of the IRS). A reference to any
Regulation shall be deemed to include any amendatory or successor provision thereto.

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

     “REOC” shall have the meaning set forth in Section 2.10 herein.

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     “Required Expenditures” shall have the meaning set forth in Section 5.2 herein.

     “Response Date” shall have the meaning set forth in Section 6.2 herein.

     “Retaining Member” shall have the meaning set forth in Section 7.5(a) herein.

     “Revised Offer” shall have the meaning set forth in Section 7.5(c) herein.

     “Sale Notice” shall have the meaning set forth in Section 7.4(a) herein.

     “Sale Period” shall have the meaning set forth in Section 7.4(c) herein.

     “Sale Price” shall have the meaning set forth in Section 7.4(a) herein.

     “Securities Laws” shall mean collectively the 1933 Act, the 1934 Act and the 1940 Act.

     “Selling Member” shall have the meaning set forth in Section 7.4(a) herein.

     “Subsidiary” shall mean a corporation, partnership, limited liability company or other entity
which is directly or indirectly wholly owned by the Company and which is organized by the Company
to, directly or indirectly, acquire, hold and invest in Investments, including the entities
depicted on the structure chart attached hereto as Exhibit B.

     “Tax Matters Member” shall have the meaning set forth in Code § 6231(a)(7) and described in
Section 8.6.

     “Term” shall have the meaning set forth in Section 2.5 herein.

     “Third Party Sale Amount” means the sum of the amount of cash proposed to be paid in an Offer
plus the Cash Value of any non-cash consideration proposed to be paid in such Offer.

     “Transfer” shall mean to, directly or indirectly, sell, assign, convey, give, mortgage,
transfer, pledge, hypothecate, encumber, grant a security interest in, exchange or otherwise
dispose of any beneficial interest or grant any option or warrant with respect to or otherwise
transfer any beneficial interest by any means whatsoever, whether voluntary, involuntary, by
operation of law or otherwise.

     “Wells Loan” shall mean the loan made by Wells Fargo Bank, N.A. described on Exhibit E
to this Agreement.

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ARTICLE II

ORGANIZATION AND PURPOSE

     Section 2.1 Formation. The Company was formed as a Delaware limited liability company pursuant to
the Act on February 18, 2011 by the filing of the Certificate of Formation for the Company with the
Secretary of State of the State of Delaware, and the Members hereby adopt and ratify the
Certificate of Formation and all acts taken in connection therewith. The Certificate of Formation
shall include all amendments thereto, and additional instruments and amendments thereto, as may
from time to time be necessary or appropriate to carry out this Agreement and enable the Company to
conduct its business in accordance with applicable laws.

     Section 2.2 Name. The name of the Company is “PIM Highland Holding LLC.” The Company business
may be conducted under any other name or names approved by the Executive Committee, including the
name of any Member or any Affiliate thereof.

     Section 2.3 Places of Business. The Company may locate its place or places of business at any
place or places as the Executive Committee may from time to time approve. The Company’s initial
principal place of business shall be at c/o Ashford Hospitality Trust, Inc., 14185 Dallas Parkway,
Suite 1100, Dallas, Texas 75254. The Company may maintain offices at such other place or places
as approved by the Executive Committee.

     Section 2.4 Registered Office and Agent. The name of the Company’s registered agent for service
of process shall be Corporation Service Company, and the address of the Company’s registered agent
and the address of the Company’s registered office in the State of Delaware shall be Corporation
Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The registered
agent and the registered office of the Company may be changed from time to time by filing the
address of the new registered office and/or the name of the new registered agent with the Secretary
of the State of the State of Delaware pursuant to the Act.

     Section 2.5 Term. The term of the Agreement (the “Term”) commenced on the date hereof and shall
continue until terminated in accordance with the provisions of this Agreement.

     Section 2.6 Purpose. The principal purposes of the Company shall be to acquire, own, administer,
service, sell, dispose of, finance, refinance, improve or otherwise deal with the Investments and
to do all the things and to take all actions necessary and desirable in connection therewith. The
business and purpose of the Company shall be limited to its principal purposes, unless the Members
otherwise determines by unanimous approval that the Company shall have the authority to engage in
any other lawful business purpose or activity permitted under the Act. Subject to the restrictions
set forth above, the Company shall possess and may exercise all of the powers and privileges
granted by the Act or which may be exercised by any Person, together with any powers incidental
thereto, so far as such powers or privileges are desirable, necessary, suitable or convenient to
the conduct, promotion or attainment of the purposes of the Company. In furtherance of these
purposes, the Company shall have all powers desirable, necessary, suitable or convenient for the
accomplishment thereof.

16

 

     Section 2.7 Member Information. The name, address, Initial Capital Contribution, initial Capital
Account and Percentage Interest of each Member is set forth on Exhibit A attached hereto.
Exhibit A shall be revised from time to time by the Executive Committee to reflect the
withdrawal or admission of Members and the Transfer of Company Interests by Members pursuant to the
provisions of this Agreement and to reflect any other change in the name, address or Percentage
Interest of a Member or description of the Investments (collectively, the “Member Information”).

     Section 2.8 Ownership and Waiver of Partition. All property and interests in property, real or
personal, owned by the Company shall be held in the name of the Company and deemed owned by the
Company as an entity, and no Member, individually, shall have any ownership of or interest in such
property or interests owned by the Company, except as a Member of the Company. Each of the Members
irrevocably waives, during the Term and during any period of its liquidation following any
dissolution, any right that it may have to seek or maintain any action for partition with respect
to any Company assets.

     Section 2.9 Qualifications in Other Jurisdictions. The Executive Committee shall cause the
Company to be qualified or registered if and to the extent required under applicable laws of any
jurisdiction in which the Company transacts business and shall be authorized to execute, deliver
and file or cause the execution, delivery and filing of any certificates and documents necessary to
effect such qualification or registration including the appointment of agents for service of
process in such jurisdictions.

     Section 2.10 Management of the Company. Notwithstanding anything to the contrary set forth herein,
to the extent the underlying Company Assets constitute an investment in real estate that is managed
or developed (within the meaning of the Plan Assets Regulation), the Members shall conduct the
activities of the Company so as not to disqualify the Operating Partner or any holder of direct or
indirect interests in PRISA III as a “real estate operating company” (“REOC”) within the meaning of
U.S. Department of Labor Regulations published at 29 C.F.R. § 2510.3-101 (the “Plan Assets
Regulation”).

ARTICLE III

MEMBERS

     Section 3.1 Members. Each of the parties to this Agreement and each Person admitted as a Member
of the Company pursuant to Section 2.7 of this Agreement and in accordance with the Act shall be
Members of the Company until they cease to be Members in accordance with the provisions of this
Agreement. Each Member shall have the rights, powers, duties, obligations, preferences and
privileges set forth in this Agreement. No Member (solely in its capacity as such) shall have any
authority to bind the Company except as permitted by this Agreement.

     Section 3.2 Voting Rights of Members. The Members shall have no other voting or approval rights
as to any matter except as expressly provided by this Agreement.

     Section 3.3 No Liability to the Members or the Company.

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          (a) Except as otherwise required by law or the provisions of this Agreement, none of Ashford,
PRISA III or any Affiliate of any of the foregoing, nor any of the Company’s current or former
Affiliates, officers or agents, if any, shall be liable to the Company, any Subsidiary or to each
other for any debts, liabilities or obligations of the Company, whether arising in contract, tort
or otherwise, or for any action taken, or omitted to be taken, in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interest of the Company and, with respect
to any criminal action or proceeding, for any action taken, or omitted to be taken, with no
reasonable cause to believe that the conduct was unlawful, in each case except to the extent of the
applicable party’s adjudicated fraud, gross negligence, willful misconduct, criminal conduct
(unless there was no reasonable cause to believe the criminal action taken or omitted was unlawful)
or to the extent such action taken or omitted to be taken constitutes a material breach of any
provision of this Agreement or other contract between such party and the Company. Except as
expressly set forth herein, none of Ashford, PRISA III or any Affiliate of any of the foregoing
shall have to make any contributions or deliver any letters of credit, guaranties or other tangible
property to the Company or any Subsidiary. Nothing in this Agreement shall be construed to make
Ashford or PRISA III liable for any losses or debts of the Company, except to the extent of losses
of their respective Capital Contributions to the Company pursuant to the terms of this Agreement.

          (b) No Affiliate or partner or member of Ashford or PRISA III shall have personal liability
for the obligations of such person hereunder or otherwise, except as provided herein or under
applicable law or in a written agreement (including this Agreement), the parties to which include
such Affiliate or partner or member.

          (c) Nothing in this Agreement, and, without limiting the generality of the foregoing, in this
Section 3.3, expressed or implied, is intended or shall be construed to give to any creditor of the
Company or any Subsidiary or to any creditor of Ashford or PRISA III or any creditor of any other
Person whatsoever, other than Ashford, PRISA III and the Company, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any covenant, condition or provisions
herein contained, and such provisions are and shall be held to be for the sole and exclusive
benefit of Ashford, PRISA III and the Company.

          (d) In accordance with the Act, a member of a limited liability company may, under certain
circumstances, be required to return to the Company for the benefit of Company creditors amounts
previously distributed to it as a return of capital. It is the intent of the Members that a
distribution to any Member be deemed a compromise within the meaning of Section 18-502(b) of the
Act and not a return or withdrawal of capital, even if such distribution represents, for income tax
purposes or otherwise (in full or in part), a distribution of capital, and no Member shall be
obligated to pay any such amount to or for the account of the Company or any creditor of the
Company, except as provided in this Section 3.3. However, if any court of competent jurisdiction
holds that, notwithstanding the provisions of this Agreement, any Member is obligated to make any
such payment, such obligation shall be the obligation of such Member.

     Section 3.4 Other Business Activities of PRISA III. PRISA III and its Affiliates may have other
business interests and may engage in other business ventures of any nature or description
whatsoever, whether presently existing or hereafter created, including, the

18

 

acquisition,
development, ownership, administration, servicing, leasing, management, operation, franchising,
syndication, financing, refinancing and/or sale of real estate or real estate related investments
and may compete, directly or indirectly, with the business of the Company or any Subsidiary or any
Members thereof. None of PRISA III or its Affiliates shall incur any liability to the Company,
Ashford, any Subsidiary or any of its members or their Affiliates as a result of the pursuit by
PRISA III or any of its Affiliates of such other real estate, business interests or ventures and
competitive activity, and neither the Company, nor Ashford, nor any Subsidiary, nor any of its
Members nor their Affiliates shall have any right to participate in such other real estate
holdings, business interests or ventures or to receive or share in any income derived therefrom
except as provided herein.

     Section 3.5 Other Business Activities of Ashford. Ashford and its Affiliates may have other
business interests and may engage in other business ventures of any nature or description
whatsoever, whether presently existing or hereafter created, including, the acquisition,
development, ownership, administration, servicing, leasing, management, operation, franchising,
syndication, financing, refinancing and/or sale of real estate or real estate related investments
and may compete, directly or indirectly, with the business of the Company or any Subsidiary or any
Members thereof. None of Ashford or its Affiliates shall incur any liability to the Company, PRISA
III, any Subsidiary or any of its members or their Affiliates as a result of the pursuit by Ashford
or any of its Affiliates of such other real estate, business interests or ventures and competitive
activity, and neither the Company, nor PRISA III, nor any Subsidiary nor any of its Members nor
their Affiliates shall have any right to participate in such other real estate holdings, business
interests or ventures or to receive or share in any income derived therefrom except as provided
herein.

ARTICLE IV

DISTRIBUTIONS/ALLOCATIONS

     Section 4.1 Percentage Interests in Company. The percentage interest of the respective Members in
the Company initially shall be:

          (a) PRISA III: 28.26%

          (b) Ashford: 71.74%

     The percentage interest of each Member, which is subject to adjustment pursuant to the terms
of Section 5.4, shall be set forth on Exhibit A, and is hereinafter called such Member’s
“Percentage Interest.”

     Section 4.2 Distributions. Subject to the set off rights contained in the Indemnity and
Contribution Agreement, unless the Executive Committee decides otherwise, the Cash Flow for each
calendar month shall be distributed to the Members on or before the 25th day of the next succeeding
calendar month in the following order of priority:

          (a)
first, to the Members parri passu, in accordance with their Default Capital Contribution
Preferred Return Accounts in payment of their Default Capital Contribution

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Preferred Returns until
their Default Capital Contribution Preferred Return Accounts have been reduced to zero;

          (b) next,
to the Members parri passu, in accordance with their Default Capital Contribution
Accounts in payment of their Default Capital Contributions until their Default Capital Contribution
Accounts have been reduced to zero;

          (c) next,
to the Members parri passu, in accordance with the balances in their Preferred
Equity Return Accounts in payment of their Preferred Equity Returns until their Preferred Equity
Return Accounts have been reduced to zero;

          (d) next,
to the Members parri passu, in accordance with the balances in their Preferred
Equity Accounts in payment of their Preferred Equity Contributions until their Preferred Equity
Accounts have been reduced to zero;

          (e) next,
to the Members parri passu, in accordance with their Percentage Interests until
Hypothetical Investor would have received a 15% IRR had the distributions pursuant to this Section
4.2(e) been made to Members and Hypothetical Member in accordance with the Hypothetical Percentage
Interests;

          (f) next,
until Hypothetical Investor would have received a 20% IRR, to the Members parri
passu, in accordance with their Hypothetical Percentage Interests, except that the amount
representing distributions to Hypothetical Investor shall be paid as follows:

               (i) to PRISA III, an amount equal to 15% of the Available Promote Amount; and

               (ii) the remainder to Ashford;

          (g) next,
until Hypothetical Investor would have received a 25% IRR, to the Members parri
passu, in accordance with their Hypothetical Percentage Interests, except that the amount
representing distributions to Hypothetical Investor shall be paid as follows:

               (i) to PRISA III, an amount equal to the 20% of the Available Promote Amount; and

               (ii) the remainder to Ashford;

          (h) next,
to the Members parri passu, in accordance with their Hypothetical Percentage
Interests, except that the amounts representing distributions to Hypothetical Investor shall be
paid as follows:

               (i) to PRISA III, an amount equal to the 25% of the Available Promote Amount; and

               (ii) the remainder to Ashford.

Exhibit I sets forth an example distribution computation pursuant to this Section 4.2.

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     Section 4.3 Allocations.

          (a) Profits and Losses. Except as otherwise provided in this Agreement, Profits and
Losses and to the extent necessary, individual items of income, gain or loss or deduction of the
Company shall be allocated in a manner such that the Capital Account of each Member after giving
effect to the special allocations set forth in Sections 4.3(b) through 4.3(k) is, as nearly as
possible, equal (proportionately) to (i) the distributions that would be made pursuant to Section
4.2 if the Company were dissolved, its affairs wound up and its assets sold for cash equal to their
Gross Asset Value, all Company liabilities were satisfied (limited with respect to each non
recourse liability to the Gross Asset Value of the assets securing such liability) and the net
assets of the Company were distributed in accordance with Section 4.2 to the Members immediately
after making such allocation, minus (ii) such Member’s share of Company Minimum Gain and
Member Minimum Gain, computed immediately prior to the hypothetical sale of assets.

          (b) Minimum Gain Chargeback. Notwithstanding any other provision of this Article IV,
if there is a net decrease in Company Minimum Gain during any Company Year or other applicable
period, then, subject to the exceptions set forth in Regulations § 1.704-2(f)(2), (3), (4) and (5),
each Member shall be specially allocated items of Company income and gain for such Company Year
(and, if necessary, subsequent Company Years) in an amount equal to such Member’s share of the net
decrease in Company Minimum Gain, as determined in accordance with Regulation § 1.704-2(g).
Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulation § 1.704-2(f). This Section 4.3(b) is intended to comply
with the minimum gain chargeback requirement in Regulation § 1.704-2(f) and shall be interpreted
consistently therewith.

          (c) Member Minimum Gain Chargeback. Notwithstanding any other provision of this
Article IV, except Section 4.3(b), if there is a net decrease in Member Minimum Gain attributable
to a Member Nonrecourse Debt during any Company Year or other applicable period, then, subject to
the exceptions set forth in Regulation § 1.704-2(i)(4), each Member who has a share of the Member
Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulation
§ 1.704-2(i)(5) shall be specially allocated items of Company income and gain for such Company Year
(and, if necessary, subsequent Company Years) in an amount equal to such Member’s share of the net
decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Regulation § 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
made in proportion to the respective amounts required to be allocated to each Member pursuant
thereto. The items to be so allocated shall be determined in accordance with Regulation §
1.704-2(i)(4). This Section 4.3(c) is intended to comply with the minimum gain chargeback
requirement in Regulation § 1.704-2(i)(4) and shall be interpreted consistently therewith.

     (d) Qualified Income Offset. Notwithstanding any provision of this Article IV, except
Sections 4.3(b) and 4.3(c), in the event any Member receives any adjustments, allocations or
distributions described in Regulations §§ 1.704-1(b)(2)(ii)(d)(4), (5) or (6), that cause or
increase an Adjusted Capital Account Deficit of such Member, items of Company income and gain shall
be specially allocated to such Member in an amount and manner sufficient

21

 

to eliminate, to the
extent required by the Regulations, the Adjusted Capital Account Deficit of such Member as quickly
as possible unless such Adjusted Capital Account Deficit is otherwise eliminated pursuant to
Section 4.3(b) and Section 4.3(c). This Section 4.3(d) is intended to comply with the qualified
income offset provision of Regulation § 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.

          (e) No Excess Deficit. To the extent that any Member has or would have, as a result
of an allocation of Loss (or item thereof), an Adjusted Capital Account Deficit, such amount of
Loss (or item thereof) shall be allocated to the other Members in accordance with Section 4.3(a),
but in a manner which will not produce an Adjusted Capital Account Deficit as to such Members. To
the extent such allocation would result in all Members having Adjusted Capital Account Deficits,
such Losses shall be allocated in accordance with Section 4.3(a). Any allocations of Loss pursuant
to this Section 4.3(e) shall be reversed with a corresponding allocation of Profits in subsequent
years.

          (f) Gross Income Allocation. In the event any Member has an Adjusted Capital Account
Deficit at the end of any Company Year or other applicable period, such Member shall be specially
allocated items of Company gross income and gain in the amount of such Adjusted Capital Account
Deficit as quickly as possible; provided, however, that an allocation pursuant to this Section
4.3(f) shall be made only if and to the extent that such Member would have an Adjusted Capital
Account Deficit after all other allocations provided in this Section 4.3 have been tentatively made
as if this Section 4.3(f) were not in this Agreement.

          (g) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Company
Year or other applicable period shall be specially allocated to the Member who bears the economic
risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Regulation § 1.704-2(i)(1).

          (h) Nonrecourse Deductions. Any Nonrecourse Deductions shall be allocated among the
Members in accordance with their Percentage Interests.

          (i) Code § 754 Adjustments. To the extent an adjustment to the adjusted tax basis of
any Company Asset pursuant to Code §§ 734(b) or 743(b) is required, pursuant to Regulation §
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss
shall be specially allocated to the Members in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such section of the Regulations.

          (j) Allocation of Excess Nonrecourse Liabilities. Solely for the purpose of
allocating excess Nonrecourse Liabilities of the Company among the Members in connection with the
determination of the Members’ adjusted tax bases for their interests in the Company, in accordance
with Code § 752 and the Regulations from time to time promulgated thereunder, the Members agree
that each Member’s interest in Company profits equals the Member’s Percentage Interest.

22

 

          (k) Curative Allocations. Any mandatory allocations of items of income, gain, loss or
deduction pursuant to Sections 4.3(b) through 4.3(j) above shall be taken into account for the
purpose of equitably adjusting subsequent allocations of Profits and Losses and items of income,
gain, loss or deduction among the Members so that, to the extent possible, the net allocations, in
the aggregate, allocated to each Member pursuant to this Article IV, and the Capital Accounts of
each Member, shall as quickly as possible and to the extent possible, be the same as if no
mandatory allocations had been made.

     Section 4.4 Other Allocations and Profits.

          (a) For purposes of determining the Profits, Losses or any other items allocable to any
period, Profits, Losses and any such other items shall be determined on a daily, monthly or other
basis, as determined by the Executive Committee using any permissible method under Code § 706 and
the Regulations thereunder.

          (b) Except as otherwise provided in this Agreement, all items of Member income, gain, loss,
deduction, and any other allocations not otherwise provided for shall be divided among the Members
in the same proportions as they share Profits and Losses, as the case may be, for the Company Year.

          (c) The Members are aware of the income tax consequences of the allocations made by this
Article IV and hereby agree to be bound by the provisions thereof in reporting their shares of
Company income and loss for income tax purposes.

          (d) To the extent permitted under Regulations § 1.704-2(h)(3), the Company shall treat a
distribution of proceeds of a Nonrecourse Liability as a distribution that is not allocable to an
increase in Company Minimum Gain.

     Section 4.5 Tax Allocations.

          (a) Except as otherwise provided for in this Section 4.5, for federal income tax purposes,
each item of income, gain, loss and deduction shall be allocated among the Members in the same
manner as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to
Sections 4.3 and 4.4 above.

          (b) In accordance with Code §§ 704(b) and 704(c) and the Regulations thereunder, income, gain,
loss and deduction with respect to any property contributed to the Company shall, solely for
federal income tax purposes, be allocated among the Members so as to take into account any
variation between the adjusted basis of such property to the Company for federal income tax
purposes and the initial Gross Asset Value. If the Gross Asset Value of any Company asset is
adjusted as described in the definition of Gross Asset Value, subsequent allocations of income,
gain, loss and deduction with respect to such Company asset shall take into account any variation
between the adjusted basis of such Company asset for federal income tax purposes and its Gross
Asset Value in the same manner as under Code § 704(c) and the Regulations thereunder. Any
elections or other decisions relating to allocations under this Section 4.5(b) (including the
selection of the method for making such allocations) will be made by the Executive Committee.
Allocations pursuant to this Section 4.5(b) are solely for purposes of federal, state and local
taxes and shall not affect, or in any way be taken into account in

23

 

computing, any Member’s Capital
Account or share of Profits, Losses, other items or distributions pursuant to any provision of this
Agreement.

          (c) Profits and Losses allocable to a Company Interest assigned or reissued during a Company
Year shall be allocated to each Person who was the holder of such Company Interest during such
Company Year, in proportion to the number of days that each such holder was recognized as the owner
of such Company Interest during such Company Year or by an interim closing of the books or in any
other proportion permitted by the Code and selected by the Executive Committee in accordance with
this Agreement, without regard to the results of the Company operations or the date, amount or
recipient of any distributions which may have been made with respect to such Company Interest.

