Document:

Exhibit
      10.1

    
       

      $60,000,000

      

      

      REVOLVING
        CREDIT LOAN AND SECURITY AGREEMENT

      

      

      

      by
        and between

      

      

      

      

      HERSHA
        HOSPITALTY LIMITED PARTNERSHIP,

      as
        Borrower

      

      HERSHA
        HOSPITALITY TRUST

      2844
        ASSOCIATES

      HHLP
        VALLEY FORGE ASSOCIATES

      44
        LAUREL ASSOCIATES, LLC

      44
        NEW ENGLAND MANAGEMENT COMPANY,

      as
        Guarantors

      

      

      EACH
        OF THE FINANCIAL INSTITUTIONS

      NOW
        OR HEREAFTER A PARTY HERETO,

      as
        Lenders

      

      

      and

      

      

      

      COMMERCE
        BANK, N.A.

      as
        Lender and Agent

      

      

      

      

      Dated:
        January 17, 2006

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    TABLE
      OF CONTENTS

     

    
 

    
      
        	 	 	
                Page

              
	 	 	 	 
	
                ARTICLE
                  I DEFINITIONS

              	 	
                1

              
	 	 	 
	
                1.1

              	
                Definitions

              	 	
                1

              
	
                1.2

              	
                Other
                  Definitional Provisions

              	 	
                17

              
	 	 	 	 
	
                ARTICLE
                  II THE LINE: USE OF PROCEEDS

              	 	
                17

              
	 	 	 
	
                2.1

              	
                Line
                  of Credit

              	 	
                17

              
	
                2.2

              	
                Letters
                  of Credit

              	 	
                19

              
	
                2.3

              	
                Commitments

              	 	
                24

              
	
                2.4

              	
                Use
                  of Proceeds

              	 	
                24

              
	
                2.5

              	
                Advances
                  of the Line

              	 	
                24

              
	
                2.6

              	
                Conditions
                  to Advances; Borrowing Base

              	 	
                24

              
	 	 	 	 
	
                ARTICLE
                  III INTEREST RATES

              	 	
                26

              
	 	 	 
	
                3.1

              	
                Interest
                  on the Line

              	 	
                26

              
	
                3.2

              	
                Default
                  Interest

              	 	
                26

              
	
                3.3

              	
                Calculation

              	 	
                26

              
	
                3.4

              	
                Limitation
                  of Interest to Maximum Lawful Rate

              	 	
                26

              
	 	 	 	 
	
                ARTICLE
                  IV PAYMENTS AND FEES; COLLATERAL

              	 	
                27

              
	 	 	 
	
                4.1

              	
                Interest
                  Payments on the Line

              	 	
                27

              
	
                4.2

              	
                Principal
                  Payments on the Line; Prepayments

              	 	
                27

              
	
                4.3

              	
                Facility
                  Fee

              	 	
                28

              
	
                4.4

              	
                Arrangement
                  Fee

              	 	
                28

              
	
                4.5

              	
                Unused
                  Facility Fee

              	 	
                28

              
	
                4.6

              	
                Letter
                  of Credit Fees

              	 	
                28

              
	
                4.7

              	
                Late
                  Charge

              	 	
                29

              
	
                4.8

              	
                Payment
                  Method

              	 	
                29

              
	
                4.9

              	
                Application
                  of Payments

              	 	
                29

              
	
                4.10

              	
                Loan
                  Account

              	 	
                29

              
	
                4.11

              	
                Indemnity;
                  Loss of Margin

              	 	
                30

              
	
                4.12

              	
                Extension
                  of Expiration Date

              	 	
                31

              
	
                4.13

              	
                Collateral

              	 	
                31

              
	
                4.14

              	
                Release
                  and Substitution of Collateral; Additional Collateral

              	 	
                31

              
	 	 	 	 
	
                ARTICLE
                  V REPRESENTATIONS AND WARRANTIES

              	 	
                33

              
	 	 	 
	
                5.1

              	
                Valid
                  Organization, Standing and Qualification

              	 	
                33

              
	
                5.2

              	
                Licenses

              	 	
                33

              
	
                5.3

              	
                Ownership
                  Interests

              	 	
                34

              
	
                5.4

              	
                Subsidiaries

              	 	
                34

              
	
                5.5

              	
                Financial
                  Statements

              	 	
                34

              
	
                5.6

              	
                No
                  Material Adverse Change in Financial Condition

              	 	
                34

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	
                5.7

              	
                Pending
                  Litigation or Proceedings

              	 	
                34

              
	
                5.8

              	
                Due
                  Authorization; No Legal Restrictions

              	 	
                34

              
	
                5.9

              	
                Enforceability

              	 	
                35

              
	
                5.10

              	
                No
                  Default Under Other Obligations Orders or Governmental
                  Obligations

              	 	
                35

              
	
                5.11

              	
                Governmental
                  Consents

              	 	
                35

              
	
                5.12

              	
                Taxes

              	 	
                36

              
	
                5.13

              	
                Addresses

              	 	
                36

              
	
                5.14

              	
                Investment
                  Company

              	 	
                36

              
	
                5.15

              	
                Current
                  Compliance

              	 	
                36

              
	
                5.16

              	
                Deferred
                  Compensation Plans

              	 	
                36

              
	
                5.17

              	
                Leases
                  and Contracts

              	 	
                36

              
	
                5.18

              	
                Contingent
                  Liabilities

              	 	
                36

              
	
                5.19

              	
                Encumbrances

              	 	
                37

              
	
                5.20

              	
                Environmental
                  Matters

              	 	
                37

              
	
                5.21

              	
                Insurance

              	 	
                38

              
	
                5.22

              	
                Anti-Terrorism
                  Laws

              	 	
                38

              
	
                5.23

              	
                Compliance
                  with OFAC Rules and Regulations

              	 	
                38

              
	
                5.24

              	
                Securities
                  Act

              	 	
                38

              
	
                5.25

              	
                Disclosure

              	 	
                38

              
	
                5.26

              	
                Margin
                  Stock

              	 	
                39

              
	
                5.27

              	
                Bank
                  Accounts

              	 	
                39

              
	 	 	 	 
	
                ARTICLE
                  VI GENERAL AFFIRMATIVE COVENANTS

              	 	
                39

              
	 	 	 
	
                6.1

              	
                Existence,
                  Approvals, Qualifications, Business Operations; Compliance with
                  Laws

              	 	
                39

              
	
                6.2

              	
                Taxes;
                  Claims for Labor and Materials

              	 	
                40

              
	
                6.3

              	
                Maintenance
                  of Properties

              	 	
                40

              
	
                6.4

              	
                Insurance

              	 	
                40

              
	
                6.5

              	
                Inspections;
                  Examinations

              	 	
                40

              
	
                6.6

              	
                Bank
                  Accounts

              	 	
                41

              
	
                6.7

              	
                Maintenance
                  of Management

              	 	
                41

              
	
                6.8

              	
                Notices

              	 	
                41

              
	
                6.9

              	
                Appraisals

              	 	
                41

              
	
                6.10

              	
                Further
                  Assurances

              	 	
                41

              
	 	 	 	 
	
                ARTICLE
                  VII FINANCIAL COVENANTS

              	 	
                42

              
	 	 	 
	
                7.1

              	
                Debt
                  Service Coverage Ratio

              	 	
                42

              
	
                7.2

              	
                Total
                  Funded Debt to Gross Asset Value

              	 	
                42

              
	
                7.3

              	
                EBITDA
                  to Debt Service

              	 	
                42

              
	
                7.4

              	
                Tangible
                  Net Worth

              	 	
                42

              
	
                7.5

              	
                Certain
                  Indebtedness

              	 	
                42

              
	
                7.6

              	
                Changes
                  to Financial Covenants

              	 	
                42

              
	 	 	 	 
	
                ARTICLE
                  VIII NEGATIVE COVENANTS

              	 	
                43

              
	 	 	 
	
                8.1

              	
                Limitation
                  on Indebtedness

              	 	
                43

              
	
                8.2

              	
                Guaranties

              	 	
                43

              
	
                8.3

              	
                Disposition
                  of Assets

              	 	
                44

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	
                8.4

              	
                Liens

              	 	
                44

              
	
                8.5

              	
                Nature
                  of Business

              	 	
                44

              
	
                8.6

              	
                Consolidation,
                  Merger, Sale or Purchase of Assets

              	 	
                44

              
	
                8.7

              	
                Advances,
                  Investments and Loans

              	 	
                45

              
	
                8.8

              	
                Default
                  Under Other Indebtedness

              	 	
                45

              
	
                8.9

              	
                Deferred
                  Compensation Plans

              	 	
                46

              
	
                8.10

              	
                Transactions
                  with Affiliates

              	 	
                46

              
	
                8.11

              	
                Restriction
                  on Transfer

              	 	
                46

              
	
                8.12

              	
                Corporate
                  Changes

              	 	
                46

              
	
                8.13

              	
                Limitations
                  on Restricted Actions

              	 	
                47

              
	
                8.14

              	
                Restricted
                  Payments

              	 	
                47

              
	
                8.15

              	
                Negative
                  Pledges

              	 	
                47

              
	
                8.16

              	
                Name
                  or Address Change

              	 	
                47

              
	
                8.17

              	
                Material
                  Adverse Contracts

              	 	
                48

              
	 	 	 	 
	
                ARTICLE
                  IX ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS

              	 	
                48

              
	 	 	 
	
                9.1

              	
                Annual
                  Statements

              	 	
                48

              
	
                9.2

              	
                Quarterly
                  Statements

              	 	
                48

              
	
                9.3

              	
                Requested
                  Information

              	 	
                49

              
	
                9.4

              	
                Compliance
                  Certificates

              	 	
                49

              
	
                9.5

              	
                Other
                  Operating Information

              	 	
                49

              
	
                9.6

              	
                Annual
                  Budget and Financial Projections

              	 	
                49

              
	 	 	 	 
	
                ARTICLE
                  X CONDITIONS OF CLOSING

              	 	
                49

              
	 	 	 
	
                10.1

              	
                Conditions
                  Precedent

              	 	
                50

              
	
                10.2

              	
                Representations
                  and Warranties

              	 	
                53

              
	
                10.3

              	
                No
                  Default

              	 	
                53

              
	
                10.4

              	
                Environmental
                  Matters

              	 	
                53

              
	
                10.5

              	
                Additional
                  Documents

              	 	
                53

              
	
                10.6

              	
                No
                  Material Adverse Change

              	 	
                53

              
	
                10.7

              	
                Conditions
                  Subsequent

              	 	
                53

              
	 	 	 	 
	
                ARTICLE
                  XI CERTAIN CONDITIONS TO SUBSEQUENT ADVANCES

              	 	
                54

              
	 	 	 
	
                11.1

              	
                Representations
                  and Warranties

              	 	
                54

              
	
                11.2

              	
                No
                  Default

              	 	
                54

              
	
                11.3

              	
                Additional
                  Conditions

              	 	
                54

              
	
                11.4

              	
                Other
                  Requirements

              	 	
                54

              
	 	 	 	 
	
                ARTICLE
                  XII DEFAULT AND REMEDIES

              	 	
                54

              
	 	 	 
	
                12.1

              	
                Events
                  of Default

              	 	
                54

              
	
                12.2

              	
                Acceleration;
                  Remedies

              	 	
                56

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      
        	
                ARTICLE
                  XIII THE AGENT

              	 	
                57

              
	 	 	 
	
                13.1

              	
                Appointment
                  of Agent

              	 	
                57

              
	
                13.2

              	
                Nature
                  of Duties of Agent

              	 	
                58

              
	
                13.3

              	
                Lack
                  of Reliance on Agent

              	 	
                58

              
	
                13.4

              	
                Certain
                  Rights of the Agent

              	 	
                58

              
	
                13.5

              	
                Reliance
                  by Agent

              	 	
                59

              
	
                13.6

              	
                Indemnification
                  of Agent

              	 	
                59

              
	
                13.7

              	
                The
                  Agent in its Individual Capacity

              	 	
                59

              
	
                13.8

              	
                Holders
                  of Notes

              	 	
                59

              
	
                13.9

              	
                Successor
                  Agent

              	 	
                60

              
	
                13.10

              	
                Collateral
                  Matters

              	 	
                60

              
	
                13.11

              	
                Actions
                  with Respect to Defaults

              	 	
                62

              
	
                13.12

              	
                Delivery
                  of Information

              	 	
                62

              
	
                13.13

              	
                Disbursements
                  to Lenders

              	 	
                62

              
	 	 	 	 
	
                ARTICLE
                  XIV COMMUNICATIONS AND NOTICES

              	 	
                63

              
	 	 	 
	
                14.1

              	
                Communications
                  and Notices

              	 	
                63

              
	 	 	 	 
	
                ARTICLE
                  XV WAIVERS

              	 	
                64

              
	 	 	 
	
                15.1

              	
                Waivers

              	 	
                64

              
	
                15.2

              	
                Forbearance

              	 	
                64

              
	
                15.3

              	
                Limitation
                  on Liability

              	 	
                65

              
	 	 	 	 
	
                ARTICLE
                  XVI SUBMISSION TO JURISDICTION

              	 	
                65

              
	 	 	 
	
                16.1

              	
                Submission
                  to Jurisdiction

              	 	
                65

              
	 	 	 	 
	
                ARTICLE
                  XVII MISCELLANEOUS

              	 	
                66

              
	 	 	 
	
                17.1

              	
                Brokers

              	 	
                66

              
	
                17.2

              	
                No
                  Joint Venture

              	 	
                66

              
	
                17.3

              	
                Survival

              	 	
                66

              
	
                17.4

              	
                No
                  Assignment by Borrower

              	 	
                66

              
	
                17.5

              	
                Assignment
                  or Sale by Bank

              	 	
                66

              
	
                17.6

              	
                Binding
                  Effect

              	 	
                67

              
	
                17.7

              	
                Severability

              	 	
                67

              
	
                17.8

              	
                No
                  Third Party Beneficiaries

              	 	
                67

              
	
                17.9

              	
                Modifications

              	 	
                67

              
	
                17.10

              	
                Holidays

              	 	
                67

              
	
                17.11

              	
                Law
                  Governing

              	 	
                67

              
	
                17.12

              	
                Integration

              	 	
                68

              
	
                17.13

              	
                Exhibits
                  and Schedules

              	 	
                68

              
	
                17.14

              	
                Headings

              	 	
                68

              
	
                17.15

              	
                Counterparts

              	 	
                68

              
	
                17.16

              	
                Waiver
                  of Right to Trial by Jury

              	 	
                68

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    REVOLVING
      CREDIT LOAN AND SECURITY AGREEMENT

    

    

    THIS
      REVOLVING CREDIT LOAN AND SECURITY AGREEMENT
      (this
“Agreement”)
      is
      made effective the 17th day of January, 2006, by and between HERSHA
      HOSPITALITY LIMITED PARTNERSHIP,
      a
      Virginia limited partnership (“Borrower”),
      HERSHA
      HOSPITALITY TRUST,
      a
      Maryland real estate investment trust (the “Trust”),
      as
      Guarantor, each of the other Guarantors party hereto, each of the financial
      institutions identified as Lenders on Schedule
      A
      hereto
      (together with each of their successors and assigns, referred to individually
      as
      a “Lender”
and
      collectively as “Lenders”)
      and
COMMERCE
      BANK, N.A.
      (“Bank”),
      as
      Lender and as administrative agent for the Lenders hereunder, acting in the
      manner and to the extent described herein (in such capacity, “Agent”).

    

    

    BACKGROUND

    

    A.    Borrower
      desires to obtain a revolving credit facility to provide funds for the purposes
      described herein.

    

    B.    Lenders
      are willing to make loans and advances to Borrower upon the terms and subject
      to
      the conditions set forth herein.

    

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants contained
      herein, and intending to be legally bound, the parties hereto hereby agree
      as
      follows:

    

    

    ARTICLE
      I

    DEFINITIONS

    

    
      	
              Section
                1.1

            	
              Definitions.

            

    

    

    Capitalized
      terms not otherwise defined herein will have the following
      meanings:

    

    “Accounting
      Terms”
as
      used
      in this Agreement, or any certificate, report or other document made or
      delivered pursuant to this Agreement, accounting terms not defined elsewhere
      in
      this Agreement shall have the respective meanings given to them under GAAP
      as it
      applies to REIT accounting.

    

    “Adjusted
      Funds From Operations”
means
      net income (computed in accordance with GAAP), excluding gains or losses from
      the sale of property, plus interest expense, plus depreciation and amortization
      expenses, minus required capital expenditures reserves, and after adjustments
      for unconsolidated partnerships and joint ventures, minority interest applicable
      to common units, and preferred stock distributions.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Affiliate”
as
      to
      any Person, means each other Person that directly or indirectly through one
      or
      more intermediaries, controls, or is controlled by, or is under common control
      with, the Person in question. 

    

    “Appraisal”
means
      an appraisal performed by an MAI appraiser approved by Agent and in form and
      substance satisfactory to Agent. Agent reserves the right to make reasonable
      adjustments in the assumptions and other variables used in such appraisals
      in
      order to conform to the policies of Agent, which adjustments may result in
      a
      change in the appraised value.

    

    “Appraised
      Value”
means
      the fair market value of each property constituting or proposed to constitute
      Real Estate, as shown by an Appraisal of such property.

    

    “Assignments
      of Leases”
means
      each Assignment of Leases, Rents and Profits of even date herewith from Grantors
      to Agent, relating to the Mortgaged Properties, as the same may be amended,
      modified, supplemented or restated from time to time.

    

    “Bank
      Indebtedness”
shall
      mean all obligations and Indebtedness of Borrower to Bank, whether now or
      hereafter owing or existing, including, without limitation, all obligations
      under the Loan Documents, all obligations to reimburse Bank for payments made
      by
      Bank pursuant to any letter of credit issued for the account or benefit of
      Borrower by Bank, all other obligations or undertakings now or hereafter made
      by
      or for the benefit of Borrower to or for the benefit of Bank under any other
      agreement, promissory note or undertaking now existing or hereafter entered
      into
      by Borrower with Bank, including, without limitation, all obligations of
      Borrower to Bank under any guaranty or surety agreement and all obligations
      of
      Borrower to immediately pay to Bank the amount of any overdraft on any deposit
      account maintained with Bank, together with all interest and other sums payable
      in connection with any of the foregoing.

    

    “Bankruptcy
      Code”
means
      the Bankruptcy Code codified in Title 11 of the United States Code, as
      amended, modified, succeeded or replaced from time to time.

    

    “Borrowing
      Base”
has
      the
      meaning given to such term in Section 2.6 herein.

    

    “Business
      Day”
means
      any day except a Saturday, Sunday or other day on which commercial banks in
      Pennsylvania are authorized by law to close; provided, however, that when used
      in connection with a borrowing or payment in respect of a LIBOR Rate Loan,
      the
      term “Business Day” shall also exclude any day on which banks in London, England
      are not open for dealings in Dollar deposits in the London interbank
      market.

    

    “Capital
      Lease”
means
      any lease of property, real or personal, the obligations with respect to which
      are required to be capitalized on a balance sheet of the lessee in accordance
      with GAAP.

    

    “Capital
      Stock”
means
      (a) in the case of a corporation, capital stock, (b) in the case of an
      association or business entity, any and all shares, interests, participations,
      rights or other equivalents (however designated) of capital stock, (c) in
      the case of a partnership, partnership interests (whether general or limited),
      (d) in the case of a limited liability company, membership interests and
      (e) any other interest or participation that confers on a Person the right
      to receive a share of the profits and losses of, or distributions of assets
      upon
      liquidation of, the issuing Person.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Cash
      Equivalents”
means
      (a) securities issued or directly and fully guaranteed or insured by the
      United States of America or any agency or instrumentality thereof (provided
      that the full faith and credit of the United States of America is pledged
      in support thereof) having maturities of not more than twelve (12) months from
      the date of acquisition (“Government
      Obligations”),
      (b) U.S. dollar denominated time deposits, certificates of deposit of
      (i) any domestic commercial bank of recognized standing having capital and
      surplus in excess of $250,000,000 or (ii) any bank whose short-term
      commercial paper rating from S&P is at least A-1 or the equivalent thereof
      or from Moody’s is at least P-1 or the equivalent thereof (any such bank being
      an “Approved
      Bank”),
      in
      each case with maturities of not more than 364 days from the date of
      acquisition, (c) commercial paper and variable or fixed rate notes issued
      by any Approved Bank (or by the parent company thereof) or any variable rate
      notes issued by or guaranteed by any domestic corporation rated A-1 (or the
      equivalent thereof) or better by S&P or P-1 (or the equivalent thereof) or
      better by Moody’s and maturing within six (6) months of the date of acquisition,
      (d) repurchase agreements with a bank or trust company (including a Lender)
      or a recognized securities dealer having capital and surplus in excess of
      $500,000,000 for direct obligations issued by or fully guaranteed by the
      United States of America, (e) obligations of any state of the
      United States of America or any political subdivision thereof for the
      payment of the principal and redemption price of and interest on which there
      has
      been irrevocably deposited Government Obligations maturing as to principal
      and
      interest at times and in amounts sufficient to provide such payment and
      (f) auction preferred stock rated in the highest short-term credit rating
      category by S&P or Moody’s.

    

    “Closing
      Date”
means
      the date of this Agreement.

    

    “Code”
means
      the Internal Revenue Code of 1986, as amended, modified, succeeded or replaced
      from time to time.

    

    “Collateral”
means
      a
      collective reference to the collateral that is identified in, and at any time
      will be covered by, the Collateral Documents, and any other property or assets,
      whether tangible or intangible and whether real or personal, now owned or
      hereafter acquired by any of the Credit Parties.

    

    “Collateral
      Documents”
means
      the Mortgages, the Assignments of Leases, the Collateral Assignments of Hotel
      Management Agreements, the Guaranties and all other agreements, documents and
      instruments relating to, arising out of, or in any way connected with any of
      the
      foregoing documents or granting to the Agent, for the benefit of the Secured
      Parties, Liens or security interests to secure, inter
      alia,
      the
      Obligations whether now or hereafter executed and/or filed, each as may be
      amended from time to time in accordance with the terms hereof, executed and
      delivered in connection with the granting, attachment and perfection of the
      Administrative Agent’s security interests and Liens arising thereunder,
      including, without limitation, UCC financing statements.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Commitment”
of
      any
      Lender shall mean the commitment of such Lender to make its portion of the
      Loan
      in a principal amount up to such Lender’s Commitment Percentage of the Committed
      Amount.

    

    “Commitment
      Percentage”
means,
      for any Lender, the percentage identified as its commitment percentage on
Schedule
      A
      or in
      the Assignment and Assumption pursuant to which such Lender became a Lender
      hereunder, as such percentage may be modified.

    

    “Commitment
      Amount”
means
      the aggregate revolving credit line extended by Lenders to Borrower for Loans
      and Letters of Credit pursuant to and in accordance with the terms of this
      Agreement, in an amount up to $60,000,000.

    

    “Corporation”
means
      a
      corporation, partnership, trust, unincorporated organization, association or
      joint stock company.

    

    “Credit
      Party”
or
      “Credit
      Parties”
means
      the Borrower and/or the Guarantors, individually or collectively, as
      appropriate.

    

    “Debt
      Service”
means
      the sum of the current portion of long-term debt and the current portion of
      capitalized lease obligations plus interest expense on all
      obligations.

    

    “Debt
      Service Coverage Ratio”
means
      the ratio of Adjusted Funds From Operations to the sum of the current portion
      of
      long-term debt and the current portion of capitalized lease obligations plus
      interest expense on all obligations. 

    

    “Default
      Rate”
has
      the
      meaning given to such term in Section
      3.2 herein.

    

    “Deferred
      Compensation Plan”
means
      any plan described in Section 3(3) of ERISA or any other plan or arrangement
      under which Borrower or any ERISA Affiliate may become obligated to pay
      deferred, bonus, incentive, or other compensation or health, life, medical,
      dental, or other welfare benefits, excluding only any fully insured major
      medical, hospital, or dental program for which Borrower or such ERISA Affiliate
      has no obligation other than the payment of premiums.

    

    “Deposit
      Accounts”
has
      the
      meaning given to such term in Section
      5.27 herein.

    

    “EBITDA”
means
      net income, less income or plus loss from discontinued operations and
      extraordinary items, plus income taxes, plus interest expense, plus
      depreciation, depletion and amortization. 

    

    “Environmental
      Affiliate”
means
      Borrower and any other Person for whom Borrower at any time has any liability
      (contingent or otherwise) with respect to any claims arising out of the failure
      of Borrower or such Person to comply with all applicable Environmental
      Requirements.

    

    “Environmental
      Cleanup Site”
means
      any location which is listed or proposed for listing on the National Priorities
      List, on CERCLIS or on any similar state list of sites requiring investigation
      or cleanup, or which is the subject of any pending or threatened action, suit,
      proceeding or investigation related to or arising from any alleged violation
      of
      any Environmental Requirements.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Environmental
      Requirements”
means
      any and all applicable federal, state or local laws, statutes, ordinances,
      regulations or standards, administrative or court orders or decrees, common
      law
      doctrines or private agreements, relating to (i) pollution or protection of
      the
      environment and natural resources, (ii) exposure of employees or other persons
      to Special Materials, (iii) protection of the public health and welfare from
      the
      effects of Special Materials and their products, by-products, wastes, emissions,
      discharges or releases, and (iv) regulation, licensing, approval or
      authorization of the manufacture, generation, use, formulation, packaging,
      labeling, transporting, distributing, handling, storing or disposing of any
      Special Materials.

    

    “Equity”
means
      Borrower's consolidated equity, as shown on its financial statements submitted
      to Bank in accordance with Article
      IX
      herein.

    

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and all rules
      or regulations issued in connection therewith.

    

    “ERISA
      Affiliate”
means
      each trade or business (whether or not incorporated) that, together with
      Borrower, would be treated as a single employer under Section 4001(b)(1) of
      ERISA or Section 414(b) or 414(c) of the Internal Revenue Code.

    

    “Eurodollar
      Reserve Percentage”
means
      for any day, the percentage (expressed as a decimal and rounded upwards, if
      necessary, to the next higher 1/100th of 1%) that is in effect for such day
      as
      prescribed by the Federal Reserve Board (or any successor) for determining
      the
      maximum reserve requirement (including without limitation any basic,
      supplemental or emergency reserves) in respect of Eurocurrency liabilities,
      as
      defined in Regulation D of such Board as in effect from time to time, or
      any similar category of liabilities for a member bank of the Federal Reserve
      System in New York City.

    

    “Event
      of Default”
means
      each of the events specified in Section
      12.1.

    

    “Expiration
      Date”
means
      December 31, 2008.

    

    “Extension
      of Credit”
means,
      as to any Lender, the making of a Loan by such Lender or the issuance of, or
      participation in, a Letter of Credit by such Lender.

    

    “Fee
      Letter”
means
      the agreement of even date herewith between the Borrower and Agent setting
      forth
      the amounts of certain fees payable by Borrower hereunder.

    

    “Federal
      Funds Rate”
shall
      mean, for any period, a fluctuating interest rate per annum equal, for each
      day
      during such period, to the weighted average of the rates on overnight Federal
      Funds transactions with members of the Federal Reserve System arranged by
      Federal Funds brokers, as published for such day (or, if such day is not a
      Business Day, for the next preceding Business Day) by the Federal Reserve Bank
      of New York, or, if such rate is not so published for any day that is a Business
      Day, the average of the quotations for such day on such transactions received
      by
      the Agent from three Federal Funds brokers of recognized standing selected
      by
      it.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “GAAP”
means
      generally accepted accounting principles in the United States of America, in
      effect from time to time, consistently applied and maintained.

    

    “Government
      Acts”
has
      the
      meaning set forth in Section 2.2.8.

    

    “Governmental
      Authority”
means
      any nation or government, any state or other political subdivision thereof
      and
      any entity exercising executive, legislative, judicial, regulatory or
      administrative functions of or pertaining to government.

    

    “Grantors”
means
      the Harrisburg Grantor, the King of Prussia Grantor, the Laurel Grantor and
      each
      fee owner of any other Mortgaged Property, as grantor under the Mortgage in
      respect of such Mortgaged Property.

    

    “Gross
      Asset Value”
means:
      (i) Operating Real Estate Value, plus (ii) cash and cash equivalents (excluding
      any restricted cash), plus (iii) accounts receivable less than ninety (90)
      days,
      plus (iv) with respect to any operating hotel acquired during the preceding
      quarter, the acquisition cost of such property. 

    

    “Guarantor”
means
      the Trust, each of the Grantors, 44 New England Management Company, a Virginia
      corporation and each other Subsidiary or Affiliate of Borrower that hereafter
      becomes a guarantor of Borrower’s obligations hereunder.

    

    “Guaranty”
means
      the Guaranty of Payment and Performance of each Guarantor. 