          (d) All items of income, gain, loss, deduction and credit allocated to the Members in
accordance with the provisions hereof and basis allocations recognized by the Company for federal
income tax purposes shall be determined without regard to any election under Code § 754 which may
be made by the Company; provided, however, such allocations, once made, shall be adjusted as
necessary or appropriate to take into account the adjustments permitted by Code §§ 734 and 743.

          (e) Subject to Section 4.5(b), if any portion of taxable gain recognized from the disposition
of property by the Company represents the “recapture” of previously allocated deductions by virtue
of the application of Code § 1(h)(1)(D), 1245 or 1250 (“Recapture Gain”), such Recapture Gain shall
be allocated as follows:

               (i) First, to the Members in proportion to the lesser of each Member’s (A) allocable share of
the total taxable gain recognized from the disposition of such property and (B) share of
depreciation or amortization with respect to such property (as determined in the manner provided
under Regulations §§ 1.1245-1(e)(2) and (3)), until each such Member has been allocated Recapture
Gain equal to such lesser amount.

               (ii) Second, the balance of Recapture Gain shall be allocated among the Members whose
allocable shares of total taxable gain from the disposition of such property exceed their shares of
depreciation or amortization with respect to such property (as determined in the manner provided
under Regulations §§ 1.1245-1(e)(2) and (3)), in proportion to their shares of total taxable gain
(including Recapture Gain) from the disposition of such property; provided, however, that no Member
shall be allocated Recapture Gain under this Section 4.5(e) in excess of the total taxable gain
otherwise allocated to such Member from such disposition.

          (f) Unless otherwise required by the Code, any tax credits of the Company shall be allocated
among the Members in accordance with their Percentage Interests. Any recapture of tax credits
shall be allocated among the Members in the same ratio as the applicable tax credits were allocated
to the Members.

     Section 4.6 Withholding. Each Member hereby authorizes the Company to withhold from or pay on
behalf of or with respect to such Member any amount of federal, state, local, or foreign taxes that
the Executive Committee reasonably determines the Company is or may be required to withhold or pay
with respect to any amount distributable or allocable to such Member

24

 

pursuant to this Agreement,
including any taxes required to be withheld or paid by the Company pursuant to Code § 1441, 1442,
1445, or 1446. Any amount paid on behalf of or with respect to a Member shall constitute a loan by
the Company to such Member, which loan shall be due on demand. In the event that a Member fails to
pay any amounts owed to the Company pursuant to this Section 4.6 when due, the Executive Committee
may, in its sole and absolute discretion, elect to cause the Company to make the payment on behalf
of such defaulting Member, and in such event the Company shall be deemed to have loaned such amount
to such defaulting Member and shall succeed to all rights and remedies of the Company as against
such defaulting Member. Without limitation, in such event the Company shall have the right to
retain distributions that would otherwise be distributable to such defaulting Member until such
time as such loan, together with all interest thereon, has been paid in full; and any such
distributions so retained by the Company shall be treated as having been distributed to the
defaulting Member and immediately paid by the defaulting Member to Company in repayment of such
loan. Any amounts payable by a Member hereunder shall bear interest at the lesser of (i) the Prime
Rate plus five percent (5%) or (ii) the maximum lawful rate of interest on such obligation, such
interest to accrue from the date such amount is due (which shall be fifteen (15) Business Days
after written demand) until such amount is paid in full.

     Section 4.7 Code Section 83 Safe Harbor Election.

          (a) By executing this Agreement, each Member authorizes and directs the Company to elect to
have the “Safe Harbor” described in the proposed Revenue Procedure set forth in Internal Revenue
Service Notice 2005-43 (the “Notice”) apply to any interest in the Company transferred to a service
provider by the Company on or after the effective date of such Revenue Procedure in connection with
services provided to the Company. For purposes of making such Safe Harbor election, Ashford is
hereby designated as the “partner who has responsibility for federal income tax reporting” by the
Company and, accordingly, execution of such Safe Harbor election by Ashford constitutes execution
of a “Safe Harbor Election” in accordance with Section 3.03(1) of the Notice. The Company and each
Member agree to comply with all requirements of the Safe Harbor described in the Notice, including
the requirement that each Member shall prepare and file all federal income tax returns reporting
the income tax effects of each interest in the Company issued by the Company covered by the Safe
Harbor in a manner consistent with the requirements of the Notice.

          (b) Each Member authorizes Ashford to amend Section 4.7(a) to the extent necessary to achieve
substantially the same tax treatment with respect to any interest in the Company transferred to a
service provider by the Company in connection with services provided to the Company as set forth in
Section 4 of the Notice (e.g., the reflect changes from the rules set forth in the Notice in
subsequent Internal Revenue Service guidance), provided that such amendment is not materially
adverse to such Member (as compared with the after-tax consequences that would result if the
provisions of the Notice applied to all interests in the Company transferred to a service provider
by the Company in connection with services provided to the Company).

25

 

ARTICLE V

CAPITAL CONTRIBUTIONS

     Section 5.1 Members’ Initial Capital Contributions. Concurrently with the execution of this
Agreement, PRISA III is making a Capital Contribution in cash to the Company of Fifty Million
Dollars ($50,000,000.00), and Ashford is making a Capital Contribution in cash to the Company of
One Hundred Fifty Million Dollars ($150,000,000.00). In addition, concurrently with the execution
of this Agreement, PRISA III and Ashford are making or causing to be made contributions to the
Company of the property described in Exhibit A having an agreed Gross Asset Value as set
forth on Exhibit A (together with the initial cash Capital Contributions set forth on
Exhibit A, the “Initial Capital Contributions”). On the date hereof the Members will cause the
following to occur: (1) the Company shall form PIM Highland TRS Corporation (“New TRS”) as a wholly
owned subsidiary; (2) PRISA III and Ashford Hospitality Finance, LP shall cause PIM Ashford
Venture I, LLC (owned by PRISA III and Ashford Hospitality Finance, LP) to contribute 100% of the
equity interests in PIM Ashford Subsidiary II, LLC (“M6 Lender”) to the Company for no additional
consideration; (3) Ashford Hospitality Finance, LP shall distribute its ownership interest in PIM
Ashford Mezz 4 LLC to Ashford; (4) PRISA III and Ashford shall cause PIM Ashford Mezz 4 LLC (now
owned by PRISA III and Ashford) to contribute the Mezz 4 Participation Interest which it owns to
the Company in exchange for common and preferred equity interests as set forth in Exhibit A, which
common and preferred equity interests shall be immediately distributed to PRISA III and Ashford;
(5) PRISA III shall cause Blackjack Mezz 5 PRISA III LLC, the holder of Mezz 5 mezzanine loan to
cancel the Mezz 5 mezzanine loan immediately prior to the foreclosure described in step 5; (6) M6
Lender will conduct the foreclosure of the Mezz 5 mezzanine loan and acquire the equity interests
in HH Mezz Borrower A-5 LLC, HH Mezz Borrower C-5, LLC, HH Mezz Borrower D-5, LLC, HH Mezz Borrower
F-5, LLC and HH Mezz Borrower G-5 LLC (“M5 Borrower”); (7) M5 Borrower will dissolve and
distribute its equity interests in HH Mezz Borrower A-4 LLC, HH Mezz Borrower C-4, LLC, HH Mezz
Borrower D-4, LLC, HH Mezz Borrower F-4, LLC, and HH Mezz Borrower G-4 LLC (“M4 Borrower”) to M6
Lender; (8) M6 Lender will dissolve and distribute its equity interests in M4 Borrower to the
Company; and (9) the Company will contribute the equity interests in HH Mezz Borrower D-4, LLC and
HH Mezz Borrower F-4, LLC to New TRS. After giving effect to all such Initial Capital
Contributions, the Capital Account of each Member as of the date of this Agreement shall equal the
amount set forth as such for such Member in Exhibit A.

     Section 5.2 Additional Capital Contributions. If any Member believes in its reasonable discretion
that the Company needs funding (currently or in the reasonably foreseeable future), in addition to
the proceeds of any Approved Loan, Cash Flow and any funds held in any reserve or by a Subsidiary
and available for the obligation needing funding, to pay, without penalty or interest, any of the
following (each, a “Required Expenditure”):

               (i) expenditures that are required to comply with any present or future law, ordinance, order,
rule, regulation or requirement, as such may change from time to time, of any Federal, State or
municipal government, department, commission, board or officer, or any order, rule or regulation of
the National Board of Fire Underwriters or any other body exercising similar functions, or any
final order, judgment or decree of any court or governmental authority having jurisdiction;

               (ii) taxes or assessments or insurance premiums with respect to any Company Asset;

26

 

               (iii) expenditures that arise from an emergency situation or any unanticipated event or
circumstance that causes an imminent danger of material financial or other loss to the Company; or

               (iv) payments due under any recourse provisions of any Approved Loan creating recourse to the
Company;

such Member shall give a Decision Notice to the Executive Committee regarding the need for
Additional Capital Contributions. If the Executive Committee does not approve a call for
Additional Capital Contributions within fifteen (15) days after receipt of such Decision Notice
(unless (i) an emergency exists, in which case said fifteen (15) day period may be shortened by the
such Member in its Decision Notice to the extent reasonably necessary and practicable, (ii) a
monetary default exists under an Approved Loan, in which case said fifteen (15) day period shall be
one (1) Business Day or (iii) a non monetary default exists under an Approved Loan, in which case
said 15 day period shall be to one third of the cure period provided for the commencement of the
cure of such default under the applicable loan documents), such Member may make a Capital Call for
the Required Expenditure.

     Section 5.3 Capital Call Notices. If approved by the Executive Committee or otherwise permitted
by Section 5.2, a Member shall make a capital call (“Capital Call”) by providing written notice to
each Member (each, a “Capital Call Notice”) in the manner set forth in this Section 5.3. Each
Capital Call Notice shall specify the total amount of the Capital Call and the date (the “Funding
Date”) that the applicable Additional Capital Contribution shall be funded by the Members, which
date shall be no less than three (3) Business Days nor more than five (5) Business Days after the
Capital Call Notice is provided to each Member. On the Funding Date, each of the Members shall
contribute its Percentage Interest of the total amount of the Capital Call to the Company in
immediately available funds by wire transfer to an account specified by Executive Committee.

     Section 5.4 Failure to Fund Capital Contributions. If a Member fails to contribute an amount
equal to the entire amount required to be contributed by it within the applicable period specified
above after the Capital Call Notice (the “Failing Member”), and if the other Member (the “Non
Failing Member”) makes its proportionate contribution within such applicable period and so notifies
the Failing Member, and the Failing Member fails fully to remedy its failure to contribute within
five (5) days after the giving of a notice by the Non Failing Member with respect to a failure
under this Section 5.4 (the “Notice of Intention”), then one or more of the following may occur, at
the option and election of the Non Failing Member, which election shall be specified in the Notice
of Intention: (i) the Non Failing Member may require the Company to repay immediately to the Non
Failing Member the contribution it made pursuant to the applicable Capital Call Notice, together
with interest actually earned thereon by the Company until repayment, if any; (ii) the Non Failing
Member may, but need not, make an additional contribution to the Company not in excess of the
amount the Failing Member failed to contribute pursuant to Section 5.3, in which case the
Percentage Interests of the Members shall be adjusted as provided below in this Section 5.4 (the
“Contribution Option”), (iii) the Non Failing Member may, but need not, make an additional
contribution to the Company not in excess of the amount the Failing Member failed to contribute
pursuant to Section 5.3 as default capital (a “Default Capital Contribution”), or (iv) the Non
Failing Member may elect to advance to the

27

 

Company, as a loan to the Failing Member, an amount
equal to the amount the Failing Member failed to contribute pursuant to Section 5.3, which loan
shall bear interest at an annual rate (compounded semi annually) equal to the highest rate
permitted by applicable law in no event to exceed eighteen percent (18%) (a “Member Loan”). During
the Term, notwithstanding anything to the contrary, a Member Loan shall be repaid with amounts
otherwise distributable by the Company to the Failing Member being delivered directly by the
Company to the Non Failing Member until such Member Loan and all interest thereon is repaid (which
payments will be applied first to accrued interest on the outstanding principal balance of such
loan and then outstanding principal balance of such loan) and any amounts so applied shall be
treated under this Agreement as having been distributed to the Failing Member. Any such loan shall
be recourse to the Failing Member and any outstanding balance following dissolution of the Company
shall be immediately due and payable by the Failing Member. A Member Loan may be prepaid at any
time or from time to time by a Failing Member. If requested by the Non Failing Member, any Member
Loan shall be structured (i) to qualify as a “real estate asset” under Code § 856(c)(5)(B) or, if
such Member Loan cannot so qualify, it (A) shall be structured in such manner as the Non Failing
Member determines may be necessary or appropriate to prevent any such Member Loan from giving rise
to a violation of the requirements of Code § 856(c)(4) with respect to the PRISA III REIT (in the
event that the PRISA III is the Non Failing Member) or Ashford (in the event Ashford is the Non
Failing Member) or (B) may be transferred to a taxable REIT subsidiary with respect to the PRISA
III REIT or Ashford (as applicable), (ii) to generate income qualified under Code §§ 856(c)(2) and
856(c)(3), and (iii) to contain such terms as the Non Failing Member shall reasonably request to
cause such Member Loan to be properly treated as indebtedness for federal income tax purposes, and
the Failing Member shall cooperate in such structuring and execute all documents reasonably
required in connection therewith. If a Non Failing member elects the Contribution Option above,
the Percentage Interests of the Members shall be subject to adjustment, as follows:

               (i) The Percentage Interest of each Failing Member shall be reduced by an amount equal to 150%
x A/B, where

	 	 	A 	= the share of the contribution
required of the Failing Member and contributed by the Non
Failing Member, and

	 	 	B 	= the sum of all unreturned
Capital Contributions (other than Preferred Equity
Contributions) previously made to the Company after giving
effect to the amounts advanced under this section on behalf of
the Failing Member; and

               (ii) The Percentage Interest of the Non Failing Member shall be increased by the decrease in a
Failing Member’s Percentage Interest.

     Section 5.5 Records to Reflect Capital Contributions and Capital Commitments. The Member
Information described in Section 2.7 and set forth on Exhibit A attached hereto shall be
revised from time to time by Executive Committee to reflect any change in the Member Information.

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     Section 5.6 Further Capital Contributions. Unless approved by the Executive Committee or
otherwise approved in writing or in an amendment to this Agreement by a Member, no Member shall be
required to make Capital Contributions other than those it has committed to make hereunder as set
forth in Sections 5.1, 5.2 and 5.3 and on Exhibit A.

     Section 5.7 Resignations; Withdrawals of Capital. Except upon dissolution of the Company or as
may be expressly set forth in this Agreement, no Member shall have the right to withdraw from the
Company or demand or receive the return of its Capital Contributions or any part of its Capital
Account, and, except as expressly set forth in this Agreement, no Member shall be entitled to
receive any interest on its outstanding Capital Account balance or any distribution (including the
return of its Capital Contributions) that is not expressly provided for in this Agreement.

     Section 5.8 Restoration of Negative Capital Accounts. No Member shall be obligated to restore any
deficit balance in its Capital Account or be personally liable for the return of the Capital
Contributions of any other Member, or any portion thereof or return thereon, it being expressly
understood that (x) any such return shall be made solely from Company Assets, and (y) a deficit in
a Member’s Capital Account shall not constitute a Company Asset.

ARTICLE VI

MANAGEMENT; INDEMNIFICATION

     Section 6.1 Management by the Executive Committee. The Executive Committee shall manage the
affairs of the Company and make all decisions with regard thereto, except where the approval of any
of the Members is expressly required by a non-waivable provision of applicable law. The Executive
Committee shall be responsible for the establishment of policy and operating procedures respecting
business affairs of the Company. No action shall be taken, obligations incurred or amounts
expended by the Company without the consent of the Executive Committee. This Section 6.1 shall not
be construed to prohibit delegations of duties pursuant Section 6.3, Section 6.4, Section 6.9 or as
otherwise determined by this Agreement or the Executive Committee. The Company is prohibited from
guaranteeing the indebtedness of any other Person without the prior written consent of all of the
Members.

     Section 6.2 Executive Committee. The Members hereby establish an executive committee (the
“Executive Committee”). The Executive Committee shall be comprised of four persons, two of whom
will be designated by Ashford (each an “Ashford Representative”) and two of whom will be designated
by PRISA III (each a “PRISA III Representative”, and together with the Ashford Representatives the
“Committee Representatives”). The initial Ashford Representatives are David Brooks and Douglas
Kessler, and the initial PRISA III Representatives are Soultana Reigle and Scott Dalrymple.
Decisions of the Executive Committee may be made only with the approval of a majority of the
Committee Representatives. Each Member designating representatives on the Executive Committee
shall also be entitled to appoint one or more alternates who may serve in the absence of such
Member’s Representative. Any Committee Representative or alternate appointed by a Member may be
replaced at any time by such Member (with or without
cause). Any appointment or replacement (with
or without

29

 

 cause) of a Committee Representative or an alternate by the applicable Member shall be
effective upon written notice of such appointment or replacement given to the Company and the other
Members. All Committee Representatives and alternates shall serve for indefinite terms at the
pleasure of the appointing Member. No Committee Representative shall receive any compensation from
the Company for its services on the Executive Committee. For the avoidance of doubt, a decision
may be introduced for consideration and approval of the Executive Committee by any Committee
Representative. If a decision must be made, the Member requesting the decision shall give to all
Committee Representatives a notice (a “Decision Notice”) of the nature of the decision, together
with a statement of the proposal as to the decision and all documentation, agreements and other
information necessary to enable the Committee Representatives to make the decision. The Decision
Notice shall specify the date (the “Response Date”) by which the Committee Representatives’
response to the Decision Notice shall be reasonably required under the circumstances (it being
agreed that except as otherwise provided herein the Response Date shall not be less than 15 days
after the date of the Decision Notice, unless an emergency exists, in which case said 15 day period
shall be shortened to the extent reasonably necessary and practicable as determined by the Person
delivering the Decision Notice in its reasonable judgment). Upon receipt of written request from
any Committee Representative, each Member shall promptly deliver to such Committee Representative
such additional information, to the extent the same is within its possession, as it shall
reasonably request in order to respond to a Decision Notice. The Committee Representatives shall
give written notice of their decision regarding the decision to the Ashford in its role as
Administrative Member as promptly as reasonably practicable (but not later than the Response Date).
In the event that any Committee Representative fails to respond to a Decision Notice on or prior
to the Response Date therefor, such failure to respond shall be deemed a vote against the
applicable decision. Approval of a decision must be evidenced by a written instrument,
counterparts of which shall be executed by at least those Committee Representatives whose votes
were required to approve such decision.

     Section 6.3 Property Management. Concurrently herewith, various subsidiaries of the Company are
entering into the property management agreements with Remington or its Affiliates listed on
Exhibit D hereto, all of which have been approved by the Members. Notwithstanding anything
to the contrary contained herein, PRISA III shall have sole authority, after reasonable
consultation with the Executive Committee, to enforce, on behalf of the Company and the
Subsidiaries, any property management agreements between the Company or any Subsidiary, on the one
hand, and Remington (or its Affiliates), on the other hand, and to make elections, grant waivers
of, exercise termination rights, or otherwise enforce any provisions of such agreements on behalf
of the Company and the Subsidiaries that may be required under or with respect to such agreements.
If any property management agreement with Remington is terminated and the Committee Representatives
cannot agree upon a replacement property manager for the applicable property within fifteen (15)
days after the issue is submitted to the Executive Committee, the Ashford Representatives shall
submit to the
PRISA III Representatives within five (5) days thereafter a list of four Qualified
Property Managers from which the PRISA III Representatives shall select a replacement property
manager for the affected property within five (5) days thereafter. If the Ashford Representatives
do not submit to the PRISA III Representatives within such five (5) day period the list of four
Qualified Property Managers, then the PRISA III Representatives promptly shall pick a replacement
property manager that is a Qualified Property Manager. If the Ashford Representatives submit to
the

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 PRISA III Representatives within such five (5) day period the list of four Qualified Property
Managers, and the PRISA III Representatives do not then select a replacement property manager from
such list within five (5) days thereafter, the Ashford Representatives promptly shall pick a
replacement property manager from such list. After selection of a replacement property manager,
the Administrative Member shall seek any necessary consent or approval from the applicable lender
or lenders of such replacement property manager. If one or more lenders do not consent or approve
such selection, then the process for selection and approval of a replacement property manager shall
be repeated as to any affected property until a replacement property manager with all necessary
lender approvals and consents has been selected for all properties as to which Remington has been
terminated. The Members approve amending the Hotel Master Management Agreement of even date
herewith between Remington and various Company Subsidiaries to engage Remington on the same terms
as in such Hotel Master Management Agreement as a replacement property manager for Courtyard
Savannah Historic District hotel and Residence Inn Tampa Downtown hotel, provided that (i) Ashford
and Remington obtain all consents required to do so under each of the Approved Loans and otherwise
comply with any requirements of the Approved Loans in connection therewith, and (ii) Ashford and
Remington obtain all consents required to do so under any License Agreement, any other third party
agreement of the Company or its Subsidiaries, or otherwise needed to transfer any licenses
or permits necessary for the operation of such hotels.

     Section 6.4 Administrative Member. Subject to the terms and conditions of this Agreement, the
Executive Committee delegates to a Member (the “Administrative Member”), who shall initially be
Ashford, the responsibility and authority for the day to day administration of the business and
affairs of the Company in accordance with the decisions, policies and procedures established by the
Executive Committee and the terms of this Agreement. The Executive Committee shall have the right
to revoke such delegation of authority at any time in its sole discretion, in which case PRISA III
shall become the Administrative Member. PRISA III, acting alone, shall have the right to revoke
such authority at any time following the occurrence of a Duty Breach by Ashford, in which case
PRISA III shall become the Administrative Member. Each Member when and if it becomes
Administrative Member accepts and agrees to perform its duties and undertake its responsibilities
set forth in this Agreement and to exercise all commercially reasonable efforts to cause the
business of the Company to be operated and managed in accordance with the decisions, policies and
procedures established by the Executive Committee and the terms of this Agreement. The Company
will reimburse the Administrative Member for its expenditures incurred in connection with the
performance of such duties, including reimbursement of (i) all office overhead, in office salaries,
telephone, reproduction and other similar costs (except as otherwise expressly set forth in this
Agreement), and reasonable travel expenses of its personnel in connection with performing the
administrative duties and (ii) third party expenses incurred on behalf of the Company, but not in
excess of the amounts set forth in the G&A Budget for such items; provided that the Administrative
Member shall be reimbursed for expenditures that arise from an emergency situation, or any
unanticipated event or circumstance that causes an imminent danger of material financial or other
loss to the Company, without regard to the amounts set forth in the applicable G&A Budget. Upon
request of the Member that is not the Administrative Member, the Administrative Member shall
provide reasonable supporting verification to the Executive Committee for all expenditures for
which any reimbursement is requested.