    

    “Harrisburg
      Grantor”
means
      2844 Associates, a Pennsylvania limited partnership, the fee owner of the
      Harrisburg Property, as grantor under the Harrisburg Mortgage.

    

    “Harrisburg
      Mortgage”
means
      the Open-End Mortgage, Assignment of Leases and Rents and Security Agreement
      of
      even date herewith from the Harrisburg Grantor to Agent, and relating to the
      Harrisburg Property, as the same may be amended, modified, supplemented or
      restated from time to time.

    

    “Harrisburg
      Property”
means
      the real property, fixtures and improvements thereon located at 5680 Allentown
      Boulevard, Harrisburg, Pennsylvania and operated as a Holiday Inn Express Hotel
      and Suites.

    

    “Hazardous
      Material”
means
      any substance or material meeting any one or more of the following criteria:
      (i) it is or contains a substance designated as a hazardous waste,
      hazardous substance, pollutant, contaminant or toxic substance under any
      Environmental Requirement; (ii) it is toxic, explosive, corrosive,
      ignitable, infectious, radioactive, mutagenic or otherwise hazardous,
      (iii) its presence requires investigation or remediation under an
      Environmental Requirement or common law; (iv) it constitutes a danger,
      nuisance, trespass or health or safety hazard to persons or property; and/or
      (v) it is or contains, without limiting the foregoing, petroleum
      hydrocarbons.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    “Hedging
      Agreements”
shall
      mean any Interest Rate Protection Agreement or other interest rate protection
      agreement, foreign currency exchange agreement, commodity purchase or option
      agreement or other interest or exchange rate or commodity price hedging
      agreements.

    

    “Hedging
      Agreement Provider”
means
      any Person that enters into a Hedging Agreement with a Credit Party or any
      of
      its Subsidiaries that is permitted by Section 8.1(e) to the extent such Person
      is a Lender, an Affiliate of a Lender or any other Person that was a Lender
      (or
      an Affiliate of a Lender) at the time it entered into the Hedging Agreement
      but
      has ceased to be a Lender (or whose Affiliate has ceased to be a Lender) under
      this Agreement.

    

    “Improvements”
means
      all buildings, structures, fixtures and personal property now or hereafter
      located on or affixed to the Land, together with all additions and accessions
      thereto and replacements and proceeds thereof.

    

    “Indebtedness,”
as
      applied to a Person, means:

    

    (a) all
      items
      (except items of capital stock or of surplus) which in accordance with GAAP
      would be included in determining total liabilities as shown on the liability
      side of a balance sheet of such Person as at the date as of which Indebtedness
      is to be determined;

    

    (b) to
      the
      extent not included in the foregoing, all indebtedness, obligations, and
      liabilities secured by any mortgage, pledge, lien, conditional sale or other
      title retention agreement or other security interest to which any property
      or
      asset owned or held by such Person is subject, whether or not the indebtedness,
      obligations or liabilities secured thereby shall have been assumed by such
      Person; and

    

    (c) to
      the
      extent not included in the foregoing, all indebtedness, obligations and
      liabilities of others which such Person has directly or indirectly guaranteed,
      endorsed (other than for collection or deposit in the ordinary course of
      business), sold with recourse, or agreed (contingently or otherwise) to purchase
      or repurchase or otherwise acquire or in respect of which such Person has agreed
      to supply or advance funds (whether by way of loan, stock purchase, capital
      contribution or otherwise) or otherwise to become directly or indirectly
      liable.

    

    “Interest
      Payment Date”
means
      (a) as to any Prime Rate Loan, the first Business Day of each calendar
      month and on the Expiration Date, (b) as to any LIBOR Rate Loan having an
      Interest Period of three (3) months or less, the last day of such Interest
      Period, (c)  as to any LIBOR Rate Loan having an Interest Period longer
      than three (3) months, each day which is three (3) months after the first day
      of
      such Interest Period and the last day of such Interest Period and (d) as to
      any
      Loan which is the subject of a mandatory prepayment, the date on which such
      mandatory prepayment is due.

    

    “Interest
      Period”
means,
      with respect to any LIBOR Rate Loan, 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (a)   initially,
      the period commencing on the date such Loan is made or converted, as the case
      may be, with respect to such LIBOR Rate Loan and ending one (1), two (2), three
      (3) or six (6) months thereafter, subject to availability, as selected by the
      Borrower in the Line Request given with respect thereto; and

    

    (b)   thereafter,
      each period commencing on the last day of the immediately preceding Interest
      Period applicable to such LIBOR Rate Loan and ending one (1), two (2), three
      (3)
      or six (6) months thereafter, as selected by the Borrower by irrevocable notice
      to the Agent not less than two (2) Business Days prior to the last day of the
      then current Interest Period with respect thereto;

     

    provided
      that the
      foregoing provisions are subject to the following:

    

    (i)    
if
      any
      Interest Period pertaining to a LIBOR Rate Loan would otherwise end on a day
      that is not a Business Day, such Interest Period shall be extended to the next
      succeeding Business Day unless the result of such extension would be to carry
      such Interest Period into another calendar month in which event such Interest
      Period shall end on the immediately preceding Business Day;

     

    (ii)    any
      Interest Period pertaining to a LIBOR Rate Loan that begins on the last Business
      Day of a calendar month (or on a day for which there is no numerically
      corresponding day in the calendar month at the end of such Interest Period)
      shall end on the last Business Day of the relevant calendar month;

     

    (iii)   if
      the
      Borrower shall fail to give notice as provided above, the Borrower shall be
      deemed to have selected a Prime Rate Loan to replace the affected LIBOR Rate
      Loan;

     

    (iv)   no
      Interest Period in respect of any Loan shall extend beyond the Expiration Date;
      and

     

    (v)    no
      more
      than six (6) LIBOR Rate Loans may be in effect at any time. For purposes
      hereof, LIBOR Rate Loans of different Interest Periods or Tranches shall be
      considered as separate LIBOR Rate Loans, even if they shall begin on the same
      date and have the same duration, although borrowings, extensions and conversions
      in the same Tranche may, in accordance with the provisions hereof, be combined
      at the end of existing Interest Periods to constitute a new LIBOR Rate Loan
      with
      a single Interest Period.

    

    “Interest
      Rate Option”
means
      the option of Borrower to select a Prime Rate Loan or LIBOR Rate Loan as the
      interest rate applicable to principal advances under the Line.

    

    “Interest
      Rate Protection Agreement”
means
      any interest rate protection agreement, foreign currency exchange agreement,
      commodity purchase or option agreement or other interest or exchange rate or
      commodity price hedging agreements between Borrower and any Lender, or any
      affiliate of Bank.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    “Investment”
means,
      as to any Person, any direct or indirect acquisition or investment by such
      Person, whether by means of (a) the purchase or other acquisition of
      capital stock or other securities of another Person, (b) a loan, advance or
      capital contribution to, guaranty or assumption of debt of, or purchase or
      other
      acquisition of any other debt or equity participation or interest in, another
      Person, including any partnership or joint venture interest in such other
      Person, or (c) the purchase or other acquisition (in one transaction or a
      series of transactions) of assets of another Person that constitute a business
      unit.

    

    “Issuing
      Bank”
or
      “Issuing
      Lender”
shall
      mean Bank or any other Lender that is acceptable to Agent which shall issue
      a
      Letter of Credit for the account of Borrower.

    

    “King
      of Prussia Grantor”
means
      HHLP Valley Forge Associates, a Pennsylvania limited partnership, the fee owner
      of the King of Prussia Property, as grantor under the King of Prussia
      Mortgage.

    

    “King
      of Prussia Mortgage”
means
      the Open-End Mortgage, Assignment of Leases and Rents and Security Agreement
      of
      even date herewith from the King of Prussia Grantor to Agent, and relating
      to
      the King of Prussia Property, as the same may be amended, modified, supplemented
      or restated from time to time.

    

    “King
      of Prussia Property”
means
      the real property, fixtures and improvements thereon located at 440 American
      Avenue, King of Prussia, Pennsylvania and operated as a Mainstay Suites and
      Sleep Inn.

    

    “Land”
means
      the real property described in Exhibit
      A
      to each
      of the Mortgages.

    

    “Laurel
      Grantor”
means
      44 Laurel Associates, LLC, a Maryland limited liability company, the fee owner
      of the Laurel Property, as grantor under the Laurel Mortgage.

    

    “Laurel
      Mortgage”
means
      the Deed of Trust of even date herewith from the Laurel Grantor to Agent, and
      relating to the Laurel Property, as the same may be amended, modified,
      supplemented or restated from time to time.

    

    “Laurel
      Property”
means
      the real property, fixtures and improvements thereon located at 13700 Baltimore
      Avenue, Laurel, Maryland and operated as a Fairfield Inn.

    

    “Lender’s
      Fees”
shall
      mean the non-refundable fees payable to each of the Lenders as set forth herein
      and in the fee letter between Agent and Borrower.

    

    “Letter
      of Credit Committed Amount”
shall
      have the meaning given to such term in Section
      2.2
      herein.

    

    “Letter
      of Credit Documents”
shall
      mean, with respect to any Letter of Credit, such Letter of Credit, any
      amendments thereto, any documents delivered in connection therewith, any
      application therefor, and any agreements, instruments, guarantees or other
      documents (whether general in application or applicable only to such Letter
      of
      Credit) governing or providing for (i) the rights and obligations of the parties
      concerned or at risk or (ii) any collateral security for such
      obligations.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    “Letter
      of Credit Fees”
shall
      mean the letter of credit fees referred to in Section
      4.6
      herein.

    

    “Letter
      of Credit Obligations”
shall
      mean, at any time, the sum of (i) the aggregate undrawn amount of all Letters
      of
      Credit outstanding at such time, plus (ii) the aggregate amount of all drawings
      under Letters of Credit for which Agent has not at such time been
      reimbursed.

    

    “Letter
      of Credit Sublimit”
shall
      mean $15,000,000.

    

    “Letters
      of Credit”
shall
      mean all letters of credit (whether documentary or stand-by) issued by Lenders
      for the account of Borrower pursuant to this Agreement, and all amendments,
      renewals, extensions or replacements thereof.

    

    “LIBOR”
means,
      for any LIBOR Rate Loan for any Interest Period therefor, the rate per annum
      (rounded upwards, if necessary, to the nearest 1/100th
      of 1%)
      appearing on Moneyline Telerate Page 3750 (or any successor page) as the London
      interbank offered rate for deposits in Dollars at approximately
      11:00 A.M.
      (London
      time) two (2) Business Days prior to the first day of such Interest Period
      for a
      term comparable to such Interest Period. If for any reason such rate is not
      available, the term “LIBOR” means, for any LIBOR Rate Loan for any Interest
      Period therefor, the rate per annum (rounded upwards, if necessary, to the
      nearest 1/100th
      of 1%)
      appearing on Reuters Screen LIBO Page as the London interbank offered rate
      for
      deposits in Dollars at approximately 11:00 A.M. (London time) two (2)
      Business Days prior to the first day of such Interest Period for a term
      comparable to such Interest Period; provided,
      however,
      if more
      than one rate is specified on Reuters Screen LIBO Page, the applicable rate
      shall be the arithmetic mean of all such rates (rounded upwards, if necessary,
      to the nearest 1/100th
      of 1%).
      If, for any reason, neither of such rates is available, then “LIBOR” means the
      rate per annum at which, as determined by the Agent, Dollars in an amount
      comparable to the Loans then requested are being offered to leading banks at
      approximately 11:00 A.M. London time, two (2) Business Days prior to
      the commencement of the applicable Interest Period for settlement in immediately
      available funds by leading banks in the London interbank market for a period
      equal to the Interest Period selected.

    

    “LIBOR
      Lending Office”
means,
      as to any Lender, such office of such Lender as such Lender may from time to
      time specify to the Agent and the Borrower as the office of such Lender at
      which
      the LIBOR Rate Loans of such Lender are to be made.

    

    “LIBOR
      Market Index Rate”
means,
      for any day, the rate for one (1) month U.S. dollar deposits as reported on
      Telerate page 3750 as of 11:00 a.m., London time, on such day, or if such day
      is
      not a Business Day, then the immediately preceding Business Day (or if not
      so
      reported, then as determined by the Agent from another recognized source or
      interbank quotation).

    

    “LIBOR
      Rate”
means
      a
      rate per annum (rounded upwards, if necessary, to the next higher 1/100th of
      1%)
      determined by the Agent pursuant to the following formula:

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    
      	 	
              LIBOR
                Rate =

            	
              LIBOR

            	 
	 	 	
              1.00
                - Eurodollar Reserve Percentage

            	 

    

    

    “LIBOR
      Rate Loan”
means
      a
      Loan the rate of interest applicable to which is based on the LIBOR Rate as
      described in Section
      3.1.2
      herein.

    

    “Lien”
means
      any mortgage, pledge, hypothecation, assignment, deposit arrangement,
      encumbrance, lien (statutory or other), charge or other security interest or
      any
      other security agreement of any kind or nature whatsoever (including, without
      limitation, any conditional sale or other title retention agreement and any
      capital lease having substantially the same economic effect as any of the
      foregoing).

    

    “Line”
has
      the
      meaning given to such term in Section
      2.1
      herein.

    

    “Line
      Note”
has
      the
      meaning given to such term in Section
      2.1
      herein.

    

    “Line
      Request”
has
      the
      meaning given to such term in Section
      2.5
      herein.

    

    “Loan
      Documents”
means
      this Agreement, the Line Notes, the Mortgages, the Assignments of Leases, the
      Collateral Assignments of Hotel Management Agreements, the Guaranties and all
      other documents executed or delivered by the Credit Parties and their respective
      Subsidiaries and Affiliates pursuant to this Agreement, as they may be amended
      from time to time.

    

    “Loans”
means
      the unpaid balance of advances under the Line, which may be Prime Rate Loans
      or
      LIBOR Rate Loans.

    

    “Material
      Adverse Effect”
means
      a
      material adverse effect on (a) the businesses, properties, operations or
      financial conditions of the Credit Parties taken as a whole, (b) the
      ability of the Credit Parties taken as a whole to perform their obligations,
      when such obligations are required to be performed, under this Agreement, any
      of
      the Notes or any other Loan Document or (c) the validity or enforceability
      of this Agreement, any of the Notes, any of the other Loan Documents, any
      Hedging Agreement or the rights or remedies of the Agent or the Lenders
      hereunder or thereunder, in any material respect.

    

    “Minimum
      Debt Service Coverage Ratio”
means
      1.35:1.00.

    

    “Mortgage”
or
      “Mortgages”
means,
      individually or collectively, as applicable, any of the Harrisburg Mortgage,
      the
      King of Prussia Mortgage, the Laurel Mortgage and each other Mortgage and
      Security Agreement from the fee owner, as grantor, to Agent, and relating to
      any
      of the Mortgaged Properties, as the same may be amended, modified, supplemented
      or restated from time to time.

    

    “Mortgaged
      Property”
or
      “Mortgaged
      Properties”
means,
      individually or collectively, as applicable, any of the Harrisburg Property,
      the
      King of Prussia Property, the Laurel Property and such additions, replacements
      or substitutions thereto and therefore as may approved by Lenders pursuant
      to
      Section 13.10 hereof.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    “Multiemployer
      Plan”
means
      a
      plan described in Section 3(37) or 4001(a)(3) of ERISA or Section 414 of the
      Internal Revenue Code of 1986, as amended from time to time, which cover
      employees of Borrower or any ERISA Affiliate.

    

    “Net
      Operating Income”
means
      Borrower’s consolidated gross revenues less expenses (excluding depreciation,
      interest and amortization).

    

    “Net
      Worth”
means,
      as of any date, net worth of Borrower as determined in accordance with
      GAAP.

    

    “Note”
or
      “Notes”
means
      the promissory note or notes of the Borrower in favor of each of the Lenders
      evidencing the Loans provided pursuant to Section 2.1, individually or
      collectively, as appropriate, as such promissory notes may be amended, modified,
      supplemented, extended, renewed or replaced from time to time.

    

    “Obligations”
means,
      without duplication, (a) all of the obligations, indebtedness and
      liabilities of the Credit Parties to the Lenders and the Agent, whenever
      arising, under this Agreement, the Notes or any of the other Loan Documents
      including principal, interest, fees, Letter of Credit Obligations,
      reimbursements and indemnification obligations and other amounts (including,
      but
      not limited to, any interest accruing after the occurrence of a filing of a
      petition of bankruptcy under the Bankruptcy Code with respect to any Credit
      Party, regardless of whether such interest is an allowed claim under the
      Bankruptcy Code), and (b) all Swap Obligations owing to one or more Lenders
      or
      their respective Affiliates, provided that at or prior to the time that any
      transaction relating to such Swap Obligations is executed, the Lender or
      Affiliate party thereto (other than Bank) shall have delivered written notice
      to
      the Agent that such a transaction has been entered into and that it constitutes
      an Obligation entitled to the benefits of the Loan Documents. 

    

    “Obligor”
means
      each maker, mortgagor, guarantor, or other obligor under or with respect to
      any
      Collateral Document.

    

    “OFAC”
means
      the U.S. Department of the Treasury’s Office of Foreign Assets
      Control.

    

    “Operating
      Real Estate Value”
means
      the aggregate EBITDA generated by the Borrower and its Subsidiaries for the
      preceding fiscal quarter annualized and capitalized at the higher of (i) 10.0%;
      or (ii) the national average capitalization rate as determined by Korpacz Real
      Estate Investor Survey for limited service hotels; the capitalization rate
      shall
      be adjusted not more than annually. For the purposes of determining Operating
      Real Estate Value, EBITDA from the properties acquired during the prior quarter
      or disposed of during the prior quarter shall be excluded.

    

    “Patriot
      Act”
means
      the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26,
      2001, as amended.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    “Permitted
      Investments”
      means:

    

    (a)    cash
      and
      Cash Equivalents;

    

    (b)    receivables
      owing to any Credit Party or any of their Subsidiaries and advances to
      suppliers, in each case if created, acquired or made in the ordinary course
      of
      business and payable or dischargeable in accordance with customary trade
      terms;

     

    (c)    Investments
      in and loans to any Credit Parties;

     

    (d)    Investments
      received in connection with the bankruptcy or reorganization of suppliers and
      customers and in settlement of delinquent obligations of, and other disputes
      with, customers and suppliers arising in the ordinary course of
      business;

     

    (e)    Investments,
      acquisitions or transactions permitted under Section 8.7; and

     

    (f)    Hedging
      Agreements to the extent permitted pursuant to Section 8.1(e).

    

    “Permitted
      Liens”
      means:

     

    (a)    Liens
      created by or otherwise existing, under or in connection with this Agreement
      or
      the other Loan Documents in favor of the Lenders;

    

    (b)    Liens
      in
      favor of a Hedging Agreement Provider in connection with any Hedging Agreement,
      but only (i) to the extent such Liens secure obligations under Hedging
      Agreements with any Lender, or any Affiliate of a Lender, (ii) to the
      extent such Liens are on the same collateral as to which the Agent on behalf
      of
      the Lenders also has a Lien and (iii) if such Hedging Agreement Provider
      and the Agent, on behalf of the Lenders shall share pari passu
      in the
      collateral subject to such Liens;

     

    (c)    Liens
      securing purchase money indebtedness to the extent permitted under
      Section 8.1;

     

    (d)    Liens
      for
      taxes, assessments, charges or other governmental levies not yet due or as
      to
      which the period of grace (not to exceed sixty (60) days), if any, related
      thereto has not expired or which are being contested in good faith by
      appropriate proceedings; provided
      that
      adequate reserves with respect thereto are maintained on the books of the Credit
      Parties or their Subsidiaries, as the case may be, in conformity with
      GAAP;

     

    (e)    carriers’,
      warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens
      arising in the ordinary course of business which are not overdue for a period
      of
      more than sixty (60) days or which are being contested in good faith by
      appropriate proceedings; provided that a reserve or other appropriate provision
      has been made therefor and the aggregate amount of such Liens is less than
      $100,000;

     

    (f)    mechanics’,
      materialmen’s, repairmen’s or other like Liens arising in the ordinary course of
      business under any construction contract which are not overdue for a period
      of
      more than sixty (60) days or which are being contested in good faith by
      appropriate proceedings; provided that a reserve or other appropriate provision
      has been made therefor;

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (g)    pledges
      or deposits in connection with workers’ compensation, unemployment insurance and
      other social security legislation and deposits securing liability to insurance
      carriers under insurance or self-insurance arrangements in an aggregate amount
      not to exceed $100,000;

     

    (h)    deposits
      to secure the performance of bids, trade contracts (other than for borrowed
      money), leases, statutory obligations, surety and appeal bonds, performance
      bonds and other obligations of a like nature incurred in the ordinary course
      of
      business; 

     

    (i)    
any
      extension, renewal or replacement (or successive extensions, renewals or
      replacements), in whole or in part, of any Lien referred to in the foregoing
      clauses; provided
      that
      such extension, renewal or replacement Lien shall be limited to all or a part
      of
      the property which secured the Lien so extended, renewed or replaced (plus
      improvements on such property);

     

    (j)    
easements,
      rights-of-way, zoning restrictions, minor defects or irregularities in title
      and
      other similar encumbrances not interfering in any material respect with the
      value or use of the property to which such lien is attached;

     

    (k)    Liens
      on
      equipment arising from precautionary UCC financing statements relating to the
      lease of such equipment to the extent permitted by this Agreement; 

     

    (l)    
Liens
      existing on the Closing Date and set forth on Schedule
      8.4;
      provided that (i) no such Lien shall at any time be extended to cover property
      or assets other than the property or assets subject thereto on the Closing
      Date
      and (ii) the Indebtedness secured by such Liens shall remain permitted pursuant
      to Section
      8.1;
      and

     

    (m)    any
      attachment or judgment Lien not constituting an Event of Default.

    

    “Person”
means
      an individual, a Corporation or a government or any agency or subdivision
      thereof, or any other entity.

    

    “Philadelphia
      Grantor”
means
      the fee owner of the Philadelphia Property, as grantor under the Philadelphia
      Mortgage.

    

    “Philadelphia
      Mortgage”
means
      the Open-End Mortgage, Assignment of Leases and Rents and Security Agreement
      from the Philadelphia Grantor to Agent, and relating to the Philadelphia
      Property, as the same may be amended, modified, supplemented or restated from
      time to time.

    

    “Philadelphia
      Property”
means
      the real property, fixtures and improvements thereon located at 1301 Race
      Street, Philadelphia, Pennsylvania and operated as a Hampton Inn.

    

    “Potential
      Default”
means
      the occurrence of any event which, with the giving of notice or passage of
      time
      or both, would constitute an Event of Default.

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    “Prime
      Rate”
means
      the variable rate of interest published from time to time in the Wall Street
      Journal as the Prime Rate.

    

    “Prime
      Rate Loan”
means
      a
      Loan the rate of interest applicable to which is based on the Prime Rate, as
      described in Section
      3.1.1
      herein.

    

    “Recovery
      Event”
means
      theft, loss, physical destruction or damage, taking or similar event with
      respect to any property or assets owned by any of the Credit Parties or any
      of
      their Subsidiaries which results in the receipt by any of the Credit Parties
      or
      any of their Subsidiaries of any cash insurance proceeds or condemnation award
      payable by reason thereof.

    

    “Replacement
      Guarantor”
means
      any Person, reasonably acceptable to Agent, who becomes a Guarantor hereunder
      pursuant to Section
      4.14
      hereof
      or otherwise.

    

    “Required
      Lenders”
means
      at any time, Lenders which are then in compliance with their obligations
      hereunder (as determined by the Agent) and holding in the aggregate at least
      sixty-six and two-thirds percent (66 2/3%) of (i) the Commitment (and
      participation interests therein) and the outstanding Loans (and participation
      interests therein) or (ii) if the Commitment have been terminated, the
      outstanding Loans and participation interests (including the participation
      interests of the Issuing Bank in any Letters of Credit).

    

    “Restricted
      Payment”
means,
      as to any Person (a) any dividend or other distribution, direct or
      indirect, on account of any shares of any class of Capital Stock of such Person,
      now or hereafter outstanding, (b) any redemption, retirement, sinking fund
      or similar payment, purchase or other acquisition for value, direct or indirect,
      of any shares of any class of Capital Stock of such Person, now or hereafter
      outstanding, (c) any payment made to retire, or to obtain the surrender of,
      any outstanding warrants, options or other rights to acquire shares of any
      class
      of Capital Stock of such Person, now or hereafter outstanding, (d) any payment
      with respect to any earnout obligation, (e) any payment or prepayment of
      principal of, premium, if any, or interest on, redemption, purchase, retirement,
      defeasance, sinking fund or similar payment with respect to, any Subordinated
      Debt; (f) any payment of any management or consulting fee to any Person; or
      (g)
      any payment of any bonus or other form of compensation (other than salary)
      to
      any Person who is directly or indirectly a significant partner, shareholder,
      owner, managing member or Affiliate of such Person.

    

    “RevPAR”
means
      revenue per available room.

    

    “Sanctioned
      Country”
means
      a
      country subject to a sanctions program identified on the list maintained by
      OFAC
      and available at http://www.treas.gov/offices/enforcement
      /ofac/sanctions/index.html,
      or as
      otherwise published from time to time.

    

    “Sanctioned
      Person”
means
      (a) a Person named on the list of “Specially Designated Nationals and Blocked
      Persons” maintained by OFAC available at http://www.treas.gov/offices/enforcement/ofac/sdn/index.html,
      or as
      otherwise published from time to time, or (b) (i) an agency of the government
      of
      a Sanctioned Country, (ii) an organization controlled by a Sanctioned Country,
      or (iii) a person resident in a Sanctioned Country, to the extent subject to
      a
      sanctions program administered by OFAC.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    “Secured
      Parties”
means
      collectively, (i) the Agent, (ii) the Lenders (including the Bank), (iii) the
      Issuing Lender, (iv) any Hedging Agreement Provider which is a counterparty
      to
      any Hedging Agreement, provided that with respect to clause (iv) the Lender
      or
      Affiliate of a Lender party thereto (other than Bank or its Affiliates) shall
      have delivered written notice to the Agent that such a transaction has been
      entered into and that it constitutes an Obligation entitled to the benefits
      of
      the Collateral Documents. 

     

    “Special
      Materials”
means
      any and all materials which, under Environmental Requirements, require special
      handling in use, generation, collection, storage, treatment or disposal, or
      payment of costs associated with responding to the lawful directives of any
      court or agency of competent jurisdiction. Special Materials shall include,
      without limitation: (i) any flammable substance, explosive, radioactive
      material, hazardous material, hazardous waste, toxic substance, solid waste,
      pollutant, contaminant or any related material, raw material, substance, product
      or by-product of any substance specified in or regulated or otherwise affected
      by any Environmental Requirements (including but not limited to any "hazardous
      substance" as defined in the Comprehensive Environmental Response, Compensation
      and Liability Act of 1980, as amended, or any similar state or local law),
      (ii)
      any toxic chemical or other substance from or related to industrial, commercial
      or institutional activities, and (iii) asbestos, gasoline, diesel fuel, motor
      oil, waste and used oil, heating oil and other petroleum products or compounds,
      polychlorinated biphenyls, radon, urea formaldehyde and lead-containing
      materials.

    

    “Subordinated
      Liabilities”
means
      liabilities subordinated to the Borrower’s obligation to Lenders in a manner
      acceptable to Agent in its sole discretion.

    

    “Subsidiary”
means
      a
      Corporation (a) which is organized under the laws of the United States or any
      state thereof, or any other country or jurisdiction, (b) which conducts
      substantially all of its business and has substantially all of its assets within
      the United States, and (c) of which more than fifty percent (50%) of its
      outstanding voting stock of every class (or other voting equity interest) is
      owned by Borrower or one or more of its Subsidiaries.

    

    “Substitute
      Collateral”
means
      any real property, together with the improvements thereon, owned by an Affiliate
      or Subsidiary of Borrower or the Trust, in respect of which Agent shall have
      received an Appraisal and such other reports, documents and instruments as
      may
      be required by Agent pursuant to Section
      4.14
      hereof.
      Upon the delivery of Substitute Collateral to Agent and the acceptance thereof
      by Agent and Lenders, the Substitute Mortgage and the Substitute Assignment
      of
      Leases delivered to Agent shall constitute Collateral Documents and the Land
      and
      Improvements to which they relate shall constitute Mortgaged
      Property.

    

    “Swap
      Obligations”
of
      a
      Person means any and all obligations of such Person, whether absolute or
      contingent and however and whenever created, arising, evidenced or acquired
      (including all renewals, extensions and modifications thereof and substitutions
      therefor), under a Hedging Agreement.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    “Tangible
      Net Worth”
means
      the value of the Borrower’s total assets (including leaseholds and leasehold
      improvements and reserves against assets, but excluding goodwill, patents,
      trademarks, trade names, organization expense, unamortized debt discount and
      expense, capitalized or deferred research and development costs, deferred
      marketing expenses, and other like intangibles, and monies due from affiliates,
      officers, employees, shareholders or managers of the Borrower) less total
      liabilities, including, but not limited to accrued and deferred income taxes,
      but excluding the non-current portion of subordinated liabilities. 

    

    “Total
      Funded Debt”
means
      all outstanding liabilities for borrowed money and other interest
      interest-bearing liabilities, including current and long-term debt, less the
      non-current portion of subordinated liabilities. 

    

    “Tranche”
means
      the collective reference to LIBOR Rate Loans with Interest Periods which begin
      and end on the same day. 

    

    “UCC”
means
      the Uniform Commercial Code, as presently and hereafter enacted in the
      Commonwealth of Pennsylvania. Any term used in this Agreement which is defined
      in the UCC and not otherwise defined in this Agreement or in any other Loan
      Document has the meaning given to the term in the UCC. 

     

    
      	
              Section
                1.2

            	
              Other
                Definitional Provisions.

            

    

     

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

     

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

     

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

     

     

    ARTICLE
      II

    THE
      LINE: USE OF PROCEEDS

    

    

    
      	
              Section
                2.1

            	
              Line
                of Credit.

            

    

    

    (a)    Lenders
      will establish for Borrower for and during the period from the date hereof
      and
      until the Expiration Date, subject to the terms and conditions hereof, a
      revolving line of credit (the “Line”)
      pursuant to which Lenders will from time to time make Loans to Borrower in
      an
      aggregate outstanding principal amount not to exceed at any time Sixty Million
      Dollars ($60,000,000) (the “Committed
      Amount”).
      Each
      Lender severally agrees to make Loans to Borrower from time to time in an amount
      equal to such Lender’s Commitment Percentage of the advance under the Line
      requested by Borrower and in an aggregate principal amount up to its Commitment
      Percentage of the Committed Amount; provided,
      however,
      that
      (i) with regard to each Lender individually, the aggregate principal amount
      of
      such Lender’s Commitment Percentage of Loans plus Letter of Credit Obligations
      shall not exceed such Lender’s Commitment Percentage of the Committed Amount and
      (ii) with regard to the Lenders collectively, the aggregate principal amount
      of
      Loans plus Letter of Credit Obligations shall not exceed the Committed Amount.
      Neither Agent nor any other Lender shall be obligated to advance the share
      of
      any other Lender. Agent shall not be required to make the full amount of any
      requested advance unless and until it receives funds representing each other
      Lender’s Commitment Percentage of such requested advance, but Agent shall
      advance to Borrower that portion of the requested advance equal to the
      Commitment Percentages of such requested advance which it has received from
      Lenders. Within the limits of the Line, Borrower may borrow, repay and re-borrow
      under the Line. The Line shall be subject to all terms and conditions set forth
      in all of the Loan Documents, which terms and conditions are incorporated
      herein.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (b)    The
      obligations to repay the Loans and to pay interest thereon shall be evidenced
      by
      a promissory note of Borrower to Agent in substantially the form of Exhibit
      A
      attached
      hereto (“Line
      Note”).
      In
      the event a Lender requests a separate promissory note of Borrower representing
      such Lender’s Commitment, Borrower hereby agrees to execute and deliver to such
      Lender a separate Line Note substantially in the form of Exhibit
      A
      attached
      hereto, payable to the order of such Lender in a principal amount equal to
      such
      Lender’s Commitment and representing the obligations of Borrower to pay such
      Lender the amount of such Lender’s Commitment or, if less, the aggregate unpaid
      principal amount of all Loans made by such Lender hereunder, plus interest
      accrued thereon, as set forth herein. All payments under the Line Notes shall
      be
      remitted by Borrower to Agent. In the event any Lender receives a Loan payment
      directly from Borrower, such Lender shall immediately remit the entire amount
      of
      such payment to Agent, to be disbursed by Agent in accordance with Section
      13.13
      hereof. Borrower irrevocably authorizes each Lender to make or cause to be
      made
      appropriate notations on its Line Note, or on a record pertaining thereto,
      reflecting Loans and repayments thereof. The outstanding amount of the Loans
      set
      forth on such Lender’s Line Note or record shall be prima facie
      evidence
      of the principal amount thereof owing and unpaid to such Lender, but the failure
      to make such notation or record, or any error in such notation or record shall
      not limit or otherwise affect the obligations of Borrower hereunder or under
      any
      Line Note to make payments of principal of or interest on any Line Note when
      due. Any references herein to a “Note” or “Notes” shall be deemed to mean and
      refer to each Line Note individually and all Line Notes collectively.

    

    (c)    Each
      Lender shall make its Commitment Percentage of each advance available to Agent,
      for the account of the Borrower, in funds immediately available to Agent at
      Agent’s designated office by 1:00 p.m. on the date specified in the applicable
      Line Request. If Agent does not receive each other Lender’s Commitment
      Percentage of an advance, and Agent elects, in its sole discretion, to make
      the
      advance on behalf of Lenders or any of them, Agent shall be entitled to recover
      each Lender’s Commitment Percentage of each such advance together with interest
      at a per annum rate equal to the Federal Funds Rate during the period commencing
      on the date such advance is made and ending on (but excluding) the date Agent
      recovers such amount. Each Lender is absolutely and unconditionally obligated,
      without deduction or setoff of any kind, to forward to Agent its Commitment
      Percentage of each advance made pursuant to the terms of this Agreement. To
      the
      extent Agent is not reimbursed by such Lender, Borrower shall repay Agent
      immediately upon demand such amount. Agent also shall be entitled to recover
      any
      and all actual losses and damages (including, without limitation, reasonable
      attorneys’ fees) from any Lender failing to so advance upon demand of Agent.
      Agent may set off the obligations of a Lender under this paragraph against
      any
      distributions of payments of the Obligations, which Agent would otherwise make
      available to such Lender, at any time.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (d)   To
      the
      extent and during the time period in which any Lender fails to provide or delays
      providing its respective payment to Agent pursuant to subparagraph (a) above,
      such Lender’s percentage of all payments of the Obligations (but not its
      Commitment Percentage of future advances required to be funded by such Lender)
      shall decrease to reflect the actual percentage which its actual outstanding
      Loans bears to the total outstanding Loans of all Lenders. During the time
      period in which any Lender fails to provide or delays providing its respective
      payment to Agent pursuant to subparagraph (a) above, such Lender shall not
      be
      entitled to give instructions to Agent or to approve, disapprove, consent or
      to
      vote on any matters relating to this Agreement and the other Loan Documents.
      All
      amendments, waivers and other modifications of this Agreement and the other
      Loan
      Documents may be made without regard to such Lender and, for purposes of the
      definition of Required Lenders, such Lender shall be deemed not to be a Lender.
      

    

    
      	
              Section
                2.2

            	
              Letters
                of Credit.
                

            

    

    

    2.2.1       
      Issuance
      of Letters of Credit.
      Subject
      to the terms and conditions hereof and of the Letter of Credit Documents, if
      any, and any other terms and conditions which the Issuing Bank may reasonably
      require, the Lenders will participate in the issuance by the Issuing Bank from
      time to time of such Letters of Credit in Dollars from the Closing Date until
      the Expiration Date as Borrower may request, in a form acceptable to the Issuing
      Bank; provided,
      however,
      that
      (a) the Letter of Credit Obligations outstanding shall not at any time exceed
      Fifteen Million Dollars ($15,000,000) (the “Letter
      of Credit Committed Amount”)
      and
      (b) the sum of the aggregate principal amount of outstanding Loans plus
      Letter
      of Credit Obligations outstanding shall not at any time exceed the lesser of
      the
      Committed Amount and the Borrowing Base. No Letter of Credit shall (x) have
      an
      original expiry date more than one year from the date of issuance or (y) as
      originally issued or as extended, have an expiry date extending beyond the
      Expiration Date. Each Letter of Credit shall comply with the related Letter
      of
      Credit Documents. The issuance and expiry date of each Letter of Credit shall
      comply with the related Letter of Credit Documents. The issuance and expiry
      date
      of each Letter of Credit shall be a Business Day.

    

    2.2.2       
      Notice
      and Reports.
      The
      request for the issuance of a Letter of Credit shall be submitted by Borrower
      to
      the Issuing Bank at least five (5) Business Days prior to the requested date
      of
      issuance. The Issuing Bank will, upon request, disseminate to each of the
      Lenders a detailed report specifying the Letters of Credit which are then issued
      and outstanding and any activity with respect thereto which may have occurred
      since the date of the prior report, and including therein, among other things,
      the beneficiary, the face amount and the expiry date as well as any payment
      or
      expirations which may have occurred.

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    2.2.3       
      Participation.
      Each
      Lender, upon issuance of a Letter of Credit, shall be deemed to have purchased
      without recourse a risk participation from the Issuing Bank in such Letter
      of
      Credit and the obligations arising thereunder, in each case in an amount equal
      to its Commitment Percentage of such Letter of Credit, and shall absolutely,
      unconditionally and irrevocably assume, as primary obligor and not as surety,
      and be obligated to pay to the Issuing Bank therefor and discharge when due,
      its
      Commitment Percentage of the obligations arising under such Letter of Credit.
      Without limiting the scope and nature of each Lender’s participation in any
      Letter of Credit, to the extent that the Issuing Bank has not been reimbursed
      as
      required hereunder or under any such Letter of Credit, each such Lender shall
      pay to the Issuing Bank its Commitment Percentage of such unreimbursed drawing
      pursuant to the provisions of Section
       2.2.4(c).
      The
      obligation of each Lender to so reimburse the Issuing Bank shall be absolute
      and
      unconditional and shall not be affected by the occurrence of a Default, an
      Event
      of Default or any other occurrence or event. Any such reimbursement shall not
      relieve or otherwise impair the obligation of Borrower to reimburse the Issuing
      Bank under any Letter of Credit, together with interest as hereinafter
      provided.

    

    2.2.4       
      Reimbursement.

    

    (a)    In
      the
      event of any drawing under any Letter of Credit, the Issuing Bank will promptly
      notify Borrower. Unless Borrower shall immediately notify the Issuing Bank
      that
      Borrower intends to otherwise reimburse the Issuing Bank for such drawing,
      Borrower shall be deemed to have requested that the Lenders make a Loan in
      the
      amount of the drawing as provided in Section
      2.2.5
      on the
      related Letter of Credit, the proceeds of which will be used to satisfy the
      related reimbursement obligations. 

    

    (b)    Borrower
      promises to reimburse the Issuing Bank on the day of drawing under any Letter
      of
      Credit (either with the proceeds of a Loan obtained hereunder or otherwise)
      in
      same day funds. If Borrower shall fail to reimburse the Issuing Bank as provided
      hereinabove, the unreimbursed amount of such drawing shall bear interest at
      a
      per annum rate equal to the Prime Rate plus three percent (3%). Borrower’s
      reimbursement obligations hereunder shall be absolute and unconditional under
      all circumstances irrespective of any rights of setoff, counterclaim or defense
      to payment Borrower may claim or have against the Issuing Bank, the Agent,
      the
      Lenders, the beneficiary of the Letter of Credit drawn upon or any other Person,
      including without limitation any defense based on any failure of Borrower to
      receive consideration or the legality, validity, regularity or unenforceability
      of the Letter of Credit. 

    

    (c)    The
      Issuing Bank will promptly notify the other Lenders of the amount of any
      unreimbursed drawing and each Lender shall promptly pay to the Agent for the
      account of the Issuing Bank in Dollars and in immediately available funds,
      the
      amount of such Lender’s Commitment Percentage of such unreimbursed drawing. Such
      payment shall be made on the Business Day such notice is received by such Lender
      from the Issuing Bank if such notice is received at or before 2:00 P.M.
      otherwise such payment shall be made at or before 12:00 Noon on the Business
      Day
      next succeeding the day such notice is received. If such Lender does not pay
      such amount to the Issuing Bank in full upon such request, such Lender shall,
      on
      demand, pay to the Agent for the account of the Issuing Bank interest on the
      unpaid amount during the period from the date of such drawing until such Lender
      pays such amount to the Issuing Bank in full at a rate per annum equal to,
      if
      paid within two (2) Business Days of the date that such Lender is required
      to
      make payments of such amount pursuant to the preceding sentence, the Federal
      Funds Rate and thereafter at a rate equal to the Prime Rate. Each Lender’s
      obligation to make such payment to the Issuing Bank, and the right of the
      Issuing Bank to receive the same, shall be absolute and unconditional, shall
      not
      be affected by any circumstance whatsoever and without regard to the termination
      of this Agreement or the Commitments hereunder, the existence of a Default
      or
      Event of Default or the acceleration of the obligations of Borrower hereunder
      and shall be made without any offset, abatement, withholding or reduction
      whatsoever.

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    (d)    Simultaneously
      with the making of each payment by a Lender to the Issuing Bank, such Lender
      shall, automatically and without any further action on the part of the Issuing
      Bank or such Lender, acquire a participation in an amount equal to such payment
      (excluding the portion of such payment constituting interest owing to the
      Issuing Bank) in the related unreimbursed drawing portion of the Letter of
      Credit Obligation and in the interest thereon and in the related Letter of
      Credit Documents, and shall have a claim against Borrower with respect
      thereto.

    

    2.2.5       
      Repayment
      with Loans.
      

    

    (a)    On
      any
      day on which Borrower shall have requested, or been deemed to have requested,
      a
      Loan advance to reimburse a drawing under a standby Letter of Credit, the Agent
      shall give notice to the Lenders that a Loan has been requested or deemed
      requested by Borrower to be made in connection with a drawing under a Letter
      of
      Credit, in which case a Loan advance shall be immediately made to Borrower
      by
      all Lenders (without giving effect to any termination of the Commitments
      pursuant to Section 12.2) pro
      rata
      based on
      the respective Commitment Percentages of the Lenders (determined before giving
      effect to any termination of the Commitments pursuant to Section 12.2) and
      the
      proceeds thereof shall be paid directly by the Agent to the Issuing Bank for
      application to the respective Letter of Credit Obligations. 

    

    (b)    Each
      such
      Lender hereby irrevocably agrees to make its Commitment Percentage of each
      such
      Loan immediately upon any such request or deemed request in the amount, in
      the
      manner and on the date specified in the preceding sentence notwithstanding:
      (i)
      the amount of such borrowing may not comply with the minimum amount for advances
      of Loans otherwise required hereunder, (ii) whether any conditions specified
      in
Article
      XI
      are then
      satisfied, (iii) whether a Default or an Event of Default then exists, (iv)
      failure for any such request or deemed request for Revolving Loan to be made
      by
      the time otherwise required hereunder, (v) whether the date of such borrowing
      is
      a date on which Loans are otherwise permitted to be made hereunder or (vi)
      any
      termination of the Commitments relating thereto immediately prior to or
      contemporaneously with such borrowing. 

    

    (c)    In
      the
      event that any Loan cannot for any reason be made on the date otherwise required
      above (including, without limitation, as a result of the commencement of a
      bankruptcy or insolvency proceeding with respect to Borrower), then each such
      Lender hereby agrees that it shall forthwith purchase (as of the date such
      borrowing would otherwise have occurred, but adjusted for any payments received
      from Borrower on or after such date and prior to such purchase) from the Issuing
      Bank such participation in the outstanding Letter of Credit Obligations as
      shall
      be necessary to cause each such Lender to share in such Letter of Credit
      Obligations ratably (based upon the respective Commitment Percentages of the
      Lenders (determined before giving effect to any termination of the Commitments
      pursuant to Section
      12.2)),
      provided that at the time any purchase of participation pursuant to this
      sentence is actually made, the purchasing Lender shall be required to pay to
      the
      Issuing Bank, to the extent not paid to the Issuing Bank by Borrower in
      accordance with the terms of Section
      2.2.3,
      interest on the principal amount of participation purchased for each day from
      and including the day upon which such borrowing would otherwise have occurred
      to
      but excluding the date of payment for such participation, at the rate equal
      to,
      if paid within two (2) Business Days of the date of the Loan advance, the
      Federal Funds Rate, and thereafter at a rate equal to the Prime
      Rate.

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    2.2.6       
      Renewal,
      Extension.
      The
      renewal or extension of any Letter of Credit shall, for purposes hereof, be
      treated in all respects the same as the issuance of a new Letter of Credit
      hereunder. 

    

    2.2.7       
      Uniform
      Customs and Practices.
      The
      Issuing Bank may provide that the Letters of Credit shall be subject to The
      Uniform Customs and Practice for Documentary Credits, as published as of the
      date of issue by the International Chamber of Commerce (the “UCP”),
      in
      which case the UCP may be incorporated by reference therein and deemed in all
      respects to be a part thereof.

    

    2.2.8       
      Indemnification;
      Nature of Issuing Bank’s Duties.
      

    

    (a)    In
      addition to their other obligations under this Section
      2.2,
      Borrower agrees to protect, indemnify, pay and save the Issuing Bank harmless
      from and against any and all claims, demands, liabilities, damages, losses,
      costs, charges and expenses (including reasonable attorneys’ fees) that the
      Issuing Bank may incur or be subject to as a consequence, direct or indirect,
      of
      (i) the issuance of any Letter of Credit or (ii) the failure of the Issuing
      Bank
      to honor a drawing under a Letter of Credit as a result of any act or omission,
      whether rightful or wrongful, of any present or future de jure or de facto
      government or Governmental Authority (all such acts or omissions, herein called
      “Government
      Acts”).

    

    (b)    As
      between Borrower and the Issuing Bank, Borrower shall assume all risks of the
      acts, omissions or misuse of any Letter of Credit by the beneficiary thereof.
      The Issuing Bank shall not be responsible: (i) for the form, validity,
      sufficiency, accuracy, genuineness or legal effect of any document submitted
      by
      any party in connection with the application for and issuance of any Letter
      of
      Credit, even if it should in fact prove to be in any or all respects invalid,
      insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
      sufficiency of any instrument transferring or assigning or purporting to
      transfer or assign any Letter of Credit or the rights or benefits thereunder
      or
      proceeds thereof, in whole or in part, that may prove to be invalid or
      ineffective for any reason; (iii) for errors, omissions, interruptions or delays
      in transmission or delivery of any messages, by mail, cable, telegraph, telex
      or
      otherwise, whether or not they be in cipher; (iv) for any loss or delay in
      the
      transmission or otherwise of any document required in order to make a drawing
      under a Letter of Credit or of the proceeds thereof; and (v) for any
      consequences arising from causes beyond the control of the Issuing Bank,
      including, without limitation, any Government Acts. None of the above shall
      affect, impair, or prevent the vesting of the Issuing Bank’s rights or powers
      hereunder.

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (c)    In
      furtherance and extension and not in limitation of the specific provisions
      hereinabove set forth, any action taken or omitted by the Issuing Bank, under
      or
      in connection with any Letter of Credit or the related certificates, if taken
      or
      omitted in good faith, shall not put such Issuing Bank under any resulting
      liability to Borrower. It is the intention of the parties that this Credit
      Agreement shall be construed and applied to protect and indemnify the Issuing
      Bank against any and all risks involved in the issuance of the Letters of
      Credit, all of which risks are hereby assumed by Borrower, including, without
      limitation, any and all Government Acts. The Issuing Bank shall not, in any
      way,
      be liable for any failure by the Issuing Bank or anyone else to pay any drawing
      under any Letter of Credit as a result of any Government Acts or any other
      cause
      beyond the control of the Issuing Bank.

    

    (d)    Nothing
      in this Section 2.2.8 is intended to limit the reimbursement obligations of
      Borrower contained in Section 2.2.4 above. The obligations of Borrower under
      this Section 2.2 shall survive the termination of this Agreement. No act or
      omission of any current or prior beneficiary of a Letter of Credit shall in
      any
      way affect or impair the rights of the Issuing Bank to enforce any right, power
      or benefit under this Agreement.

    

    (e)    Notwithstanding
      anything to the contrary contained in this Section 2.2.8, Borrower shall have
      no
      obligation to indemnify the Issuing Bank in respect of any liability incurred
      by
      the Issuing Bank (i) arising solely out of the gross negligence or willful
      misconduct of the Issuing Bank, as determined by a court of competent
      jurisdiction, or (ii) caused by the Issuing Bank’s failure to pay under any
      Letter of Credit after presentation to it of a request strictly complying with
      the terms and conditions of such Letter of Credit, as determined by a court
      of
      competent jurisdiction, unless such payment is prohibited by any law,
      regulation, court order or decree.

    

    2.2.9       
      Responsibility
      of Issuing Bank.
      It is
      expressly understood and agreed that the obligations of the Issuing Bank
      hereunder to the Lenders are only those expressly set forth in this Agreement
      and that the Issuing Bank shall be entitled to assume that the conditions
      precedent set forth herein have been satisfied unless it shall have acquired
      actual knowledge that any such condition precedent has not been satisfied;
      provided, however, that nothing set forth in this Section 2.2 shall be deemed
      to
      prejudice the right of any Lender to recover from the Issuing Bank any amounts
      made available by such Lender to the Issuing Bank pursuant to this Section
      2.2
      in the event that it is determined by a court of competent jurisdiction that
      the
      payment with respect to a Letter of Credit constituted gross negligence or
      willful misconduct on the part of the Issuing Bank.

    

    2.2.10      Conflict
      with Letter of Credit Documents.
      In the
      event of any conflict between this Agreement and any Letter of Credit Document
      (including any letter of credit application), this Agreement shall
      control.

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    
      	
              Section
                2.3

            	
              Commitments.

            

    

    

    Subject
      to the terms and conditions hereof and in reliance upon the representations
      and
      warranties set forth herein, each of the Lenders severally agrees to lend to
      Borrower at any time or from time to time on or after the Closing Date and
      before the Expiration Date, such Lender’s Commitment Percentage of the Loans and
      Letter of Credit obligations as may be requested or deemed requested by
      Borrower.

    

    
      	
              Section
                2.4

            	
              Use
                of Proceeds.
                

            

    

    

    Borrower
      agrees to use advances under the Line (a) for working capital and general
      corporate purposes (including without limitation, the payment of distributions
      or dividends to partners or shareholders of the Credit Parties, as the case
      may
      be), (b) to acquire additional hotels or an interest therein, and for no other
      purpose.

    

    
      	
              Section
                2.5

            	
              Advances
                of the Line.
                

            

    

    

    Borrower
      shall give Agent not less than two (2) Business Days prior written notice of
      a
      proposed advance of the Line (each a “Line
      Request”)
      in the
      form attached hereto as Exhibit
      B.
      Each
      Line Request shall (a) state the principal amount to be advanced and the use
      of
      the proceeds of the Line being requested (including any acquisition to which
      such use relates), (b) include a description of the economics of any
      acquisition, (c) designate the Interest Rate Option (including the designation
      of the applicable Interest Period for any LIBOR Rate Loan as 30, 60, 90 or
      180
      days) and (d) contain such other information as Agent may request in the
      exercise of its reasonable discretion. All advances requested by Borrower must
      be in the minimum amount of $1,000,000 and integral multiples of $100,000 in
      excess thereof. Provided that all of the conditions precedent to Agent making
      such advance have occurred, and provided further that the making of such advance
      will not cause Borrower to be in default of the covenants and conditions set
      forth in this Agreement (including without limitation Article
      VII
      herein),
      Agent shall make the proceeds of such advance available to Borrower by crediting
      the amount thereof to Borrower’s deposit account with Bank.

    

    
      	
              Section
                2.6

            	
              Conditions
                to Advances; Borrowing Base.
                 

            

    

    

    Lenders
      agree, subject to the terms and conditions of this Agreement, from time to
      time,
      to make loans and advances to Borrower hereunder on a revolving basis. Such
      Loans shall be subject to the following conditions:

    

    
      	 	
              2.6.1

            	
              Type
                A Loans.

            

    

    

    (a)    Lenders
      will advance such amounts as Borrower may request, up to Fifty Million Dollars
      ($50,000,000), for secured Loans (“Type
      A
      Loans”);
      provided however,
      that
      the sum of the aggregate amount of outstanding (i) Type A Loans, (ii) Type
      B
      Loans and (iii) Letter of Credit obligations shall not at any time exceed the
      Committed Amount.

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    
      	 	
              (b)

            	
              Type
                A Loans shall be subject to the following additional
                conditions:

            

    

    

    
      	 	
              (i)

            	
              The
                aggregate amount of all Type A Loans outstanding shall not exceed
                at any
                time the lesser of: 

            

    

    

    
      	 	
              (A)

            	
              67%
                of the Appraised Value of the Mortgaged Properties;
                or

            

    

    

    
      	 	
              (B)

            	
              An
                amount that would cause the Borrower to exceed the Minimum Debt Service
                Coverage Ratio (the “Borrowing
                Base”).

            

    

    

    
      	 	
              (ii)

            	
              Each
                Type A Loan shall be repaid in full on or prior to the earlier to
                occur
                of: (A) the date that is eighteen (18) months following the date
                of the
                advance of such Type A Loan by Lenders (the “Due
                Date”)
                and (B) the Expiration Date; provided,
                however,
                that Borrower’s failure to repay a Type A Loan when due shall constitute
                an Event of Default under Section 12.1(a)(i) hereof only if Borrower
                fails
                to repay such Type A Loan in full on or prior to the earlier to occur
                of:
                (x) the date that is six (6) months after the Due Date and (y) the
                Expiration Date.

            

    

    

    
      	 	
              (iii)

            	
              Notwithstanding
                the above conditions, Borrower may borrow, as determined by the Required
                Lenders in their discretion, Type A Loans in an aggregate principal
                amount
                up to the lesser of (A) one hundred percent (100%) of the Appraised
                Value
                of the Mortgaged Property or (B) the Committed Amount for a period
                expiring upon the earlier to occur of (x) the date that is ninety
                (90)
                days after the date such Type A Loan is advanced and (y) the Expiration
                Date. 

            

    

    

    
      	 	
              2.6.2

            	
              Type
                B Loans.
                

            

    

    

    (a)    Lenders
      will advance such amounts as Borrower may request, up to Ten Million Dollars
      ($10,000,000), for unsecured Loans (“Type
      B
      Loans”);
      provided,
      however,
      that
      the sum of the aggregate amount of outstanding (i) Type A Loans, (ii) Type
      B
      Loans and (iii) Letter of Credit obligations shall not at any time exceed the
      Committed Amount. 

     

    (b)    Each
      Type
      B Loan shall be repaid in full on or prior to the earlier to occur of (i) the
      date that is ninety (90) days following the date of the advance of such Type
      B
      Loan by Lenders and (ii) the Expiration Date. 

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III

    INTEREST
      RATES

    

    

    
      	
              Section
                3.1

            	
              Interest
                on the Line.

            

    

    

    Subject
      to the provisions of Section 3.2, each Loan shall bear interest as
      follows:

    

    3.1.1      
      Prime
      Rate Loans.
      During
      such periods as a Loan is a Prime Rate Loan, each such Prime Rate Loan shall
      bear interest at a per annum rate equal to the sum of the Prime Rate
minus
      one-half
      of one percent (0.50%); and

     

    3.1.2      
      LIBOR
      Rate Loans.
      During
      such periods as a Loan is a LIBOR Rate Loan, each such LIBOR Rate Loan shall
      bear interest at a per annum rate equal to the sum of the LIBOR Rate
plus
      two and
      one-quarter percent (2.25%).

     

    Interest
      on each Loan shall be payable in arrears on each related Interest Payment
      Date.

    

    
      	
              Section
                3.2

            	
              Default
                Interest.

            

    

    

    From
      the
      maturity of the obligations evidenced by the Line Note, as well as upon the
      occurrence of an Event of Default, the outstanding principal balance and all
      other sums due hereunder and under the Line Note shall bear interest at a rate
      which is three percent (3%) in excess of the non-default rate otherwise set
      forth herein (“Default
      Rate”).
      The
      Default Rate shall apply to all sums evidenced by the Line Note as set forth
      above, including after entry of a judgment or judgments against Borrower, and
      said judgment or judgments shall bear interest at the Default Rate until
      satisfied in full.

    

    
      	
              Section
                3.3

            	
              Calculation.

            

    

    

    Interest
      will be computed on the basis of a year of 360 days and paid for the actual
      number of days elapsed.

    

    
      	
              Section
                3.4

            	
              Limitation
                of Interest to Maximum Lawful Rate. 