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     Section 6.5 Affiliate Transactions. Notwithstanding anything to the contrary contained in this
Agreement, the Executive Committee must approve of any contract or understanding between the
Company and any Member or Affiliate of any Member in any capacity, including in connection with the
business and operations of the Company, and the terms of any such arrangement shall be commercially
reasonable and competitive with amounts that would be paid to third parties on an “arms length”
basis.

     Section 6.6 Annual Budgets. The Company and each Subsidiary shall operate under an annual
Operating Budget, G&A Budget and Capital Expenditure Budget (collectively, the “Annual Budget”),
each of which shall be prepared on a project by project basis and submitted by the Advisor to the
Executive Committee for approval. After the Annual Budgets have been approved, the Advisor shall
cause the managers to implement them on behalf of the Company and applicable Subsidiary. With
respect to the Company and each Subsidiary, the Advisor shall deliver to the Executive Committee
for approval the proposed Annual Budget for each calendar year by November 2 of the preceding
calendar year (subject to receiving all required information from property managers other than
Remington). Provided that each Committee Representative receives the proposed Annual Budget for
each calendar year by November 2 of the preceding calendar year, together with all supporting
information necessary for such Committee Representative to review the Annual Budget, the Executive
Committee will approve, reject, or provide changes to the Annual Budget by December 1 of the year
in which the proposed Annual Budget is submitted to the Executive Committee. By no later than the
tenth (10th) Business Day after the Annual Budget is approved by the Executive Committee but no
later than required under any applicable loan documents, the Executive Committee shall be
authorized to deliver the Annual Budget to each lender of the Approved Loans; provided, however, to
the extent the Annual Budget has not yet been approved by the Executive Committee, the Annual
Budget to be submitted to the lenders shall be the same as the Annual Budget in effect for the
prior year with only those adjustments approved by the Executive Committee or comprising Permitted
Adjustments. If an Operating Budget or the G&A Budget for any calendar year has not been approved
by January 1 of that year, the Company and applicable Subsidiary shall continue to operate under
the Operating Budget or the G&A Budget, as applicable, for the previous year with such adjustments
as may be necessary to reflect deletion of non recurring expense items set forth on the previous
Operating Budget or G&A Budget, as applicable, expenditures required under any Management
Agreement, increased insurance costs, taxes, utility costs, and debt service payments and, in the
case of the G&A Budget, increases by a CPI adjustment (collectively, the “Permitted Adjustments”);
however, no payments or reimbursements to the Members or any of their Affiliates (other than
payment of the management fee in accordance with the previous Operating Budget and reimbursements
to Ashford, in its capacity as Administrative Member and as the Advisor, in accordance with the
previous G&A Budget increased by a CPI adjustment) shall be made by the Company and the
Subsidiaries for that year until an Operating Budget or G&A Budget, as applicable, for such year is
approved, unless the Executive Committee specifically consents thereto in writing. If a Capital
Expenditure Budget for any calendar year has not been approved by January 1 of that year, no
capital expenditures (other than deposits into the capital expenditure reserves and Required
Expenditures) shall be made by the Company and the Subsidiaries for that year until a Capital
Expenditure Budget for such year is approved, unless the Executive Committee specifically consents
thereto in writing or such expenditure is required by the applicable licensor.

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     Section 6.7 Meetings of the Executive Committee.

          (a) The Executive Committee shall hold quarterly meetings to discuss such matters regarding
Company business as the Members may elect. Any such meeting may be held by phone.

          (b) Special meetings of the Executive Committee to discuss such matters regarding Company
business as the Members may elect may be called by any Member at any time upon the delivery of
notice to the other Members not less than two (2) Business Days prior to the date of such meeting.
Any such meeting may be held by phone.

          (c) Each Executive Committee meeting shall be held at the principal place of business of the
Company, unless the Committee Representatives otherwise agree. Attendance of a Person at a meeting
shall constitute a waiver of notice of such meeting, unless such Person attends the meeting for the
purpose of objecting to the transaction of any business on the ground that the meeting is not
lawfully called or convened. A Person may vote at such meeting by written proxy executed by that
Person and delivered to a Member. A proxy shall be revocable unless it is stated to be
irrevocable. Any action required or permitted to be taken at such meeting may be taken without a
meeting, without prior notice, and without a vote if a consent or consents in writing, setting
forth the action so taken, is signed by the Committee Representatives that would be necessary to
take the action at a meeting at which all Committee Representatives were present and voted. At the
request of any Committee Representative, any meeting may take place by means of telephone
conference, video conference, or similar communication equipment by means of which all Persons
participating therein can hear each other.

     Section 6.8 Compensation.

          (a) Except for expense reimbursements set forth in Section 6.9, no compensatory payment shall
be made by the Company to any Member for the services to the Company of such Member or any member,
partner or employee of such Member.

          (b) Except as other provided herein, each of the PRISA III and Ashford shall bear their own
costs and expenses associated with negotiating and entering into this Agreement.

     Section 6.9 Ashford’s Advisory Duties.

          (a) In its capacity as a Member, Ashford agrees to perform for the Company the duties
(“Duties”) as set forth on Exhibit H, Section 6.6 and Article VIII and when performing the
Duties in such capacity Ashford is referred to as the “Advisor.” Ashford shall perform such Duties
until the earlier of (i) the date Ashford is no longer a Member and (ii) the date Ashford’s role as
Advisor is terminated pursuant to Section 6.9(j) or 6.9(k).

          (b) The Advisor shall perform and discharge the Duties under this Section 6.9: (i) in good
faith to further the rights, interests, investments and objectives of the Company and in the best
interests of the Company; and (ii) in accordance with the requirements of any applicable federal,
state or local law or regulation. In performing the Duties, the Advisor may from time to time call
upon and utilize various facilities, personnel and support services of one or more Affiliates of
the Advisor.

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          (c) The Advisor’s authority for purposes of this Agreement shall be limited as set forth in
Section 6.6, Section 6.9 and Article VIII and any increase in scope of the Advisor’s
responsibilities and authority shall be pursuant to prior written authorization by the Executive
Committee.

          (d) The Executive Committee shall direct the Advisor, for purposes of this Agreement, except
as provided in (i) the following sentence, (ii) Section 6.9(j), (iii) Section 6.9(k) and (iv) with
respect to certain expense reviews pursuant to the penultimate sentence of Section 6.9(h).
Notwithstanding any other provision in this Section 6.9, PRISA III shall have sole authority, after
reasonable consultation with the Executive Committee, to enforce or to grant waivers, on behalf of
the Company, under this Section 6.9.

          (e) At all times, the Advisor shall keep true, accurate and complete books of accounts and
records relating to the performance of the Duties, which shall be accessible for inspection by any
Committee Representative at any time during ordinary business hours upon reasonable notice given by
such Committee Representative. The Advisor shall also cause all financial reports reasonably
required by any Committee Representative to be prepared and distributed to the Executive Committee
on a timely basis. If requested by any Committee Representative and at the Company’s cost, the
Advisor shall set up a secure website for documentation relating to the Investments in consultation
with the Executive Committee. The Advisor shall regularly request from the Executive Committee
such information and direction as the Advisor deems necessary to fulfill its responsibilities under
this Agreement and the Executive Committee shall provide the same on a timely basis.

          (f) In addition to the Duties, the Advisor shall regularly consult with the Executive
Committee and meet with the Executive Committee promptly upon request of any Committee
Representative, and shall, at the reasonable request of any Committee Representative: (i) give
advice and recommendations regarding the management, operation and improvement of the Investments,
and (ii) participate in strategic planning with the Executive Committee, including, in decisions
regarding hold and sell strategies for the Company or individual assets. In general, the Advisor
shall inform the Executive Committee of any information of which it has knowledge that the Advisor
reasonably believes could influence the policies of the Executive Committee with respect to the
Investments or are appropriate for the protection of Investments or preservation of their value.

          (g) The Executive Committee shall make available to the Advisor such documents, materials and
information regarding the Investments which, in the reasonable professional judgment of the
Advisor, are necessary or appropriate for the proper performance of the Duties. The Executive
Committee shall provide timely responses to written requests for approvals received from the
Advisor. Failure of the Executive Committee to respond to any such written request for approval
within seven (7) Business Days after receipt thereof shall be deemed a denial of approval by the
Executive Committee.

          (h) The Advisor shall not receive any separate fee for performance of the Duties but shall be
reimbursed for expenses as provided in this Section 6.9. The applicable G&A Budget shall set forth
an estimate of the categories and amount of expenses that the Advisor anticipates incurring in
connection with the performance of the Duties for the period covered by

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the applicable G&A Budget.
The Company shall reimburse the Advisor for reasonable and customary expenses incurred by the
Advisor and its Affiliates in connection with the performance of the Duties, including, but not
limited to, all third party expenses and all office overhead, in-office salaries, telephone,
reproduction and similar costs fairly allocable to performance of its duties hereunder, provided,
however, that (i) the Advisor must obtain the prior written consent of the Executive Committee
either as part of the G&A Budget or otherwise, prior to incurring any expense, and (ii) such
reimbursement shall not exceed the maximum amount provided in the applicable G&A Budget unless
approved by the Executive Committee; provided further that no prior consent of the Executive
Committee shall be required for expenditures that arise from an emergency situation, or any
unanticipated event or circumstance that causes an imminent danger of material financial or other
loss to the Company. The Advisor shall include any such reimbursable expenses the Advisor (or its
Affiliates) incurred in a quarterly invoice together with reasonable supporting documentation for
expenditures for which reimbursement is requested. PRISA III may initiate, at PRISA III’s cost,
upon reasonable notice and at reasonable times, a review of the books and records of the Advisor
relating to reimbursable expenses. Any discrepancies shall be promptly adjusted.

          (i) The Advisor represents and warrants that:

               (i) The Advisor has, and will at all times during which it is the Advisor have, sufficient,
experienced and competent personnel directly or through Affiliates perform the Duties.

               (ii) The Advisor holds all licenses and permits necessary to perform the Duties and receive
the reimbursements as may be required by applicable laws, rules, regulations and ordinances; and

               (iii) The Advisor shall comply with all laws, rules, regulations and ordinances applicable to
performance of the Duties.

          (j) PRISA III may terminate Ashford in its role as the Advisor for cause immediately upon
written notice of termination from PRISA III to the Advisor, if any of the following events shall
occur:

               (i) If the Advisor (A) commits a material breach of this Section 6.9 or a Duty Breach, (B)
neglects or is negligent in the performance of the Duties in any material respect or (C) if any
representation or warranty of the Advisor in this Section 6.9 becomes untrue or incorrect in any
material respect; provided the Advisor shall have thirty (30) days after written notice from PRISA
III to cure any of the foregoing; provided further, that if a failure to satisfy any of clause (A),
(B) or (C) can be cured but is not reasonably capable of being cured within such thirty (30) day
period, the Advisor shall have such longer period of time as is necessary to cure such breach but
in no event in excess of a total of one hundred five (105) days.

               (ii) If the Advisor shall be adjudged bankrupt or insolvent by a court of competent
jurisdiction, or any order shall be made by a court of competent jurisdiction for the appointment
of a receiver, liquidator or trustee of the Advisor or of all or substantially all of its assets by
reason of the foregoing, or approving any petition filed against the Advisor for its

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reorganization, and the adjudication or order shall remain in force or unstayed for a period of
thirty (30) days; or

               (iii) If the Advisor shall institute proceedings for voluntary bankruptcy or shall file a
petition seeking reorganization under the federal bankruptcy laws, or for relief under any law for
the relief of debtors, or shall consent to the appointment of a receiver of itself or of all or
substantially all its assets, or shall make a general assignment for the benefit of its creditors,
or if an involuntary petition shall be filed under the federal bankruptcy laws against the Advisor,
unless such petition is set aside or withdrawn or ceases to be in effect within sixty (60) days
from the date of such filing.

          (k) Ashford may terminate its role as the Advisor and cease performing the Duties at any time
without cause upon six months’ prior written notice to the Executive Committee. If Ashford’s
Percentage Interest is reduced to less than 25%, PRISA III may terminate Ashford in its role as the
Advisor at any time without cause upon six months’ prior written notice after such reduction in
Percentage Interest. In addition to the foregoing, the Executive Committee may terminate Ashford
in its role as the Advisor without a termination fee with respect to any individual hotel
comprising an Investment concurrently with the sale of such hotel by the Company or its Subsidiary.

          (l) Upon the occurrence of any termination of Ashford as the Advisor, the Company shall
reimburse the Advisor for all reimbursable expenses incurred through the effective date of
termination, but the Company will not be required to pay any termination fee or other fee to the
Advisor.

          (m) To the fullest extent permitted by applicable law, the Advisor shall and does hereby fully
indemnify, defend and hold harmless the Company, its Members, their partners, Affiliates, officers,
employees, agents, representatives, successors and assigns from and against all costs, expenses,
claims, damages, liabilities, losses and causes of action, including attorneys’ fees, of any
nature, kind or description, and of any person or entity whomsoever (including any governmental
agency), relating to or arising out of the bad faith, willful misconduct or gross negligence of the
Advisor and its Affiliates and their respective members, shareholders, partners, officers,
directors, agents and employees (the “Covered Parties”) in connection with the duties being (or to
be) performed under this Section 6.9 or arising out of any breach of this Section 6.9 by the
Advisor (or any of the other Covered Parties) or any acts by the Advisor (or any of the other
Covered Parties) outside the scope of its authority under this Agreement. The indemnification
provisions of this Section 6.9(m) shall survive the termination or expiration of this Agreement.

          (n) The Advisor agrees to provide its full cooperation (and to cause it Affiliates to provide
their full cooperation) with the Company and the Executive Committee and their respective members
in connection with any sale of any hotel comprising an Investment. At the request of the Company
or any Member, the Advisor shall take such reasonable actions for the benefit of, and use
reasonable efforts to provide information relating to the Company, its Subsidiaries, the Advisor,
or the hotels comprising an Investment in order to satisfy the due diligence disclosure standard to
which the Company or such Member customarily adheres or

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which may be reasonably required in the
marketplace by a buyer performing due diligence, including to:

               (i) provide updated financial, budget and other information with respect to each individual
hotel comprising an Investment, the Company, the Advisor, and subject to any restrictions contained
in a management or franchise agreement, each property manager and franchisor, and provide
modifications and/or updates to the market studies, environmental reviews and reports (Phase I
reports and, if appropriate, Phase II reports) and engineering reports of each individual hotel
comprising an Investment(all of the foregoing being referred to as the “Section 6.9 Provided
Information”), together, if customary, with appropriate verification and/or consents of the Section
6.9 Provided Information through letters of auditors or opinions of counsel of independent
attorneys; and

               (ii) permit site inspections, appraisals, market studies and other due diligence
investigations of each hotel comprising an Investment, as may be reasonably requested by the
Company or such Member.

     In addition, as reasonably requested by the Company or such Member, the Advisor shall execute
and deliver such certificates and other instruments as are customary for the sale of real estate
assets by PRISA III and its Affiliates.

          (o) This Section 6.9 shall not be changed, modified, terminated or discharged in whole or in
part except as provided in Section 12.5.

     Section 6.10 Indemnification. Neither (i) the Members, (ii) any Affiliate of the Members, nor
(iii) any officer, director, member, partner, shareholder, agent, employee or representative of a
Member or such Affiliate (each, an “Indemnified Person”), acting on behalf of the Company or any
Subsidiary in connection with any business or activity of the Company or any Subsidiary, including
acting in the role of the Advisor, shall be liable, responsible or accountable to the Company, to
any Subsidiary or to any Member for any loss or damage arising out of or in connection with the
management, operation or conduct of affairs of the Company or any Subsidiary, except (i) to the
extent caused by reason of bad faith, willful misconduct, fraud, gross negligence, or acting
outside the scope of its authority hereunder and (ii) as to any liability arising out of the
Indemnity and Contribution Agreement. The Company, to the fullest extent permitted by the Act and
other applicable law, shall indemnify and hold harmless each Indemnified Person, in its capacity as
such, from and against any and all claims, obligations, costs, losses, liabilities, damages,
penalties, actions, judgments, suits, proceedings, disbursements, expenses (including the
reasonable expense of defending, investigating or preparing to defend, or the cost of any appeal or
settlement of, any claim, suit, action or proceeding instituted or threatened and the costs of
enforcing its indemnification rights hereunder) or liabilities (including reasonable attorneys’
fees) of any kind or nature whatsoever suffered or sustained by such Indemnified Person by reason
of, or in any way relating to or arising out of, or alleged to relate to or arise out of or caused
or alleged to have been caused in whole or in part by, any acts performed or omitted to be
performed by such Indemnified Person on behalf of the Company or any Subsidiary or in furtherance
of the interest of the Company or any Subsidiary, except (i) to the extent caused by reason of bad
faith, willful misconduct, fraud,

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gross negligence, or acting outside the scope of its authority
hereunder and (ii) as to any liability arising out of the Indemnity and Contribution Agreement.

          (a) No claim, action or proceeding, or any appeal therefrom which is subject to the
indemnification provisions of Section 6.10 shall be settled by the Company without the consent of
the Indemnified Person affected thereby, unless the settlement of such claim, action or proceeding
requires solely the payment of money which is fully paid by the Company. Notwithstanding the
foregoing, if the Company is also a defendant in any such claim, action, proceeding or appeal, the
Company may enter into any settlement for itself without the consent of any other defendant;
provided that (i) such settlement does not adversely affect any Indemnified Person and (ii) the
Company shall remain liable for the satisfaction of its obligations to the Indemnified Persons in
accordance with its obligations under this Agreement.

          (b) To the extent that, at law or in equity, an Indemnified Person has duties (including
fiduciary duties) and liabilities relating thereto to the Company or to the Members, such
Indemnified Person acting under this Agreement or otherwise shall not be liable to the Company or
to any Member for its good faith reliance on the provisions of this Agreement unless it constitutes
bad faith, willful misconduct, fraud, gross negligence, or acting outside the scope of its
authority. The provisions of this Agreement, to the extent that they expand or restrict the duties
and liabilities of an Indemnified Person otherwise existing at law or in equity, are agreed by the
Members to replace such other duties and liabilities of such Indemnified Person.

          (c) In any action, suit or proceeding against the Company or any Indemnified Person relating
to or arising, or alleged to relate to or arise, out of or caused or alleged to have been caused in
whole or in part by any action or non action of an Indemnified Person, the Indemnified Persons
shall have the right to jointly employ, at the expense of the Company, counsel of the Indemnified
Persons’ choice, which counsel shall be reasonably satisfactory to the Company, in such action,
suit or proceeding, provided that if retention of joint counsel by the Indemnified Persons would
create a conflict of interest, each group of Indemnified Persons which would not cause such a
conflict shall have the right to employ, at the expense of the Company, separate counsel of the
Indemnified Persons’ choice, which counsel shall be reasonably satisfactory to the Company, in such
action, suit or proceeding. The satisfaction of the obligations of the Company under this Section
6.10(c) shall be from and limited to the assets of the Company and no Member shall have any
personal liability on account thereof.

          (d) The provision of advances of funds from the Company to an Indemnified Person for legal
expenses and other costs incurred as a result of any legal action or proceeding is required if
requested by any Member or Indemnified Person if (i) such suit, action or proceeding relates to or
arises out of, or is alleged to relate to or arise out of or caused or alleged to have been caused
in whole or in part by, any action or inaction on the part of the Indemnified Person in the
performance of its duties or provision of its services on behalf of the Company; and (ii) the
Indemnified Person undertakes to repay any funds advanced pursuant to this Section 6.10(d) in cases
in which such Indemnified Person would not be entitled to indemnification under Section 6.10(a).
If advances are required under this Section 6.10(d), the Indemnified Person shall furnish the
Company with an undertaking as set forth in clause (ii) of this paragraph and shall thereafter have
the right to bill the Company for, or otherwise require the Company to pay, at any time and

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from
time to time after such Indemnified Person shall become obligated to make payment therefor, any and
all reasonable amounts for which such Indemnified Person is entitled to indemnification under
Section 6.10 and the Company shall pay the same within thirty (30) days after request for payment.
In the event that a determination is made by a court of competent jurisdiction or an arbitrator
that the Company is not so obligated in respect of any amount paid by it to a particular
Indemnified Person, such Indemnified Person will refund such amount within sixty (60) days of such
determination, and in the event that a determination by a court of competent jurisdiction or an
arbitrator is made that the Company is so obligated in respect to any amount not paid by the
Company to a particular Indemnified Person, the Company will pay such amount to such Indemnified
Person within thirty (30) days of such final determination, in either case together with interest
at the Prime Rate plus two percent (2%) from the date paid until repaid or the date it was
obligated to be paid until the date actually paid.

          (e) Each Member (for purposes of this clause (e), the “First Member”) shall, severally and not
jointly, indemnify and hold harmless the Company and each other Member and its respective officers,
directors, members, partners, shareholders and agents from and against any and all claims,
obligations, costs, losses, damages, penalties, actions, judgments, suits, proceedings,
disbursements, expenses (including the expense of defending, investigating or preparing to defend,
or the cost of any appeal or settlement of any claim, suit, action or proceeding instituted or
threatened and the costs of enforcing its indemnification rights hereunder) or liabilities
(including reasonable attorneys’ fees) suffered or sustained by the Company or any other Member to
the extent caused by reason of bad faith, willful misconduct, fraud, gross negligence, and acting
outside the scope of its authority hereunder. In any such action, suit or proceeding against the
Company or any other Member, the Company and each such other Member shall have the right to jointly
employ, at the expense of the First Member, counsel of the First Member’s choice, which counsel
shall be reasonably satisfactory to the Company and each such other Member, in such action, suit or
proceeding, provided that if retention of joint counsel by the Company and each such other Member
would create a conflict of interest, the Company and each group of other Members which would not
cause such a conflict shall have the right to employ, at the expense of the First Member, separate
counsel of the First Member’s choice, which counsel shall be reasonably satisfactory to the Company
and each such other Member, in such action, suit or proceeding, and provided, further that such
counsel is acceptable to internal counsel of PRISA III, in its reasonable discretion, if PRISA III
is an Indemnified Person.

          (f) Notwithstanding anything to the contrary in this Agreement, (i) the Members and the
Company each waive any and all rights to allege or claim any punitive, special, speculative and/or
consequential damages and (ii) the term “Indemnified Person” shall not include Remington or any
officer, director, member, partner, shareholder, agent, employee or representative of Remington.

     Section 6.11 Consulting Agreement. PRISA III intends to enter into a Consulting Agreement with a
consultant (“Consultant”) to provide certain hotel consulting services to the Company. The Members
agree to provide the Consultant and any replacement therefor that may be selected by PRISA III
access to the properties of the Company and its Subsidiaries and all reports and other information
related thereto that the Consultant may require to perform its consulting services, and PRISA III
agrees to bear all costs and expenses for any such Consultant.

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ARTICLE VII

TRANSFER RIGHTS OF MEMBERS

     Section 7.1 Transfers. (a) Except as expressly provided in this Article VII, no Member, or any
assignee or successor in interest of a Member, may Transfer or permit the Transfer of, all or any
portion of its Company Interest, or in any loans, including Default Capital Contributions, made by
it to the Company, or in all or any part of the assets of the Company, directly or indirectly,
whether by operation of law or otherwise without the prior written consent of the other Member
(which consent may be given or withheld in the other Member’s sole and absolute discretion). A
Transfer shall be deemed to have occurred with respect to a Member’s Company Interest upon any
Transfer of any direct or indirect interest in that Member. Except as otherwise provided in this
Agreement and for the limited purpose described herein, no Member shall have the right to Transfer
less than all of its Entire Interest. Any purported Transfer of all or any portion of a Member’s
Company Interest or any loans, including Default Capital Contributions, made by it to the Company
not otherwise expressly permitted by this Article VII shall be null and void and of no force or
effect whatsoever. Except upon a Transfer of an Entire Interest by a Member in accordance with and
as permitted by this Agreement, no Member may resign or withdraw from the Company before the
dissolution and winding up of the Company. Notwithstanding any provision in the Act to the
contrary, including Section 18-604 of the Act, upon a resignation or withdrawal of a Member from
the Company, whether in accordance with this Agreement or in violation of this Agreement, such
Member shall not be entitled to any payment or any distribution except as specifically provided in
this Agreement. Notwithstanding the foregoing, the following Transfers are permitted without the
consent of the other Member (each, a “Permitted Transfer”):

               (1) any Transfer of a Member’s entire Company Interest and all unpaid Member Loans made by
such Member (collectively, such Member’s “Entire Interest”), excluding any Preferred Interest or
Economic Interest previously Transferred (for the avoidance of doubt and without impacting the
provisions of Section 7.1(b), a Member’s Entire Interest includes all of such Member’s Preferred
Interest not previously transferred), (i) to an Affiliate of such Member or (ii) to an
Institutional Investor in connection with any corporate merger, acquisition or other combination
involving such Member or the sale or transfer of all or substantially all of its assets; and

               (2) without any right to be admitted a Member of the Company pursuant to this Agreement or the
Act, any Transfer to an Institutional Investor of a Member’s rights to receive distributions of
Cash Flow pursuant to Sections 4.2(c) and 4.2(d) (the Member’s “Preferred Interest”), provided that
the transferee of the Preferred Interest Transferred and such transferred Preferred Interest shall
continue to be subject to the right of the other Member to purchase such Preferred Interest
pursuant to Section 7.1(b) in the event of a sale of the Transferring Member’s remaining Entire
Interest;

provided that notwithstanding any other provision in this Agreement, without the prior written
consent of the other Member, no Member shall have any right to mortgage, pledge, hypothecate,
encumber, or grant a security interest in all or any portion of such Member’s Company Interest

40

 

and
even with receipt of such consent all Transfers shall be subject to the third party consent
requirements of Section 7.6.

No Transfers of any interest in PRISA III REIT, Operating Partner, PRISA III Fund LP, Ashford REIT
or Ashford (and its partners) shall be restricted in any way. Further, if necessary or desirable
for or to any Member for purposes described in Article XIII, each Member will cooperate in all
reasonable respects with respect to the structuring of the acquisition of any Investment,
including, by structuring the acquisition of such Investment in a manner that would allow each
Member to invest through one (1) or more taxable REIT subsidiaries, so long as such structuring
does not adversely affect the economic terms intended to be provided the Members under this
Agreement.

          (b) If a Preferred Interest has been Transferred by a Member (“Transferring Member”) pursuant
to Section 7.1(a)(2), and then there is a Transfer by the Transferring Member of its remaining
Entire Interest to another Member, then at any time after the first anniversary of the Transfer of
the Preferred Interest by the Transferring Member the Member acquiring the Entire Interest of the
Transferring Member shall have the right to purchase such Preferred Interest for a cash payment
equal to the sum, as of the date of payment, of the outstanding balance of the Preferred Equity
Account and Preferred Equity Return Account allocable to such Preferred Interest. For avoidance of
doubt this Section 7.1 shall not limit the distribution of Cash Flow pursuant to Section 4.2 to any
Preferred Interest.

     Section 7.2 Sales of Company Interests to Third Parties. Any Member wishing to exercise its
rights under this Section 7.2 shall provide the other Member not more than 120 days and not less
than 30 days advance written notice prior to initiating an Offer pursuant to this Section 7.2. If
any time after the eighteen (18) month anniversary of the date of this Agreement any Member desires
to offer for sale either (a) its Entire Interest other than as provided in Section 7.1 or (b) up to
49% of such Member’s Economic Interest, and in each case only to Institutional Investors, prior to
commencing formal marketing or sales efforts, such Member (the “Offeror”) shall first deliver to
the other Member (the “Offeree”) a notice signed by the Offeror setting forth all the material
terms of the offer (the “Offer”), including the conditions to closing and a statement of the cash
value, as reasonably determined by the Offeror, of any non-cash consideration to be delivered in
connection with such Offer (the “Cash Value”).

          (a) In such event, the Offeree may, within thirty (30) days after receiving a copy of the
Offer from the Offeror, either:

               (i) notify the Offeror of the Offeree’s intent to purchase the Offeror’s Entire Interest or
applicable portion of the Economic Interest, as applicable, (the “Proffered Interest”) upon the
terms and conditions, including any seller financing, contained in the Offer, except as to date and
place of closing and as otherwise provided below in this item (i). If the Offer proposes
consideration that is in whole or in part other than cash, the Offeree shall be entitled to
purchase the Proffered Interest for the same consideration less, in the case of a sale of the
Entire Interest, any Member Loans (and interest thereon), held by Offeree. Notice of election to
purchase the Offeror’s Proffered Interest shall be addressed to the Offeror and shall provide for
the consummation of the transaction on the date set forth in the notice of election, which date
shall be not more than thirty (30) days after receipt by the Offeror of
the Offeree’s notice of

41

 

election to purchase. Such notice shall also set forth the date and place of closing, which shall
be in the offices of the seller’s counsel set forth herein, during usual business hours and such
notice shall be accompanied by a deposit in an amount equal to ten percent (10%) of the Third Party
Sale Amount (including the Cash Value of non-cash consideration) which amount shall be
non-refundable except in the event of any default by the Offeror or a failure by the Offeror to
satisfy the conditions to closing set forth herein or described in the Offer. If the Offeree
elects to purchase the Offeror’s Proffered Interest in accordance with this Section 7.2(a)(i), then
the Offeror shall be obligated to sell and transfer its Proffered Interest to the Offeree in
accordance with the terms and conditions of the Offer and notice of election provided for in this
Section 7.2(a)(i); provided that the closing date may be extended by not more than thirty (30) days
if all third party releases and consents required for the Transfer have not been obtained after
reasonable efforts; or

               (ii) notify the Offeror that it has no objection to the Offeror selling the Proffered Interest
to an Institutional Investor pursuant to the Offer, in which event the Offeror may sell the
Proffered Interest to an Institutional Investor upon the same terms and conditions contained in the
Offer (provided, that the Offeror may sell the Proffered Interest at a price equal to or in excess
of 95% of the price set forth in the Offer), subject to compliance with the provisions of the
remainder of this Article VII. The Offeror must complete any such assignment within one hundred
eighty (180) days after the expiration of the Offeree’s thirty (30) day election period. In
connection with the sale of the Proffered Interest by the Offeror, the Offeree and its Affiliates
shall promptly cooperate in all manners reasonably required in order for the Offeror to promptly
and efficiently complete such sale, including, in the same manner as is required of the Hold Member
with respect to the Portfolio pursuant to Section 7.4(f) below.

If the Offeree shall not have given written notice to the Offeror, as described in subsections (i)
or (ii) above, within such 30-day period, it shall be deemed to have exercised the option provided
in subsection (ii) above.

               (iii) Any sale of an Economic Interest must provide that such Economic Interest is subject to
the right of first offer provisions of this Section 7.2, the buy/sell provisions of Section 7.3 in
the event of a subsequent sale of an Entire Interest and the right of first offer provisions of
Section 7.4. For avoidance of doubt, any offer to a Member of an Entire Interest includes any and
all Economic Interests previously Transferred by the Offeror; and, any Preferred Interests
previously Transferred by the Offeror shall be subject to Section 7.1(b).

          (b) Whether or not any transaction contemplated by the foregoing provisions of this Section
7.2 is consummated pursuant to the provisions of the Offer, all the provisions of this Section 7.2
shall apply to any subsequent offer or offers to purchase all or any portion of a Member’s Company
Interest, except as provided in Section 7.1. If any new Member is admitted pursuant to this
Section 7.2, then such new Member may not exercise any rights to initiate a “buy/sell” procedure
pursuant to Section 7.3 or to initiate the provisions of Section 7.4 for a period of twelve (12)
months.

          (c) From and after receipt by the Offeree of a copy of the Offer from the Offeror related to
the sale of a Proffered Interest and until the earlier of (i) closing of any transfer of a
Proffered Interest pursuant to this Section 7.2 and (ii) ninety (90) days following receipt by

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the
Offeree of a copy of the Offer from the Offeror, Ashford’s and PRISA III’s rights to initiate a
“buy/sell” procedure pursuant to Section 7.3 and to initiate the provisions of Section 7.4 and
Section 7.5 shall be suspended.

     Section 7.3 Buy/Sell: Sale of Entire Interest to Other Member. Either Member may commence a
“buy/sell” procedure with respect to its respective Entire Interest in accordance with the
following provisions:

          (a) At any time (i) after the third (3rd) anniversary of this Agreement or (ii) after the
second (2nd) anniversary of this Agreement, the Executive Committee is unable to agree upon a
decision for more than thirty (30) days following delivery of written notice from any Committee
Representative to all of the other Committee Representatives stating that a deadlock exists, either
Member, as the Buy/Sell Initiator, may give the other Member, as the Buy/Sell Receiving Member, a
Buy/Sell Notice, in accordance with the following provisions, provided that notwithstanding the
foregoing in the event a new Member is admitted in addition to the restrictions in clause (i) and
clause (ii), such new Member may not deliver a Buy/Sell Notice until after the first (1st)
anniversary of such Member’s admittance as a Member. For the avoidance of doubt, rights pursuant
to this Section 7.3 are not assignable by any Member separate and apart from the Member’s Entire
Interest..

          (b) The Buy/Sell Selling Price and the Buy/Sell Purchase Price specified in the Buy/Sell
Notice shall be the amounts that the Buy/Sell Initiator and the Buy/Sell Receiving Member would
receive (taking into account the repayment of Member Loans from distributions) if the Company were
to liquidate all of its assets at the Buy/Sell Company Asset Value designated by the Buy/Sell
Initiator, and the Company were to dissolve and distribute the proceeds of liquidation (in
accordance with the procedures and priorities stated in Article XI) effective as of the date of the
Buy/Sell Notice. The calculation of the amounts a Member would receive in exchange for its Entire
Interest, if the Company were to dissolve, liquidate its assets and distribute the liquidation
proceeds effective as of the date of the Buy/Sell Notice, shall be made by the Independent
Accountants (at the Buy/Sell Initiator’s expense) in accordance with the provisions of Article XI;
provided, however, that, in making such calculation, it shall be assumed that no reserves are
required with respect to contingent liabilities and no deduction from the hypothetical liquidation
proceeds shall be made with respect to transfer and other taxes.

          (c) The Buy/Sell Notice must be accompanied by payment of the Buy/Sell Initiator’s Deposit,
which shall be paid, subject to the terms of this Agreement, directly to Buy/Sell Receiving Member,
or, at the option of Buy/Sell Initiator, to a title insurance company pursuant to escrow
instructions which place such amount in escrow pending closing of the buy/sell initiated by the
Buy/Sell Notice.

          (d) The Buy/Sell Receiving Member may, on or before the date that is seventy-five (75) days
after the date of receipt of the Buy/Sell Notice, either (i) accept the offer to sell the Buy/Sell
Receiving Member’s Entire Interest to the Buy/Sell Initiator, or (ii) accept the offer to purchase
the Buy/Sell Initiator’s Entire Interest. Any such response shall be by written notice, and if
such response is to accept the offer to purchase the Buy/Sell Initiator’s Entire Interest as set
forth in clause (ii) above, such response must be accompanied by the deposits set forth in Section
7.3(e) below. If the Buy/Sell Receiving Member fails to respond by

43

 

written notice to the Buy/Sell
Notice within such 75-day period, the failure to respond shall be deemed the Buy/Sell Receiving
Member’s election to accept the offer of the Buy/Sell Initiator to purchase the Entire Interest of
the Buy/Sell Receiving Member in accordance with the Buy/Sell Notice.

          (e) If the Buy/Sell Receiving Member elects to purchase the Buy/Sell Initiator’s Entire
Interest, notice of such election shall be accompanied by (i) the return of the Buy/Sell
Initiator’s Deposit or an irrevocable instruction letter to the escrow agent to release the
Buy/Sell Initiator’s Deposit, and (ii) the Buy/Sell Receiving Member’s Deposit, which shall be
paid, subject to the terms of this Agreement, directly to Buy/Sell Initiator, or, at the option of
Buy/Sell Receiving Member, to a title insurance company pursuant to escrow instructions which place
such amount in escrow pending closing of the buy/sell initiated by the Buy/Sell Notice.

          (f) In connection with the sale of one Member’s Entire Interest to the other Member pursuant
to this Section 7.3, except as otherwise provided to the contrary as set forth in this Section 7.3,
all of the provisions of Sections 7.6, 7.7 and 7.8 shall be applicable to such sale. Closing of
the purchase and sale pursuant to this Section 7.3 shall occur on the date which is not later than
sixty (60) days after the Buy/Sell Receiving Member’s notice of election or deemed election
pursuant to Section 7.3(b), or at such other time as may be otherwise agreed to in writing by the
Buy/Sell Receiving Member and the Buy/Sell Initiator; provided that the closing date may be
extended by not more than thirty (30) days if all third party releases and consents required for
the Transfer have not been obtained after reasonable efforts. The closing shall occur at the
office of selling Member’s counsel, unless otherwise agreed by the Members. The Buy/Sell
Initiator’s Deposit or the Buy/Sell Receiving Member’s Deposit, as the case may be, shall be
credited against the total purchase price for the Entire Interest being purchased pursuant to this
Section 7.3.

          (g) Until the earlier of closing of the sale pursuant to this Section 7.3 or the end of the
one hundred eighty (180) day period after the delivery of a Buy/Sell Notice, Ashford’s and PRISA
III’s right to sell its Company Interest pursuant to the terms of Section 7.2 and to initiate the
procedures of Section 7.4 shall be suspended.

          (h) For avoidance of doubt, the Entire Interest of a Member for purposes of this Section 7.3
includes any and all Economic Interests previously Transferred by such Member; and, any Preferred
Interests previously Transferred by such Member shall be subject to Section 7.1(b).

     Section 7.4 Right to Sell Portfolio; Right of First Offer.

          (a) At any time (i) after the third (3rd) anniversary of this Agreement or (ii) provided the
distributions from any such sale will result in each Member achieving at least a 20% Internal Rate
of Rate on the portion of its Initial Capital Contribution contributed in cash, after the second
(2nd) anniversary of this Agreement, either Member (“Selling Member”) may send a written notice
(“Sale Notice”) to the other Member (“Hold Member”) that it wishes to sell all of the Investments
held by the Company and its Subsidiaries (the “Portfolio”), provided that a Sale Notice may be
delivered only if the Selling Member has first delivered a written notice not more than 120 days
and not less than 30 days before delivery of the Sale Notice that

44

 

the Selling Member intends to
deliver a Sale Notice. Such Sale Notice shall specify the price (“Sale Price”) at which the
Selling Member is willing to sell the Portfolio.

          (b) Within forty-five (45) days after receiving a copy of the Sale Notice, Hold Member shall
notify Selling Member in writing (“Election Notice”) that either:

               (1) Hold Member elects to purchase the Selling Member’s Company Interest for an amount
determined by the Independent Accountants (at the Hold Member’s expense) equal to the amount that
Selling Member would receive (taking into account the repayment of Member Loans from distributions)
if the Company were to dissolve, liquidate all of its assets at the Sales Price and distribute the
liquidation proceeds effective as of the date of the Sale Notice (the “Interest Purchase Price”).
In such case, the Election Notice shall be accompanied by a non-refundable deposit in the amount of
ten percent (10%) of the Interest Purchase Price (the “Interest Purchase Deposit”). Hold Member
shall thereafter close on the acquisition of the Entire Interest of the Selling Member on a date
chosen by Hold Member which shall not be more than seventy-five (75) days nor earlier than twenty
(20) days following the date of the Election Notice all in accordance with the terms of Section 7.2
as if Hold Member were the acquiring Member; or

               (2) Hold Member is agreeable to the sale of the Portfolio by the Company to a third party at
the price not less than the Sale Price.

Failure of the Hold Member to provide an Election Notice within forty-five (45) days after receipt
of a Sale Notice shall be deemed an election to sell the Portfolio to a third party.

          (c) If there is an election or deemed election to sell the Portfolio to a third party, the
Executive Committee shall make every reasonable effort to effect a sale of the Portfolio to a third
party within six (6) months after such election or deemed election (the “Sale Period”), and such
assets shall be sold as a single portfolio. The Members and their Affiliates shall not be entitled
to bid to purchase the Portfolio pursuant to this Section 7.4(c). The Hold Member and its
Affiliates shall promptly cooperate in all manners reasonably required in order for the Selling
Member to promptly and efficiently complete such sale, including as provided in Section 7.4(f)
below. The Executive Committee shall promptly select a broker with a national reputation for the
sale of similar portfolios of hotel properties for the Company to engage for the marketing and sale
of the assets. Such broker shall be directed to undertake customary marketing efforts and solicit
bids for the purchase of the assets on an all cash, as is basis and such other terms as are
customary for the sale of real estate assets as the Executive Committee may reasonably determine.
Upon receipt of final bids from prospective third party purchasers, the Selling Member shall select
the third party bidder with the highest bid (taking into account all relevant closing costs such as
defeasance expenses and transfer taxes), provided that the Selling Member shall not be required to
accept a purchase price less than ninety-five percent (95%) of the Sale Price. If the highest bid
received during the Sale Period is for a purchase price less than ninety-five percent (95%) of the
Sale Price (the “Alternative Offer”), which Alternative Offer is acceptable to the Selling Member,
then the Selling Member shall give notice to the Hold Member at such time of such Alternative
Offer, which notice shall include all of the relevant terms and conditions of such Alternative
Offer. The Hold Member shall have the right, for a period of thirty (30) days after its receipt of
notice of an Alternative Offer, to elect to purchase

45

 

the Selling Member’s Entire Interest in the
manner set forth in Section 7.4(b)(i) and at an Interest Purchase Price based on the purchase price
set forth in the Alternative Offer. Any such election notice shall be accompanied by payment to
Selling Member of the Interest Purchase Deposit. The Interest Purchase Deposit shall be
non-refundable but shall be applicable to the Interest Purchase Price. If the Hold Member shall
deliver an election notice together with the Interest Purchase Deposit to the Selling Member during
such thirty (30) day period, the purchase and sale pursuant to this Section 7.4(c) shall occur
within thirty (30) days after receipt by the Selling Member of the notice of such election. If the
Hold Member shall not elect, within such thirty (30) day period, to purchase the Selling Member’s
Entire Interest pursuant to the foregoing provisions of this Section 7.4(c), the Selling Member
shall have the right to effect a sale of the Portfolio pursuant to the terms of the Alternative
Offer. If no sale is completed within the Sale Period, the provisions of this Section 7.4 shall
reset and continue.

          (d) From and after the date of any Sale Notice or Alternative Offer and until any such Sale
Notice or Alternative Offer is withdrawn (and, if not consummated within the Sale Period, then such
Marketing Proposal or Alternative Offer shall be deemed withdrawn) Ashford’s and PRISA III’s right
to sell its Entire Interest pursuant to the terms of Section 7.2, to initiate a “buy/sell”
procedure pursuant to Section 7.3, and to initiate the sale provisions of Section 7.5 shall be
suspended.

          (e) In no event shall the Selling Member be in default or have any liability to the Hold
Member or the Company for a failure by a third party to complete any purchase of the Portfolio
pursuant to this Section 7.4.

          (f) The Hold Member shall cooperate on a timely basis (and to cause it Affiliates to cooperate
on a timely basis) with the Selling Member in connection with any sale of the Portfolio pursuant to
this Section 7.4. At the request of the Selling Member, all Members shall cause the Company to
take all reasonable actions in support of consummating any Transfer under this Section 7.4, and
shall use reasonable efforts to provide information relating to the Company, its Subsidiaries, the
Hold Member, or the Investments in order to satisfy the due diligence disclosure standard to which
the Selling Member customarily adheres or which may be reasonably required in the marketplace by a
buyer performing due diligence, including to:

               (i) (a) provide updated financial, budget and other information with respect to each
individual property in the Portfolio, the Company, the Hold Member, and subject to any restrictions
contained in a management or franchise agreement, each property manager and franchisor, and (b)
assist in obtaining modifications and/or updates (to the extent more than 12 months old) to the
market studies, environmental reviews and reports (Phase I reports and, if appropriate, Phase II
reports) and engineering reports of each individual property comprising the Portfolio (all of the
foregoing being referred to as the “Provided Information”), together, if customary, with
appropriate verification and/or consents of the Provided Information through letters of auditors or
opinions of counsel of independent attorneys; and

               (ii) Accommodate and facilitate site inspections, appraisals, market studies and other due
diligence investigations of each individual property, as may be reasonably requested by the Selling
Member.

46

 

In addition, as reasonably requested by the Selling Member, the Hold Member shall execute and
deliver (or, as applicable, authorize the Company and its Subsidiaries to execute and deliver) such
sale agreements, conveyance documents, resolutions, certificates and other instruments in form and
substance as are customary for the sale of real estate assets.