            

    

    

    In
      no
      event will the rate of interest payable hereunder exceed the maximum rate of
      interest permitted to be charged by applicable law (including the choice of
      law
      rules) and any interest paid in excess of the permitted rate will be refunded
      to
      Borrower. Such refund will be made by application of the excessive amount of
      interest paid against any sums outstanding hereunder and will be applied in
      such
      order as Agent may determine. If the excessive amount of interest paid exceeds
      the sums outstanding, the portion exceeding the sums outstanding will be
      refunded in cash by Agent. Any such crediting or refunding will not cure or
      waive any default by Borrower. Borrower agrees, however, that in determining
      whether or not any interest payable hereunder exceeds the highest rate permitted
      by law, any non-principal payment, including without limitation prepayment
      fees
      and late charges, will be deemed to the extent permitted by law to be an
      expense, fee, premium or penalty rather than interest.

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV

    PAYMENTS
      AND FEES; COLLATERAL

    

    

    
      	
              Section
                4.1

            	
              Interest
                Payments on the Line.
                

            

    

    

    Borrower
      will pay interest on the outstanding principal balance of each Loan on the
      Interest Payment Date for such Loan.

    

    
      	
              Section
                4.2

            	
              Principal
                Payments on the Line; Prepayments. 

            

    

    

    (a)   Borrower
      will pay the outstanding principal balance of the Line, together with any
      accrued and unpaid interest thereon, and any other sums due pursuant to the
      terms hereof, on the Expiration Date.

    

    (b)   Borrower
      may prepay any Loan in full or in part at any time upon not less than two (2)
      Business Days prior via written notice to the Agent, without premium or penalty;
      provided, however, that upon the prepayment of the principal amount of any
      LIBOR
      Rate Loan, Borrower shall be subject to a breakage fee as set forth in
      subparagraph (c) below. In addition, upon the prepayment of any Loan subject
      to
      a Hedging Agreement, Borrower may be obligated to pay an unwind fee related
      to
      such Hedging Agreement and such unwind fee shall be governed by the Hedging
      Agreement. Any prepayment shall include accrued and unpaid interest to the
      date
      of the prepayment on the principal amount prepaid and all other sums due and
      payable hereunder including, without limitation, payment of expenses including
      those costs associated with the termination of derivative
      transactions. Nothing
      herein shall be deemed to alter or affect any obligations that Borrower may
      have
      to a Lender or Hedging Agreement Provider under any Hedging Agreement. All
      costs, expenses, and indemnity obligations that may be incurred by a Lender
      as a
      result of any default under, or termination of, a Hedging Agreement shall be:
      (i) subject to immediate reimbursement by Borrower; and (ii) secured by the
      Collateral Documents. 

    

    (c)   The
      Borrower agrees to hold Lenders harmless from any loss or expense which the
      Lenders may sustain or incur as a consequence of the following:

    

    (i)    
the
      failure of the Borrower to make any required payment of the principal amount
      of
      any LIBOR Rate Loan (including payments made after any acceleration
      thereof);

    

    (ii)    the
      failure of the Borrower to borrow, continue or convert a Loan after the Borrower
      has given (or is deemed to have given) a Line Request or a Notice of
      Conversion/Continuation;

    

    (iii)   the
      failure of the Borrower to make any prepayment after the Borrower has given
      a
      notice in accordance with Section 4.2(b);

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    (iv)   the
      prepayment (other than pursuant to Section 4.2(b)) of a LIBOR Rate Loan on
      a day
      which is not the last day of the Interest Period with respect thereto;
      or

    

    (v)    the
      conversion of any LIBOR Rate Loan to a Prime Rate Loan on a day that is not
      the
      last day of the applicable Interest Period.

    

    Such
      breakage fee shall include any loss or expense arising from the liquidation
      or
      re-employment of funds obtained by the Agent to maintain the LIBOR Rate Loan
      provided hereunder or from fees payable to terminate the deposits from which
      such funds were obtained. Solely for purposes of calculating amounts payable
      by
      the Borrower to the Agent, each LIBOR Rate Loan made by the Agent (and each
      related reserve, special deposit or similar requirement) shall be conclusively
      deemed to have been funded at the LIBOR used in determining the interest rate
      for such LIBOR Rate Loan by a matching deposit or other borrowing in the
      interbank Eurodollar market for a comparable amount and for a comparable period,
      whether or not such LIBOR Rate Loan is in fact so funded. 

    

    
      	
              Section
                4.3

            	
              Facility
                Fee.

            

    

    

    Borrower
      shall pay to Lenders a facility fee in the amount set forth in the Fee Letter,
      to be paid to Agent upon execution of this Agreement and disbursed to Lenders
      in
      such amounts as Agent and Lenders have agreed.

    

    
      	
              Section
                4.4

            	
              Arrangement
                Fee.

            

    

    

    Borrower
      shall pay to Bank, as Agent, an arrangement fee in the amount set forth in
      the
      Fee Letter. The arrangement fee shall be paid to Bank not later than June 30,
      2006.

    

    
      	
              Section
                4.5

            	
              Unused
                Facility Fee.

            

    

    

    Borrower
      shall pay to Agent for the account of the Lenders at the end of each calendar
      quarter, as partial compensation for extending the Committed Amount to Borrower,
      an unused facility fee which shall be determined by multiplying (a) the positive
      difference, if any, between (i) the Committed Amount in effect at such time
      and
      (ii) the average daily Loans of Borrower and the Letter of Credit Obligations
      outstanding during such quarter by (b) one-eighth of one percent (0.125%) for
      the number of days in such quarter.

    

    
      	
              Section
                4.6

            	
              Letter
                of Credit Fees.

            

    

    

    (a) In
      consideration of the issuance of Letters of Credit hereunder, Borrower promises
      to pay to the Agent for the account of each Lender a fee (the “Letter
      of Credit Fee”)
      on
      such Lender’s Commitment Percentage of the average daily maximum amount
      available to be drawn under each such Letter of Credit, which fee shall be
      equal
      to 0.75% of such available amount, computed at a per annum rate for each day
      from the date of issuance to the date of expiration. The Letter of Credit Fee
      will be payable quarterly in arrears on the last day of each calendar
      quarter.

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    (b) In
      addition to the Letter of Credit Fee payable pursuant to subparagraph (a) above,
      Borrower promises to pay to the Issuing Bank, for its own account without
      sharing by the other Lenders, the letter of credit fronting and negotiation
      fees
      agreed to by Borrower and the Issuing Bank from time to time and the customary
      charges from time to time of the Issuing Bank with respect to the issuance,
      amendment, transfer, administration, cancellation and conversion of, and
      drawings under, such Letters of Credit (collectively, the “Issuing
      Bank Fees”).

    

    
      	
              Section
                4.7

            	
              Late
                Charge. 

            

    

    

    In
      the
      event that Borrower fails to pay any principal, interest or other fees or
      expenses payable hereunder for a period of at least ten (10) days after the
      same
      shall become due, in addition to paying such sums, Borrower will pay to Agent
      a
      late charge equal to five percent (5%) of such past due payment as compensation
      for the expenses incident to such past due payment.

    

    
      	
              Section
                4.8

            	
              Payment
                Method. 

            

    

    

    Borrower
      irrevocably authorizes Agent to debit all payments required to be made by
      Borrower hereunder or otherwise under the Line, on the date due, from any
      deposit account maintained by Borrower with Bank (other than escrow funds owned
      legally by Borrower but held in escrow for the beneficial interest of another
      Person). Otherwise, Borrower will be obligated to make such payments directly
      to
      Agent. All payments are to be made in immediately available funds. If Agent
      accepts payment in any other form, such payment shall not be deemed to have
      been
      made until the funds comprising such payment have actually been received by
      or
      made available to Agent.

    

    
      	
              Section
                4.9

            	
              Application
                of Payments. 

            

    

    

    Prior
      to
      the occurrence of an Event of Default, any and all payments on account of the
      Line will be applied first to any amounts due to Agent pursuant to the Loan
      Documents, other than principal and interest on the Line; second to accrued
      interest due under the Line; and third, to
      outstanding principal under the Line. Following the occurrence of an Event
      of
      Default, any and all payments on account of the Line will be applied to accrued
      and unpaid interest, outstanding principal and other sums due hereunder or
      under
      the Loan Documents, in such order as Bank, in its discretion, elects. If
      Borrower makes a payment or payments and such payment or payments, or any part
      thereof, are subsequently invalidated, declared to be fraudulent or
      preferential, set aside or are required to be repaid to a trustee, receiver,
      or
      any other person under any bankruptcy act, state or federal law, common law
      or
      equitable cause, then to the extent of such payment or payments, the obligations
      or part thereof hereunder intended to be satisfied shall be revived and
      continued in full force and effect as if said payment or payments had not been
      made.

    

    
      	
              Section
                4.10

            	
              Loan
                Account. 

            

    

    

    Agent
      will open and maintain on its books a loan account with respect to advances
      made, repayments, prepayments, the computation and payment of interest and
      fees
      and the computation and final payment of all other amounts due and sums paid
      to
      Agent under this Agreement. Except in the case of manifest error in computation,
      such account will be conclusive and binding on the Borrower as to the amount
      at
      any time due to Agent from Borrower under this Agreement or the
      Notes.

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                4.11

            	
              Indemnity;
                Loss of Margin.
                

            

    

    

    (a)   Borrower
      will indemnify Lenders against any loss or expense which Lenders sustain or
      incur as a consequence of an Event of Default, including, without limitation,
      any failure of Borrower to pay when due (at maturity, by acceleration or
      otherwise) any principal, interest, fee or any other amount due under this
      Agreement or the other Loan Documents. If a Lender sustains or incurs any such
      loss or expense it will from time to time notify Agent in writing of the amount
      determined in good faith by Lender to be necessary to indemnify Lender for
      the
      loss or expense and Agent shall provide such notice to Borrower. Such amount
      will be due and payable by Borrower to such Lender within ten (10) days after
      presentation by Lender of a statement setting forth a brief explanation of
      and
      Lender’s calculation of such amount, which statement shall be conclusively
      deemed correct absent manifest error. Any amount payable to the Lenders under
      this Section will bear interest at the default rate payable under the Line
      from
      the due date until paid, both before and after judgment.

    

    (b)    In
      the
      event that any present or future law, rule, regulation, treaty or official
      directive or the interpretation or application thereof by any central bank,
      monetary authority or governmental authority, or the compliance with any
      guideline or request of any central bank, monetary authority or governmental
      authority (whether or not having the force of law):

    

    (i)    
subjects
      a Lender to any tax with respect to any amounts payable under this Agreement
      or
      the other Loan Documents by Borrower or otherwise with respect to the
      transactions contemplated under this Agreement or the other Loan Documents
      (except for taxes on the overall net income and/or revenues of Bank imposed
      by
      the United States of America, the Commonwealth of Pennsylvania, or any political
      subdivision of either of them); or

    

    (ii)    imposes,
      modifies or deems applicable any deposit insurance, reserve, special deposit,
      capital maintenance, capital adequacy, or similar requirement against assets
      held by, or deposits in or for the account of, or loans or advances or
      commitment to make loans or advances by, Lenders; or

    

    (iii)   imposes
      upon a Lender any other condition with respect to advances or extensions of
      credit or the commitment to make advances or extensions of credit under this
      Agreement, and the result of any of the foregoing is to increase the costs
      of
      such Lender, reduce the income receivable by or return on equity of such Lender
      or impose any expense upon such Lender with respect to any advances or
      extensions of credit or commitments to make advances or extensions of credit
      under this Agreement, such Lender shall so notify Agent in writing and Agent
      shall provide such notice to Borrower. Borrower agrees to pay such Lender the
      amount of such increase in cost, reduction in income, reduced return on equity
      or capital, or additional expense within ten (10) days after presentation by
      such Lender of a statement concerning such increase in cost, reduction in
      income, reduced return on equity or capital, or additional expense. Such
      statement shall set forth a brief explanation of the amount and such Lender’s
      calculation of the amount (in determining such amount the Lender may use any
      reasonable averaging and attribution methods), which statement shall be
      conclusively deemed correct absent manifest error. If the amount set forth
      in
      such statement is not paid within ten (10) days after such presentation of
      such
      statement, interest will be payable on the unpaid amount at the default rate
      payable under the Line from the due date until paid, both before and after
      judgment. 

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                4.12

            	
              Extension
                of Expiration Date. 

            

    

    

    Provided
      no Event of Default has occurred and is then continuing, Borrower, at least
      ninety (90) days prior to the Expiration Date and at least ninety (90) days
      prior to the end of each subsequent twelve (12) month period the Line of Credit
      is provided to Borrower, may request in writing to Agent that Lenders extend
      the
      Expiration Date then in effect for an additional period of one (1) year. In
      the
      event Borrower requests an extension of the Expiration Date in accordance with
      the preceding sentence, Agent will notify Borrower not less than thirty (30)
      days prior to the Expiration Date and each subsequent anniversary of the Closing
      Date that (a) Lenders have extended the Expiration Date then in effect by twelve
      (12) months, or (b) Lenders will not extend the Expiration Date then in effect.
      A failure by Agent to send any such notice shall be deemed to be a determination
      by Lenders not to extend the Expiration Date then in effect. In the event
      Lenders determine that they will extend the Expiration Date then in effect,
      Borrower shall, at least five (5) days prior to the then current Expiration
      Date, pay to Lenders an extension fee in the amount of one-eighth of one percent
      (0.125%) of the Committed Amount, to be paid to Agent for the account of each
      Lender. If Borrower shall fail to pay such extension fee to Agent as and when
      required, Lenders’ extension of the Expiration Date shall be deemed to be
      canceled and shall be null and void and of no further force or effect and the
      Expiration Date then in effect shall continue as if Agent had not provided
      any
      notice of extension.

    

    
      	
              Section
                4.13

            	
              Collateral.

            

    

    

    As
      security for the performance of this Agreement and the other Loan Documents
      and
      the payment of the Notes, and as security for the performance of the Guaranties
      and all other liabilities of Borrower to Lenders, Borrower and Guarantors are,
      contemporaneously with the execution hereof, granting to Agent security
      interests, collateral assignments and mortgage liens, as applicable, in and
      to
      the Collateral.

    

    
      	
              Section
                4.14

            	
              Release
                and Substitution of Collateral; Additional
                Collateral.

            

    

    

    Agent
      may, upon request of Borrower, allow for the release of Mortgaged Property
      from
      the Collateral, the release and substitution of Mortgaged Property and any
      Guarantor with Substitute Collateral and a Replacement Guarantor, or the
      addition of any Mortgaged Property to the Collateral (“Additional
      Collateral”)
      and
      additional Guarantor (“Additional
      Guarantor”),
      respectively, subject to the applicable requirements of Section 13.10 hereof
      and
      the following additional conditions:

    

    (a)    In
      connection with the release or release and substitution of Mortgaged Property
      from the Collateral, Borrower shall either (i) repay the outstanding principal
      amount of the Line in an amount equal to the amount by which the then unpaid
      principal balance of the Line exceeds the Borrowing Base, after taking into
      account the release of the subject Mortgaged Property, or (ii) in lieu of such
      repayment, deliver to Agent Substitute Collateral, the Appraised Value of which,
      when added to the Appraised Value of all other Mortgaged Properties that will
      remain as Collateral for the Line following such release, will cause the then
      outstanding principal balance of the Line to be not greater than the Borrowing
      Base.

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    (b)    Borrower
      shall pay all costs and fees of Agent and Lenders in connection with the
      addition of any Substitute Collateral, Additional Collateral, Replacement
      Guarantor or Additional Guarantor pursuant to this Agreement, including, but
      not
      limited to, the payment of lien searches, title insurance, appraisals,
      environmental reports, recording fees, mortgage satisfaction fees, attorneys’
fees and all other costs and expenses incurred directly by Agent or any Lender
      or payable to third parties in connection therewith.

    

    (c)    Borrower
      shall provide the following documentation to Agent (and Agent shall provide
      copies thereof to Lenders), as a condition to any such addition of any
      Substitute Collateral, Additional Collateral, Replacement Guarantor or
      Additional Guarantor:

    

    (i)    
An
      executive summary of such Collateral including the following
      information:

    

    (A)    a
      description of such Collateral in form and content reasonably acceptable to
      Agent;

    

    (B)    the
      purchase price paid or to be paid for such Collateral, if such Collateral was
      acquired within twelve (12) months of the submission of such Collateral to
      the
      Collateral hereunder;

    

    (C)    the
      current and projected condition of the regional market and specific submarket
      in
      which such Collateral is located (which may be satisfied with the submission
      of
      market reports from Smith Travel Research or other firm acceptable to Agent);
      

    

    (D)    the
      current projected capital plans and, if applicable, current renovation plans
      for
      such Collateral; and

    

    (E)    such
      additional information as Agent may reasonably request.

    

    (ii)    An
      Appraisal of such Collateral;

    

    (iii)   a
      Mortgage and Assignment of Leases in respect of such Collateral;

    

    (iv)   such
      items set forth in Section 10.1 in respect of such Collateral and Guarantor
      as
      may be required by Agent;

    

    (v)    a
      Loan
      Modification Agreement by and among Borrower and Agent and such Guarantor,
      in
      form and substance reasonably acceptable to Agent, whereby the terms and
      conditions of this Agreement and the other Loan Documents are modified and
      amended and such Guarantor becomes a Credit Party, if such agreement is
      requested by Agent;

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    (vi)   an
      environmental indemnity agreement from such Guarantor, with regard to such
      Collateral;

    

    (vii)         
      operating
      statements for such Collateral in accordance with GAAP for the previous two
      fiscal years and for the current fiscal year through the fiscal quarter most
      recently ending, provided that, if such Collateral has been operating for less
      than two fiscal years, Borrower shall provide such projections and other
      information concerning the anticipated operation of such Collateral as Agent
      may
      reasonably request; and

    

    (viii)        
      such
      other documentation and information as Agent may reasonably request in order
      to
      (A) evaluate such Collateral, (B) ensure the appropriate amendment of the Loan
      Documents, if any, and (C) ensure the due authorization of such Guarantor’s
      execution and delivery of documents and agreements in connection with the
      foregoing.

    

    

    ARTICLE
      V

     REPRESENTATIONS
      AND WARRANTIES

    

    To
      induce
      the Lenders to enter into this Agreement and to make the Extensions of Credit
      herein provided for, the Credit Parties, jointly and severally, hereby represent
      and warrant to the Agent and to each Lender as follows:

    

    
      	
              Section
                5.1

            	
              Valid
                Organization, Standing and Qualification. 

            

    

    

    Borrower
      is a limited partnership, duly formed, validly existing and in good standing
      under the laws of the Commonwealth of Virginia. The Trust is a real estate
      investment trust duly organized, validly existing and in good standing under
      the
      laws of the State of Maryland. Each other Guarantor is duly organized, validly
      existing and in good standing under the laws of its jurisdiction of
      organization. Each of the Credit Parties has full power and authority to
      execute, deliver and comply with the Loan Documents, and to carry on its
      business as it is now being conducted and is duly licensed or qualified as
      a
      foreign corporation in good standing under the laws of each jurisdiction in
      which the character or location of the properties owned by it or the business
      transacted by it requires such licensing or qualification.

    

    
      	
              Section
                5.2

            	
              Licenses.
                

            

    

    

    Each
      of
      the Credit Parties has all licenses, registrations, approvals and other
      authority as may be necessary to enable it to own and operate its business
      and
      perform all services and business which it has agreed to perform in any state,
      municipality or other jurisdiction.

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    
      	
              Section
                5.3

            	
              Ownership
                Interests. 

            

    

    

    The
      ownership of all partnership interests, stock, debentures, options, warrants,
      bonds and other securities (debt and equity) of Borrower and Guarantor, and
      all
      pledges, proxies, voting trusts, powers of attorney and other agreements
      affecting the ownership or voting rights of said interests is as set forth
      on
Schedule
      5.3
      attached hereto.

    

    
      	
              Section
                5.4

            	
              Subsidiaries. 

            

    

    

    Except
      as
      set forth on Schedule
      5.4
      attached
      hereto, Borrower does not own any shares of stock or other equity interests
      in
      any Person, directly or indirectly (by any Subsidiary or
      otherwise).

    

    
      	
              Section
                5.5

            	
              Financial
                Statements. 

            

    

    

    Borrower
      has furnished to Bank the audited consolidated financial statements of Borrower,
      certified without qualification by independent public accountants, for the
      fiscal years ended December 31, 2002, 2003 and 2004 and all management and
      comment letters from such accountants in connection therewith, and its
      internally prepared interim financial statements as of September 30, 2005.
      Such
      financial statements of Borrower (together with the related notes and comments),
      are correct and complete, fairly present the financial condition and the assets
      and liabilities of Borrower at such date, and have been prepared in accordance
      with GAAP. With respect to the interim statements, such statements are subject
      to year-end adjustment and any accompanying footnotes.

    

    
      	
              Section
                5.6

            	
              No
                Material Adverse Change in Financial Condition. 

            

    

    

    There
      has
      been no Material Adverse Change in the financial condition of Borrower since
      December 31, 2004.

    

    
      	
              Section
                5.7

            	
              Pending
                Litigation or Proceedings. 

            

    

    

    Except
      as
      set forth on Schedule
      5.7
      attached
      hereto, there are no judgments outstanding or actions, suits or proceedings
      pending or, to the best of knowledge of the Credit Parties, threatened against
      or affecting Borrower or Guarantor, at law or in equity or before or by any
      federal, state, municipal or other governmental department, commission, board,
      bureau, agency or instrumentality, domestic or foreign, in which the amount
      claimed against Borrower or Guarantor exceeds the lesser of $250,000 or the
      amount of insurance coverage available to Borrower or Guarantor to pay such
      claim. Schedule
      5.7
      lists
      all judgments, actions, suits or proceedings pending whether or not covered
      by
      insurance, and notes each judgment, action, suit or proceeding covered by
      insurance.

    

    
      	
              Section
                5.8

            	
              Due
                Authorization; No Legal Restrictions. 

            

    

    

    The
      execution and delivery by the Credit Parties of the Loan Documents, the
      consummation of the transactions contemplated by the Loan Documents and the
      fulfillment and compliance with the respective terms, conditions and provisions
      of the Loan Documents: (a) have been duly authorized by all requisite
      partnership or trust action, as the case may be, by the Credit Parties, (b)
      will
      not conflict with or result in a breach of, or constitute a default (or might,
      upon the passage of time or the giving of notice or both, constitute a default)
      under, any of the terms, conditions or provisions of (i) any applicable statute,
      law, rule, regulation or ordinance, (ii) Borrower’s Limited Partnership
      Agreement or Certificate of Limited Partnership, (iii) the Trust’s Trust
      Indenture or Bylaws or the charter and constituent documents of any other
      Guarantor, (iv) any indenture, mortgage, loan or credit agreement or instrument
      to which any of the Credit Parties is a party or by which it may be bound or
      affected, or (v) any judgment or order of any court or governmental department,
      commission, board, bureau, agency or instrumentality, domestic or foreign,
      and
      (c) will not result in the creation or imposition of any lien, charge or
      encumbrance of any nature whatsoever upon any of the property or assets of
      the
      Credit Parties under the terms or provisions of any such agreement or
      instrument, except liens in favor of Agent.

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    

    
      	
              Section
                5.9

            	
              Enforceability. 

            

    

    

    (a)   Borrower
      has duly executed and delivered each of the Loan Documents to which it is party
      and each of the Loan Documents to which Borrower is party constitutes the legal,
      valid and binding obligation of Borrower, enforceable in accordance with its
      terms.

    

    (b)   Guarantor
      has duly executed and delivered each of the Loan Documents to which it is party
      and each of the Loan Documents to which Guarantor is party constitutes the
      legal, valid and binding obligation of Guarantor, enforceable in accordance
      with
      its terms.

    

    
      	
              Section
                5.10

            	
              No
                Default Under Other Obligations Orders or Governmental
                Obligations. 

            

    

    

    Borrower
      is not in violation of its Limited Partnership Agreement or Certificate of
      Limited Partnership, the Trust is not in violation of its Trust Indenture or
      Bylaws, none of the other Guarantors is in violation of its certificate of
      limited partnership, certificate of organization, partnership agreement,
      operating agreement or other charter or governing documents, as applicable,
      and
      none of the Credit Parties is in default in the performance or observance of
      any
      of its obligations, covenants or conditions contained in any indenture or other
      agreement creating, evidencing or securing any Indebtedness or pursuant to
      which
      any such Indebtedness is issued, nor are any of the Credit Parties in violation
      of or in default under any other agreement or instrument or any judgment,
      decree, order, statute, rule or governmental regulation, applicable to it or
      by
      which its properties may be bound or affected.

    

    
      	
              Section
                5.11

            	
              Governmental
                Consents. 

            

    

    

    No
      consent, approval or authorization of or designation, declaration or filing
      with
      any governmental authority on the part of Borrower or Guarantor is required
      in
      connection with the execution, delivery or performance by Borrower or Guarantor
      of the Loan Documents to which it is party or the consummation of the
      transactions contemplated thereby.

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    
      	
              Section
                5.12

            	
              Taxes. 

            

    

    

    Borrower
      has filed all tax returns which it is required to file and has paid, or made
      provision for the payment of, all taxes which have or may have become due
      pursuant to such returns or pursuant to any assessment received by them. Such
      tax returns are complete and accurate in all respects. Borrower does not know
      of
      any proposed additional assessment or basis for any assessment of additional
      taxes.

    

    
      	
              Section
                5.13

            	
              Addresses. 

            

    

    

    During
      the past five (5) years, Borrower has not been known by any names (including
      tradenames) other than those set forth in Schedule
      5.13
      attached
      hereto and has been located at any addresses other than those set forth on
      Schedule
      5.13
      attached
      hereto. Borrower's books and records pertaining to the Collateral will at all
      times be located at the addresses set forth on Schedule
      5.13;
      or such
      other location determined by Borrower after prior notice to Agent and delivery
      to Agent of any items requested by Agent to maintain perfection and priority
      of
      Agent's security interests and access to Borrower's books and records.

    

    
      	
              Section
                5.14

            	
              Investment
                Company.

            

    

     

    No
      Credit
      Party is an “investment company” or a company “controlled” by an “investment
      company”, within the meaning of the Investment Company Act of 1940, as
      amended.

    

    
      	
              Section
                5.15

            	
              Current
                Compliance. 

            

    

    

    Each
      of
      the Credit Parties is currently in compliance with all of the terms and
      conditions of the Loan Documents applicable to it.

    

    
      	
              Section
                5.16

            	
              Deferred
                Compensation Plans. 

            

    

    

    Neither
      Borrower nor any ERISA Affiliate has ever been a participant in or has in any
      way provided or maintained, any Deferred Compensation Plan for the benefit
      of
      Borrower’s or any ERISA Affiliate’s employees, or has ever contributed to a
      Multiemployer Plan.

    

    
      	
              Section
                5.17

            	
              Leases
                and Contracts. 

            

    

    

    Each
      of
      the Credit Parties has complied with the provisions of all material leases,
      contracts or commitments of any kind to which it is a party and is not in
      default thereunder. No other party is in default under any such leases,
      contracts or other commitments and no event has occurred which, but for the
      giving of notice or the passage of time or both, would constitute an event
      of
      default thereunder.

    

    
      	
              Section
                5.18

            	
              Contingent
                Liabilities. 

            

    

    

    There
      are
      no suretyship agreements, guarantees or other contingent liabilities of Borrower
      which are not disclosed by the financial statements mentioned in Section
      5.5
      herein.

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    

    
      	
              Section
                5.19

            	
              Encumbrances. 

            

    

    

    The
      property and assets of Borrower are not subject to any lien, encumbrance or
      security interest except as set forth on Exhibit
      5.19
      attached.

     

    
      	
              Section
                5.20

            	
              Environmental
                Matters.

            

    

     

    (a)   Except
      as
      otherwise set forth on Schedule
      5.20
      hereto,
      to the knowledge of the Credit Parties and their Environmental Affiliates,
      the
      Mortgaged Properties do not contain any Hazardous Materials which are not being
      used in compliance with applicable Environmental Requirements.

     

    (b)   To
      the
      knowledge of the Credit Parties and their Environmental Affiliates, (i) the
      Mortgaged Properties and all operations of any Credit Parties and/or their
      Environmental Affiliates at the Mortgaged Properties are in compliance in all
      material respects, and have in the period of such ownership, lease or operation
      been in compliance in all material respects, with all applicable Environmental
      Requirements, and (ii) there is no contamination at, under or about the
      Mortgaged Properties in concentrations constituting a material violation of
      Environmental Requirements or any material violation of any Environmental
      Requirements with respect to the Mortgaged Properties.

     

    (c)   Neither
      any Credit Party nor any Environmental Affiliates have received any written
      or
      actual notice of violation, alleged violation, non-compliance, liability or
      potential liability with respect to environmental matters or Environmental
      Requirements regarding any of the Mortgaged Properties, nor does any Credit
      Party or any Environmental Affiliate have knowledge that any such notice will
      be
      received or is being threatened.

     

    (d)   To
      the
      knowledge of the Credit Parties and their Environmental Affiliates, Materials
      of
      Environmental Concern have not been transported or disposed of from the
      Mortgaged Properties, during any period of ownership, lease, operation or use
      by
      any Credit Party or Environmental Affiliate, in material violation of, or in
      a
      manner or to a location that reasonably could be expected to give rise to
      liability under any Environmental Requirements, and no Hazardous Materials
      have
      been generated, treated, stored or disposed of at, on or under any of the
      Mortgaged Properties, during any period of ownership, lease, operation or use
      by
      any Credit Party or Environmental Affiliate, in material violation of, or in
      a
      manner that reasonably could be expected to give rise to liability under, any
      applicable Environmental Requirement.

     

    (e)    No
      judicial proceeding or governmental or administrative action is pending or,
      to
      the knowledge of any Credit Party or Environmental Affiliate, threatened, under
      any Environmental Requirement to which any Credit Party or any Environmental
      Affiliate is or, to any such Credit Party’s or Environmental Affiliate’s
      knowledge, will be named as a party with respect to the Mortgaged Properties,
      nor, to any Credit Party’s or Environmental Affiliate’s knowledge, are there any
      consent decrees or other decrees, consent orders, administrative orders or
      other
      orders, or other administrative or judicial requirements outstanding under
      any
      Environmental Requirement with respect to the Mortgaged Properties.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    (f)   There
      has
      been no release or threat of release of Hazardous Materials at or from the
      Mortgaged Properties arising from or related to the operations of any Credit
      Party or any Environmental Affiliate in connection with the Mortgaged Properties
      or otherwise, in violation of or in amounts or in a manner that reasonably
      could
      be expected to give rise to liability under Environmental
      Requirements.

     

    

    
      	
              Section
                5.21

            	
              Insurance.

            

    

    

    The
      present insurance coverage of the Credit Parties is outlined as to carrier,
      policy number, expiration date, type and amount on Schedule
      5.21
      hereto,
      and such insurance coverage complies with the requirements set forth in
Section
      6.5
      hereof.

    

    
      	
              Section
                5.22

            	
              Anti-Terrorism
                Laws.

            

    

    

    Neither
      any Credit Party nor any of their respective Affiliates is an “enemy” or an
“ally of the enemy” within the meaning of Section 2 of the Trading with the
      Enemy Act of the United States of America (50 U.S.C. App. §§ 1 et
      seq.),
      as
      amended. Neither any Credit Party nor any of their respective Affiliates is
      in
      violation of (a) the Trading with the Enemy Act, as amended, (b) any of the
      foreign assets control regulations of the United States Treasury Department
      (31
      CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
      order relating thereto or (c) the Patriot Act. None of the Credit Parties (i)
      is
      a blocked person described in Section 1 of the Anti-Terrorism Order or (ii)
      to
      the best of its knowledge, engages in any dealings or transactions, or is
      otherwise associated, with any such blocked person.

    

    
      	
              Section
                5.23

            	
              Compliance
                with OFAC Rules and Regulations.

            

    

     

    None
      of
      the Credit Parties or their Subsidiaries or their respective Affiliates (a)
      is a
      Sanctioned Person, (b) has any of its assets in Sanctioned Countries, or (c)
      derives any of its operating income from investments in, or transactions with
      Sanctioned Persons or Sanctioned Countries. No part of the proceeds of any
      Extension of Credit hereunder will be used directly or indirectly to fund any
      operations in, finance any investments or activities in or make any payments
      to,
      a Sanctioned Person or a Sanctioned Country.

    

    
      	
              Section
                5.24

            	
              Securities
                Act. 

            

    

    

    Borrower
      has not, directly or through any agent, offered the Line Note or any part
      thereof or any similar security for sale to, or solicited offers to buy the
      same
      from, or otherwise approached or negotiated in respect thereof with, anyone
      other than Agent so as to bring the issue or sale of the Line Note or any part
      thereof within the provisions of Section 5 of the Securities Act 1933, as
      amended.

    

    
      	
              Section
                5.25

            	
              Disclosure. 

            

    

    

    Neither
      this Agreement, nor the schedules attached to this Agreement, nor the financial
      statements referred to in this Agreement, nor any certificate, statement, report
      or other document furnished or to be furnished by Borrower to Agent in
      connection with this Agreement, contain any untrue statement of a material
      fact,
      or omit to state any material fact necessary in order to make the statements
      contained in any of the foregoing not misleading. Borrower has disclosed to
      Agent in writing every fact that materially and adversely affects the business
      or financial condition of Borrower or its ability to perform its obligations
      under this Agreement, the Line Note, or any other documents or instruments
      required hereby.

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    

    
      	
              Section
                5.26

            	
              Margin
                Stock.
                

            

    

    

    Borrower
      is not engaged in, nor does it have as one of its substantial activities, the
      business of extending or obtaining credit for the purpose of purchasing or
      carrying “margin stock” (as that term is defined in Regulation U, G, T, or X of
      the Board of Governors of the Federal Reserve System) and no proceeds of any
      advance of the Line will be used for such purpose of for the purpose of
      purchasing or carrying any shares of margin stock.

    

    
      	
              Section
                5.27

            	
              Bank
                Accounts. 

            

    

    

    Other
      than the bank accounts set forth on Schedule
      5.27
      hereto
      (the “Deposit
      Accounts”),
      Borrower does not maintain any accounts with any bank or other financial
      institution.

    

    

    ARTICLE
      VI 

    GENERAL
      AFFIRMATIVE COVENANTS

    

    

    The
      Credit Parties hereby covenant and agree that on the Closing Date, and
      thereafter for so long as this Agreement is in effect and until the Commitments
      have terminated, no Note remains outstanding and unpaid and the Obligations
      and
      all other amounts owing to the Agent or any Lender hereunder are paid in full,
      that:

    

    
      	
              Section
                6.1

            	
              Existence,
                Approvals, Qualification, Business Operations; Compliance with
                Laws.
                

            

    

    

    Each
      of
      the Credit Parties (a) will obtain, preserve and keep in full force and effect
      its separate trust, partnership or limited liability company existence, as
      the
      case may be, and all rights, licenses, registrations and franchises necessary
      to
      the proper conduct of its business or affairs; (b) will qualify and remain
      qualified as a foreign trust or partnership, as the case may be, in each
      jurisdiction in which the character or location of the properties owned by
      it or
      the business transacted by it requires such qualification; (c) will continue
      to
      operate its business as presently operated and will not engage in any new
      businesses without the prior written consent of Bank; and (d) will comply with
      the requirements of all applicable laws and all rules, regulations (including
      environmental regulations) and orders of regulatory agencies and authorities
      having jurisdiction over it.

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

    
      	
              Section
                6.2

            	
              Taxes;
                Claims for Labor and Materials. 

            

    

    

    Borrower
      will pay or cause to be paid when due all taxes, assessments, governmental
      charges or levies imposed upon it or its income, profits, payroll or any
      property belonging to it, including without limitation all withholding taxes,
      and all claims for labor, materials and supplies which, if unpaid, might become
      a lien or charge upon any of its properties or assets.

    

    
      	
              Section
                6.3

            	
              Maintenance
                of Properties. 

            

    

    

    Borrower
      will maintain, preserve, protect and keep or cause to be maintained, preserved,
      protected and kept its real and personal property used or useful in the conduct
      of its business in good working order and condition, reasonable wear and tear
      excepted, and will pay and discharge when due the cost of repairs to and
      maintenance of the same.

    

    
      	
              Section
                6.4

            	
              Insurance. 

            

    

    

    Each
      of
      the Credit Parties will carry adequate insurance issued by an insurer acceptable
      to Agent, in amounts acceptable to Agent (at least adequate to comply with
      any
      co-insurance provisions) and against all such liability and hazards as are
      usually carried by entities engaged in the same or a similar business similarly
      situated or as may be required by Agent, and shall cause Agent to be named
      as
      loss payee (with a lender's loss payable endorsement) with respect to all
      personal property, and additional insured with respect to all liability
      insurance, as its interests may appear with thirty (30) days’ notice to be given
      Agent by the insurance carrier prior to cancellation or material modification
      of
      such insurance coverage. Borrower shall cause to be delivered to Agent the
      insurance policies therefor or in the alternative, evidence of insurance, and
      at
      least thirty (30) business days prior to the expiration of any such insurance,
      additional policies or duplicates thereof or in the alternative, evidence of
      insurance evidencing the renewal of such insurance and payment of the premiums
      therefor. Borrower and Grantors shall direct all insurers that in the event
      of
      any loss thereunder or the cancellation of any insurance policy, the insurers
      shall make payments for such loss and pay all return or unearned premiums
      directly to Agent and not to Borrower and Agent jointly. Borrower and Grantors
      shall not take out any insurance without having Agent named as loss payee or
      additional insured thereon.

    

    
      	
              Section
                6.5

            	
              Inspections;
                Examinations.
                 

            

    

    

    Borrower
      hereby irrevocably authorizes and directs all accountants and auditors employed
      by Borrower at any time to exhibit and deliver to Agent copies of any and all
      of
      Borrower’s financial statements, or other accounting records of any sort in the
      accountant's or auditor's possession and copies of all reports submitted to
      Borrower by such accountants or auditors, including management letters,
“comment” letters and audit reports, and to disclose to Agent any information
      they may have concerning Borrower’s financial status and business operations.
      Borrower further authorizes all federal, state and municipal authorities to
      furnish to Agent copies of reports or examinations relating to any Borrower,
      whether made by Borrower or otherwise. The officers of Agent, or such Persons
      as
      any of them may designate, may visit and inspect any of the properties of
      Borrower, examine (either by Agent’s employees or by independent accountants)
      any of the Collateral or other assets of Borrower, including the books of
      account of Borrower, and discuss the affairs, finances and accounts of Borrower
      with its officers and with its independent accountants, at such times as Agent
      may desire.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                6.6

            	
              Bank
                Accounts. 

            

    

    

    Borrower
      will maintain its primary deposit, cash management and operating accounts with
      Bank, including without limitation the Loan Account referred to
      herein.

     

    
      	
              Section
                6.7

            	
              Maintenance
                of Management. 

            

    

    

    Borrower
      will cause its business to be continuously managed by its present management
      or
      such other persons (serving in such management positions) as may be reasonably
      satisfactory to Agent.

    

    
      	
              Section
                6.8

            	
              Notices. 

            

    

    

    Borrower
      will promptly notify Agent of (a) any action or proceeding brought against
      Borrower or any Guarantor wherein such action or proceeding would, if determined
      adversely to Borrower or any Guarantor result in liability of Borrower or any
      Guarantor in excess of $100,000 individually, or $250,000 in the aggregate,
      (b)
      the occurrence of any Event of Default, (c) any fact, condition or event which,
      with the giving of notice or the passage of time or both, could become an Event
      of Default, (d) the failure of Borrower or any Guarantor to observe any of
      its
      undertakings under the Loan Documents, or (e) any material adverse change in
      the
      assets, business, operations or financial condition of Borrower.

    

    
      	
              Section
                6.9

            	
              Appraisals. 

            

    

    

    Agent
      shall have the right, in the exercise of its reasonable discretion, and/or
      as
      required by any applicable governmental authority, at Borrower's cost and
      expense, to obtain additional or updated Appraisals on any or all of the
      Mortgaged Properties.

    

    
      	
              Section
                6.10

            	
              Further
                Assurances.

            

    

    

    Upon
      the
      request of the Agent, promptly perform or cause to be performed any and all
      acts
      and execute or cause to be executed any and all documents for filing under
      the
      provisions of the UCC or any other applicable laws which are necessary or
      advisable to maintain in favor of the Agent, for the benefit of the Lenders,
      Liens on the Collateral that are duly perfected in accordance with the
      requirements of, or the obligations of the Credit Parties under, the Loan
      Documents and all applicable laws.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII

    FINANCIAL
      COVENANTS

    

    

    So
      long
      as any Line Note remains unpaid or Agent has any obligation hereunder with
      respect to the Line:

    

    
      	
              Section
                7.1

            	
              Debt
                Service Coverage Ratio. 

            

    

    

    Borrower
      shall maintain a Debt Service Coverage Ratio, calculated for the previous twelve
      (12) month period, of not less than 1.35:1.00, calculated as of each March
      31,
      June 30, September 30 and December 31. 

    

    
      	
              Section
                7.2

            	
              Total
                Funded Debt to Gross Asset Value. 

            

    

    

    Borrower
      shall maintain a ratio of Total Funded Debt to Gross Asset Value, calculated
      for
      the previous twelve (12) month period, of not more than 0.67:1.00, calculated
      as
      of each March 31, June 30, September 30 and December 31. 

    

    
      	
              Section
                7.3

            	
              EBITDA
                to Debt Service.

            

    

    

    Borrower
      shall maintain a ratio of EBITDA to Debt Service, calculated for the previous
      twelve (12) month period, of not less than 1.40:1.00, calculated as of each
      March 31, June 30, September 30 and December 31.

    

    
      	
              Section
                7.4

            	
              Tangible
                Net Worth. 

            

    

    

    Borrower
      shall maintain a minimum Tangible Net Worth, calculated as of the fiscal year
      ended June 30, 2005, of not less than $110,000,000. Borrower shall maintain
      a
      minimum Tangible Net Worth calculated as of June 30 of each subsequent fiscal
      year, in an amount not less than the sum of $110,000,000, plus 100% of
      Borrower’s undistributed net income for the 2005 fiscal year and for each
      subsequent fiscal year, including the fiscal year then ended. 

    

    
      	
              Section
                7.5

            	
              Certain
                Indebtedness.

            

    

    

    The
      aggregate of all accounts receivable, notes receivable and loans receivable
      or
      due from officers, employees or Affiliates of the Borrower shall not exceed
      $75,000,000 as of June 30, 2005 and at all times thereafter.

    

    
      	
              Section
                7.6

            	
              Changes
                to Financial Covenants. 

            

    

    

    Lenders
      may condition any extension of the Expiration Date upon revision of the
      foregoing financial covenants, as Lenders in their reasonable discretion may
      require prior to the date that Agent must give Borrower notice of
      extension.

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VIII

    NEGATIVE
      COVENANTS

    

    

    The
      Credit Parties hereby covenant and agree that on the Closing Date, and
      thereafter for so long as this Agreement is in effect and until the Commitments
      have terminated, no Note remains outstanding and unpaid and the Obligations
      and
      all other amounts owing to the Agent or any Lender hereunder are paid in full,
      that:

    

    
      	
              Section
                8.1

            	
              Limitation
                on Indebtedness. 

            

    

    

    The
      Credit Parties will not, contract, create, incur, assume or permit to exist
      any
      Indebtedness, except:

     

    (a)    Indebtedness
      arising or existing under this Agreement and the other Loan Documents and
      Indebtedness constituting permanent mortgage financing for a hotel
      property;

     

    (b)    Indebtedness
      of the Credit Parties existing as of the Closing Date as referenced in the
      financial statements referenced in Section 5.5
      (and set
      out more specifically in Schedule 8.1)
      hereto
      and renewals, refinancings or extensions thereof in a principal amount not
      in
      excess of the original principal balance thereof, except if such excess arises
      from an increase in the value of collateral, as demonstrated by an Appraisal;
      

     

    (c)    Indebtedness
      of the Credit Parties incurred after the Closing Date consisting of Capital
      Leases or Indebtedness incurred to provide all or a portion of the purchase
      price or cost of construction of an asset; provided
      that
      (i) such Indebtedness when incurred shall not exceed the purchase price or
      cost of construction of such asset; and (ii) no such Indebtedness shall be
      refinanced for a principal amount in excess of the original principal balance
      thereof, except if such excess arises from an increase in the value of
      collateral, as demonstrated by an Appraisal;

     

    (d)    Unsecured
      intercompany Indebtedness among the Credit Parties; provided
      that any
      such Indebtedness shall be (i) fully subordinated to the Obligations
      hereunder on terms reasonably satisfactory to the Agent and (ii) evidenced
      by promissory notes which shall be pledged to the Agent as Collateral for the
      Obligations; 

     

    (e)    Indebtedness
      and obligations owing under Hedging Agreements entered into in order to manage
      existing or anticipated interest rate risks and not for speculative purposes;
      and

     

    (f)    Guaranty
      Obligations in respect of Indebtedness of a Credit Party to the extent such
      Indebtedness is permitted to exist or be incurred pursuant to this Section
      8.1.

    

    
      	
              Section
                8.2

            	
              Guaranties. 

            

    

    

    Borrower
      shall not, directly or indirectly, guarantee, endorse (other than for collection
      or deposit in the ordinary course of business), discount, sell with recourse
      or
      for less than the face value or agree (contingently or otherwise) to purchase
      or
      repurchase or otherwise acquire, or otherwise become directly or indirectly
      liable for, or agree (contingently or otherwise) to supply or advance funds
      (whether by loan, stock purchase, capital contribution or otherwise) in respect
      of, any Indebtedness, obligations or liabilities of any Person other than an
      Affiliate.

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                8.3

            	
              Disposition
                of Assets. 

            

    

    

    The
      Credit Parties shall not sell, lease, transfer or otherwise dispose of (a)
      all
      or substantially all of its property or assets, or (b) any material portion
      of
      its property or assets unless, in the case of (b) herein, following any such
      sale, lease, transfer or other disposition, Borrower shall be in compliance
      with
      the covenants contained in Article
      VII
      herein,
      calculated as of the date immediately following such sale, lease, transfer
      or
      other disposition.

    

    
      	
              Section
                8.4

            	
              Liens. 

            

    

    

    Borrower
      shall not create, incur or permit to exist any mortgage, pledge, encumbrance,
      lien, security interest or charge of any kind (including liens or charges upon
      properties acquired or to be acquired under conditional sales agreements or
      other title retention devices) on its property or assets, whether now owned
      or
      hereafter acquired, or upon any income, profits or proceeds therefrom, except
      Permitted Liens.

    

    
      	
              Section
                8.5

            	
              Nature
                of Business.

            

    

    

    None
      of
      the Credit Parties will alter the character of its business in any material
      respect from that conducted as of the Closing Date
      without
      the prior written consent of the Agent.

    

    
      	
              Section
                8.6

            	
              Consolidation,
                Merger, Sale or Purchase of Assets.

            

    

     

    The
      Credit Parties will not:

     

    (a)    dissolve,
      liquidate or wind up their affairs, or sell, transfer, lease or otherwise
      dispose of their property or assets or agree to do so at a future time, except
      the following, without duplication, shall be expressly permitted:

     

    (i)    
the
      sale,
      transfer, lease or other disposition of cash and Cash Equivalents, inventory
      and
      materials in the ordinary course of business;

     

    (ii)    Recovery
      Events; provided
      that the
      net proceeds from any such Recovery Event shall be used either (A) to repair
      or
      replace the property damaged in such Recovery Event or to purchase or otherwise
      acquire new assets or property within one hundred eighty (180) days (or
      such longer period of time (not to exceed 360 days) as may be permitted pursuant
      to the lease of the property damaged in such Recovery Event) of receipt of
      such
      net proceeds and the Borrowers shall deliver to the Agent a certificate stating
      that Credit Parties intend to use such net proceeds in such manner, it being
      expressly agreed that any net proceeds not so reinvested shall be applied to
      prepay Loans and cash collateralize Letter of Credit Obligations immediately
      thereafter, or (B) to prepay Loans and cash collateralize Letter if Credit
      Obligations;

     

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    (iii)   the
      sale,
      lease, transfer or other disposition of machinery, parts and equipment no longer
      used or useful in the conduct of the business of the Credit Parties or any
      of
      their Subsidiaries;

     

    (iv)   the
      sale,
      lease or transfer of property or assets (at fair value) between any Credit
      Parties;

     

    (v)    the
      merger of any Credit Party with and into another Credit Party, so long as (A)
      a
      Borrower is the surviving entity of any such merger among a Borrower and any
      other Credit Party, (B) the security interests granted to the Agent for the
      benefit of the Secured Parties pursuant to the Collateral Documents in the
      assets of the Credit Parties so merged shall remain in full force and effect
      and
      perfected (to at least the same extent as in effect immediately prior to such
      merger) and (C) no Person other than the surviving Credit Party receives any
      consideration in respect or as a result of such transaction;

     

    (vi)   payments
      otherwise permitted under Section
      8.7
      hereof;

     

    (vii)         
      the
      liquidation or voluntary dissolution of a Credit Party so long as such
      liquidation or dissolution is not reasonably likely to have a Material Adverse
      Effect and, in connection therewith, either (A) all of the remaining assets
      of
      such entity are transferred to a Credit Party, or (B) all consideration received
      by such Credit Party in connection with the liquidation of its assets is used
      to
      make a prepayment of the Loan.

     

    (b)   purchase,
      lease or
      otherwise acquire (in a single transaction or a series of related transactions)
      all or substantially all of the property or assets of any Person, or (ii) enter
      into any transaction of merger or consolidation, except for (A) Investments
      or
      acquisitions permitted pursuant to Section 8.7
      and (B)
      the merger or consolidation of a Credit Party with and into another Credit
      Party; provided
      that if
      any Borrower is a party thereto, such Borrower will be the surviving
      Person.

    

    This
      Section 8.6 shall not prohibit or otherwise affect the issuance of Capital
      Stock
      or any other equity or debt securities by the Borrower and the Trust in the
      ordinary course of business.

    

    
      	
              Section
                8.7

            	
              Advances,
                Investments and Loans.

            

    

    

    The
      Credit Parties will not make any Investment except for Permitted Investments
      and
      Investments described on Schedule
      8.7
      hereto.

    

    
      	
              Section
                8.8

            	
              Default
                Under Other Indebtedness. 

            

    

    

    None
      of
      the Credit Parties shall permit any of its material Indebtedness to be in
      default. If any material Indebtedness of a Credit Party is declared or becomes
      due and payable before its expressed maturity by reason of default or otherwise,
      or to the knowledge of Borrower, the holder of any such Indebtedness shall
      have
      the right (or upon the giving of notice or the passage of time, or both, shall
      have the right) to declare such Indebtedness to be so due and payable, Borrower
      will immediately give Agent written notice of such declaration, acceleration
      or
      right of declaration.

    
      
        
        

      

      
        45

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                8.9

            	
              Deferred
                Compensation Plans. 

            

    

    

    Neither
      Borrower nor any ERISA Affiliate shall become a participant in, or in any way
      provide or maintain, any Deferred Compensation Plan for the benefit of any
      or
      Borrower’s or any ERISA Affiliates’ employees, or shall contribute to any
      Multiemployer Plan, without giving Bank prior written notice of such action
      and
      executing such related amendments to this Agreement as Agent may
      request.

    

    
      	
              Section
                8.10

            	
              Transactions
                with Affiliates. 

            

    

    

    Borrower
      shall not enter into or conduct any transaction with any Affiliate except on
      terms that would be usual and customary in a similar transaction between Persons
      not affiliated with each other and except as disclosed to Agent. Borrower shall
      not make any loans or extensions of credit to any of its Affiliates,
      shareholders, directors or officers, except for the existing loans described
      in
Schedule
      8.7
      attached
      hereto and loans made in the future in compliance with Section
      7.5
      herein.
      Borrower will cause all of its Indebtedness at any time owed to its Affiliates,
      shareholders, directors and officers to be subordinated in all respects to
      all
      present and future Bank Indebtedness and will not make any payments thereon,
      except as approved by Agent in writing.

    

    
      	
              Section
                8.11

            	
              Restriction
                on Transfer. 

            

    

    

    Borrower
      shall not, and shall not permit its general partner to, directly or indirectly,
      issue, transfer, sell or otherwise dispose of, or part with control of, or
      permit the transfer of, any partnership interests of Borrower, as a result
      of
      which the Trust shall cease to own, legally and beneficially, at least a
      majority of all outstanding partnership interests of the Borrower.

     

    
      	
              Section
                8.12

            	
              Corporate
                Changes.

            

    

     

    No
      Credit
      Party will (a) change its fiscal year, (b) amend, modify or change its articles
      of incorporation, certificate of formation (or corporate charter or other
      similar organizational document), partnership agreement, operating agreement
      or
      bylaws (or other similar document) in any respect adverse to the interests
      of
      the Lenders without the prior written consent of the Agent, (c) amend, modify,
      cancel or terminate or fail to renew or extend or permit the amendment,
      modification, cancellation or termination of any of its Material Contracts
      in
      any respect adverse to the interests of the Lenders without the prior written
      consent of the Required Lenders, except in the event such amendment,
      modification, cancellation or termination could not, individually or in the
      aggregate, reasonably be expected to have a Material Adverse Effect, (d) change
      its state of incorporation, organization or formation or have more than one
      state of incorporation, organization or formation or (e) materially change
      its
      accounting method (except in accordance with GAAP) in any manner materially
      adverse to the interests of the Lenders without the prior written consent of
      the
      Required Lenders. This Section 8.12 shall not prohibit any Credit Party from
      qualifying to conduct business as a foreign entity in any
      jurisdiction.

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

    
      	
              Section
                8.13

            	
              Limitation
                on Restricted Actions.

            

    

    

    Except
      as
      set forth on Schedule
      8.13
      hereto,
      the Credit Parties will not, nor will they permit any Subsidiary to, directly
      or
      indirectly, create or otherwise cause or suffer to exist or become effective
      any
      encumbrance or restriction on the ability of any such Person to (a) pay
      dividends or make any other distributions to any Credit Party on its Capital
      Stock or with respect to any other interest or participation in, or measured
      by,
      its profits, (b) pay any Indebtedness or other obligation owed to any
      Credit Party, (c) make loans or advances to any Credit Party except in
      compliance with Section
      7.5
      herein,
      (d) sell, lease or transfer any of its properties or assets to any Credit
      Party, or (e) act as a Guarantor and pledge its assets pursuant to the
      Credit Documents or any renewals, refinancings, exchanges, refundings or
      extension thereof, except for such encumbrances or restrictions existing under
      or by reason of (i) this Agreement and the other Loan Documents,
      (ii) applicable law, (iii) any
      document or instrument governing Indebtedness incurred pursuant to Section 8.1(b)
      or
Section
      8.1(c);
      provided
      that any
      such restriction contained in any such document referenced in Section
      8.1(c)
      relates
      only to the asset or assets constructed or acquired in connection therewith,
      or
      (iv) any Permitted Lien or any document or instrument governing any
      Permitted Lien.

     

    
      	
              Section
                8.14

            	
              Restricted
                Payments.

            

    

     

    The
      Credit Parties will not, nor will they permit any Subsidiary to, directly or
      indirectly, declare, order, make or set apart any sum for or pay any Restricted
      Payment, except: to make (a)  dividends payable solely in the same class of
      Capital
      Stock of such Person; (b) dividends
      or other distributions (directly or indirectly through Subsidiaries) payable
      to
      any Credit Party; (c) contractually required distributions to holders of
      minority interests in non-wholly owned Subsidiaries; and (d) management and
      consulting fees pursuant to agreements with other Credit Parties. In addition,
      the Borrowers may request the ability to make additional dividends and
      distributions, which shall be at the sole discretion of the Agent.

     

    
      	
              Section
                8.15

            	
              Negative
                Pledges.

            

    

     

    The
      Credit Parties will not, nor will they permit any Subsidiary to, enter into,
      assume or become subject to any agreement prohibiting or otherwise restricting
      the creation or assumption of any Lien upon any of their properties or assets,
      whether now owned or hereafter acquired, or requiring the grant of any security
      for such obligation if security is given for some other obligation, except
      (a) pursuant to this Agreement and the other Loan Documents,
      (b) pursuant to any document or instrument governing Indebtedness incurred
      pursuant to Section 8.1(c);
      provided
      that any
      such restriction contained therein relates only to the asset or assets
      constructed or acquired in connection therewith, (c) in connection with any
      Permitted Lien or any document or instrument governing any Permitted Lien;
      provided
      that any
      such restriction contained therein relates only to the asset or assets subject
      to such Permitted Lien.

    

    
      	
              Section
                8.16

            	
              Name
                or Address Change. 

            

    

    

    Borrower
      shall not change its name or address except upon thirty (30) days prior written
      notice to Agent and delivery to Agent of any items requested by Agent to
      maintain perfection and priority of Agent's security interests and access to
      Borrower's books and records.

    
      
        
        

      

      
        47

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                8.17

            	
              Material
                Adverse Contracts. 

            

    

    

    Borrower
      shall not become or be a party to any contract or agreement which has a Material
      Adverse Effect on Borrower's ability to perform under this Agreement or any
      other agreement with Bank to which Borrower is a party.

    

    

    ARTICLE
      IX

    ACCOUNTING
      RECORDS, REPORTS AND FINANCIAL STATEMENTS

    

    

    The
      Credit Parties will maintain books of record and account in which full, correct
      and current entries in accordance with GAAP will be made of all of its dealings,
      business and affairs, and will deliver to Agent the following:

    

    
      	
              Section
                9.1

            	
              Annual
                Statements. 