          (g) With respect to decisions to be made by the Executive Committee relating to or under this
Section 7.4, the Committee Representatives shall act promptly and reasonably so as to maximize the
value of the Portfolio and to accomplish efficiently a sale of the Portfolio on market terms. The
Members hereby agree that any dispute among the Members or Committee Representatives as to how to
proceed under this Section 7.4 shall be arbitrated in the Court of Chancery of the State of
Delaware, pursuant to 10 Del. C. § 349 and the Rules of the Delaware Court of Chancery. The
parties hereby submit to the exclusive jurisdiction of the Delaware Court of Chancery in connection
with any action to compel arbitration, in aid of arbitration, or for provisional relief to maintain
the status quo or prevent irreparable harm prior to the appointment of the arbitrator. Upon
resolution of any such dispute, the losing Member and its Committee Representatives shall lose all
rights to participate in decision making regarding the sale of the Portfolio unless and until no
sale occurs during the Sale Period and the provisions of this Section 7.4 reset. Each party hereto
shall bear its own legal fees and costs in connection with the arbitration; provided, however, that
each such party shall pay one-half of the any filing fees, fees and expenses of the arbitrator or
similar costs incurred by the parties in connection with the prosecution of the arbitration.

          (h) For avoidance of doubt, the Entire Interest of a Member for purposes of this Section 7.4
includes any and all Economic Interests previously Transferred by such Member; and, any Preferred
Interests previously Transferred by such Member shall be subject to Section 7.1(b).

     Section 7.5 Right to Sell Partial Portfolio.

          (a) At any time (i) after the third (3rd) anniversary of this Agreement or (ii) provided the
distributions from any such sale will result in each Member achieving at least a 20% Internal Rate
of Return on the portion of its Initial Capital Contribution contributed in cash, after the second
(2nd) anniversary of this Agreement, either Member (“Divesting Member”) may send a written notice
(“Partial Sale Notice”) to the other Member (“Retaining Member”) that it wishes to sell a portion
of the Investments held by the Company and its Subsidiaries (the “Partial Portfolio”), provided
that a Partial Sale Notice may be delivered only if the Divesting Member has first delivered a
written notice not more than 120 and not less than 30 days before delivery of the Partial Sale
Notice that the Divesting Member intends to deliver a Partial Sale Notice and provided further that
in each of clause (i) and clause (ii):

	 	(1)	 	Each Approved Loan allows a sale of a Partial
Portfolio pursuant to its terms or written lender consent to such sale
is obtained by the Divesting Member on behalf of the Company;
	 
	 	(2)	 	No such sale of a Partial Portfolio shall in
any manner require a Capital Call;

47

 

	 	(3)	 	The Divesting Member has no outstanding Member
Loans as a borrower that are not paid before or in connection with the
sale of the Partial Portfolio; and
	 
	 	(4)	 	The amount of the net proceeds from the Partial
Portfolio sale, net of all costs and reserves, shall exceed the amount
required to be paid to all lenders under any Approved Loan as a result
of such sale, unless the Divesting Member pays such shortfall which
shall not be treated as a Capital Contribution; and
	 
	 	(5)	 	Without Executive Committee approval, not more
than three (3) hotels that compromise Investments may be sold pursuant
to this Section 7.5 in any 12 calendar month period.

Such Partial Sale Notice shall specify the price (“Partial Sale Price”) at which the Divesting
Member is willing to sell the Partial Portfolio. Any sale of an Investment securing the Cigna Loan
shall not be subject to the time restrictions of clause (i) or clause (ii) in this Section 7.5(a),
but shall nevertheless be subject to the remaining portions of this Section 7.5.

          (b) Within forty-five (45) days after receiving a copy of the Partial Sale Notice, Retaining
Member shall notify Divesting Member in writing (“Buy Notice”) that either:

               (1) Retaining Member elects to purchase the Partial Portfolio for the Partial Sale Price. In
such case, the Buy Notice shall be accompanied by a non-refundable deposit in the amount of ten
percent (10%) of the Partial Sale Price (the “Partial Sale Deposit”). Retaining Member shall
thereafter close on the acquisition of the Partial Portfolio on an all cash, as-is basis on a date
chosen by Retaining Member which shall not be more than seventy-five (75) days nor earlier than
twenty (20) days following the date of the Buy Notice; or

               (2) Retaining Member is agreeable to the sale of the Partial Portfolio by the Company to a
third party at the price not less than the Partial Sale Price.

     Failure of the Retaining Member to provide an Election Notice within forty-five (45) days
after receipt of a Partial Sale Notice shall be deemed an election to sell the Partial Portfolio to
a third party.

          (c) If there is an election or deemed election to sell the Partial Portfolio to a third party,
the Executive Committee shall make every reasonable effort to effect a sale of the Partial
Portfolio to a third party within 120 days for a Partial Portfolio of three or fewer hotels that
comprise Investments and 150 days for a Partial Portfolio of more than three hotels that comprise
Investments after such election or deemed election (the “Partial Sale Period”). The Members and
their Affiliates shall not be entitled to bid to purchase the Partial Portfolio. The Retaining
Member and its Affiliates shall promptly cooperate in all manners reasonably required in order for
the Divesting Member to promptly and efficiently complete such sale, including in the same manner
with respect to the Partial Portfolio as is required of the Hold Member with respect to the
Portfolio pursuant to Section 7.4(f) above. The Executive Committee shall promptly select a
broker with a national reputation for the sale of similar portfolios of hotel properties for the
Company to engage for the marketing and sale of the assets. Such broker shall

48

 

be directed to undertake customary marketing efforts and solicit bids for the purchase of the
assets on an all cash, as is basis and such other terms as are customary for the sale of real
estate assets as the Executive Committee may reasonably determine. Upon receipt of final bids from
prospective third party purchasers, the Executive Committee shall select the third party bidder
with the highest bid (taking into account all relevant closing costs such as defeasance expenses
and transfer taxes), provided that the Executive Committee shall not be required to accept a
purchase price less than ninety-five percent (95%) of the Partial Sale Price. If the highest bid
received during the Partial Sale Period is for a purchase price less than ninety-five percent (95%)
of the Partial Sale Price (the “Revised Offer”), which Revised Offer is acceptable to the Divesting
Member, then the Divesting Member shall give notice to the Retaining Member at such time of such
Revised Offer, which notice shall include all of the relevant terms and conditions of such Revised
Offer. The Retaining Member shall have the right, for a period of thirty (30) days after its
receipt of notice of an Revised Offer, to elect to purchase the Partial Portfolio in the manner set
forth in Section 7.5(b)(1) and at the purchase price set forth in the Revised Offer. Any such
election notice shall be accompanied by payment to Divesting Member of the Partial Sale Deposit.
The Partial Sale Deposit shall be non-refundable but shall be applicable to the purchase price set
forth in the Revised Offer. If the Retaining Member shall deliver an election notice together with
the Partial Sale Deposit to the Divesting Member during such thirty (30) day period, the purchase
and sale pursuant to this Section 7.5(c) shall occur within thirty (30) days after receipt by the
Divesting Member of the notice of such election. If the Retaining Member shall not elect, within
such thirty (30) day period, to purchase the Partial Portfolio pursuant to the foregoing provisions
of this Section 7.5(c), the Divesting Member shall have the right to affect a sale of the Partial
Portfolio pursuant to the terms of the Revised Offer. If no sale is completed within the Partial
Sale Period, the provisions of this Section 7.5 shall reset and continue with respect to the
Partial Portfolio.

          (d) In no event shall the Divesting Member be in default or have any liability to the
Retaining Member or the Company for a failure by a third party to complete any purchase of the
Portfolio pursuant to this Section 7.5. Upon any forfeiture of the Partial Sale Deposit to the
Company by the Retaining Member, there shall be a special distribution of the Partial Sale Deposit
to the Divesting Member.

          (e) With respect to decisions to be made by the Executive Committee relating to or under this
Section 7.5, the Committee Representatives shall act promptly and reasonably so as to maximize the
value of the Partial Portfolio and to accomplish efficiently a sale of the Partial Portfolio on
market terms. The Members hereby agree that any dispute among the Members or Committee
Representatives as to how to proceed under this Section 7.5 shall be arbitrated in the Court of
Chancery of the State of Delaware, pursuant to 10 Del. C. § 349 and the Rules of the Delaware Court
of Chancery. The parties hereby submit to the exclusive jurisdiction of the Delaware Court of
Chancery in connection with any action to compel arbitration, in aid of arbitration, or for
provisional relief to maintain the status quo or prevent irreparable harm prior to the appointment
of the arbitrator. Upon resolution of any such dispute, the losing Member and its Committee
Representatives shall lose all rights to participate in decision making regarding the sale of the
Partial Portfolio. Each party hereto shall bear its own legal fees and costs in connection with
the arbitration; provided, however, that each such party shall pay one-half of the any filing fees,
fees and expenses of the arbitrator or similar costs incurred by the parties in connection with the
prosecution of the arbitration.

49

 

     Section 7.6 Assumption by Assignee. Any assignment of an Entire Interest or a Permitted Transfer
under Section 7.1(a) in the Company permitted under this Article VII shall be in writing, and shall
be an assignment and transfer of all of the assignor’s rights and obligations hereunder, and the
assignee shall expressly agree in writing to be bound by all of the terms of this Agreement and
assume and agree to perform all of the assignor’s agreements and obligations existing or arising at
the time of and subsequent to such assignment. Upon any such permitted assignment of the
assignor’s Entire Interest, and after such assumption, the assignor shall be relieved of its
agreements and obligations hereunder arising after such assignment and the assignee shall become a
Member in place of the assignor. An executed counterpart of each such assignment of an Entire
Interest in the Company and assumption of a Member’s obligations shall be delivered to each Member
and to the Company. The assignee shall pay all expenses incurred by the Company in admitting the
assignee as a Member. Except as otherwise expressly provided herein, no permitted assignment shall
terminate the Company.

If any direct or indirect interest in the Company is being Transferred to a third party, as a
condition to any such Transfer, the Transferring Member shall obtain such consents as may be
required from third parties, if any, or waivers thereof. If any party to the No Transfer Agreement
attempts a Transfer of any direct or indirect interest in the Company that is in violation of the
No Transfer Agreement (whether or not such Transfer is void ab initio), then such party, if such
party was a Member, or the Member who is an Affiliate of such party if such party was not a Member
(the “Violating Member”) shall no longer have the right to exercise any rights otherwise granted
to, or retained by, the Violating Member under this Agreement to propose, authorize, approve or
consent to any action, decision, agreement or other issue under this Agreement, including those of
the Violating Member’s representatives on the Executive Committee set forth in Article VI (and,
accordingly, Violating Member shall be deemed to have consented to any action by the other Member);
(ii) the other Member shall replace Violating Member in its role, if any, as the Administrative
Member and Tax Matters Member, (iii) the other Member may terminate Violating Member in its role,
if any, as Advisor, and (iv) Violating Member shall lose all rights to exercise and make elections
under Sections 7.2, 7.3, 7.4, and 7.5 of this Agreement. If an Entire Interest is being assigned
to the other Member, as a condition to any such assignment, the assignee Member shall obtain such
consents as may be required from third parties, if any, or waivers thereof. Each Member shall use
reasonable efforts to cooperate with the other Member in obtaining such consents or waivers.
Notwithstanding anything to the contrary contained herein, in the event any Member is required to
assign its Entire Interest to the other Member pursuant to this Article VII, (i) the assignee
Member shall concurrently deliver full and unconditional releases of the assigning Member and its
Affiliates from all liability under that certain Indemnity and Contribution Agreement, and (ii) the
assignee Member shall exercise commercially reasonable efforts to obtain full and unconditional
releases (“Third Party Releases”) of the assigning Member and its Affiliates from the Joint and
Several Documents (as defined in the Indemnity and Contribution Agreement) and all other direct or
contingent debts, liabilities, obligations and claims related to the Company and the Subsidiaries
for which the assigning Member or its Affiliates may be liable. If any Third Party Release is not
available on commercially reasonable terms, the assignee Member shall indemnify and hold the
assigning Member and its Affiliates harmless from and against all debts, liabilities and
obligations for which for which the missing Third Party Release was being sought. If the Ashford
is the assignee Member, Ashford shall provide the indemnity required by the prior sentence. If the

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PRISA
III is the assignee Member, PRISA III shall cause Operating Partner to provide the indemnity
required by the second prior sentence.

     Section 7.7 Amendment of Certificate of Formation. If an assignment of an Entire Interest in the
Company shall take place pursuant to the provisions of this Article VII then unless the Company is
dissolved by such assignment, the continuing Member or Members promptly thereafter shall cause to
be filed, to the extent necessary, an amendment to the Company’s Certificate of Formation with all
applicable state authorities, together with any necessary amendments to the fictitious or assumed
name(s) of the Company in order to reflect such change or take such similar action as may be
required.

     Section 7.8 General Transfer Provisions. All of the subsections of this Section 7.8 shall apply
to the sale of one Member’s Entire Interest to the other Member pursuant to this Article VII:

          (a) Purchase Price. In the event of the sale of an Entire Interest, the purchase
price to the extent payable in cash shall be paid, at the selling Member’s option, by wire transfer
of immediately available funds to an account which is designated by the selling Member or by
certified check drawn to the order of the selling Member.

          (b) Intentionally Omitted.

          (c) Distributions Prior to Closing. Both Members (including the selling Member) shall
be entitled to any distributions of Cash Flow from the Company in accordance with Section 4.2 until
the date of closing of the sale of the applicable Entire Interest. The purchasing Member shall
receive all distributions of Cash Flow after the closing other than any Cash Flow payable to the
holder of a Preferred Interest that has not been acquired.

          (d) Non-Foreign Compliance. At closing the selling Member shall deliver to the
purchasing Member a “nonforeign affidavit” as referred to in the Foreign Investment in Real
Property Tax Act in form and substance reasonably satisfactory to the purchasing Member, together
with original counterparts or certified copies of all sales contracts, leases and service contracts
affecting the Property.

          (e) Title and Survey. If the purchasing Member desires to receive a new or updated
title insurance policy or survey or both, such Member shall pay for same at its own expense.

          (f) Closing Documents. In a sale of an interest in the Company, the selling Member
shall execute an assignment of such interest, free and clear of all liens, encumbrances and adverse
claims, which assignment shall otherwise be in form and substance reasonably satisfactory to the
purchasing Member, and such other instruments as the purchasing Member shall reasonably require to
assign the interest of the selling Member to such Person or entity as the purchasing Member may
designate. Such documents shall be prepared by the purchasing Member, and closing costs and all
other charges required to be paid hereunder in closing the sale [except for attorneys’ fees (each party paying their own) and title insurance costs (to be
paid by the purchaser)] shall be prorated between PRISA III and Ashford in the ratio of the
Percentage

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Interests of the Members. Stamp, recording, transfer or similar taxes arising in
connection with the sale of the interest, if any, shall be paid by the selling Member.

          (g) Remedies (Selling Member Default). If the selling Member defaults in the
observance or performance of its covenants and obligations to sell its Entire Interest hereunder,
and such default continues for five (5) days after the date of receipt of written notice from the
purchasing Member demanding cure of such default, the purchasing Member shall be entitled either,
at the purchasing Member’s option:

               (i) to sue the selling Member for specific performance of this Agreement, provided that if
such remedy is not completed, purchasing Member shall have the right to elect to exercise any other
remedy option provided hereunder,

               (ii) if specific performance of this Agreement is not available or the selling Member engages
in an intentional default hereunder, to sue the selling Member for damages,

               (iii) to waive the current obligation of the selling Member to sell its Entire Interest
pursuant to this Agreement and to obtain by payment from the selling Member, or by allocation from
the amounts otherwise distributable to the selling Member hereunder, an amount equal to the
Buy/Sell Deposit in addition to the return of the Buy/Sell Deposit to the purchasing Member,
Interest Purchase Deposit or other earnest money deposit posted by the purchasing Member, the
amount of which shall constitute full liquidated damages for such default of the selling Member,
the parties hereto acknowledging the difficulty of ascertaining the actual damages in the event of
such a default, that it is impossible more precisely to estimate the damages to be suffered by the
purchasing Member upon the selling Member’s default, that such payment is intended not as a
penalty, but as full liquidated damages and that such amount constitutes a reasonable good faith
estimate of the potential damages arising therefrom, it being otherwise difficult or impossible to
estimate such actual damages.

In addition, and without regard to any exercise of remedies under this Section 7.8(g), for a period
beginning on the date five (5) days after the date of receipt of such written notice from the
purchasing Member demanding cure of such default by the selling Member, the selling Member shall no
longer have the right to exercise any rights otherwise granted to, or retained by, the selling
Member under this Agreement to propose, authorize, approve or consent to any action, decision,
agreement or other issue under this Agreement, including those of the selling Member’s
representatives on the Executive Committee set forth in Article VI (and, accordingly, selling
Member shall be deemed to have consented to any action by the other Member); (ii) purchasing Member
shall replace selling Member in its role, if any, as the Administrative Member and Tax Matters
Member, (iii) purchasing Member may terminate selling Member in its role, if any, as Advisor, and
(iv) selling Member shall lose all rights to exercise and make elections under Sections 7.2, 7.3,
7.4, and 7.5 of this Agreement.

          (h) Remedies (Purchasing Member Default). If the purchasing Member defaults in the
observance or performance of its covenants and obligations to sell its Entire
Interest hereunder, and such default continues for five (5) days after the date of receipt of
written

52

 

notice from the selling Member demanding cure of such default, the selling Member shall be
entitled either, at the selling Member’s option:

               (i) to acquire from the purchasing Member the Entire Interest of the purchasing Member for a
purchase price equal to ninety-five percent (95%) of the purchase price determined, as applicable,
based on the Buy/Sell Company Asset Value or Sale Price (or, with respect to a sale of an Entire
Interest under Section 7.2, derived from the amount which would constitute the Buy/Sell Company
Asset Value by determination of the value of the selling Member’s Entire Interest which such
purchasing Member failed to purchase), or

               (ii) to waive the current obligation of the purchasing Member to purchase such Entire Interest
pursuant to this Agreement and to obtain, or retain, as applicable, the Buy/Sell Deposit, Interest
Purchase Deposit or other earnest money deposit, the amount of which shall constitute full
liquidated damages for such default of the purchasing Member, the parties hereto acknowledging the
difficulty of ascertaining the actual damages in the event of such a default, that it is impossible
more precisely to estimate the damages to be suffered by the selling Member upon the purchasing
Member’s default, that such payment is intended not as a penalty, but as full liquidated damages
and that such amount constitutes a reasonable good faith estimate of the potential damages arising
therefrom, it being otherwise difficult or impossible to estimate such actual damages.

In addition, and without regard to any exercise of remedies under this Section 7.8(h), for a period
beginning on the date five (5) days after the date of receipt of such written notice from the
selling Member demanding cure of such default by the purchasing Member, the purchasing Member shall
no longer have the right to exercise any rights otherwise granted to, or retained by, the
purchasing Member under this Agreement to propose, authorize, approve or consent to any action,
decision, agreement or other issue under this Agreement, including those of the selling Member’s
representatives on the Executive Committee set forth in Article 6 (and, accordingly, purchasing
Member shall be deemed to have consented to any action by the other Member); (ii) selling Member
shall replace purchasing Member in its role, if any, as the Administrative Member and Tax Matters
Member, (iii) selling Member may terminate purchasing Member in its role, if any, as Advisor, and
(iv) purchasing Member shall lose all rights to exercise and make elections under Sections 7.2,
7.3, 7.4, and 7.5 of this Agreement

          (i) Nominee of Purchaser. In the event of the purchase of an interest in the Company
of one Member by the other Member, at the option of the purchasing Member, the interest may be
transferred to a nominee of the purchasing Member.

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     Section 7.9 Indemnification for Securities Laws Violations.

          (a) Acknowledgement of Securities Laws. Each party hereto acknowledges that (i) any
Transfer of a direct or indirect interest in the Company may constitute or involve an offering or
sale of securities for purposes of Securities Laws, and (ii) no Transfer of a direct or indirect
interest in the Company, or in the Company Interest, may be effected in violation of this
Agreement.

          (b) Ashford Liability for Transfers. If Ashford shall Transfer all or any portion of
its Company Interest to anyone other than PRISA III pursuant to Article VII, Ashford shall be fully
liable and responsible to PRISA III for any and all liability, loss, cost, injury, damage or
expense suffered or incurred by PRISA III resulting from violations of any Securities Laws
occurring in connection with such transfer; provided, however, that PRISA III shall be responsible
and liable to Ashford for any and all liability, loss, cost, injury, damage or expense suffered or
incurred by Ashford resulting from any violation or breach of any Securities Laws occurring in
connection with such transfer based upon false or misleading information that is furnished in
writing by PRISA III in connection with such transfer. Ashford shall indemnify, defend and hold
PRISA III and its Affiliates free and harmless for, from and against any and all liability, loss,
cost, injury, damage or expense (including attorneys’ fees and costs incurred in the investigation,
defense and settlement of the matter) suffered or incurred by reason of any breach by Ashford of
its obligations under this Section 7.9(b).

          (c) PRISA III Liability for Transfers. If PRISA III shall transfer all or any portion
of its Company Interest to anyone other than Ashford pursuant to Article VII, PRISA III shall be
fully liable and responsible to Ashford for any and all liability, loss, cost, injury, damage or
expense suffered or incurred by Ashford resulting from violations of any Securities Laws occurring
in connection with such transfer; provided, however, that Ashford shall be responsible and liable
to PRISA III for any and all liability, loss, cost, injury, damage or expense suffered or incurred
by PRISA III resulting from any violation or breach of any Securities Laws incurred in connection
with such transfer based upon any false or misleading information which is furnished in writing by
Ashford in connection with such transfer by PRISA III. PRISA III shall indemnify, defend and hold
Ashford and its Affiliates free and harmless for, from and against any and all liability, loss,
cost, injury, damage or expense (including attorneys’ fees and costs incurred in the investigation,
defense and settlement of the matter) suffered or incurred by reason of any breach by PRISA III of
its obligations under this Section 7.9(c).

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     Section 7.10 Compliance with ERISA and State Statutes on Governmental Plans.

          (a) Not less than thirty (30) days before each transfer or pledge of a direct or indirect
interest in Ashford (and no transfer or pledge of a direct or indirect interest in Ashford may be
effected in violation of this Agreement), Ashford shall cause the proposed transferee to deliver to
PRISA III a certification in substantially the form of Exhibit F attached hereto and made a
part hereof; provided that a Transfer of an interest in Ashford REIT or in Ashford shall not be
subject to this Section 7.10. In addition:

               (i) If Ashford proposes to sell its Entire Interest pursuant to Article VII, Ashford shall
cause the purchaser to deliver to PRISA III a certification in the form set forth in Exhibit
F, at the same time that Ashford initially notifies PRISA III of the intended sale.