            

    

    

    As
      soon
      as available and in any event within one hundred twenty (120) days after the
      end
      of each fiscal year of the Credit Parties, beginning with the close of the
      current fiscal year, the audited annual consolidated and consolidating financial
      statements for such fiscal year, including (a) income and retained earnings
      statements of the Credit Parties for such fiscal year, (b) balance sheet of
      the
      Credit Parties as at the end of such fiscal year, and (c) statement of cash
      flow
      of the Credit Parties for such fiscal year, all setting forth in comparative
      form the corresponding figures as at the end of the previous fiscal year, all
      in
      reasonable detail, including all supporting schedules and comments. The
      foregoing statements and balance sheets shall be prepared in accordance with
      GAAP and shall be audited by independent certified public accountants of
      recognized standing acceptable to Agent in the reasonable exercise of its
      discretion with respect to which such accountants shall deliver their
      unqualified opinion.

    

    
      	
              Section
                9.2

            	
              Quarterly
                Statements. 

            

    

    

    As
      soon
      as available and in any event within forty-five (45) days after the close of
      each fiscal quarter of the Credit Parties, beginning with the close of the
      current fiscal quarter, (a) the consolidated and consolidating income and
      retained earnings statements of the Credit Parties for such quarter, (b) the
      consolidated and consolidating balance sheet of the Credit Parties as of the
      end
      of such quarter and (c) the consolidated and consolidating statement of cash
      flow of the Credit Parties for such quarter, all setting forth in comparative
      form the corresponding figures as at the end of the corresponding quarter of
      the
      previous fiscal year (if applicable) all in reasonable detail, subject to year
      end adjustments and certified by the chief financial officer of each of the
      Credit Parties to be accurate and to have been prepared in accordance with
      GAAP.

    
      
        
        

      

      
        48

        
          

        

      

      
        
        

      

    

    
      	
              Section
                9.3

            	
              Requested
                Information. 

            

    

    

    With
      reasonable promptness, all such other data and information in respect of the
      condition, operation and affairs of the Credit Parties as Agent may reasonably
      request from time to time.

    

    
      	
              Section
                9.4

            	
              Compliance
                Certificates. 

            

    

    

    Together
      with the annual statements required by Section
      9.1
      above
      and the quarterly statements required by Section
      9.2
      above, a
      certificate of the chief financial officer of each of the Credit Parties: (a)
      stating that such Credit Party has observed, performed and complied with each
      and every undertaking contained herein, (b) setting forth the information and
      computations (in sufficient detail) required in order to establish whether
      such
      Credit Party was operating in compliance with the financial covenants in
Article
      VII
      of this
      Agreement, and (c) certifying that as of the date of such certification, there
      does not exist any Event of Default or any occurrence or state of affairs which
      with the giving of notice, passage of time or both would constitute an Event
      of
      Default.

    

    
      	
              Section
                9.5

            	
              Other
                Operating Information.

            

    

    

    As
      soon
      as available and in any event within twenty (20) days after the close of each
      fiscal quarter of the Credit Parties, beginning with the close of the current
      fiscal quarter, accounts receivable agings reports, accounts payable agings
      reports and management reports providing for each of Borrower’s properties: (a)
      rooms available and rooms occupied for the quarter then ended and year-to-date;
      (b) percentage occupancy for the quarter then ended and year-to-date; (c)
      average daily rate for the quarter then ended and year-to-date; and (d) the
      RevPAR for the quarter then ended and year-to-date.

    

    
      	
              Section
                9.6

            	
              Annual
                Budget and Financial Projections.

            

    

    

    As
      soon
      as available and in any event within sixty (60) days after the close of each
      fiscal year of the Credit Parties, beginning with the close of the current
      fiscal year, an annual budget and financial projections of the Credit Parties
      for the current fiscal year, containing monthly revenue and expenses and a
      listing of all assumptions related to such budget and projections for such
      fiscal year. 

    

    ARTICLE
      X

    CONDITIONS
      OF CLOSING

    

    The
      obligation of Lenders to make available the Line is subject to the performance
      by Borrower of all of its agreements to be performed hereunder and to the
      following further conditions:

    
      
        
        

      

      
        49

        
          

        

      

      
        
        

      

    

    
      	
              Section
                10.1

            	
              Conditions
                Precedent. 

            

    

    

    (a)    On
      or
      before the Closing Date, the Agent shall have received the following documents,
      instruments, opinions and certificates, each in form and substance satisfactory
      to the Agent:

    

    (i)    
a
      duly
      executed original counterpart of this Agreement and each of the other Loan
      Documents;

     

    (ii)    the
      opinion of counsel for the Credit Parties dated the Closing Date, addressed
      to
      Agent and the Lenders, addressing such matters as the Agent and the Lenders
      may
      reasonably request;

    

    (iii)    a
      certificate, dated the Closing Date, signed by the appropriate officer of the
      Borrower, certifying: (A) that attached thereto is a copy of the
      certificate of limited partnership of the Borrower and all amendments thereto
      certified as of a recent date by the appropriate Governmental Authority in
      its
      jurisdiction of organization, and that such organizational documents have not
      been amended since such date; (B) that attached thereto is a true and
      correct copy of the partnership agreement of the Borrower as in effect on the
      Closing Date; (C) that attached thereto is a true and correct copy of
      resolutions adopted by the general partner of the Borrower, authorizing the
      execution, delivery and performance of this Agreement and the other Loan
      Documents, as applicable; and (D) as to the incumbency and genuineness of
      the signature of each representative of the Borrower executing this Agreement
      or
      any of the other Loan Documents;

    

    (iv)           a
      certificate of good standing for the Borrower from the Commonwealth of Virginia
      and a certificate of authority to transact business from any jurisdiction where
      Borrower is required to be licensed to transact business;

    

    (v)    a
      certificate of each Guarantor, dated the Closing Date, signed by the appropriate
      officer of such Guarantor, certifying: (A) that attached thereto is a copy
      of the charter and governing documents of such Guarantor and all amendments
      thereto certified as of a recent date by the appropriate Governmental Authority
      in its jurisdiction of organization, and that such documents have not been
      amended since such date; (B) that attached thereto is a true and correct
      copy of the bylaws, partnership agreement, operating agreement or other
      governing documents of such Guarantor as in effect on the Closing Date;
      (C) that attached thereto is a true and correct copy of resolutions adopted
      by the governing body of such Guarantor, authorizing the execution, delivery
      and
      performance of the Loan Documents to which it is a party; and (iv) as to
      the incumbency and genuineness of the signature of each officer of the Guarantor
      executing the Loan Documents;

    

    (vi)   a
      certificate of good standing for each Guarantor from its jurisdiction of
      organization and a certificate of authority to transact business from any
      jurisdiction where any Guarantor is required to be licensed to transact
      business; and

    

    (vii)         
      such
      other documents, instruments, opinions, certificates, approvals or consents
      as
      Agent may reasonably request.

    
      
        
        

      

      
        50

        
          

        

      

      
        
        

      

    

     

    (b)    No
      less
      than ten (10) days before the Closing Date the Agent shall have
      received:

     

    (i)    
a
      mortgagee title insurance commitment (“Title
      Commitment”)
      dated
      within forty-five (45) days of the Closing Date, that provides for the issuance
      of a policy that shall: (A) be in an amount not less than the amount of the
      Loan; (B) insure that each of the Mortgages creates a valid first lien on
      the Mortgaged Property free and clear of all defects and encumbrances (except
      those acceptable to the Agent); (C) name the Agent as the insured party
      thereunder; (D) be in the form of ALTA Loan Policy-1992 (amended 10-17-92)
      or other form approved by the Agent; (E) provide mechanic’s lien
      protection; and (F) contain such endorsements and effective coverage as
      Agent may reasonably require, including without limitation an ALTA Form 3 Zoning
      Endorsement, an ALTA Form 6 Variable Rate Endorsement, an ALTA Form 9
      Comprehensive Endorsement, a usury endorsement, an access endorsement, a “same
      as survey” endorsement, a separate tax parcel endorsement, a doing business
      endorsement, a first loss endorsement, a tie-in endorsement, a last dollar
      endorsement, and a “future advances” endorsement, or the equivalent;

     

    (ii)    copies
      of
      all exceptions to title coverage listed in the Title Commitment and copies
      of
      all recorded plats referenced in the Title Commitment or an exception to title
      coverage;

     

    (iii)   one
      (1)
      print of a current (dated not more than six (6) months before the Closing Date,
      but more recently if new construction is underway) physical survey of the Land
      certified to the Agent and the title insurance company, in a manner acceptable
      to each of them, by an independent professional licensed land surveyor, which
      survey shall indicate, without limitation, the following: (A) all
      boundaries of the Land with a metes and bounds description (course and distance
      indicated); (B) the course and distance to and names of the nearest
      intersecting public street or roads; (C) the locations on the Land and
      dimensions of all the Improvements and the established building setback lines;
      (D) the lines of streets abutting the Land and width thereof; (E) all
      access and other easements appurtenant to the Land necessary or desirable to
      use
      the Land; (F) all roadways, paths, driveways, easements, encroachments and
      overhanging projections and similar encumbrances affecting the Land, whether
      recorded, apparent from a physical inspection of the Land or otherwise known
      to
      the surveyor; (G) any encroachments on any adjoining property by the
      Improvements on the Land; and (H) if the Land is described as being on a
      filed map, a legend relating the survey to said map, all in form satisfactory
      to
      the Agent; together with a certification as to the location of the Land or
      the
      Improvements in any “special flood hazard” area within the meaning of the
      Federal Flood Disaster Protection Act of 1973;

     

    (iv)   an
      appraisal of the Mortgaged Property acceptable to the Agent and the Lenders,
      supporting a Loan-to-Value ratio of 67% or less, calculated using the principal
      amount of the Loan and a “Value” equal to the “as completed” market value of the
      Mortgaged Property as determined by such appraisal; and 

     

    (v)    evidence
      that the Mortgaged Property complies with applicable laws and regulations
      pertaining to the protection and preservation of the environment. Such evidence
      shall include, without limitation, an inspection report by an environmental
      engineer satisfactory to Agent and Lenders, who may conduct soil and chemical
      testing, addressing the probability of toxic or hazardous waste on, at or
      adjacent to the Land, in soil or water, taking into consideration the history
      of
      the Land, including an identification of all owners and tenants for at least
      the
      most recent forty (40) years and its uses, adjacent land uses and the result
      of
      a site inspection by such engineer, and certifying that there are no hazardous
      or toxic wastes on or at the Land. In addition, if fill dirt is at any time
      to
      be brought to the Land from another tract of land, the Agent shall require
      similar evidence regarding such other tract prior to such fill dirt being placed
      on the Land.

     

    
      
        
        

      

      
        51

        
          

        

      

      
        
        

      

    

     

    (c)    On
      or
      before the Closing Date the Agent shall have received:

     

    (i)    
a
      mortgagee’s title insurance policy dated no later than the Closing Date, issued
      pursuant to the Title Commitment and showing no exceptions to title coverage
      not
      previously approved by the Agent and included in the Title Commitment, together
      with evidence that all premiums in respect of such policy have been
      paid;

     

    (ii)    evidence
      satisfactory to the Agent that the Mortgages and the Assignments of Leases
      have
      been properly recorded;

     

    (iii)   evidence
      satisfactory to Agent that all Uniform Commercial Code financing statements
      necessary to perfect the security interests granted to the Agent pursuant to
      the
      Mortgages and the Security Agreement have been duly filed in all appropriate
      offices and that each such security interest constitutes a valid, perfected,
      first-priority security interest in favor of the Agent, which evidence shall
      include, without limitation, official UCC search reports from all appropriate
      offices; 

     

    (iv)   evidence
      of insurance in form and substance satisfactory to the Agent and Lenders upon
      the collateral described in the Collateral Documents and the business of the
      Borrower, which must: (1) include fire, vandalism and malicious mischief
      coverage; (2) be in an amount sufficient to avoid co-insurance liability
      and equal to the total replacement value of the Improvements with extended
      coverage endorsement covering all Improvements located on the Land;
      (3) business interruption insurance in amounts and with coverages (not less
      than 6 months) satisfactory to the Agent; (4) be issued by a company
      approved by the Agent and licensed to transact business in the state where
      the
      Land is located; (5) contain a standard mortgagee clause designating the
      Agent as mortgagee and lender loss payee; and (6) contain provisions
      providing for written notice to the Agent at least thirty (30) days prior to
      any
      cancellation, termination, or modification thereof or of any coverage
      therein;

     

    (v)    evidence
      of liability insurance in form and in amount satisfactory to the Agent issued
      by
      a company approved by the Agent and licensed to transact business in the state
      where the Land is located;

     

    (vi)   an
      independent flood certification made by the Agent or its representative or
      agent, which shall be in form and substance satisfactory to the Agent and
      support a finding that none of the Land or the Improvements, are in any “special
      flood hazard” area within the meaning of the Federal Flood Disaster Protection
      Act of 1973;

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

    (vii)          
      evidence
      of compliance of the Mortgaged Properties with all zoning requirements;
      and

     

    (viii)         
      copies
      of
      all security agreements or instruments constituting liens or encumbrances on
      any
      portion of the Mortgaged Properties or on any property located on the Land,
      and
      related UCC-1 financing statements.

    

    
      	
              Section
                10.2

            	
              Representations
                and Warranties. 

            

    

    

    All
      representations and warranties of the Credit Parties set forth in the Loan
      Documents will be true at and as of the date hereof.

    

    
      	
              Section
                10.3

            	
              No
                Default. 

            

    

    

    No
      condition or event shall exist or have occurred which would constitute an Event
      of Default or a Potential Default.

    

    
      	
              Section
                10.4

            	
              Environmental
                Matters. 

            

    

    

    Agent
      shall have received a report from an environmental consultant or engineer
      acceptable to Agent, satisfactory in form and substance to Agent as to such
      environmental matters pertaining to the Mortgaged Properties as Agent may
      require.

    

    
      	
              Section
                10.5

            	
              Additional
                Documents. 

            

    

    

    Copies
      of
      record searches (including UCC searches and judgments, suits, tax and other
      lien
      searches) confirming that Agent has a first priority security interest in the
      Collateral, acceptable to Agent, shall have been delivered to
      Agent.

    

    
      	
              Section
                10.6

            	
              No
                Material Adverse Change. 

            

    

    

    As
      of the
      Closing Date, the Agent shall be satisfied that there has been no Material
      Adverse Change, and that all information, representations and materials
      submitted to the Agent by the Credit Parties in connection with the Loan are
      accurate and complete in all material respects.

    

    
      	
              Section
                10.7

            	
              Conditions
                Subsequent. 

            

    

    

    (a)    Within
      seven (7) Business Days after the Closing Date, Agent shall have received an
      ALTA survey of each Mortgaged Property, each in form and substance satisfactory
      to Agent.

    

    (b)    Within
      five (5) Business Days following the receipt by Borrower of a determination
      by
      Promus Hotels, Inc., the franchisor of the Philadelphia Property, upon the
      pending request that it approve the assignment of the Franchise License
      Agreement for the Philadelphia Property from the current franchisee to Philly
      One TRS, LLC or another Subsidiary or Affiliate of Borrower, Borrower,
      Affordable Hospitality Associates, LP, Philly One TRS, LLC and any other
      Affiliate or Subsidiary of Borrower that is an owner, lessee or operator of
      the
      Philadelphia Property shall execute and deliver such documents, instruments,
      opinions and certificates as Agent may require in connection with the addition
      of the Philadelphia Property to the Collateral, including, without limitation,
      a
      Mortgage, an Assignment of Leases an Assignment of Hotel Management Contract
      and
      the items set forth in Section 10.1 hereof.

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

    ARTICLE
      XI

    CERTAIN
      CONDITIONS TO SUBSEQUENT ADVANCES

    

    

    Subsequent
      advances under the Line shall be conditioned upon the following conditions
      and
      each Line Request shall constitute a representation by the Credit Parties to
      Agent that each condition has been met or satisfied:

    

    
      	
              Section
                11.1

            	
              Representations
                and Warranties. 

            

    

    

    All
      representations and warranties of the Credit Parties contained herein or in
      the
      Loan Documents shall be true at and as of the date of such advance as if made
      on
      such date, and each Line Request shall constitute reaffirmation by the Credit
      Parties that such representations and warranties are then true.

    

    
      	
              Section
                11.2

            	
              No
                Default. 

            

    

    

    No
      condition or event shall exist at or as of the date of such advance which would
      constitute an Event of Default hereunder or a Potential Default.

    

    
      	
              Section
                11.3

            	
              Additional
                Conditions.

            

    

    

    All
      applicable conditions set forth in Article II hereof shall have been
      satisfied.

    

    
      	
              Section
                11.4

            	
              Other
                Requirements. 

            

    

    

    Agent
      shall have received all certificates, authorizations, affidavits, schedules
      and
      other documents which are provided for hereunder or under the Loan Documents,
      or
      which Agent may reasonably request.

    

    

    ARTICLE
      XII

    DEFAULT
      AND REMEDIES

    

    

    
      	
              Section
                12.1

            	
              Events
                of Default. 

            

    

    

    An
      Event
      of Default shall exist upon the occurrence of any of the following specified
      events (each an “Event
      of Default”):

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    
      	 	
              (a)

            	
              Payment.
                

            

    

     

    (i)    
Borrower
      shall fail to pay any principal on any Loan within five (5) Business Days
      following the date when due in accordance with the terms hereof (including,
      without limitation, any mandatory prepayment); or 

     

    (ii)    Borrower
      shall fail to reimburse the Issuing Lender for any Letter of Credit Obligations
      within five (5) Business Days following the date when due in accordance with
      the
      terms hereof; or 

     

    (iii)   Borrower
      shall fail to pay any interest on any Loan or any fee or other amount payable
      hereunder within five (5) Business Days following the date when due in
      accordance with the terms hereof; or 

     

    (iv)   Any
      Guarantor shall fail to pay on the its Guaranty in respect of any of the
      foregoing, on demand; or

     

    
      	 	
              (b)

            	
              Misrepresentation.
                

            

    

     

    Any
      representation or warranty made or deemed made herein, in the Collateral
      Documents or in any of the other Loan Documents or which is contained in any
      certificate, document or financial or other statement furnished at any time
      under or in connection with this Agreement shall prove to have been incorrect,
      false or misleading in any material respect on or as of the date made or deemed
      made; or

     

    
      	 	
              (c)

            	
              Covenant.
                

            

    

     

    A
      Credit
      Party shall fail to perform, comply with or observe any term, covenant or
      agreement applicable to it contained herein and, in the event such breach or
      failure to comply is capable of cure, such breach or non-compliance is not
      cured
      within ten (10) days after its occurrence; or

     

    
      	 	
              (d)

            	
              Cross
                Default.
                

            

    

     

    A
      Credit
      Party shall (i) default in any payment of principal of or interest on any
      Indebtedness (other than the Obligations) in a principal amount outstanding
      of
      at least $100,000 in the aggregate for the Credit Parties beyond the period
      of
      grace (not to exceed 30 days), if any, provided in the instrument or
      agreement under which such Indebtedness was created; or (ii) default in the
      observance or performance of any other agreement or condition relating to any
      Indebtedness in a principal amount outstanding of at least $1,000,000 in the
      aggregate for the Credit Parties or contained in any instrument or agreement
      evidencing, securing or relating thereto, or any other event shall occur or
      condition exist, the effect of which default or other event or condition is
      to
      cause, or to permit the holder or holders of such Indebtedness or beneficiary
      or
      beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
      holder or holders or beneficiary or beneficiaries) to cause, with the giving
      of
      notice if required, such Indebtedness to become due prior to its stated
      maturity; or (iii) breach or default any Hedging Agreement; or

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (e)

            	
              Bankruptcy.
                

            

    

     

    (i)    
Any
      Credit Party or any of their Subsidiaries shall commence any case, proceeding
      or
      other action (A) under any existing or future law of any jurisdiction, domestic
      or foreign, relating to bankruptcy, insolvency, reorganization or relief of
      debtors, seeking to have an order for relief entered with respect to it, or
      seeking to adjudicate it a bankrupt or insolvent, or (B) seeking appointment
      of
      a receiver, trustee, custodian, conservator or other similar official for it
      or
      for all or any substantial part of its assets, or any Credit Party or any of
      their Subsidiaries shall make a general assignment for the benefit of its
      creditors; or 

     

    (ii)    There
      shall be commenced against any Credit Party or any of their Subsidiaries, any
      case, proceeding or other action of a nature referred to in clause (i)
      above which (A) results in the entry of an order for relief or any such
      adjudication or appointment or (B) remains undismissed, undischarged or unbonded
      for a period of sixty (60) days; or 

     

    (iii)   There
      shall be commenced against any Credit Party or any of their Subsidiaries, any
      case, proceeding or other action seeking issuance of a warrant of attachment,
      execution, distraint or similar process against all or any substantial part
      of
      their assets which results in the entry of an order for any such relief which
      shall not have been vacated, discharged, or stayed or bonded pending appeal
      within sixty (60) days from the entry thereof; or 

     

    (iv)   Any
      Credit Party or any of their Subsidiaries, shall take any action in furtherance
      of, or indicating its consent to, approval of, or acquiescence in, any of the
      acts set forth in clause (i), (ii), or (iii) above; or 

     

    (v)    Any
      Credit Party or any of their Subsidiaries, shall generally not, or shall be
      unable to, or shall admit in writing their inability to, pay its debts as they
      become due; or

     

    
      	 	
              (f)

            	
              Dissolution.
                

            

    

     

    Any
      Credit Party or any of their Subsidiaries shall commence any reorganization,
      arrangement, adjustment, winding-up, liquidation, dissolution, or composition
      other than as expressly permitted by Section 8.6 hereof; or

     

    
      	 	
              (g)

            	
              Judgment.
                

            

    

     

    One
      or
      more judgments or decrees shall be entered against a Credit Party or any of
      its
      Subsidiaries involving in the aggregate a liability (to the extent not covered
      by insurance) of $100,000 or more and all such judgments or decrees shall not
      have been paid and satisfied, vacated, discharged, stayed or bonded pending
      appeal within ten (10) Business Days from the entry thereof or any
      injunction, temporary restraining order or similar decree shall be issued
      against a Credit Party or any of its Subsidiaries that, individually or in
      the
      aggregate, could reasonably be expected to result in a Material Adverse
      Effect.

     

    
      	
              Section
                12.2

            	
              Acceleration;
                Remedies.

            

    

     

    Upon
      the
      occurrence and during the continuance of an Event of Default, then, and in
      any
      such event, 

    
      
        
        

      

      
        56

        
          

        

      

      
        
        

      

    

     

    (a)    if
      such
      event is an Event of Default specified in Section 8.1(e) above,
      automatically the Commitments shall immediately terminate and the Loans (with
      accrued interest thereon), and all other amounts under the Loan Documents
      (including without limitation the maximum amount of all contingent liabilities
      under Letters of Credit) shall immediately become due and payable, and

    

    (b)    if
      such
      event is any other Event of Default, any or all of the following actions may
      be
      taken: (i) with the written consent of the Required Lenders under any
      Commitment, the Agent may, or upon the written request of such Required Lenders,
      the Agent shall, by written notice to Borrowers declare such Commitment to
      be
      terminated forthwith, whereupon such Commitment shall immediately terminate;
      (ii) with the written consent of the Required Lenders, the Agent may, or
      upon the written request of the Required Lenders, the Agent shall, by written
      notice to Borrower, declare the Loans (with accrued interest thereon) and all
      other amounts owing under this Agreement and the Notes to be due and payable
      forthwith and direct the Borrowers to pay to the Agent cash collateral as
      security for the LOC Obligations for subsequent drawings under then outstanding
      Letters of Credit an amount equal to the maximum amount of which may be drawn
      under Letters of Credit then outstanding, whereupon the same shall immediately
      become due and payable; and/or (iii) with the written consent of the Required
      Lenders, the Agent may, or upon the written request of the Required Lenders,
      the
      Agent shall, exercise such other rights and remedies as provided under the
      Loan
      Documents and under applicable law, providing such notices thereof to Borrowers
      as may be required by applicable law.

    

    

    ARTICLE
      XIII

    THE
      AGENT

    

    

    
      	
              Section
                13.1

            	
              Appointment
                of Agent. 

            

    

    

    (a)    Each
      Lender hereby designates the Bank as Agent to act as herein specified. Each
      Lender hereby irrevocably authorizes, and each holder of any Note or
      participation in any Letter of Credit by the acceptance of a Note or
      participation shall be deemed irrevocably to authorize, the Agent to take such
      action on its behalf under the provisions of this Agreement and the Notes and
      any other instruments and agreements referred to herein and to exercise such
      powers and to perform such duties hereunder and thereunder as are specifically
      delegated to or required of the Agent by the terms hereof and thereof. Except
      as
      otherwise provided in this Agreement, the Agent shall hold all Collateral and
      all payments of principal, interest, Fees, charges and expenses received
      pursuant to this Agreement or any other Loan Document for the ratable benefit
      of
      the Lenders. The Agent may perform any of its duties hereunder by or through
      its
      agents or employees.

    

    (b)    The
      provisions of this Article
      XIII
      are
      solely for the benefit of the Agent and the Lenders, and Borrower shall have
      no
      rights as a third party beneficiary of any of the provisions hereof (other
      than
Section
      13.9).
      In
      performing its functions and duties under this Agreement, the Agent shall act
      solely as agent of the Lenders and does not assume and shall not be deemed
      to
      have assumed any obligation toward or relationship of agency or trust with
      or
      for Borrower.

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

    
      	
              Section
                13.2

            	
              Nature
                of Duties of Agent. 

            

    

    

    The
      Agent
      shall have no duties or responsibilities except those expressly set forth in
      this Agreement. Neither the Agent nor any of its officers, directors, employees
      or agents shall be liable for any action taken or omitted by it as such
      hereunder or in connection herewith, unless caused by its or their gross
      negligence or willful misconduct. The duties of the Agent shall be mechanical
      and administrative in nature; the Agent shall not have by reason of this
      Agreement a fiduciary relationship in respect of any Lender; and nothing in
      this
      Agreement, expressed or implied, is intended to or shall be so construed as
      to
      impose upon the Agent any obligations in respect of this Agreement except as
      expressly set forth herein.

    

    
      	
              Section
                13.3

            	
              Lack
                of Reliance on Agent.

            

    

    

    (a)    Independently
      and without reliance upon the Agent, each Lender, to the extent it deems
      appropriate, has made and shall continue to make (i) its own independent
      investigation of the financial or other condition and affairs of Borrower in
      connection with the taking or not taking of any action in connection herewith
      and (ii) its own appraisal of the creditworthiness of Borrower, and, except
      as
      expressly provided in this Agreement, the Agent shall have no duty or
      responsibility, either initially or on a continuing basis, to provide any Lender
      with any credit or other information with respect thereto, whether coming into
      its possession before the making of the Loans or at any time or times
      thereafter.

    

    (b)    The
      Agent
      shall not be responsible to any Lender for any recitals, statements,
      information, representations or warranties herein or in any document,
      certificate or other writing delivered in connection herewith or for the
      execution, effectiveness, genuineness, validity, enforceability, collectability,
      priority or sufficiency of this Agreement or the Notes or the financial or
      other
      condition of Borrower. The Agent shall not be required to make any inquiry
      concerning either the performance or observance of any of the terms, provisions
      or conditions of this Agreement or the Notes, or the financial condition of
      Borrower, or the existence or possible existence of any Default or Event of
      Default, unless expressly provided in this Agreement or specifically requested
      to do so in writing by any Lender.

    

    
      	
              Section
                13.4

            	
              Certain
                Rights of the Agent. 

            

    

    

    Without
      limiting Agent's rights and discretion under any provisions hereof, the Agent
      shall have the right to request instructions from the Required Lenders or,
      as
      required, each of the Lenders. If the Agent shall request instructions from
      the
      Required Lenders or each of the Lenders, as the case may be, with respect to
      any
      act or action (including the failure to act) in connection with this Agreement,
      the Agent shall be entitled to refrain from such act or taking such action
      unless and until the Agent shall have received instructions from the Required
      Lenders or each of the Lenders, as the case may be, and the Agent shall not
      incur liability to any Person by reason of so refraining. Without limiting
      the
      foregoing, no Lender shall have any right of action whatsoever against the
      Agent
      as a result of the Agent acting or refraining from acting hereunder in
      accordance with the instructions of the Required Lenders or each of the Lenders,
      as the case may be.

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

    

    

    
      	
              Section
                13.5

            	
              Reliance
                by Agent. 

            

    

    

    The
      Agent
      shall be entitled to rely, and shall be fully protected in relying, upon any
      note, writing, resolution, notice, statement, certificate, telex teletype or
      telecopier message, cablegram, radiogram, order or other documentary,
      teletransmission or telephone message believed by it to be genuine and correct
      and to have been signed, sent or made by the proper person. The Agent may
      consult with legal counsel (including counsel for Borrower with respect to
      matters concerning Borrower), independent public accountants and other experts
      selected by it and shall not be liable for any action taken or omitted to be
      taken by it in good faith in accordance with the advice of such counsel,
      accountants or experts.