               (ii) If PRISA III notifies Ashford that Ashford’s sale to the proposed purchaser would be a
Plan Violation (with the explanation of the reasons therefor as required by Section 7.10(b)), then
Ashford shall not sell its Entire Interest to the proposed purchaser.

               (iii) If PRISA III does not give notice in accordance with Section 7.10(a)(ii), and:

               (1) Ashford sells its Entire Interest to the proposed purchaser, then, at the closing of the
sale, (a) Ashford shall cause the proposed purchaser to deliver to PRISA III a certification in
substantially the form of Exhibit F, and (b) PRISA III shall deliver to the proposed
purchaser a certification in substantially the form of Exhibit G; or

               (2) Ashford sells its Company Interest to PRISA III, then, at the closing of the sale, (a)
Ashford shall deliver to PRISA III a certification in substantially the form of Exhibit F,
and (b) PRISA III shall deliver to Ashford a certification in substantially the form of Exhibit
G.

          (b) Anything else in this Agreement to the contrary notwithstanding, PRISA III shall have up
to thirty (30) days following the receipt by it of a certification by Ashford or a proposed
transferee provided for in this Section 7.10 to notify Ashford that it has determined that a
proposed transfer by Ashford of its Entire Interest or a proposed transfer of the Investment would
result in a Plan Violation. If PRISA III notifies Ashford that any such proposed transaction would
constitute a Plan Violation (which notification shall contain an explanation of the reasons for
such determination), the proposed transaction shall not be consummated and any attempt to do so
shall be void. If, within such 30-day period, PRISA III notifies Ashford that it has determined
that no Plan Violation will result from the proposed transaction, or if PRISA III does not deliver
any notification to Ashford within such 30-day period, then the proposed transaction may be
consummated; provided, however, that such transaction must be consummated no later than (i) the
20th day after the delivery to Ashford by PRISA III of a notice that it has determined that the
proposed transaction will not result in a Plan Violation or the expiration of the 30-day period
referred to in this Section 7.10, as the case may be, or (ii) if the applicable Section of this
Agreement provides for a closing that is later than such 20-day period, the latest day that such
Section permits such closing to occur; and provided, further, that, if any certification by Ashford
or a proposed transferee contains a material misrepresentation or

55

 

omission, then, in such event, notwithstanding PRISA III’s lack of objection or deemed lack of
objection thereto, the proposed transaction shall not be consummated and, if it is consummated,
such transaction shall be void, if such transaction would result in a Plan Violation.

          (c) Ashford shall indemnify PRISA III and defend and hold PRISA III harmless from and against
all loss, cost, damage and expense that PRISA III may incur, directly or indirectly, as a result of
(i) a default by Ashford under the provisions of this Section 7.10, or (ii) a breach of a
representation or warranty given by Ashford or any Affiliate of Ashford under this Section 7.10, or
(iii) any material misstatement or omission in a certification by Ashford which is given to PRISA
III pursuant to this Section 7.10. The loss, cost, damage and expense will include attorney’s fees
and costs incurred in the investigation, defense and settlement of claims and losses incurred in

               (i) correcting any Plan Violation,

               (ii) the prohibited sale of a Company interest, or

               (iii) obtaining any individual exemption for a Plan Violation

that may be required, in PRISA III’s sole discretion. This indemnity shall survive (x) the sale of
Ashford’s Entire Interest and (y) termination of this Agreement. Ashford shall not be required to
indemnify PRISA III pursuant to this subsection (b) if any of PRISA III’s representations and
warranties relating to ERISA or Plan Violation are materially false.

          (d) The Company will not enter into any agreements, or suffer any conditions, that PRISA III
determines would result in a Plan Violation. At Ashford’s request, PRISA III shall deliver a
notice of each such determination to Ashford together with an explanation of the reasons for the
determination.

          (e) PRISA III and Ashford will cooperate to discover and correct Plan Violations.

ARTICLE VIII

COMPANY BOOKS AND RECORDS

     Section 8.1 Books, Records, Accounting and Reports.

          (a) Ashford, acting as the Advisor and on behalf of the Company, shall maintain, or cause to
be maintained, in a manner customary and consistent with good accounting principles, practices and
procedures, a comprehensive system of office records, books and accounts (which records, books and
accounts shall be and remain the property of the Company) in which shall be entered fully and
accurately each and every financial transaction with respect to the ownership and operation of the
property of the Company. Such books and records of account shall be prepared and maintained at the
principal place of business of the Company. Such books and records shall be maintained, and
income, gain, losses, deductions and credits shall be determined and accounted for, on the accrual
basis in accordance with generally accepted accounting principals consistently applied (with
sufficient supplementary records to permit the

56

 

computation of cash flow on a cash basis). Each Member or its duly authorized representative,
upon reasonable prior notice, shall have the right to inspect, examine and copy such books and
records of account at the Company’s office during reasonable business hours and to receive other
material information about the Company and its operations. A reasonable charge for copying books
and records may be charged by the Company. Each Member, upon reasonable prior notice, shall have
the right to audit such records and books of account by an accountant of its choice at its expense.
Ashford, acting as the Advisor and on behalf of the Company, shall reasonably cooperate with any
Member or its agents in connection with any review or audit of the Company or its records and
books. Ashford, acting as the Advisor and on behalf of the Company, shall retain all records and
books relating to the Company for a period of at least six (6) years after the dissolution of the
Company and shall thereafter destroy such records and books only after giving at least thirty (30)
days’ advance written notice to the Members.

          (b) The Company and its Subsidiaries shall report their operations for tax purposes on the
accrual method.

     Section 8.2 Tax Returns. Ernst & Young LLP or one of the other “big four” accounting firms
selected by the Executive Committee (the “Independent Accountants”) shall either prepare or review
and sign, as requested by the Executive Committee, all federal, state and/or local income tax
returns of the Company, including required Schedule K 1s for the Members. Ashford, acting as the
Advisor and on behalf of the Company, shall use its commercially reasonable efforts to cause the
tax and information returns that the Company may be required to file, to be filed on a timely basis
with the appropriate governmental authorities; provided that the Executive Committee shall have
provided its approval of all such tax and information returns on a timely basis. The Company shall
provide to each Member a copy of each tax return filed by the Company within thirty (30) days of
the applicable due date, but in no event later than May 30th of each year for federal returns and
June 30th of each year for state and local returns.

     Section 8.3 Reports.

          (a) Ashford, acting as the Advisor and on behalf of the Company, shall cause the preparation
of the financial reports and other information provided for herein in such manner as Executive
Committee determines appropriate, provided, however, that all such reports shall be prepared in
form and substance as required for public reporting. In any event:

               (1) Ashford, acting as the Advisor and on behalf of the Company, shall cause to be prepared
and furnished to Executive Committee in draft form within sixty (60) calendar days after the close
of each Company Year a balance sheet of the Company dated as of the end of the Company Year, a
related statement of income and expense, a statement of cash flow and a statement of changes in
Members’ capital for the Company for the Company Year and information for the Company Year as to
the balance in each Member’s Capital Account, unpaid balance under all obligations of the Company
and all other information reasonably required by each Member, all of which shall be certified by
the Chief Financial Officer of Ashford, to the best of his or her knowledge, as being true and
correct and all of which shall promptly thereafter be finalized by Ashford upon its receipt of
comments from, or the approval of, Executive Committee. If requested by a Member, Ashford shall cause all or any portion of

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the materials to be delivered under this Section to be reviewed and/or audited at such Member’s
sole cost and expense, provided that if independent accountants that perform audit services for
Ashford and its Affiliates are a “big four” accounting firm, such accountants shall perform the
audit.

               (2) Ashford, acting as the Advisor and on behalf of the Company, shall prepare and furnish to
each of the Members, within twenty (20) days after the end of February, May, August and November, a
balance sheet of the Company dated as of the end of such calendar month, and a related statement of
income and expense and a statement of cash flow, each of which shall be unaudited, and a
consolidated operations report with respect to such calendar month, in such form as Executive
Committee shall reasonably determine, and with variance explanations for line items contained
within the comparative income statement that exceed both $25,000 and 10% of such line item in the
Operating Budget. Separately, on a monthly basis, Ashford, acting as the Advisor, shall submit a
statement of income and expenses on the individual underlying Investments of the Portfolio to the
Executive Committee within 30 days after the end of each calendar month.

               (3) Ashford, acting as the Advisor and on behalf of the Company within seventy-five (75) days
after the end of each Company Year, shall use all commercially reasonable efforts to cause the
Independent Accountants to prepare and deliver to each Member a report setting forth in sufficient
detail all such information and data with respect to business transactions effected by or involving
the Company during the applicable Company Year as shall enable the Company and each Member timely
to prepare its federal, state and local income tax returns in accordance with all applicable laws,
rules and regulations. Ashford also shall use all commercially reasonable efforts to cause the
Independent Accountant to prepare federal, state and local tax returns required of the Company,
submit those returns to Executive Committee for its approval no later than thirty (30) calendar
days of the applicable due date but in no event later than May 30th of each year for federal
returns and June 30th of each year for state and local returns and shall file the tax returns after
they have been approved by the Executive Committee. In the event the Executive Committee shall not
desire or be able to approve any such tax return prior to the date required for the filing thereof
(including any extensions granted), Ashford, acting as the Advisor and on behalf of the Company, or
an officer designated by Ashford, shall timely obtain an extension of such date to the extent
permitted by the Code.

               (4) Ashford, acting as the Advisor and on behalf of the Company, shall cause each property
manager to timely prepare and deliver to the Company and Executive Committee all reports such
property manager is required to prepare for the Company or any Subsidiary pursuant to the
Management Agreements.

          (b) All other decisions as to accounting principles shall be made by the Executive Committee,
subject to the provisions of this Agreement.

     Section 8.4 Bank Accounts. All funds of the Company shall be deposited in its name in an account
or accounts maintained with a bank or other financial institution selected by the Executive Committee.
Funds of the Company shall not be commingled with funds of any other Person. Checks and wire
transfers shall be drawn upon the Company’s account or accounts only

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for the purposes of the
Company and shall be signed by duly authorized representatives of the Company.

     Section 8.5 Tax Elections. Any and all federal, state or local tax elections for the Company
shall be made by the Executive Committee in its reasonable discretion. In making such elections,
the Executive Committee shall take into account tax matters with respect to the Company that would
adversely affect a Member and shall use its good faith efforts to consult with such Member and to
make elections that have the least adverse effect on that Member, provided that such election(s) do
not have a material adverse effect on the Company or any other Member.

     Section 8.6 Tax Matters Member. Ashford shall be the “Tax Matters Member” of the Company within
the meaning of Code § 6231(a)(7) and in any similar capacity under applicable state or local law
and shall have all of the power and responsibilities of such position as provided in the Code,
provided that PRISA III, at its sole option, can request that an Agreed Upon Procedures
Engagement/Review be performed at the cost of the Company. Additionally, any reasonable expenses
incurred by Ashford, on behalf of the Members, while acting as Tax Matters Partner shall be paid or
reimbursed by the Company. The Tax Matters Member shall not take any actions other than
ministerial actions without the consent of the Executive Committee.

ARTICLE IX

COVENANTS

     Section 9.1 Preservation of Company’s Existence and Compliance with Laws and Regulations. The
Members shall use all commercially reasonable efforts to cause to be done all things necessary to
preserve, renew and keep in full force and effect and good standing the Company’s existence,
rights, licenses, permits and franchise, and shall use all commercially reasonable efforts to cause
the Company to comply in all material respects with all applicable laws and regulations.

     Section 9.2 Confidentiality.

          (a) General. It is expected that the Members and the Company will disclose to each
other during the Term certain information which is confidential or proprietary and which may
include technology, products, trade secrets, processes, programs, technical know how, customers,
distributors, costs, pricing, business operations and other business information (“Proprietary
Information”). All Proprietary Information owned solely by one party or by the Company and
disclosed to any other party shall remain solely the property of the disclosing party or the
Company, and its confidentiality shall be maintained and protected by the party to whom the
information was disclosed with the same degree of care used to protect its own Proprietary
Information of a similar nature; provided, however, that client lists, financial and analytical
models, processes and procedures utilized or developed by Ashford in connection with the
business of the Company or the applicable Subsidiary shall be deemed the property of Ashford, but
only to the extent they are different than the client lists, models, processes and procedures
currently used by Affiliates of PRISA III. No Proprietary Information owned solely by one party or
by the Company shall be used by the other party except in furtherance of the terms and

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provisions
of this Agreement. Except to the extent permitted under this Agreement or as required by law or
court order, the parties shall in all circumstances exercise reasonable care not to allow to be
published or disclosed the other party’s or the Company’s Proprietary Information to any third
party or to any of its own employees not having a need to know. Each party shall advise its
employees to whom the other party’s or the Company’s Proprietary Information is disclosed of these
obligations of confidentiality.

          (b) The parties agree that the following information shall not constitute Proprietary
Information under this Agreement:

               (1) information available from public sources at any time before or after it is disclosed to a
party hereto by the other party hereto;

               (2) information obtained from a third party who obtained such information, directly or
indirectly, from a party other than a party to this Agreement; and

               (3) information independently developed by the party against whom enforcement of this
provision is sought without the use of information provided by the party seeking such enforcement.

          (c) Notwithstanding any provision of this Agreement to the contrary, any person (and each
employee, representative, or other agent of such person) may disclose to any and all other persons,
without limitation of any kind, (i) the tax treatment and tax structure of any transaction
contemplated or consummated pursuant to this Agreement, (ii) all materials of any kind (including
any opinions or other tax analysis) that are provided to such person relating to the tax treatment
and tax structure of any such transaction and (iii) any information required to be disclosed or
obtained by law or court order.

ARTICLE X

REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

     Section 10.1 Member Representations. Each Member represents and warrants to and covenants with the
other Members as follows:

          (a) Organization. It is duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation with all requisite power and authority to enter into this
Agreement, to perform its obligations hereunder and to conduct the business of the Company.

          (b) Enforceability. This Agreement constitutes the legal, valid and binding
obligation of such Member enforceable in accordance with its terms.

          (c) Consents and Authority. No consents or approvals are required from any
governmental authority or other Person for the Member to enter into this Agreement. All action on
the part of such Member necessary for the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by such Member, have been duly taken.

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          (d) No Conflict. The execution and delivery of this Agreement by such Member and the
consummation of the transactions contemplated hereby by such Member do not conflict with or
contravene the provisions of its organizational documents or any agreement or instrument by which
it or its properties or assets are bound or any law, rule, regulation, order or decree to which it
or its properties or assets are subject.

          (e) Investment Intent. Such Member’s interest in the Company is intended to be and is
being acquired solely for such Member’s own account for investment, with no present intention of
distributing or reselling all or any part thereof; such Member acknowledges that it is able and is
prepared to bear the economic risk of making all Capital Contributions contemplated hereby and to
suffer any loss up to the amount of such Member’s liability hereunder.

          (f) Sophistication. It, alone or with its professional advisors, has the educational,
financial and business background and knowledge so as to be capable of evaluating the merits and
risks of an investment in the Company and has the capacity to protect its own interests in making
this investment.

          (g) Regulatory Approval. It understands that neither the Commission nor any state
regulatory agency has passed upon or endorsed the merits of an investment in the Company.

          (h) Registration. It understands that its interest in the Company has not been and
will not be registered pursuant to the 1933 Act, or any applicable state securities laws, and is
being issued pursuant to an exemption therefrom.

          (i) Transfer Restrictions. It understands that there are substantial restrictions on
the transferability of its interest in the Company and such interest will not be, and such Member
has no right to require that it be, registered or qualified under the 1933 Act, and/or any
applicable state securities laws. It understands that there will be no public market for interests
in the Company.

          (j) Advisors. It has been afforded the opportunity to seek and rely upon the advice
of its own attorney, accountant or other professional advisor in connection with an investment in
the Company and the execution of this Agreement.

          (k) Rule 144. It understands that the exemption under Rule 144 under the 1933 Act,
for holders of securities which have been held for at least two years since the acquisition of such
securities from the issuer or any affiliate of the issuer and concerning which
issuer there is available specified public information, may not be available to it or to the
Company for sales of Company Interests because the Company does not contemplate making available
such public information, and there may never be a trading market for the interests in the Company
sufficient to permit compliance with the “brokers’ transaction” requirement of such Rule 144.

          (l) Government Determinations. It is aware that no federal or state agency has made
any finding or determination as to the fairness of any aspect of the investment in the Company.

61

 

          (m) Breach. As of the date hereof, it is not aware of any breach of this Agreement by
any of the other Members.

          (n) Investment Company. Either (i) all of its outstanding securities (as such term is
defined in the 1940 Act) are beneficially owned by five or less natural person or (ii) it is not an
“investment company” (as such term is defined in the 1940 Act) and is not excluded from the
definition of “investment company” under the 1940 Act based on the exceptions set forth in
subparagraph 3(c)(1) or 3(c)(7) of the 1940 Act.

          (o) ERISA. If any portion of its Capital Contributions consist, or will consist, of
assets of an employee benefit plan as defined in Section 3(3) of ERISA, whether or not such plan is
subject to Title I of ERISA or a plan subject to Code § 4975, determined after giving effect to
applicable regulations, rulings, and exemptions thereunder, it has so notified the other Member in
writing.

          (p) Unpledgeable Subsidiary. If any provision of this Agreement may be construed in
such a manner as to render the Company not an Unpledgeable Subsidiary (as defined in the Ashford
Credit Facility Agreement), such provision shall be void ab initio and either Member may
unilaterally amend this Agreement as is necessary to make it clear that the Company is an
Unpledgeable Subsidiary.

     Section 10.2 Ashford Representations. Ashford represents and warrants to and covenants with the
PRISA III as follows:

          (a) Ashford Credit Facility. Ashford has provided to PRISA III a true and complete
copy of the Ashford Credit Facility Loan Documents, together with all amendments or modifications
thereto. No default or “Event of Default” exists under the Ashford Credit Facility Loan Documents,
and the execution and delivery by Ashford of this Agreement will not constitute a default or Event
of Default (as defined in the Ashford Credit Facility Agreement) under the Ashford Credit Facility
Loan Documents. The exercise by PRISA III of any of its remedies under this Agreement, the
Indemnity and Contribution Agreement or the No Transfer Agreement will not cause a default or Event
of Default (as defined in the Ashford Credit Facility Agreement) under the Ashford Credit Facility
Loan Documents.

          (b) Unpledgeable Subsidiary. The Company is an Unpledgeable Subsidiary (as defined in
the Ashford Credit Facility Agreement).

ARTICLE XI

DISSOLUTION AND TERMINATION

     Section 11.1 Dissolution.

          (a) The Company shall be dissolved upon the occurrence of any of the following events:

               (1) On the twentieth (20th) anniversary of date of this Agreement unless and to the extent
extended by mutual agreement of all of the Members;

62

 

               (2) (x) the filing by the Company of a voluntary petition for relief under Title 11 of the
United States Code or any successor or amendatory provisions thereto, or (y) ninety (90) days after
the filing of an involuntary petition against the Company for relief under Title 11 of the United
States Code or any successor or amendatory provisions thereto, or (z) ninety (90) days after the
appointment of a trustee or receiver of the Company or the assignment of the Company or any
material part of the Company Assets for the benefit of creditors by, of, or with respect to the
Company, unless any such event referred to in subsection (a)(2)(y) or (a)(2)(z) is remedied within
ninety (90) days of its occurrence or unless within ninety (90) days after the occurrence of an
event referred to in subsection (a)(2)(x) or the expiration of the ninety (90) day period referred
to in subsection (a)(2)(y) or (a)(2)(z) the Members jointly determine to continue the Company;

               (3) a unanimous election by the Members to dissolve the Company;

               (4) any other event causing the dissolution of the Company under the Act.

          (b) The Company shall be dissolved in accordance with Section 11.2. Notwithstanding any
provision of the Act to the contrary, the Company shall continue and not dissolve as a result of
the death, retirement, resignation, expulsion, bankruptcy or dissolution of any Member or any other
event that terminates the continued membership of any Member.

     Section 11.2 Winding Up, Liquidation and Distribution of Assets.

          (a) Upon dissolution, (i) the Executive Committee shall immediately proceed to wind up the
affairs of the Company as expeditiously as business circumstances allow and proceed within a
reasonable period of time to sell or otherwise liquidate the Company Assets. In the event that the
Executive Committee shall, in its discretion, determine that a sale or other disposition of part or
all of the Company Assets would cause undue loss to the Members or otherwise be impractical, the
Executive Committee may either defer liquidation of any such Company Assets, and withhold
distributions relating thereto for a reasonable time, or distribute part or all of such Company
Assets to the Members in accordance with this Agreement.

          (b) Upon any liquidation, dissolution or winding up of the Company, proceeds from the Company
Assets shall be distributed as follows:

               (1) first, to creditors, including Members who are creditors in satisfaction of liabilities of
the Company (whether by payment or the making of reasonable provision for payment thereof) other
than liabilities for which reasonable provision for payment has been made, and for the expenses of
winding up or liquidation; and

               (2) the balance to the Members in accordance with the priorities of Section 4.2.

     Section 11.3 Certificate of Cancellation. When all debts, liabilities and obligations have been
paid and discharged or adequate provisions have been made therefor and all of the remaining
property and Company Assets have been distributed to the Members, a certificate of

63

 

cancellation
shall be prepared, executed and filed by the Executive Committee in accordance with the Act.

     Section 11.4 Return of Contribution Nonrecourse to Other Members. Except as provided by law or as
expressly provided in this Agreement, upon dissolution, each Member shall look solely to the
Company Assets for the return of such Member’s Capital Contribution. If the distribution provided
in Section 11.2(b)(2) is insufficient to return the Capital Contribution of one or more Members,
such Member or Members shall have no recourse against the Company or any other Member.

ARTICLE XII

MISCELLANEOUS

     Section 12.1 Specific Performance; Other Rights. The parties recognize that various of the rights
granted under this Agreement are unique and, accordingly, except as provided in Section 7.8(h) the
parties shall, in addition to such other remedies as may be available to them at law or in equity,
have the right to enforce their rights under this Agreement by actions for injunctive relief and
specific performance.