     

    
      
        	
                Section
                  13.6

              	
                Indemnification
                  of Agent.

              

      

    

    

    To
      the
      extent the Agent is not reimbursed and indemnified by Borrower, each Lender
      will
      reimburse and indemnify the Agent, in proportion to its respective Commitment,
      for and against any and all liabilities, obligations, losses, damages,
      penalties, actions, judgments, suits, costs, expenses (including counsel fees
      and disbursements) or disbursements of any kind or nature whatsoever which
      may
      be imposed on, incurred by or asserted against the Agent in any way relating
      to
      or arising out of this Agreement, provided
      that no
      Lender shall be liable for any portion of such liabilities, obligations, losses,
      damages, penalties, actions, judgments, suits, costs, expenses or disbursements
      resulting from the Agent’s gross negligence or willful misconduct.

    

    
      	
              Section
                13.7

            	
              The
                Agent in its Individual Capacity. 

            

    

    

    With
      respect to its obligation to lend under this Agreement, the Loans made by it
      and
      the Notes issued to it, its participation in Letters of Credit issued hereunder,
      and all of its rights and obligations as a Lender hereunder and under the other
      Loan Documents, the Agent shall have the same rights and powers hereunder as
      any
      other Lender or holder of a Note or participation interests and may exercise
      the
      same as though it was not performing the duties specified herein; and the terms
      “Lenders”, “Required Lenders”, “holders of Notes”, or any similar terms shall,
      unless the context clearly otherwise indicates, include the Agent in its
      individual capacity. The Agent may accept deposits from, lend money to, acquire
      equity interests in, and generally engage in any kind of banking, trust,
      financial advisory or other business with Borrower or any Affiliate of Borrower
      as if it were not performing the duties specified herein, and may accept fees
      and other consideration from Borrower for services in connection with this
      Agreement and otherwise without having to account for the same with the
      Lenders.

    

    
      	
              Section
                13.8

            	
              Holders
                of Notes. 

            

    

    

    The
      Agent
      may deem and treat the payee of any Note as the owner thereof for all purposes
      hereof unless and until a written notice of the assignment or transfer thereof
      shall have been filed with the Agent. Any request, authority or consent of
      any
      Person who, at the time of making such request or giving such authority or
      consent, is the holder of any Note, shall be conclusive and binding on any
      subsequent holder, transferee or assignee of such Note or of any Note or Notes
      issued in exchange therefor.

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                13.9

            	
              Successor
                Agent.

            

    

    

    (a)    The
      Agent
      may, upon five (5) Business Days’ notice to the Lenders and Borrower, resign at
      any time (effective upon the appointment of a successor Agent pursuant to the
      provisions of this Section
      13.9(a))
      by
      giving written notice thereof to the Lenders and Borrower. Upon any such
      resignation, the Required Lenders shall have the right, upon five (5) days’
notice, to appoint a successor Agent. If no successor Agent shall have been
      so
      appointed by the Required Lenders, and shall have accepted such appointment,
      within thirty (30) days after the retiring Agent’s giving of notice of
      resignation, then, upon five (5) days’ notice, the retiring Agent may, on behalf
      of the Lenders, appoint a successor Agent, which shall be a bank or a trust
      company or other financial institution which maintains an office in the United
      States, or a commercial bank organized under the laws of the United States
      of
      America or of any State thereof, or any affiliate of such bank or trust company
      or other financial institution which is engaged in the banking business, having
      a combined capital and surplus of at least $500,000,000. Notwithstanding
      anything herein to the contrary, so long as no Event of Default shall have
      occurred and be continuing, any successor Agent (whether appointed by the
      Required Lenders or the Agent) shall have been approved in writing by Borrower
      (such approval not to be unreasonably withheld).

    

    (b)    Upon
      the
      acceptance of any appointment as Agent hereunder by a successor Agent, such
      successor Agent shall thereupon succeed to and become vested with all the
      rights, powers, privileges and duties of the retiring Agent, and the retiring
      Agent shall be discharged from its duties and obligations under this Agreement.
      After any retiring Agent’s resignation hereunder as Agent, the provisions of
      this Article
      XIII
      shall
      inure to its benefit as to any actions taken or omitted to be taken by it while
      it was Agent under this Agreement.

    

    
      	
              Section
                13.10

            	
               Collateral
                Matters.

            

    

    

    (a)    Each
      Lender authorizes and directs the Agent to enter into the Collateral Documents
      and accept the other Loan Documents for the benefit of the Lenders. Agent is
      hereby authorized, on behalf of all Lenders, without the necessity of any notice
      to or further consent from any Lender, from time to time prior to an Event
      of
      Default, to take any action, in its sole discretion, with respect to any
      Collateral or Loan Document which may be necessary or appropriate to perfect
      and
      maintain perfected or enforce the Liens upon the Collateral granted pursuant
      to
      the Collateral Documents.

    

    (b)    The
      Lenders hereby authorize the Agent to release any Lien granted to or held by
      the
      Agent upon any Collateral and to accept Substitute Collateral or Additional
      Collateral in accordance with Section 4.14 hereof, in accordance with the
      following requirements:

    

    (i)    
Agent
      may
      accept Substitute Collateral or Additional Collateral if approved, authorized
      or
      ratified in writing by the Required Lenders;

    
      
        
        

      

      
        60

        
          

        

      

      
        
        

      

    

    (ii)    Agent,
      at
      its option and in its discretion, may release any Lien granted to or held by
      Agent upon any Collateral if, after giving effect to the release of such Lien
      upon the Collateral, the aggregate amount of all Type A Loans outstanding does
      not exceed the Borrowing Base; and

    

    (iii)   Agent
      may
      not release any Lien granted to or held by Agent upon any Collateral if, after
      giving effect to the release of such Lien upon the Collateral, the aggregate
      amount of all Type A Loans outstanding exceeds the Borrowing Base, unless such
      release has been approved by all Lenders. 

    

    Upon
      request by the Agent at any time, the Lenders will confirm in writing the
      Agent’s authority to release particular types or items of Collateral pursuant to
      this Section
      13.10(b).
      Notwithstanding the foregoing, the Lenders hereby authorize and approve the
      addition of the Philadelphia Property to the Collateral.

    

    (c)   Upon
      any
      sale and transfer of Collateral which is expressly permitted pursuant to the
      terms of this Agreement, or consented to in writing by the Required Lenders
      or
      all of the Lenders, as applicable, and upon at least five (5) Business Days’
prior written request by Borrower, the Agent shall (and is hereby irrevocably
      authorized by the Lenders to execute such documents as may be necessary to
      evidence the release of the Liens granted to the Agent for the benefit of the
      Lenders herein or pursuant hereto upon the Collateral that was sold or
      transferred; provided
      that (i)
      the Agent shall not be required to execute any such document on terms which,
      in
      the Agent’s opinion, would expose the Agent to liability or create any
      obligation or entail any consequence other than the release of such Liens
      without recourse or warranty and (ii) such release shall not in any manner
      discharge, affect or impair the Obligations or any Liens upon (or obligations
      of
      Borrower in respect of) all interests retained by Borrower, including (without
      limitation) the proceeds of the sale, all of which shall continue to constitute
      part of the Collateral. In the event of any sale or transfer of Collateral,
      or
      any foreclosure with respect to any of the Collateral, the Agent shall be
      authorized to deduct all of the expenses reasonably incurred by the Agent from
      the proceeds of any such sale, transfer or foreclosure.

    

    (d)   The
      Agent
      shall have no obligation whatsoever to the Lenders or to any other Person to
      assure that the Collateral exists or is owned by a Credit Party or is cared
      for,
      protected or insured or that the liens granted to the Agent herein or pursuant
      hereto have been properly or sufficiently or lawfully created, perfected,
      protected or enforced or are entitled to any particular priority, or to exercise
      or to continue exercising at all or in any manner or under any duty of care,
      disclosure or fidelity any of the rights, authorities and powers granted or
      available to the Agent in this Section
      13.10
      or in
      any of the Loan Documents, it being understood and agreed that in respect of
      the
      Collateral, or any act, omission or event related thereto, the Agent may act
      in
      any manner it may deem appropriate, in its sole discretion, given the Agent’s
      own interest in the Collateral as one of the Lenders and that the Agent shall
      have no duty or liability whatsoever to the Lenders, except for its gross
      negligence or willful misconduct.

    
      
        
        

      

      
        61

        
          

        

      

      
        
        

      

    

    
      	
              Section
                13.11

            	
              Actions
                with Respect to Defaults. 

            

    

    

    In
      addition to the Agent’s right to take actions on its own accord as permitted
      under this Agreement, the Agent shall take such action with respect to a Default
      or Event of Default as shall be directed by the Required Lenders or all of
      the
      Lenders, as the case may be; provided
      that,
      until the Agent shall have received such directions, the Agent may (but shall
      not be obligated to) take such action, or refrain from taking such action,
      with
      respect to such Default or Event of Default as it shall deem advisable and
      in
      the best interests of the Lenders, including without limitation, exercising
      any
      right of offset in respect of the Collateral. 

    

    
      	
              Section
                13.12

            	
              Delivery
                of Information.
                 

            

    

    

    The
      Agent
      shall not be required to deliver to any Lender originals or copies of any
      documents, instruments, notices, communications or other information received
      by
      the Agent from Borrower, the Required Lenders, any Lender or any other Person
      under or in connection with this Agreement or any other Loan Document except
      (a)
      copies of credit or other information with respect thereto received by Agent,
      (b) as otherwise specifically provided in this Agreement or any other Loan
      Document and (c) as specifically requested from time to time in writing by
      any
      Lender with respect to a specific document instrument, notice or other written
      communication received by and in the possession of the Agent at the time of
      receipt of such request and then only in accordance with such specific
      request.

    

    
      	
              Section
                13.13

            	
              Disbursements
                to Lenders.

            

    

    

    (a)    The
      Agent
      shall pay to each Lender, from the interest actually received by Agent from
      Borrower, a sum equal to the interest calculated for the actual number of days
      elapsed on the basis of a year of 360 days, on each Lender’s outstanding balance
      of its Loans at the rate equal to the applicable rate of interest with respect
      to such Lender’s Commitment Percentage of the Loans outstanding. Agent shall
      make such payments to Lenders on the day Agent receives payment from Borrower,
      if payment is received by Agent at or before 11:00 a.m., or on the next Business
      Day following the day Agent receives payment from Borrower, if payment is
      received by Agent after 11:00 a.m. Any payment from Borrower that is not timely
      disbursed by Agent to Lenders in accordance with the preceding sentence shall
      bear interest payable by Agent to Lenders at a rate equal to the interest rate
      then applicable to Prime Rate Loans. If Agent should for any reason receive
      less
      than the full amount of the interest or other compensation due under the Loan
      Documents, each Lender’s share of such interest or compensation shall decrease
      in proportion to each Lender’s Commitment Percentage.

    

    (b)    If
      any
      such payment received by Agent is rescinded, determined to be unenforceable
      or
      invalid or is otherwise required to be returned for any reason at any time,
      whether before or after termination of this Agreement and the Loan Documents,
      each Lender will, upon written notice from the Agent, promptly pay over to
      Agent
      its Commitment Percentage of the amount so rescinded, held unenforceable or
      invalid or required to be returned, together with interest and other fees
      thereon if also required to be rescinded or returned.

    
      
        
        

      

      
        62

        
          

        

      

      
        
        

      

    

    (c)    In
      the
      event that any Lender shall receive any payments in reduction of the Obligations
      in an amount greater than its applicable Commitment Percentage in respect of
      indebtedness to Lenders evidenced hereby (including, without limitation, amounts
      obtained by reason of setoffs), such Lender shall hold such excess in trust
      (to
      the extent such Lender is lawfully able to do so) for Agent (on behalf of all
      other Lenders) and shall promptly remit to Agent such excess amount so that
      the
      amounts received by each Lender hereunder shall at all times be in accordance
      with its applicable Commitment Percentage. 

    

    

    ARTICLE
      XIV

    COMMUNICATIONS
      AND NOTICES

    

    

    
      	
              Section
                14.1

            	
              Communications
                and Notices. 

            

    

    

    All
      notices, requests and other communications made or given in connection with
      the
      Loan Documents shall be in writing and, unless receipt is stated herein to
      be
      required, shall be deemed to have been validly given if delivered personally
      to
      the individual or division or department to whose attention notices to a party
      are to be addressed, or by private carrier, or registered or certified mail,
      return receipt requested, or by telecopy with the original forwarded by
      first-class mail, in all cases, with charges prepaid, addressed as follows,
      until some other address (or individual or division or department for attention)
      shall have been designated by notice given by one party to the
      other:

    

    
      	
              To
                Credit Parties:

            	
              Hersha
                Hospitality Limited Partnership

              Hersha
                Hospitality Trust

              148
                Sheraton Drive

              New
                Cumberland, PA 17070

              Attention:
                Ashish R. Parikh, CFO

              Facsimile
                No.: 215-238-0157

            
	 	 
	
              With
                a copy to:

            	
              Shah
                & Byler, LLP

              Penn
                Mutual Towers

              510
                Walnut Street, 9th
                Floor 

              Philadelphia,
                PA 19106

              Attention:
                Lokanath Mohapatra, Esquire

              Facsimile
                No.: 267-238-1874

            
	 	 
	
              To
                Agent:

            	
              Commerce
                Bank, N.A.

              2005
                Market Street, 2nd
                Floor

              Philadelphia,
                PA 19103

              Attention:
                William J. Fink, Vice President

              Facsimile
                No.: 215-557-6209

            

    

     

    
      
        
        

      

      
        63

        
          

        

      

      
        
        

      

    

     

    
      	
              With
                a copy to:

            	
              Obermayer
                Rebmann Maxwell & Hippel LLP

              1617
                John F. Kennedy Boulevard, 19th
                Floor

              Philadelphia,
                PA 19103

              Attention:
                David A. Nasatir, Esquire

              Facsimile
                No.: 215-665-3165

            

    

    

    

    ARTICLE
      XV

    WAIVERS

    

    
      	
              Section
                15.1

            	
              Waivers. 

            

    

    

    In
      connection with any proceedings under the Loan Documents, including without
      limitation any action by Agent in replevin, foreclosure or other court process
      or in connection with any other action related to the Loan Documents or the
      transactions contemplated hereunder, each of the Credit Parties
      waives:

    

    (a)    all
      errors, defects and imperfections in such proceedings;

    

    (b)    all
      benefits under any present or future laws exempting any property, real or
      personal, or any part of any proceeds thereof from attachment, levy or sale
      under execution, or providing for any stay of execution to be issued on any
      judgment recovered under any of the Loan Documents or in any replevin or
      foreclosure proceeding, or otherwise providing for any valuation, appraisal
      or
      exemption;

    

    (c)    all
      rights to inquisition on any real estate, which real estate may be levied upon
      pursuant to a judgment obtained under any of the Loan Documents and sold upon
      any writ of execution issued thereon in whole or in part, in any order desired
      by Agent;

    

    (d)    presentment
      for payment, demand, notice of demand, notice of non-payment, protest and notice
      of protest of any of the Loan Documents, including the Line Note;

    

    (e)    any
      requirement for bonds, security or sureties required by statute, court rule
      or
      otherwise;

    

    (f)    any
      demand for possession of Collateral prior to commencement of any suit;
      and

    

    (g)    all
      rights to claim or recover attorney's fees and costs in the event that Borrower
      is successful in any action to remove, suspend or enforce a judgment entered
      by
      confession.

    

    
      	
              Section
                15.2

            	
              Forbearance. 

            

    

    

    Agent
      may
      release, compromise, forbear with respect to, waive, suspend, extend or renew
      any of the terms of the Loan Documents, without notice to the Credit
      Parties.

    
      
        
        

      

      
        64

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                15.3

            	
              Limitation
                on Liability. 

            

    

    

    Each
      Credit Party shall be responsible for and Agent is hereby released from any
      claim or liability in connection with:

    

    (a)    Safekeeping
      any Collateral;

    

    (b)    Any
      loss
      or damage to any Collateral;

    

    (c)    Any
      diminution in value of the Collateral; or

    

    (d)    Any
      act
      or default of another Person.

    

    Agent
      shall only be liable for any act or omission on its part constituting willful
      misconduct. In the event that Agent breaches its required standard of conduct,
      Borrower agrees that Agent's liability shall be only for direct damages suffered
      and shall not extend to consequential or incidental damages. In the event
      Borrower brings suit against Agent in connection with the transactions
      contemplated hereunder and Agent is found not to be liable, Borrower will
      indemnify and hold Agent harmless from all costs and expenses, including
      attorney's fees, incurred by Agent in connection with such suit. This Agreement
      is not intended to obligate Agent to take any action with respect to the
      Collateral or incur expenses or perform any obligation or duty of
      Borrower.

    

    

    ARTICLE
      XVI

    SUBMISSION
      TO JURISDICTION

    

    

    
      	
              Section
                16.1

            	
              Submission
                to Jurisdiction. 

            

    

    

    Each
      Credit Party hereby consents to the exclusive jurisdiction of any state or
      federal court located within the Commonwealth of Pennsylvania, and irrevocably
      agrees that, subject to the Agent's election, all actions or proceedings
      relating to the Loan Documents or the transactions contemplated hereunder shall
      be litigated in such courts, and each Credit Party waives any objection which
      it
      may have based on lack of personal jurisdiction, improper venue or forum
      non conveniens
      to the
      conduct of any proceeding in any such court and waives personal service of
      any
      and all process upon it, and consents that all such service of process be made
      by mail or messenger directed to it at the address set forth in Section
      14.1.
      Each
      Credit Party hereby irrevocably appoints any officer, trustee, or partner of
      either of them as their agent for the purpose of accepting service of any
      process within the Commonwealth of Pennsylvania. Nothing contained in this
      Section
      16.1
      shall
      affect the right of Agent to serve legal process in any other manner permitted
      by law or affect the right of Agent to bring any action or proceeding against
      a
      Credit Party or its property in the courts of any other
      jurisdiction.

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      XVII

    MISCELLANEOUS

    

    

    
      	
              Section
                17.1

            	
              Brokers. 

            

    

    

    The
      transaction contemplated hereunder was brought about and entered into by Agent
      and Borrower acting as principals and without any brokers, agents or finders
      being the effective procuring cause hereof. Each Credit Party represents to
      Agent that it has not committed Agent to the payment of any brokerage fee or
      commission in connection with this transaction. Whether any such claim is made
      against Agent or any Lender by any broker, finder or agent or any other Person,
      the Credit Parties agree to indemnify, defend and hold Agent and Lenders
      harmless against any such claim, at their own cost and expense, including
      Agent’s and Lenders’ attorneys’ fees. Each Credit Party further agrees that
      until any such claim or demand is adjudicated in Agent's favor, the amount
      claimed and/or demanded shall be deemed part of the Obligations secured by
      the
      Collateral.

    

    
      	
              Section
                17.2

            	
              No
                Joint Venture. 

            

    

    

    Nothing
      contained herein is intended to permit or authorize any Credit Party to make
      any
      contract on behalf of Agent, nor shall this Agreement be construed as creating
      a
      partnership, joint venture or making Agent an investor in any Credit
      Party.

    

    
      	
              Section
                17.3

            	
              Survival. 

            

    

    

    All
      covenants, agreements, representations and warranties made by the Credit Parties
      in the Loan Documents or made by or on its behalf in connection with the
      transactions contemplated hereunder shall be true at all times this Agreement
      is
      in effect and shall survive the execution and delivery of the Loan Documents,
      any investigation at any time made by Agent or on its behalf and the making
      by
      Lenders of the loans or advances to Borrower. All statements contained in any
      certificate, statement or other document delivered by or on behalf of any Credit
      Party pursuant hereto or in connection with the transactions contemplated
      hereunder shall be deemed representations and warranties by such Credit
      Party.

    

    
      	
              Section
                17.4

            	
              No
                Assignment by Borrower. 

            

    

    

    Borrower
      may not assign any of its rights hereunder without the prior written consent
      of
      Agent, and Lenders shall not be required to lend hereunder except to Borrower
      as
      it presently exists.

    

    
      	
              Section
                17.5

            	
              Assignment
                or Sale by Lenders. 

            

    

    

    Each
      Lender may sell, assign or participate all or a portion of its interest in
      the
      Loan Documents in the minimum amount of $1,000,000 and integral multiples of
      $1,000,000 in excess thereof, and in connection therewith may make available
      to
      any prospective purchaser, assignee or participant any information relative
      to
      the Credit Parties in its possession. All sales and assignments shall be made
      pursuant to an Assignment and Assumption Agreement substantially in the form
      of
Exhibit
      C
      attached
      hereto and shall be subject to the approval of the Agent and to the payment
      to
      the Agent of an administrative fee of $3,500.

    
      
        
        

      

      
        66

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                17.6

            	
              Binding
                Effect. 

            

    

    

    This
      Agreement and all rights and powers granted hereby will bind and inure to the
      benefit of the parties hereto and their respective permitted successors and
      assigns.

    

    
      	
              Section
                17.7

            	
              Severability. 

            

    

    

    The
      provisions of this Agreement and all other Loan Documents are deemed to be
      severable, and the invalidity or unenforceability of any provision shall not
      affect or impair the remaining provisions which shall continue in full force
      and
      effect.

    

    
      	
              Section
                17.8

            	
              No
                Third Party Beneficiaries. 

            

    

    

    The
      rights and benefits of this Agreement and the Loan Documents shall not inure
      to
      the benefit of any third party.

    

    
      	
              Section
                17.9

            	
              Modifications. 

            

    

    

    No
      modification of this Agreement or any of the Loan Documents shall be binding
      or
      enforceable unless in writing and signed by or on behalf of the party against
      whom enforcement is sought. Notwithstanding any other provision contained in
      any
      Loan Document, no amendment, modification, termination or waiver shall (a)
      affect the payment of principal (including without limitation the date when
      due), (b) reduce any interest rate margin or any fee provided herein, (c)
      increase any Commitment, (d) extend the Expiration Date, (e) modify the
      definition of “Required Lenders” or (f) modify any voting rights of the Lenders
      without the written consent of all the Lenders. 

    

    
      	
              Section
                17.10

            	
               Holidays. 

            

    

    

    If
      the
      day provided herein for the payment of any amount or the taking of any action
      falls on a Saturday, Sunday or public holiday at the place for payment or
      action, then the due date for such payment or action will be the next succeeding
      Business Day.

    

    
      	
              Section
                17.11 

            	
              Law
                Governing. 

            

    

    

    This
      Agreement has been made, executed and delivered in the Commonwealth of
      Pennsylvania and will be construed in accordance with and governed by the laws
      thereof.

    
      
        
        

      

      
        67

        
          

        

      

      
        
        

      

    

    
      	
              Section
                17.12 

            	
              Integration. 

            

    

    

    The
      Loan
      Documents shall be construed as integrated and complementary of each other,
      and
      as augmenting and not restricting Bank's rights, powers, remedies and security.
      The Loan Documents contain the entire understanding of the parties thereto
      with
      respect to the matters contained therein and supersede all prior agreements
      and
      understandings between the parties with respect to the subject matter thereof
      and do not require parol or extrinsic evidence in order to reflect the intent
      of
      the parties. In the event of any inconsistency between the terms of this
      Agreement and the terms of the other Loan Documents, the terms of this Agreement
      shall prevail.

    

    
      	
              Section
                17.13

            	
              Exhibits
                and Schedules. 

            

    

    

    All
      exhibits and schedules attached hereto are hereby made a part of this
      Agreement.

    

    
      	
              Section
                17.14

            	
              Headings. 

            

    

    

    The
      headings of the Articles, Sections, paragraphs and clauses of this Agreement
      are
      inserted for convenience only and shall not be deemed to constitute a part
      of
      this Agreement.

    

    
      	
              Section
                17.15

            	
              Counterparts. 

            

    

    

    This
      Agreement may be executed in any number of counterparts, all of which taken
      together shall constitute one and the same instrument, and any of the parties
      hereto may execute this Agreement by signing any such counterpart.

    

    
      	
              Section
                17.16

            	
              Waiver
                of Right to Trial by Jury. 

            

    

    

    EACH
      OF
      THE CREDIT PARTIES, LENDERS AND AGENT WAIVE ANY RIGHT TO TRIAL BY JURY ON ANY
      CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER ANY OF THE LOAN
      DOCUMENTS OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
      DEALINGS OF A CREDIT PARTY, A LENDER OR AGENT WITH RESPECT TO ANY OF THE LOAN
      DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
      SOUNDING IN CONTRACT OR TORT OR OTHERWISE. EACH OF THE CREDIT PARTIES, LENDERS
      AND AGENT AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
      ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
      THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
      ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE CREDIT PARTIES, LENDERS
      AND
      AGENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH CREDIT PARTY
      ACKNOWLEDGES THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING
      THIS SECTION, THAT IT FULLY UNDERSTANDS ITS TERMS, CONTENT AND EFFECT, AND
      THAT
      IT VOLUNTARILY AND KNOWINGLY AGREES TO THE TERMS OF THIS
      SECTION.

    
      
        
        

      

      
        68

        
          

        

      

      
        
        

      

    

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

    

    

    
      	 	
              BORROWER:

            
	 	 	 	 
	 	
              HERSHA
                HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited
                partnership

            
	 	 	 	 
	 	
              By:

            	
              Hersha
                Hospitality Trust, a Maryland Real Estate Investment Trust, General
                Partner

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	 	 	 	 
	 	
              GUARANTORS:

            
	 	 	 	 
	 	
              HERSHA
                HOSPITALITY TRUST

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	 	 	 	 
	 	
              2844
                ASSOCIATES, a Pennsylvania limited partnership

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	
              Hersha
                Hospitality, LLC, a Virginia limited liability- company, its general
                partner

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              HHLP
                VALLEY FORGE ASSOCIATES, a Pennsylvania limited
                partnership

            
	 	 
	 	
              By:

            	
              Hersha
                Hospitality, LLC, a Virginia limited liability company, its general
                partner

            	 
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Name:

            	 
	 	 	
              Title:
                

            	 
	 	 
	 	 
	 	
              44
                LAUREL ASSOCIATES, LLC, a Maryland limited liability
                company

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	 	
              44
                NEW ENGLAND MANAGEMENT COMPANY, a Virginia corporation

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 
	 	 	 	 
	 	 	 	 
	 	
              AGENT
                AND LENDER:

            
	 	 	 	 
	 	
              COMMERCE
                BANK, N.A.

            
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              William
                J. Fink

            	 
	 	 	
              Vice
                President

            	 

    

    

    [Signatures
      continued on following page]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              LENDERS:

            
	 	 	 	 
	 	 	 	 
	 	
              COMMERCE
                BANK/HARRISBURG, N.A

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              By:
                

            	 	 
	 	 	
              Eric
                Warfel

            	 
	 	 	
              Vice
                President

            	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              MANUFACTURERS
                AND TRADERS TRUST COMPANY

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Peter
                J. Ostrowski

            	 
	 	 	
              Vice
                President

            	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      A

     

    

    (Commitment
      Percentages of Lenders)

    

    

    
      	
              Commerce
                Bank, N.A.

            	
              50.00%

            
	 	 
	 	 
	
              Commerce
                Bank/Harrisburg, N.A.

            	
              8.33%

            
	 	 
	 	 
	
              Manufacturers
                and Traders Trust Company

            	
              41.67%

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      A

    

    

    FORM
      OF LINE NOTE

    

     

    
      	
              $

            	
              [Date]

            

    

    

    

    FOR
      VALUE
      RECEIVED, the undersigned, HERSHA HOSPITALITY LIMITED PARTNERSHIP, a Virginia
      limited partnership (“Borrower”),
      promises to pay to the order of _____________________ (“Bank”),
      at
      the place and times provided in the Revolving Credit Loan and Security Agreement
      of even date herewith among Borrower, Hersha Hospitality Trust, as Guarantor,
      the other Guarantors party thereto, and Bank and the other Lenders party thereto
      (the “Loan
      Agreement”),
      the
      principal sum of _________________ Dollars ($______________) or, if less, the
      aggregate principal amount (as shown by Bank’s records which shall constitute
      prima facie evidence thereof) outstanding under the Line (as such term is
      defined in the Loan Agreement) extended by Bank to Borrower pursuant to the
      Loan
      Agreement, such principal sum, together with any other sums that may be due
      hereunder, unless sooner paid as required by the terms of the Loan Agreement,
      to
      be paid in full upon the Expiration Date.