     Section 12.2 Notices. All notices or other communications required or permitted to be given
hereunder shall be in writing and shall be delivered by hand or sent, postage prepaid, by
registered, certified or express mail or reputable overnight courier service or by telecopier and
shall be deemed given when so delivered by hand or, if mailed, three days after mailing (one
Business Day in the case of express mail or overnight courier service), addressed as follows:

	 	 	 	 	 

	 

	 	If to Ashford:
	 	c/o Ashford Hospitality Trust

14185 Dallas Parkway

Suite 1100

Dallas, Texas 75254

Attention:      Douglas A. Kessler

Telephone:      972 490 9600

Facsimile:      972 980 2705
	 
	 	 	 	 
	 

	 	with simultaneous copies

(which shall not constitute

notice) to:
	 	c/o Ashford Hospitality Trust

14185 Dallas Parkway

Suite 1100

Dallas, Texas 75254

Attention:      David A. Brooks

Telephone:      972 490 9600

Facsimile:      972 980 2705
	 
	 	 	 	 
	 

	 	and
	 	Andrews Kurth LLP

1717 Main Street

Suite 3700

Dallas, Texas 75201

Attention:      Muriel C. McFarling, Esq.

Telephone:      (214) 659-4461

Facsimile:      (214) 659-4784

64

 

	 	 	 	 	 

	 

	 	If to PRISA III:
	 	c/o Prudential Investment Management, Inc.

8 Campus Drive

Parsippany, NJ 07054

Attention: Jim Walker

Telephone:      (973) 683 1690

Facsimile:      (973) 683 1752
	 
	 	 	 	 
	 

	 	and
	 	c/o PREI Law Department

8 Campus Drive

Parsippany, NJ 07054

Attention:      Joan N. Hayden, Esq.

Telephone:      (973) 683 1772

Facsimile:      (973) 683 1788
	 
	 	 	 	 
	 

	 	with a simultaneous copy (which

shall not constitute notice) to:
	 	DLA Piper LLP (US)

203 North LaSalle Street, Suite 1500

Chicago, Illinois 60601

Attention:      Peter B. Ross, Esq.

Telephone:      (312) 368 2178

Facsimile:      (312) 630 7332

or to such other address, individual or electronic communication number as may be designated by
notice given by any party to the others.

     Section 12.3 Prior Agreements; Construction; Entire Agreement. This Agreement, including the
Exhibits and other documents referred to herein (which form a part hereof), constitutes the entire
agreement of the parties with respect to the subject matter hereof, and supersedes all prior
agreements and understandings between them as to such subject matter and all such prior agreements
and understandings are merged herein and shall not survive the execution and delivery hereof.

     Section 12.4 No Waiver. The waiver of any breach of any term or condition of this Agreement shall
not operate as a waiver of any other breach of such term or condition or of any other term or
condition, nor shall any failure to enforce any provision hereof operate as a waiver of such
provision or of any other provision hereof.

     Section 12.5 Amendments. Except as provided in Section 4.7(b) and Section 10.1(p), this Agreement
may not be amended, altered or modified except by an instrument in writing and signed by all
Members. Notwithstanding anything to the contrary in this Agreement, this Agreement shall be
amended by the Executive Committee automatically and without any further

65

 

action of the Members to
the extent necessary to reflect (a) the admission or substitution of any Member permitted under
this Agreement or (b) any Transfer permitted under this Agreement.

     Section 12.6 Severability. If any provision of this Agreement shall be held or deemed by a final
order of a competent authority to be invalid, inoperative or unenforceable, such circumstance shall
not have the effect of rendering any other provision or provisions herein contained invalid,
inoperative or unenforceable, but this Agreement shall be construed as if such invalid, inoperative
or unenforceable provision had never been contained herein so as to give full force and effect to
the remaining such terms and provisions.

     Section 12.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or more such
counterparts have been signed by each of the parties and delivered to each of the other parties.

     Section 12.8 Applicable Law; Jurisdiction. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. Except as provided in Section 7.4(g) and
Section 7.5(e), the parties consent to the exclusive jurisdiction of the United States District
Court for the District of Delaware in connection with any civil action concerning any controversy,
dispute or claim arising out of or relating to this Agreement, or any other agreement contemplated
by, or otherwise with respect to, this Agreement or the breach hereof, unless such court would not
have subject matter jurisdiction thereof, in which event the parties consent to the jurisdiction of
the state courts of the State of Delaware. The parties hereby waive and agree not to assert in any
litigation concerning this Agreement the doctrine of forum non conveniens.

     Section 12.9 Waiver Of Jury Trial. THE MEMBERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM
THEREIN.

     Section 12.10 [Reserved].

     Section 12.11 No Rights of Third Parties. This Agreement is made solely and specifically between
and for the benefit of the parties hereto and their respective members, successors and assigns
subject to the express provisions hereof relating to successors and assigns. No other Person
whatsoever shall have any rights, interest, or claims hereunder or be entitled to any benefits
under or on account of this Agreement as a third party beneficiary or otherwise.

     Section 12.12 Further Assurances. In connection with this Agreement, as well as all transactions
contemplated by this Agreement, each Member agrees to execute and deliver such additional documents
and instruments and to perform such additional acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement,
and all such transactions contemplated hereby.

     Section 12.13 Survival. The covenants contained in this Agreement which, by their terms, require
performance after the expiration or termination of this Agreement shall be enforceable
notwithstanding the expiration or other termination of this Agreement.

66

 

     Section 12.14 Headings. Headings are included solely for convenience of reference and if there is
any conflict between headings and the text of this Agreement, the text shall control.

     Section 12.15 No Broker. Each Member represents and warrants that it has not dealt with any broker
in connection with this Agreement and agrees to indemnify, defend and hold harmless each other
Member and its Affiliates from all claims or damages as a result of its representation and warranty
contained in this sentence being false. Each Member further represents and warrants that it has
not dealt with any broker with respect to the acquisition of its Company Interests or the
acquisition by the Company of the Company Assets and agrees to indemnify, defend and hold harmless
each other Member and its Affiliates from all claims or damages as a result of its representation
and warranty contained in this sentence being false.

     Section 12.16 Services to Members. Each Member hereby acknowledges and recognizes that the Company
has retained, and may in the future retain, the services of various professionals, including
general and special legal counsel, accountants, architects and engineers, for the purposes of
representing and providing services to the Company in the investigation, analysis, acquisition,
development, renting, marketing and operation of the Company Assets, or otherwise. Each Member
hereby acknowledges that such persons or entities may have in the past represented and performed
and currently and/or may in the future represent or perform services for certain of the Members or
their Affiliates. Accordingly, each Member and the Company consents to the performance by such
persons or entities of services for the Company and waives any right to claim a conflict of
interest based on such past or present representation or services to any of the Members or their
Affiliates.

     Section 12.17 Currency. Any exchange of funds between the Company and its Members shall be made in
United States dollars, including any distribution, reimbursement or fee payable to Members and any
Capital Contributions made by Members. In addition, all calculations including those relevant to
distributions and fees shall be based on United States dollars.

     Section 12.18 Attorneys’ Fees. Should any litigation be commenced between the parties hereto or
their representatives, or should any party institute any proceeding in a bankruptcy or similar
court which has jurisdiction over any other party hereto or any or all of his or its property or
assets concerning any provision of this Agreement or the rights and duties of any Person in
relation thereto, the party or parties prevailing in such may be granted a reasonable sum as and
for his or its or their attorneys’ fees and court and other costs in such matter, which amount
shall be determined by the judicial referee, a court in such litigation or in a separate action
brought for that purpose.

     Section 12.19 Compliance with ERISA

          (a) The Company will not enter into any agreements, or suffer any conditions, that PRISA III
determines would result in a Plan Violation. At Ashford’s request, PRISA III shall deliver notice
of each such determination to Ashford together with an explanation of the reasons for the
determination.

67

 

          (b) Each Member will cooperate in all reasonable respects to discover and correct Plan
Violations.

ARTICLE XIII

REIT COMPLIANCE

     Section 13.1 REIT Compliance. The Members and the Committee Representatives acknowledge that PRISA
III is indirectly owned through one or more pass through entities by the PRISA III REIT, and that
Ashford is indirectly owned in part by Ashford REIT and that each of PRISA III REIT and Ashford
REIT is subject to the federal income tax rules applicable to REITs (as defined below). The
Members and the Committee Representatives acknowledge and agree that:

          (a) the business and affairs of the Company will be managed in a manner that will ensure that
the each of PRISA III REIT and Ashford REIT qualifies as a real estate investment trust under the
Code (a “REIT”) and does not incur any amount of tax pursuant to Code §§ 857 or 4981;

          (b) the Committee Representatives shall be entitled to exercise any vote, consent, election or
other right under this Agreement consistent with this Section 13.1 and without regard to whether
conducting the business of the Company in such manner will maximize either pre-tax or after-tax
profit of the Company to the Members;

          (c) it is the intent of the PRISA III Representative to exercise its approval rights under any
provision of this Agreement or the organizational documents of any Subsidiary in order to ensure
that the PRISA III REIT qualifies as a REIT and does not incur any amount of tax pursuant to Code
§§ 857 or 4981; and

          (d) it is the intent of the Ashford Representative to exercise its approval rights under any
provision of this Agreement or the organizational documents of any Subsidiary , in order to ensure
that Ashford REIT qualifies as a REIT and does not incur any amount of tax pursuant to Code §§ 857
or 4981;

          (e) the Committee Representatives shall cooperate in all reasonable respects with respect to
(i) the structuring of the acquisition and operation of any Company Asset, and (ii) changes to the
structure of the ownership or operation of any existing Company Asset, as may be necessary or
advisable to allow PRISA III REIT or Ashford REIT each to qualify as a REIT and not incur any
amount of tax pursuant to Code §§ 857 or 4981, including by structuring the acquisition, operation
or ownership of any such Company Asset in a manner that would allow PRISA III REIT and Ashford
REIT, as each may request, to invest in all or a part of such Company Asset, through one (1) or
more taxable REIT subsidiaries (as defined in Code §
856(l)), so long as the structuring requested by one party does not adversely affect the
economic terms intended to be provided the other party under this Agreement; and

          (f) Notwithstanding any provision or inference in this Agreement to the contrary, any decision
or determination (including but, not limited to, under any lease, loan

68

 

document or management
agreement or with respect to any account to be maintained by or on behalf of the Company or any of
its direct or indirect subsidiaries) that could reasonably be expected to adversely affect the REIT
status of PRISA III REIT or Ashford REIT shall require consent of the Executive Committee, and no
such decision or determination shall be delegated to any other person (including, without
limitation, the Advisor).

[Remainder of page intentionally left blank.]

69

 

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
first above written.

	 	 	 	 	 
	 	PRISA III INVESTMENTS, LLC, a Delaware limited liability company

 	 
	 	By:  	PRISA III REIT Operating LP, a Delaware limited partnership,
 	 
	 	 	its sole member 	 
	 

					
	 	By:  	PRISA III OP GP, LLC, a Delaware limited liability company, its general partner
 	 
	 	 	 	 

					
	 	By:  	PRISA III Fund LP, a Delaware limited partnership, its manager
 	 
	 	 	 	 

					
	 	By:  	PRISA III Fund GP, LLC, a Delaware limited liability company, its general partner
 	 
	 	 	 	 

					
	 	By:  	PRISA III Fund PIM, LLC, a Delaware limited liability company, its sole member
 	 
	 	 	 	 

					
	 	By:  	Prudential Investment Management, Inc.,a Delaware corporation, its sole member
 	 
	 	 	 	 

					
	 	By:  	/s/ James P. Walker
 	 
	 	 	Name:  	James P. Walker 	 
	 	 	Title:  	Vice President 	 

	 	 	 	 	 
	 	ASHFORD HOSPITALITY LIMITED
PARTNERSHIP, a Delaware limited partnership

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

					
	 	
 	 
	 	By:  	/s/ David Brooks
 	 
	 	 	Name:  	David Brooks 	 
	 	 	Title:  	Vice President 	 
	 

Signature Page to Limited Liability Company Agreement

 

EXHIBIT A

LIST OF MEMBERS, INITIAL CAPITAL CONTRIBUTIONS, INITIAL CAPITAL ACCOUNTS, PERCENTAGE

INTERESTS AND INVESTMENTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Initial	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Member and	 	Capital	 	Agreed Gross	 	 	Percentage	 	 	Preferred Equity	 	 	Common Equity	 	Initial Capital
	Mailing Address	 	Contribution	 	 Asset Value	 	 Interest	 	 Contribution	 	Contribution	 	Account
	Ashford
Hospitality Limited Partnership
14185 Dallas Parkway 

Suite 1100

Dallas, TX 75254

	 	$150,000,000.00 (cash)
Mezz 4 Participation Interest1
	 	$150,000,000.00
$40,000,000.00
	 	 	71.74	%	 	$	25,000,000.00	 	 	$	165,000,000	 	 	$	190,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PRISA
III Investments, LLC

c/o Prudential Investment
 Management, Inc. 

8 Campus Drive 

Parsippany, NJ 07054

	 	$50,000,000.00 (cash)
Mezz 4 Participation Interest1
	 	$50,000,000.00
$40,000,000.00
	 	 	28.26	%	 	$	25,000,000.00	 	 	$	65,000,000	 	 	$	90,000,000	 

 

			
	1	 	On the effective date of the Agreement Ashford and PRISA III, each a 50% member
of PIM Ashford Mezz 4 LLC (“Mezz 4 JV”), caused Mezz 4 JV to contribute the Mezz 4 Participation
Interest to the Company for a total agreed Gross Asset Value of $80,000,000.00 in exchange for the
following: (i) a Preferred Equity Contribution of $50,000,000 and (ii) a common Percentage Interest
of 13.04%, calculated as follows:

	 	 	 

	30,000,000

	 	$80 million agreed Gross Asset Value of Mezz 4 Participation Interest less $50 million Preferred Equity Contribution
	÷230,000,000

	 	$30 million agreed Gross Asset Value of Mezz 4 Participation after deducting Preferred Equity Contribution plus
$200 million agreed Gross Asset Value of cash contributions
	 

	 	 
	13.04%

	 	Percentage Interest attributable to Mezz 4 Participation Interest

Mezz 4 JV then immediately distributed both its Percentage Interest and its Preferred Equity
Account pro rata to its members Ashford and PRISA III, with each receiving 50% of such interests
from Mezz 4 JV. As a result Ashford’s Percentage Interest is equal to $150M/$230M, or 65.22%, plus
6.52% (1/2 of the 13.04% Percentage Interest received from Mezz 4 JV), for a total 71.74%
Percentage Interest. Likewise, PRISA III’s Percentage Interest is equal to $50M/$230M, or 21.74%,
plus 6.52% (1/2 of the 13.04% Percentage Interest received from Mezz 4 JV), for a total 28.26%
Percentage Interest. Mezz 4 JV’s distribution of the Preferred Equity Account results in each of
Ashford and PRISA III having a $25,000,000 Preferred Equity Contribution as of the date hereof.

A-1 

 

INVESTMENTS

	 	 	 	 	 
	 	 	Owner	 	Property
	1.
	 	Portsmouth Hotel Associates, LLC	 	Portsmouth Renaissance and Conference Center
	 
	 	 	 	425 Water Street
	 
	 	 	 	Portsmouth, VA 23704
	 
	 	 	 	 
	2.
	 	HH Texas Hotel Associates, L.P.	 	Sugar Land Marriott Hotel and Conference
	 
	 	 	 	Center, 16090 City Walk
	 
	 	 	 	Sugar Land, TX 77479
	 
	 	 	 	 
	3.
	 	HH San Antonio LLC	 	Plaza San Antonio Marriott,
	 
	 	 	 	555 South Alamo Street
	 
	 	 	 	San Antonio, TX 78205
	 
	 	 	 	 
	4.
	 	HH Savannah LLC	 	Hyatt Regency Savannah,
	 
	 	 	 	2 West Bay Street
	 
	 	 	 	Savannah, GA 31401
	 
	 	 	 	 
	5.
	 	HH Tampa Westshore LLC	 	Hilton Tampa Westshore,
	 
	 	 	 	2225 North Lois Avenue
	 
	 	 	 	Tampa, FL 33607-2355
	 
	 	 	 	 
	6.
	 	HH DFW Hotel Associates, L.P.	 	Dallas-Fort Worth Airport Marriott
	 
	 	 	 	8440 Freeport Parkway
	 
	 	 	 	Irving, TX 75063
	 
	 	 	 	 
	7.
	 	HH FP Portfolio LLC	 	Hyatt Regency Wind Watch Long Island 1717
	 
	 	 	 	Motor Parkway
	 
	 	 	 	Hauppauge, NY 11788
	 
	 	 	 	 
	8.
	 	HH FP Portfolio LLC	 	Crowne Plaza Atlanta - Ravinia
	 
	 	 	 	4355 Ashford-Dunwoody Road
	 
	 	 	 	Atlanta, GA 30346
	 
	 	 	 	 
	9.
	 	HH FP Portfolio LLC	 	Hilton Hampton Parsippany,
	 
	 	 	 	One Hilton Court, Route 10
	 
	 	 	 	Parsippany, NJ 07054
	 
	 	 	 	 
	10.
	 	HH LC Portfolio LLC	 	Omaha Marriott
	 
	 	 	 	10220 Regency Circle
	 
	 	 	 	Omaha, NE 68114
	 
	11.
	 	HH Annapolis LLC	 	Sheraton Annapolis
	 
	 	 	 	173 Jennifer Road
	 
	 	 	 	Annapolis, MD 21401
	 
	 	 	 	 
	12.
	 	HH Palm Springs LLC	 	Renaissance Palm Springs
	 
	 	 	 	888 E Tahquitz Canyon Way
	 
	 	 	 	Palm Springs, CA 92262
	 
	 	 	 	 
	13.
	 	HH Churchill Hotel Associates, L.P.	 	The Churchill
	 
	 	 	 	1914 Connecticut Ave. NW
	 
	 	 	 	Washington DC, 20009
	 
	 	 	 	 
	14.
	 	HH Melrose Hotel Associates, L.P.	 	The Melrose
	 
	 	 	 	2430 Pennsylvania Ave. NW
	 
	 	 	 	Washington DC, 20037

A-2 

 

	 	 	 	 	 
	 	 	Owner	 	Property
	15.
	 	HH Atlanta LLC	 	Ritz-Carlton Atlanta Downtown
	 
	 	 	 	181 Peachtree Street Northeast, Atlanta, GA
	 
	 	 	 	30303
	 
	 	 	 	 
	16.
	 	HH LC Portfolio LLC	 	Hilton Garden Inn Virginia Beach Town Center
	 
	 	 	 	252 Town Center Drive
	 
	 	 	 	Virginia Beach, VA 23462
	 
	 	 	 	 
	17.
	 	HH Baltimore LLC	 	Hilton Garden Inn BWI Airport
	 
	 	 	 	1516 Aero Drive
	 
	 	 	 	Linthicum, MD 21090
	 
	 	 	 	 
	18.
	 	HH LC Portfolio LLC	 	Residence Inn Tampa Downtown
	 
	 	 	 	101 East Tyler Street
	 
	 	 	 	Tampa, FL 33602
	 
	 	 	 	 
	19.
	 	HH LC Portfolio LLC	 	Courtyard Savannah Historic District
	 
	 	 	 	415 West Liberty Street
	 
	 	 	 	Savannah, GA 31401
	 
	 	 	 	 
	20.
	 	HH FP Portfolio LLC	 	Courtyard Boston Tremont
	 
	 	 	 	275 Tremont Street
	 
	 	 	 	Boston, MA 02116
	 
	 	 	 	 
	21.
	 	HH Denver LLC	 	Courtyard Denver Airport
	 
	 	 	 	6901 Tower Rd,
	 
	 	 	 	Denver, CO 80249
	 
	 	 	 	 
	22.
	 	HH Gaithersburg LLC	 	Courtyard Gaithersburg Washingtonian Center
	 
	 	 	 	204 Boardwalk Place
	 
	 	 	 	Gaithersburg, MD 20878
	 
	 	 	 	 
	23.
	 	HH Chicago LLC	 	Silversmith
	 
	 	 	 	10 S Wabash Ave
	 
	 	 	 	Chicago, IL 60603
	 
	 	 	 	 
	24.
	 	HH Austin Hotel Associates, L.P.	 	Hilton Garden Inn Austin
	 
	 	 	 	500 North IH-35
	 
	 	 	 	Austin, 78701
	 
	 	 	 	 
	25.
	 	HH Boston Back Bay LLC	 	Hilton Boston Back Bay
	 
	 	 	 	40 Dalton Street
	 
	 	 	 	Boston, Massachusetts 02115-3123
	 
	 	 	 	 
	26.
	 	HH Princeton LLC	 	Westin Princeton
	 
	 	 	 	201 Village Boulevard
	 
	 	 	 	Princeton, New Jersey 08540
	 
	 	 	 	 
	27.
	 	HH Nashville LLC	 	Nashville Renaissance
	 
	 	 	 	611 Commerce Street
	 
	 	 	 	Nashville, Tennessee 37203

A-3 

 

EXHIBIT B

STRUCTURE CHART

B-1

 

EXHIBIT C

LIST OF LICENSE AGREEMENTS

C-1

 

EXHIBIT D

LIST OF MANAGEMENT AGREEMENTS

D-1

 

EXHIBIT E

APPROVED LOANS

E-1

 

EXHIBIT F

ASHFORD’S/TRANSFEREE’S ERISA CERTIFICATION

_____________________, a _______________________ (“PRISA III”)

c/o Prudential Real Estate Investors

__________________________

__________________________

Attention: ______________________, Vice President, Prudential Real Estate Investors

	 	Re:	 	 [Name of Venture] by and between _______________ (“Ashford”) and PRISA III,
[Description of Transaction] (the “Transaction”) regarding property known as
_______________ (the “Property”)

Gentlemen:

[Ashford/Transferee] represents and warrants to you, in order to comply with the Employment
Retirement Income Security Act of 1974, as amended, that:

     (i) Neither [Ashford/Transferee] nor any of its affiliates [within the meaning of Part
V(c) of Prohibited Transaction Exemption 84-14 granted by the U.S. Department of Labor (“PTE
84-14”)] has, or during the immediately preceding year has exercised, the authority to
appoint or terminate PRISA III as investment manager of any assets of the employee benefit
plans whose assets are held by PRISA III and are being used to effectuate the Transaction or
to negotiate the terms of any management agreement with PRISA III on behalf of any such
plan;

     (ii) The Transaction is not specifically excluded by Part I(b) of PTE 84-14;

     (iii) [Ashford/Transferee] is not a related party of PRISA III (as defined in Part V(h)
of PTE 84-14); and

     (iv) The terms of the Transaction have been negotiated and determined at arm’s length,
as such terms would be negotiated and determined by unrelated parties; and

     (v) Neither [Ashford/Transferee] nor its affiliates (as defined in Part V(c) of PTE
84-14) manages or has any discretionary authority with respect to any of the assets of PRISA
III which are being used to effect this Transaction.

F-1

 

	 	 	 	 	 
	 	[ASHFORD/TRANSFEREE]
	 
	 	 

	, a 
	 	
 
	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	

 	 
	 	Date Executed:

F-2

 

	 	 	 	 	 

EXHIBIT G

PRISA III’S ERISA CERTIFICATION

     [Transferee Name and Address]

	 	Re:	 	 [Name of Venture] by and between _______________ (“Ashford”) and PRISA III,
[Description of Transaction] (the “Transaction”) regarding property known as
_______________ (the “Property”)

Gentlemen:

     PRISA III represents and warrants to you, in order to comply with the Employment Retirement
Income Security Act of 1974, as amended, that:

     (1) the source of funds from which PRISA III [has purchased/is purchasing] [its interest in
the Company/the Property] is its ____________________ Account, which is an investment fund within
the meaning of Part V(b) of Prohibited Transaction Exemption 84-14, as amended, granted by the U.S.
Department of Labor (“PTE 84-14”);

     (2) PRISA III is a qualified professional asset manager (“QPAM”) within the meaning of Part
V(a) of PTE 84-14;

     (3) the terms of PRISA III’s acquisition of its interest in the Company and the Transaction
described above were negotiated on behalf of the investment fund by PRISA III, and PRISA III made
the decision on behalf of the investment fund to enter into such transaction, which was not part of
an agreement, arrangement or understanding designed to benefit a party in interest (in satisfaction
of the conditions of Part I(c) of PTE 84-14);

     (4) the transaction contemplated hereunder is not specifically excluded by Part I(b) of PTE
84-14; and

     (5) the conditions of Part I(e), (f) and (g) of PTE 84-14 are satisfied.

	 	 	 	 	 
	 	Very truly yours,
	 
	 	 	 
	 
	 	PRISA III:
	 
	 	
 
	, a 
	 	
 
	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	

 	 
	 	Date Executed:

G-1

 

	 	 	 	 	 

EXHIBIT H

ADVISORY DUTIES

Financial & Operational Review

	 	•	 	Analyze and review annual operating reports, sales and marketing programs and
capital investment plans;
	 
	 	•	 	Participate in on-site reviews of the operations, as reasonably required, with the
manager of a hotel (“Hotel”) company an Investment (“Manager”) to analyze revenues and
expenses and make recommendations regarding suitable action steps for overall
performance improvement through the maximization of both revenue and profitability
opportunities and profit management;
	 
	 	•	 	Monitor revenue management strategies in order to maximize revenue growth;
	 
	 	•	 	Analyze in detail the monthly financial statements of each Hotel and provide Owner
with a detailed quarterly report highlighting operational and financial results,
variance analyses, STR data and relative market performance insight, updates on sales
and marketing initiatives, capital expenditure status and other property-specific
observations and commentary;
	 
	 	•	 	Review Manager’s practices with respect to licensing and permit requirements and
compliance with terms of the management agreement, including the manager performance
hurdles, if applicable;
	 
	 	•	 	Advise on all material contracts and leases involving third parties to the extent
that the Company has discretion and authority pursuant to the applicable property
management agreements;
	 
	 	•	 	Assist in the preparation of annual insurance updates, monitor risk management
programs and review and contest (as appropriate) real estate tax assessments;
	 
	 	•	 	Monitor guest and employee satisfaction surveys;
	 
	 	•	 	Communicate to property management the Executive Committee’s overall strategic goals
and objectives for each Hotel as directed by the Executive Committee;
	 
	 	•	 	Oversee the implementation of the Annual Budgets;
	 
	 	•	 	Monitor each Hotel’s cash position;
	 
	 	•	 	Perform the obligations of the Advisor set forth in Article VIII of the Operating
Agreement regarding books, tax returns and reports; and
	 
	 	•	 	Advise and recommend general manager and other Hotel hires and terminations.

H-1

 

Knowledge of Ongoing Market Fundamentals and Competitive Environment

	 	•	 	Benchmark each Hotel’s REVPAR, ADR and occupancy performance compared to competitive
set in order to solidify market position and optimize operating performance;
	 
	 	•	 	Monitor monthly REVPAR, ADR and occupancy statistics for competitive set;
	 
	 	•	 	Monitor status of key demand generators;
	 
	 	•	 	Regularly track planned supply additions in market; and
	 
	 	•	 	Advise on the determination of competitive sets for each Hotel.

Physical Asset Condition & Preservation

	 	•	 	Monitor physical condition of each Hotel;
	 
	 	•	 	Conduct on-site inspection of each Hotel periodically as deemed prudent by the
Advisor in order to continuously evaluate the quality and sustainability of all major
building systems (HVAC, PMS, POS, telephone, Internet, TV/video and all relevant
interfaces);
	 
	 	•	 	Evaluate the capital expenditure budget proposed by Managers pursuant to the
management agreements;
	 
	 	•	 	Make recommendations to the Executive Committee, after appropriate analysis, of
capital expenditure requests; and
	 
	 	•	 	Monitor capital improvement projects and budget compliance.

Other Duties

	 	•	 	Coordinate and oversee the process of obtaining any Hotel’s Final Certificate of
Occupancy;
	 
	 	•	 	Coordinate and oversee the process of obtaining any Hotel’s ICIP Certification of
Completion;
	 
	 	•	 	Oversee the resolution of all outstanding construction punchlist items;
	 
	 	•	 	Oversee the resolution of any post-closing issues; and
	 
	 	•	 	Monitor compliance with the terms and conditions of all license agreements and
mortgage-related financing provisions and covenants.

In conjunction with the forgoing, the Advisor will develop and update each year with respect to
each hotel, an equity asset plan which will include, but not be limited to, a specific property
overview and analysis, physical condition assessment, historical and forecasted financial analysis,
competitive set analysis, SWOT (strengths, weaknesses, opportunities, threats) analysis, strategic
review of the Hotel including a hold/sale analysis.

H-2

 

EXHIBIT I

EXAMPLE OF SECTION 4.2 DISTRIBUTIONS

I-1exv10w26w5

Exhibit 10.26.5

CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

FOR SETTLEMENT PURPOSES ONLY

CONSENT AND SETTLEMENT AGREEMENT

     This
Consent and Settlement Agreement (“Agreement”) is effective
as of March 10, 2011 (the
“Effective Date”), and is entered into by and between Ashford Hospitality Finance, L.P. (together
with any and all of its affiliates and subsidiaries, collectively, “Ashford”) and Wells Fargo Bank,
N.A., as successor by merger to Wachovia Bank, National Association (together with any and all of
its affiliates and subsidiaries, collectively, “Wells”). Ashford and Wells are each a “Party” and
collectively “the Parties.”

RECITALS

     A. WHEREAS, on or about June 2, 2009, Ashford filed a complaint (the “Complaint”) commencing an
action in the District Court of Dallas County, Texas, 298th Judicial District, styled Ashford
Hospitality Finance, L.P. v. Wachovia Bank, N.A., No. 09-06958 (the “Action”); and

     B. WHEREAS, by Answer dated June 8, 2009, Wells denied the allegations of the Complaint and further
denies any and all liability for the claims asserted by Ashford in the Action; and

     C. WHEREAS, Ashford desires to enter into a series of related transactions with
affiliates of Prudential Life Insurance Company, Guggenheim, Barclays Capital Real Estate Finance, Inc.
(“Barclays”), The Blackstone Group and Wells, which, when and if consummated, will result in
Ashford owning an aggregate up to 75% interest in one or more entities which will own all of the
equity interests in a portfolio of hotels (and their related operating lessees and other
affiliates), which are defined as the “Individual Properties” and the “CIGNA Properties” under that
certain Amended and Restated Mortgage Loan Agreement, to be entered into by and among Wells,
Barclays and the obligors parties thereto (the “Loan Agreement” and such transactions described
herein being, collectively, the “Transaction”); and

     D. WHEREAS, the Transaction described in the foregoing Recital C requires consent from Wells in
order to effectuate the purchase by Ashford contemplated thereby; and

     E. WHEREAS, the Parties wish to enter into this Agreement to: (i) avoid further expense,
inconvenience, and the distraction of litigation and to put to rest all claims asserted in or
related to the Action, and (ii) consent to the Transaction.

     NOW, THEREFORE, in consideration of the promises, terms and provisions hereof, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:

1

 

CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

FOR SETTLEMENT PURPOSES ONLY

AGREEMENT

     1. HIGHLAND HOSPITALITY RESTRUCTURING.

          (a) In connection with the Transaction, Wells agrees to permit Ashford (or its Affiliates (as
defined in the Loan Agreement)) to acquire up to a 75% indirect ownership interest in the Borrower
Principal (as defined in the Loan Agreement) and to be the managing or administering member of the
venture which holds the ownerships interests in the Borrower Principal. It is understood and agreed
however that Wells, in its capacity as lender under the Loan Agreement, shall have the right to
review and approve all organizational documents relating to or affecting the ownership structure of
the Borrower Principal (and its equity owners), all in accordance with the terms of the Loan
Agreement.

          (b) On
the date that [***] receives any cash payment
[***] Wells shall, within 30 days after the
receipt of such properly paid payment, pay to Ashford an equivalent amount,
up to a total of $30,000,000 in the aggregate (said total sum of $30,000,000 is referred to herein as the
“Total Settlement Payment”). No interest shall accrue on the Total Settlement Amount, or on any
amounts paid or payable to Ashford [***] hereunder. If all or any portion of the Total Settlement
Payment has not been paid by Wells to Ashford on the earlier to occur of (i) the maturity date of [***],
(ii) the  date  [***] has been terminated or otherwise eliminated [***], or (iii) the [***] is sold in its entirety, then,
within 15 days following such date, Wells shall pay to Ashford the balance of the Total Settlement
Payment that remains unpaid as of such date. Once the Total Settlement Payment has been paid to
Ashford, all further obligations of Wells under this Settlement Agreement shall cease.

          (c) The payments by Wells to Ashford pursuant to the foregoing paragraph shall be made by direct
wire transfer to an account in the United States designated by Ashford. Ashford shall send Wells
acknowledgement of receipt of payment within one (1) business day after Ashford’s receipt of such
payment.

          (d) From and after the Effective Date but prior to the date that the Total Settlement Payment is
paid in full, Wells shall deliver to Ashford within fifteen (15) days after the last day of each
calendar quarter (commencing on the calendar quarter ending March 31, 2011), a written certification setting forth all payments received by Wells from or in respect of
[***] during such calendar quarter.

[***] = Indicates confidential information has been redacted.

2

 

CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

FOR SETTLEMENT PURPOSES ONLY

          (e) Well
represents, and Ashford understands and acknowledges that (i) the [***] owned by Wells is a
passive interest, (ii) Wells has no control whatsoever over the timing for when it may receive
any [***] and (iii) Wells will have no obligation to take any legal or other action or exercise
any legal or other remedy to attempt to receive such [***], nor shall Wells have any obligation to
officially market and attempt to sell its [***] in order to
generate any [***].

2. RELEASE.

          (a) In consideration of the promises and agreements set forth in this Agreement, as of the closing
date of the transaction (“Closing Date”), Ashford, on behalf of itself and its present, former or
future officers, directors, agents (alleged or otherwise), employees, representatives, consultants,
accountants, attorneys, parents, subsidiaries, affiliated entities, predecessors, successors, and
assigns (collectively, the “Ashford Releasors”), does hereby completely and irrevocably release and
forever discharge Wells, and each of its respective current and former parents, subsidiaries, and
affiliated entities, and their respective current and former officers, directors, shareholders,
agents, employees, representatives, consultants, accountants, attorneys, insurers, reinsurers,
predecessors, successors, and assigns (collectively, the “Wells Releasees”), from any and all
claims and rights (including, without limitation, rights of set-off and recoupment, demands,
charges, complaints, actions, obligations, causes of action, or liabilities of any and every kind,
nature and character, known and unknown) that the Ashford Releasors possess or possessed, assert,
asserted, or could or may have asserted, from the beginning of the world to the date of this
Agreement (including, without limitation, rights of set-off and recoupment, demands, charges,
complaints, actions, obligations, causes of action, or liabilities of any and every kind, nature
and character, known and unknown), arising out of or related to or in connection with the Ashford
Releasors’ interest, whenever acquired, in Extended Stay, Inc. and certain of its affiliates and
the financings that were originated in connection with the
acquisition thereof in 2007 and/or
arising out of or related to or in connection with the subject matter
of the Action; provided that
nothing herein shall prevent Ashford from bringing suit to enforce the terms of this Agreement.

          (b) In consideration of the promises and agreements set forth in this Agreement, as of the Closing
Date, Wells, on behalf of itself and its present, former or future officers, directors, agents
(alleged or otherwise), employees, representatives, consultants, accountants, attorneys, parents,
subsidiaries, affiliated entities, predecessors, successors, and assigns (collectively, the “Wells
Releasors”), does hereby completely and irrevocably release and forever discharge Ashford, and each
of its respective current and former parents, subsidiaries, and affiliated entities, and their
respective current and former officers, directors, shareholders, agents, employees,
representatives, consultants, accountants, attorneys, insurers, reinsurers, predecessors,
successors, and assigns (collectively, the “Ashford Releasees”), from any and all claims and rights
(including, without limitation, rights of set-off and recoupment, demands, charges, complaints,
actions, obligations, causes of action, or liabilities of any and every kind, nature and character,
known and unknown) that the Wells Releasors possess or

[***] =
Indicates confidential information has been redacted.

3

 

CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

FOR SETTLEMENT PURPOSES ONLY

possessed, assert, asserted, or could or may have asserted, from the beginning of the world to the
date of this Agreement (including, without limitation, rights of set-off and recoupment, demands,
charges, complaints, actions, obligations, causes of action, or liabilities of any and every kind,
nature and character, known and unknown), arising out of or related to the subject matter of the
Action; provided that nothing herein shall prevent Wells from bringing suit to enforce the terms of
this Agreement.

          (c) The Parties hereby acknowledge that the releases provided in this Agreement shall apply to all
claims and rights released hereby, whether known or unknown, anticipated or unanticipated, or
suspected or unsuspected, notwithstanding the fact that a Party may later discover facts in
addition to or different from those which that Party now believes to be true.

          (d) Each Party agrees to indemnify, defend and hold the other Party harmless from and against any
and all liabilities, claims, demands, losses, damages, costs and expenses (including, without
limitation, legal fees and disbursements, and litigation expenses), actions and causes of action,
arising out of or relating to a breach by the other Party of any provision of this Agreement
(including, without limitation, this Paragraph 2), or the incorrectness or inaccuracy of any
representation and warranty of such Party contained in this Agreement or in any document or
agreement delivered in connection with this Agreement.

     3. CONFIDENTIALITY. Ashford and Wells represent and warrant that they have not and none of their
officers, directors, principals, owners, employees, agents, attorneys, or other representatives
have disclosed to or discussed with anyone other than the other Party’s counsel any term,
condition, or other aspect of this Agreement. Ashford and Wells acknowledge and agree, on behalf of
themselves and each of their officers, directors, principals, owners, employees, agents, attorneys,
and other representatives, that the financial terms of this Agreement (but not the existence of
this Agreement) are and shall remain confidential except to the extent such financial information
is required to be disclosed by a Party in compliance with the rules or regulations of any
governmental entity having jurisdiction over such Party.

     4. FAILURE OF TRANSACTION TO CLOSE. If the Transaction does not close on or before June 30, 2011,
(i) the terms of this Agreement will become null and void, and the parties will have no further
obligations hereunder, except that the provisions contained in Paragraphs 8,9 and 10 shall survive
termination of this Agreement.

     5. ADDITIONAL DOCUMENTS AND AMENDMENT.

          (a) The Parties acknowledge that they may execute additional agreements relating to the terms of
their settlement of the Action. If the Parties elect to prepare such documents, the Parties agree
to cooperate in good faith in the drafting and execution thereof. However, the Parties acknowledge
and agree that the terms and conditions of this Agreement constitute a valid and binding agreement
and that they intend to be bound by its terms regardless of whether additional settlement documents
are ultimately executed between the Parties. That the Parties might execute additional settlement
documents does not in any way affect the binding nature and affect of this agreement.

4

 

CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

FOR SETTLEMENT PURPOSES ONLY

          (b) This Agreement may be amended only by an instrument in writing signed by the Parties that
expressly refers to this Agreement and specifically states that it is intended to amend this
Agreement.

     6. NO ADMISSION OF LIABILITY. The Parties agree that the consideration and other terms of this
Agreement do not constitute an admission of liability on any of the Parties’ part, that liability
is expressly denied, and that this Agreement is a settlement of a disputed claim.

     7. INTEGRATED AGREEMENT. This Agreement contains the understanding and agreement of the Parties
with respect to the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations, and discussions of the Parties, whether oral or written, relating to
the content hereof. The Parties agree that the terms of this Agreement are contractual and not mere
recitals. The Parties acknowledge that the consideration recited in this Agreement is the sole and
only consideration for it and that no representations, promises or inducements have been made other
than those that appear in this Agreement, and that in executing this Agreement, the Parties are not
relying on any statement, representation or promise made to them except as set forth herein. In
interpreting the provisions of this Agreement, no presumption shall apply against any Party that
otherwise would operate against such Party by reason of such document having been drafted by such
Party or at the direction of such Party.

     8. AUTHORITY. The Parties represent and warrant to one another that each has the full and complete
power and authority to enter into this Agreement and is entering into this Agreement voluntarily.
The Parties further represent and warrant that the signatories below have full and complete power
and authority, and have taken all necessary action, to enter into this Agreement on behalf of their
respective entities. The Parties warrant and represent that each has not sold, subrogated, assigned
or otherwise transferred or agreed to sell, assign, subrogate or otherwise transfer to any other
person or entity any claims, demand, actions, causes of action an/or suits that are the subject of
this Agreement.

     9. NOTICES. All notices, consents and requests required or permitted hereunder, shall be given in
writing and shall be effective for all purposes if (i) hand delivered with proof of attempted
delivery, (ii) sent by prepaid overnight delivery service with proof of attempted delivery, or
(iii) by facsimile (with a copy sent contemporaneously by expedited overnight delivery service with
proof of attempted delivery), addressed as follows:

5

 

CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

FOR SETTLEMENT PURPOSES ONLY

If to Ashford:

David Kimichik

CFO

Ashford Hospitality Trust

14185 Dallas Parkway, Ste. 1100

Dallas, TX 75254

and

David A. Brooks

Chief Operating Officer/General Counsel

Ashford Hospitality Trust, Inc.

14185 Dallas Parkway, Suite 1100

Dallas, TX 75254

Fax: 972-490-9605

If to Wells:

William F. Carmody

Managing Director

Wells Fargo Bank, N.A.

375 Park Avenue

New York, NY 10152

Fax: 212-214-8955

and

Joel T. Brighton

Managing Counsel

Wells Fargo Bank, N.A

MAC: D1053-300

301 South College St.

Charlotte, NC 28288

Fax: 704-383-1383

and

Alistair B. Dawson

Beck, Redden & Secrest, LLP

One Houston Center

1221 McKinney St., Suite 4500

Houston, TX 77010

Fax: (713) 951-3720

6

 

CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

FOR SETTLEMENT PURPOSES ONLY

Such notice shall be deemed given on the day delivery was attempted (as set forth in the proof of
attempted delivery).

     10. COSTS. Each Party agrees that, notwithstanding any other provision herein, it bears full
responsibility and will pay its own costs and expenses, including, without limitation, its
attorneys’ fees in connection with the Action and this Agreement (and any documents entered into in
connection with this Agreement). However, in the event of any dispute arising out of or in
connection with any terms of this Agreement the non-prevailing Party in any such dispute shall be
responsible for paying the attorneys’ fees of the prevailing Party.

     11. GOVERNING LAW AND WAIVER OF JURY TRIAL. This Agreement shall be construed and enforced pursuant
to the laws of the State of New York, without regard to the choice of law provisions thereof. The
Parties further agree that the language of each and all paragraphs, terms, and provisions of this
Agreement shall be construed as a whole, according to its fair meaning, and not strictly for or
against any Party hereto and without regard whatsoever to the identity or status of any person or
persons who drafted all or any portion of this Agreement. The Parties hereby waive their respective
rights to a jury trial of any claim or cause of action based upon or arising out of this Agreement.

     12. JURISDICTION. The Parties agree that any suit instituted to enforce the terms of this
Agreement, or to prevent any threatened violation of this Agreement, shall be instituted in the
federal or state courts within the City and State of New York, and that no suit instituted to
enforce the terms of this Agreement shall be instituted in any court or arbitral forum other than
the federal or state courts within the City and State of New York. The Parties consent to the
exercise of personal jurisdiction over each of them by the federal and state courts within the
State of New York for the purposes of any suit instituted to enforce the terms of this Agreement,
or to prevent any threatened violation of this Agreement.

     13. SEVERABILITY. Should any provision or paragraph of this Agreement be held invalid or illegal,
such invalidity or illegality shall not invalidate the whole of this Agreement, but, rather, the
Agreement shall be construed as if it did not contain the illegal or invalid part, and the rights
and obligations of the Parties shall be construed and be enforced accordingly.

     14. COOPERATION. Each Party agrees to execute and deliver any and all additional instruments and
documents, do any and all acts and things as may be necessary or expedient to effectuate more fully
the terms of this Agreement or any provision hereof.

     15. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and inure to the benefit of the
parties and their respective successors, heirs, assigns, administrators, executors and legal
representatives. This Agreement may not be assigned by Ashford without prior written consent of
Wells.

     16. COUNTERPARTS/EXECUTION. This Agreement may be executed in counterparts, including by facsimile,
with the same effect as if all Parties have signed the same document. All counterparts shall be
construed together and shall constitute a single Agreement.

7

 

CONFIDENTIAL
TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE COMMISSION.

FOR SETTLEMENT PURPOSES ONLY

IT IS SO AGREED.

	 	 	 	 	 
	DATED: February 24, 2011	
 ASHFORD HOSPITALITY FINANCE L.P.

 	 
	 	By:  	ASHFORD
HOSPITALITY FINANCE GENERAL PARTNER LLC, GEN. PTR	 
	 
	 	By:  	/s/
DAVID A. BROOKS
 	 
	 	 	DAVID A. BROOKS
VICE PRESIDENT	 

	 	 	 	 	 

	STATE
OF TEXAS
 

COUNTY OF DALLAS

	 	)

)

)	 	 
	 
	Sworn to before me this
24 day of February, 2011

	 	 	 	 	 
	 
	DATED: March 10, 2011 	WELLS FARGO BANK, N.A.

 	 
	 	By:  	/s/
Jan LaChapelle	 
	 	 	 	 
	 	 	 	 
	 

	 	 	 	 	 

	STATE OF NEW YORK 
 

COUNTY OF NEW YORK

	 	)

)

)	 	 
	 
	Sworn to before me this
10 day of March, 2011

8

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