    

    This
      Note
      and the other Line Notes collectively amend and restate that certain Revolving
      Line of Credit Note dated August 18, 2004 by Maker in favor of Sovereign Bank
      (“Sovereign”)
      in the
      principal amount of $35,000,000 (the “Original
      Note”),
      which
      was assigned by Sovereign to Commerce Bank, N.A., as Agent on behalf of Lenders,
      pursuant to that certain Assignment of Loan Documents of even date herewith
      between Sovereign and Agent. The indebtedness evidenced by the Original Note
      has
      not been repaid, discharged, extinguished or satisfied, but the terms of the
      Original Note have been amended and restated in their entirety as set forth
      herein and are superseded by the terms hereof and all of such indebtedness
      for
      all purposes is continued, replaced and substituted and shall constitute
      indebtedness outstanding under the Line Notes.

    

    Borrower
      further promises to pay to the order of Bank interest on the unpaid principal
      amount of the Line from the respective dates on which portions of the Line
      are
      disbursed until such principal amounts have been repaid in full, at the rates
      provided in the Loan Agreement.

    

    Upon
      the
      Expiration Date, as well as upon the occurrence of an Event of Default (as
      such
      term is defined in the Loan Agreement), until final payment of all sums owed
      under this Note, the outstanding principal balance and all other sums due
      hereunder shall bear interest at a rate which is three percent (3%) in excess
      of
      the non-default rate otherwise set forth in the Loan Agreement with respect
      to
      the Line (“Default
      Rate”).
      Notwithstanding the provisions of 42 Pa.C.S.A. §8101, or any other statute or
      regulation to the contrary, the Default Rate shall apply to all sums evidenced
      hereby as set forth above, including after entry of a judgment or judgments
      against Borrower, and said judgment or judgments shall bear interest at the
      Default Rate until satisfied in full.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      no
      event will the rate of interest payable hereunder exceed the maximum rate of
      interest permitted to be charged by applicable law (including the choice of
      law
      rules)
      and any interest paid in excess of the permitted rate will be refunded to
      Borrower. Such refund will be made by application of the excess amount of
      interest paid against any sums outstanding hereunder and will be applied in
      such
      order as Bank may determine. If the excess amount of interest paid exceeds
      the
      sums outstanding, the portion exceeding the sums outstanding will be refunded
      in
      cash by Bank. Any such crediting or refunding will not cure or waive any default
      by Borrower. Borrower agrees, however, that in determining whether or not any
      interest payable hereunder exceeds the highest rate permitted by law, any
      non-principal payment, including without limitation prepayment fees and late
      charges, will be deemed to the extent permitted by law to be an expense, fee,
      premium or penalty rather than interest.

    

    All
      payments of principal and interest and all other amounts due hereunder shall
      be
      made without set-off, counterclaim, deduction or withholding for any reason
      whatsoever.

     

    In
      the
      event that any scheduled payment of principal or interest or any other amount
      due hereunder shall be overdue for a period in excess of ten (10) days after
      the
      same shall become due, Borrower shall pay to Bank a late charge of five percent
      (5%) of the overdue amount to cover the additional expense incident to such
      delinquency.

     

    This
      Note
      is one of the Line Notes referred to in, is issued pursuant to, and is payable
      in accordance with the Loan Agreement the terms and conditions of which are
      incorporated herein by reference. Reference is
      made
      to
      the Loan Agreement as to rights and obligations of prepayment. The holder of
      this Note is entitled to all the benefits of the Loan Agreement.

     

    From
      the
      Expiration Date, as well as upon the occurrence, and only during the
      continuance, of any Event of Default (after all applicable grace and cure
      periods) set forth in the Loan Agreement (including, without limitation, the
      failure by the Borrower to pay any installment of interest on this Note when
      due), the entire unpaid balance of principal and interest of this Note shall,
      at
      the option of Bank, be immediately due and payable without presentment, demand,
      protest or notice of any kind, all of which are expressly waived by Borrower
      to
      the extent waiveable under applicable law or public policy, and Bank may
      forthwith exercise or cause to be exercised the warrant of attorney to confess
      judgment set forth herein, in addition to such rights and remedies as may herein
      be provided or any of the rights or remedies provided in the Loan Documents
      (as
      such term is defined in the Loan Agreement), or which may be available to Bank
      by law, without further stay, any law, usage or custom to the contrary
      notwithstanding.

     

    BORROWER
      DOES HEREBY AUTHORIZE AND EMPOWER THE CLERK OF COURT OR ANY ATTORNEY OF ANY
      COURT OF RECORD OF THE COMMONWEALTH OF PENNSYLVANIA OR ELSEWHERE, AFTER THE
      OCCURRENCE AND ONLY DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, TO APPEAR
      FOR
      AND CONFESS JUDGMENT AGAINST BORROWER AND IN FAVOR OF BANK, ITS SUCCESSORS
      OR
      ASSIGNS, AS OF ANY TERM, PAST, PRESENT OR FUTURE, WITH OR WITHOUT DECLARATION,
      FOR EACH AND ALL OF THE FOLLOWING:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (A)    THE
      UNPAID PRINCIPAL SUM EVIDENCED BY THIS NOTE WITH ALL OF THE ACCRUED AND UNPAID
      INTEREST HEREON, WHETHER BASIC INTEREST, DEFAULT INTEREST AT THE DEFAULT RATE,
      OR BOTH, AS HEREIN PROVIDED;

     

    (B)    ALL
      OTHER
      SUMS AS ARE DUE AND PAYABLE TO BANK UNDER THE TERMS OF THIS NOTE OR UNDER THE
      TERMS OF THE LOAN DOCUMENTS, WHETHER BY ACCELERATION OR OTHERWISE;

     

    (C)    THE
      AGGREGATE OF ALL SUMS EXPENDED BY BANK AT ANY TIME AND FROM TIME TO TIME,
      WHETHER PERMITTED UNDER THE TERMS OF THE LOAN DOCUMENTS, PERMITTED BY LAW,
      OR
      PERMITTED BY STATUTE, (i) TO EXTINGUISH OR KEEP CURRENT, AS THE CASE MAY BE,
      ENCUMBRANCES AND LIENS ON THE COLLATERAL (AS SUCH TERM IS DEFINED IN THE LOAN
      AGREEMENT), (ii) TO PRESERVE, PROTECT, DEFEND AND MAINTAIN THE COLLATERAL,
      TO
      PRESERVE, RESTORE AND MAINTAIN THE COLLATERAL, TO PAY INSURANCE PREMIUMS OF
      ANY
      NATURE BENEFITTING OR RELATING TO THE COLLATERAL, (iii) TO PRESERVE, PROTECT,
      DEFEND AND MAINTAIN THE LIEN PRIORITY OF THE BANK'S SECURITY INTEREST IN THE
      COLLATERAL, AND/OR (iv) DUE TO AN EVENT OF DEFAULT UNDER THIS NOTE OR UNDER
      THE
      LOAN DOCUMENTS; AND

     

    (D)    THE
      COSTS
      OF SUIT AND AN ATTORNEY'S FEE OF FIVE PERCENT (5%) OF THE SUM OF ALL OF THE
      ITEMS (A), (B) AND (C) ABOVE FOR COLLECTION, WITH RELEASE OF ALL ERRORS, AND
      ON
      WHICH JUDGMENT BANK MAY ISSUE OR CAUSE TO BE ISSUED AN EXECUTION OR EXECUTIONS,
      WAIVING (TO THE EXTENT WAIVEABLE UNDER APPLICABLE LAW OR PUBLIC POLICY) (X)
      APPRAISEMENT AS TO ANY PROPERTY LEVIED UPON BY VIRTUE OF ANY SUCH EXECUTION,
      (Y)
      ANY RIGHT TO A HEARING BEFORE EXECUTION ON ANY SUCH JUDGMENT, AND (Z) ALL
      EXEMPTIONS FROM LEVY AND SALE OF ANY PROPERTY WHICH NOW OR HEREAFTER IS EXEMPT
      UNDER ANY ACT OF THE STATE WHEREIN THE JUDGMENT IS ENTERED. NO SINGLE EXERCISE
      OF THIS WARRANT AND POWER TO CONFESS JUDGMENT SHALL BE DEEMED TO EXHAUST THIS
      POWER, WHETHER OR NOT ANY SUCH EXERCISE SHALL BE STRICKEN, VACATED, REMOVED
      OR
      OTHERWISE HELD BY ANY COURT TO BE INVALID, VOIDABLE OR VOID, BUT THIS POWER
      SHALL CONTINUE UNDIMINISHED AND MAY BE EXERCISED FROM TIME TO TIME AS OFTEN
      AS
      PAYEE SHALL ELECT UNTIL THIS NOTE AND ALL SUMS DUE HEREUNDER SHALL BE PAID
      IN
      FULL, AND BORROWER HAS PERFORMED ALL OF THE OTHER PROVISIONS THEREUNDER AND/OR
      UNDER THE TERMS OF THE OTHER LOAN DOCUMENTS. BORROWER HEREBY AUTHORIZES BANK
      TO
      RE-ASSESS DAMAGES FROM TIME TO TIME AND AS OFTEN AS BANK DEEMS NECESSARY SO
      THAT
      ANY AND ALL JUDGMENTS CONFESSED HEREUNDER SHALL INCLUDE ALL SUMS LISTED UNDER
      SUBPARAGRAPHS (A) THROUGH (D) ABOVE AS THE SAME ARE INCURRED FROM TIME TO TIME,
      EVEN AFTER ENTRY OF JUDGMENT UNDER THIS WARRANT OF ATTORNEY.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    All
      written notices to be given by either party to the other shall be sent in
      accordance with the provisions of the Loan Agreement.

    

    Borrower
      consents to the in personam jurisdiction of the courts of the Commonwealth
      of
      Pennsylvania and the United States District Court for the Eastern District
      of
      Pennsylvania in connection with any claim or dispute arising under or in
      connection with this Note. If any action
      in
      connection with any such claim is commenced by the Bank against Borrower in
      any
      such court, Borrower also agrees that service of process may be made on Borrower
      by certified or registered mail addressed to Borrower at its address specified
      in the Loan Agreement.

     

    Borrower,
      and the Bank by its acceptance of this Note, waive trial by jury in any action
      by or against the Borrower or the Bank, as the case may be, in connection with
      any claim or dispute arising under or in connection with this Note or
      any
      other
      instrument or document delivered hereunder.

     

    This
      Note
      shall be governed by and construed in accordance with the laws of the
      Commonwealth of Pennsylvania. Except where the context otherwise requires,
      the
      term “Bank” shall be deemed to include any subsequent holder of this
      Note.

     

    This
      Note
      shall be binding upon Borrower and its successors and permitted assigns and
      shall inure to the benefit of Lender and its successors and
      assigns.

     

    BORROWER
      ACKNOWLEDGES THAT THIS NOTE IS ACCOMPANIED BY AN AUTHORIZATION TO CONFESS
      JUDGMENT, THAT IT HAS CONSULTED LEGAL COUNSEL WITH RESPECT THERETO (OR KNOWINGLY
      WAIVED ITS RIGHT TO DO SO), AND THAT IT UNDERSTANDS THAT THE EXERCISE BY BANK
      OF
      THE CONFESSION WILL RESULT IN THE ENTRY OF A JUDGMENT AGAINST BORROWER AND
      COULD
      RESULT IN THE SALE OR ATTACHMENT OF, OR EXECUTION UPON, BORROWER'S PROPERTY
      (INCLUDING WITHOUT LIMITATION PERSONAL PROPERTY AND REAL PROPERTY) IN EACH
      CASE
      WITHOUT PRIOR NOTICE OR THE OPPORTUNITY FOR A HEARING.

    
 

     

    [Remainder
      of page intentionally left blank]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly
      executed this Note as of the date first written above.

     

    

     

    

    
      	 	
              HERSHA
                HOSPITALITY LIMITED PARTNERSHIP, 

            
	 	
              a
                Virginia limited partnership

            
	 	 	 	 
	 	
              By:

            	
              Hersha
                Hospitality Trust, a Maryland Real Estate Investment Trust, General
                Partner

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Ashish
                R. Parikh

            	 
	 	 	
              Chief
                Financial Officer

            	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

    

    (Form
      of
      Line Request)

    

    LINE
      REQUEST

    

    

    Dated:
      ______________

    

    Commerce
      Bank, N.A.

    2005
      Market Street

    Philadelphia,
      PA 19103

    Attention:
      

    Facsimile:
      (215) 

    

    Ladies
      and Gentlemen:

    

    This
      irrevocable Line Request is delivered to you pursuant to Section [2.1] [2.2]
      of
      the Revolving Credit Loan and Security Agreement dated January 17, 2006 (as
      amended, restated or otherwise modified, the “Credit
      Agreement”),
      among
      Hersha Hospitality Limited Partnership (the “Borrower”),
      Hersha Hospitality Trust, Commerce Bank, N.A., in
      its
      capacity as Agent
      (the
“Agent”)
      for
      the banks and other financial institutions from time to time signatory thereto
      (the “Lenders”)
      and
      the Lenders. All terms used in this Request which are defined in the Credit
      Agreement and not otherwise defined herein shall have the respective meanings
      ascribed to such terms in the Credit Agreement.

    

    1.    The
      Borrower hereby requests that the Lenders [make a _____Type A Loan ______ Type
      B
      Loan] [_____ issue a Letter of Credit].

    

    2.    The
      Borrower hereby requests that the Lenders [make such advance] [issue such Letter
      of Credit] to the Borrower in the amount of $___________.

    

    3.    The
      Borrower hereby requests that such [advance be made] [Letter of Credit be
      issued] on the following Business Day: _____________________.

    

    4.    The
      Borrower hereby requests that the advance be a [ ____Prime Rate Loan] [____LIBOR
      Rate Loan (with an Interest Period of ___(1) _____(2) _____(3) _____(6)
      months).]

    

    5.    The
      Credit Parties are, and following receipt of the requested Advance will be,
      in
      compliance with Sections 2.1, 2.2 and Article XI of the Credit
      Agreement.

    

    6.    The
      representations and warranties set forth in Article V of the Credit Agreement
      are true and correct (except to the extent that (a) such representations and
      warranties specifically refer to an earlier date, in which case they shall
      be
      true and correct as of such earlier date, and (b) any such representation or
      warranty that has been rendered incorrect or incomplete as a result of any
      action permitted, in writing, by the Required Lenders to be taken or omitted
      pursuant to the terms of this Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.    No
      Default or Event of Default under the Credit Agreement has occurred and is
      continuing.

    

    

    

    IN
      WITNESS WHEREOF, the undersigned has executed this Line Request as of the day
      and year first written above.

    

    

    

    

    
      	 	
              BORROWER:

            
	 	 	 	 
	 	
              HERSHA
                HOSPITALITY LIMITED PARTNERSHIP, a Virginia limited
                partnership

            
	 	 	 	 
	 	
              By:

            	
              Hersha
                Hospitality Trust, a Maryland Real Estate Investment Trust, General
                Partner

            
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	
              By:

            	 	 
	 	 	
              Name:

            	 
	 	 	
              Title:

            	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C

    

    FORM
      OF ASSIGNMENT AND ASSUMPTION AGREEMENT

    

    

    Dated:
      _________

    

    Reference
      is hereby made to that certain Revolving Credit Loan and Security Agreement,
      dated as of January 17, 2006 (as amended, restated, supplemented or otherwise
      modified, the “Loan
      Agreement”),
      among
      Hersha Hospitality Limited Partnership, a Virginia limited partnership, as
      Borrower (the “Borrower”),
      Hersha Hospitality Trust, a Maryland real estate investment trust, as Guarantor,
      each of the other Guarantors parties thereto (collectively, the “Guarantors”)
      (Borrower and Guarantors, each together with its respective successors and/or
      assigns, the “Credit
      Parties”),
      Commerce Bank, N.A., in
      its
      capacity as Administrative Agent
      (the
“Agent”)
      for
      the banks and other financial institutions from time to time signatory thereto
      (the “Lenders”)
      and
      the Lenders from time to time party thereto. Capitalized
      terms used but not otherwise defined herein shall have the respective meanings
      given to them in the Loan Agreement.

    

    _____________
      (the
“Assignor”)
      and _____________
      (the
“Assignee”)
      agree
      as follows:

    

    1.    The
      Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
      purchases and assumes from the Assignor, as of the Transfer Effective Date
      (as
      defined below), pursuant to, and authorized by, Section 17.5 of the Loan
      Agreement, a ____% interest in and to all of the Assignor’s interest, rights and
      obligations with respect to its Commitment and Loans, and the Assignor thereby
      retains ____% of its interest therein.

    

    2.    The
      Assignor represents that, as of the date hereof, its pro rata share of the
      Commitment (without giving effect to assignments thereof which have not yet
      become effective) is ____%, and its outstanding balance of the Loan (unreduced
      by any assignments thereof which have not yet become effective) is
      $_________________.

    

    3.    The
      Assignor:

    

    (a)    makes
      no
      representation or warranty and assumes no responsibility with respect to any
      statements, warranties or representations made in or in connection with the
      Loan
      Agreement or any other Loan Document or the execution, legality, validity,
      enforceability, genuineness, sufficiency or value of the Loan Agreement or
      any
      other instrument or document furnished pursuant thereto, other than that the
      Assignor is the legal and beneficial owner of the interest being assigned by
      it
      hereunder and that such interest is free and clear of any adverse claim;

    

    (b)    makes
      no
      representation or warranty and assumes no responsibility with respect to the
      financial condition of the Credit Parties or the performance or observance
      by
      the Credit Parties of any of their obligations under the Loan Agreement or
      any
      other instrument or document furnished or executed pursuant thereto;
      and

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)    as
      applicable, attaches the Note(s) delivered to it under the Loan Agreement and
      requests that the Borrower exchange such Note(s) for new Note(s) payable to
      each
      of the Assignor and the Assignee as follows:

    

    

    
      	
              Note:

            	
              Payable
                to the Order of:

            	
              Principal
                Amount of:

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

    

    4.    The
      Assignee: (a) represents and warrants that it is legally authorized to enter
      into this Assignment and Acceptance; (b) confirms that it has received a copy
      of
      the Loan Agreement and such other documents and information as it has deemed
      appropriate to make its own credit analysis and decision to enter into this
      Assignment and Acceptance; (c) agrees that it will, independently and without
      reliance upon the Assignor or any other Lender or the Agent and based on such
      documents and information as it shall deem appropriate at the time, continue
      to
      make its own credit decisions in taking or not taking action under the Loan
      Agreement; (d) appoints and authorizes the Agent to take such action as agent
      on
      its behalf and to exercise such powers under the Loan Agreement and the other
      Loan Documents as are delegated to the Agent by the terms thereof, together
      with
      such powers as are reasonably incidental thereto; and (e) agrees that it will
      perform in accordance with their terms all the obligations which by the terms
      of
      the Loan Agreement and the other Loan Documents are required to be performed
      by
      it as a Lender.

    

    5.    Subject
      to any consents required by the Loan Agreement, the effective date for this
      Assignment and Acceptance shall be as set forth in Section 1 of Schedule
      1
      hereto
      (the “Transfer
      Effective Date”).
      Following the execution of this Assignment and Acceptance, it will be delivered
      to the Agent for consent by the Agent.

    

    6.    Upon
      such
      consent, acceptance and recording, and the payment to Agent of any
      administrative fee in connection therewith, from and after the Transfer
      Effective Date: (a) the Assignee shall be a party to the Loan Agreement and
      the
      other Loan Documents to which Lenders are parties and, to the extent provided
      in
      this Assignment and Acceptance, have the rights and obligations of a Lender
      under each such Loan Document; and (b) the Assignor shall, to the extent
      provided in this Assignment and Acceptance, relinquish its rights and be
      released from its obligations under the Loan Agreement and the other Loan
      Documents. 

    

    7.    Upon
      such
      consent, acceptance and recording, from and after the Transfer Effective Date,
      the Administrative Agent shall make all payments in respect of the interest
      assigned hereby (including payments of principal, interest, fees and other
      amounts) to the Assignee. The Assignor and Assignee shall make all appropriate
      adjustments in payments for periods prior to the Transfer Effective Date or
      with
      respect to the making of this assignment directly between
      themselves.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    8.    THIS
      ASSIGNMENT AND ACCEPTANCE SHALL BE DEEMED TO BE A CONTRACT UNDER SEAL AND SHALL
      BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH
      OF
      PENNSYLVANIA, WITHOUT REGARD TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
      THEREOF.

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption
      Agreement to be executed under seal by their duly authorized officers as of
      the
      day and year first written above.

    

    
      	 	
              [ASSIGNOR:]

            	 
	 	 	 	 	 
	 	 	
              By:

            	 	 
	 	 	
              Name:

            	 	 
	 	 	
              Title:

            	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	
              [ASSIGNEE:]

            	 
	 	 	 	 	 
	 	 	
              By:

            	 	 
	 	 	
              Name:

            	 	 
	 	 	
              Title:

            	 	 

    

    

    

    

    
      	
              Consented
                to and Accepted by:

            
	 	 	 
	
              COMMERCE
                BANK, N.A., as Agent 

            
	 	 	 
	 	 	 
	
              By:

            	 	 
	 	
              Name:
                

            	 
	 	
              Title:
                

            	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      1 

    TO

    ASSIGNMENT
      AND ACCEPTANCE

     

    

      
        	
                1.

              	
                Transfer
                  Effective Date ___________ ____, ______

              	 	 
	 	 	 	 
	
                2.

              	
                Outstanding
                  principal amount of Loans on the Effective Date:

              	 	 
	 	 	 	 
	 	
                $
                  ____________

              	 	 
	 	 	 	 
	 	 	 	 
	
                3.

              	
                The
                  Assignor’s
                  pro rata share:

              	 	 
	 	 	 	 	 
	 	
                (a)

              	
                prior
                  to the Transfer Effective Date, of the Commitment and
                  Loans:

              	 	 	
                %

              
	 	 	 	 	 
	 	
                (b)

              	
                as
                  of the Transfer Effective Date, of the Commitment and the
                  Loans:

              	 	
                %

              
	 	 	 	 	 
	
                4.

              	
                As
                  of the Transfer Effective Date, the Assignee’s
                  pro rata share of the Commitment and the Loans:

              	 	 	
                %

              
	 	 	 	 
	
                5.

              	
                As
                  of the Transfer Effective Date, the Assignor’s
                  retained interest in the outstanding balance of the Loans:

              	
                $

              	 
	  

	 	 	 	 
	
                6.

              	
                As
                  of the Transfer Effective Date, the Assignee’s
                  interest in the outstanding balance of the Loans: 

              	
                $

              	  
	  

	 	 	 	 	 
	
                7.

              	
                Payment
                  Instructions

              	 	 	 
	 	 	 	 	 
	 	
                (a)

              	
                If
                  payable to Assignor,

              	 	 	 
	 	 	
                to
                  the account of Assignor to:

              	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	
                ABA
                  No.:

                Account
                  Name:

                Account
                  No.

                Attn:

                Ref:
                  

              	 	 	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	 	 
	 	
              (b)

            	
              If
                payable to Assignee, to the account

            
	 	 	
              of
                Assignee to:

            
	 	 	 
	 	 	 
	 	 	 
	 	 	
              ABA
                No.:

            
	 	 	
              Account
                Name:

            
	 	 	
              Account
                No.:

            
	 	 	
              Attn:

            
	 	 	
              Ref:EXHIBIT 10.23

               *CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN
                      OMITTED AND FILED SEPARATELY WITH THE
                      COMMISSION PURSUANT TO A REQUEST FOR
                             CONFIDENTIAL TREATMENT.

                             INTERNATIONAL EXCLUSIVE
                            DISTRIBUTORSHIP AGREEMENT

         THIS INTERNATIONAL EXCLUSIVE DISTRIBUTORSHIP AGREEMENT (this
"Agreement") is made as of January 16, 2005 by and between Smart Energy
Solutions, Inc., a corporation organized and existing under the laws of the
State of Nevada, United States, having its principal place of business at 207
Piaget Avenue, Clifton, NJ 07011(the "Manufacturer") and ELCART DISTRIBUTION
S.P.A., a corporation organized and existing under the laws of Italy, having its
principal place of business in via Michelangelo Buonarroti 46, Cologno Monzese,
Milan, Italy (the "Distributor").

                                    RECITALS

         WHEREAS, Manufacturer is the exclusive owner and has all right, title
and interest to a group of related proprietary products known as the "Battery
Brain Products", which are described in Exhibit A (the "Products"); and

         WHEREAS, Distributor desires to be appointed as the exclusive
distributor of the Products in the territory set forth in Exhibit B (the
"Territory"), and Manufacturer has agreed to appoint Distributor as its
exclusive distributor on the terms and conditions set forth in this Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the adequacy,
sufficiency and receipt of which are hereby acknowledged, the parties hereto
agree as follows:

1. Appointment of Distributor.

         1.1      Grant of Exclusive Rights.

                  (a) Pursuant to the terms and conditions contained in this
Agreement, Manufacturer hereby grants, and Distributor hereby accepts, the
exclusive right to promote and sell the Products in the Territory to any person
other than (i) a person engaged in the business of manufacturing motor vehicles
and (ii) national governmental bodies and persons that have as their primary
purpose to enter into contracts with national governmental bodies (a "Reserved
Customer"). For purposes of clarification, the Distributor is permitted to
promote and sell the Products in the Territory to state, county, city, town,
borough, village, district or other entities exercising, or entitled or
purporting to exercise, any governmental powers and a person that (A) has as its
primary purpose to enter into contracts with such governmental bodies, or to
engage primarily in activities carried out pursuant to an agreement or
agreements with such governmental bodies, or (B) is owned by or is subject to
the direction of such bodies, provided that such governmental bodies are not the
national governmental bodies of such jurisdiction..

<PAGE>

         1.2 Manufacturer's Distribution Rights. Manufacturer reserves for
itself the rights to directly or indirectly sell the Products in the Territory
to Reserved Customers.

         1.3 Outside the Territory. Distributor shall not, directly or
indirectly, market or sell any Products to any person (a) located outside the
Territory or (b) whom the Distributor knows or has reason to know will export
the Products outside the Territory or will market or sell the Products outside
the Territory. Distributor shall promptly refer to the Manufacturer all
inquiries or orders for the Products from any of the foregoing persons.

         1.4 Alterations to Product. Manufacturer, at its option, subject to
giving ninety (90) days' notice, may discontinue the manufacture and/or sale of
any of the Products, and may modify or alter the Products as Manufacturer, in
its sole discretion, deems appropriate.

2. Resales and Marketing by Distributor.

         2.1      Resales by Distributor

                  (a) Generally. Distributor shall be entitled to sell for its
own account the Products in the Territory. Distributor shall have the right
during the Term to describe itself as Manufacturer's "Authorized Distributor"
for the Products in the Territory, but shall not hold itself out as
Manufacturer's agent or as being entitled to bind Manufacturer in any way.

                  (b) Best Efforts. Distributor shall use its best efforts to
sell the Products and to fully develop the market for the Products within the
Territory. Distributor shall use its best efforts to promote the sale of the
Products in the Territory in accordance with the Distributor's Business Plan
(hereafter defined) and Manufacturer's policy and shall protect Manufacturer's
interests. Distributor agrees that all its sales efforts shall be directed only
to customers in the Territory.

                  (c) Resale Prices. Distributor shall be entitled to charge its
customers the resale prices of the Products as it determines, provided that its
objectives set forth in the Distributor's Business Plan (hereafter defined) are
achieved. Distributor shall avoid such pricing policies as would clearly
adversely affect the image of the Products.

         2.2 Preliminary Marketing Plan; Business Plan. Prior to or
simultaneously herewith, Distributor has submitted to Manufacturer a preliminary
marketing plan, briefly summarizing its plan for the promotion, marketing and
distribution of the Products within the Term. Within one hundred twenty (120)
days of the date hereof, Distributor shall submit to Manufacturer a detailed
business plan (the "Distributor's Business Plan") of its promotion, marketing
and distribution of the Products within the Term, including without limitation,
sales targets for each quarter in the Term that are at least equal to or greater
than the Guaranteed Minimum Target (defined in Section 2.6 below). Manufacturer
and Distributor shall have the duty to negotiate in good faith the sales targets
and other milestones set forth in the Distributor's Business Plan.
Nothwithstanding anything contained herein to the contrary, if the Guaranteed
Minimum Target amounts are not purchased by the Distributor as provided in
Section 2.6 below, the Distributor shall lose the exclusivity to promote and
sell the Product in the Territory. In such case, the Manufacturer shall have the
right to contract with another party to promote and sell the Product in the
Territory.

                                      -2-
<PAGE>

         2.3 Marketing Materials. At Distributor's expense: (a) All marketing
catalogues, sales brochures, manuals, packaging labels, warranties, disclaimers,
technical materials, and all other information and material relating to the
Products (the "Marketing Materials") provided by Manufacturer to Distributor
shall be printed, published, and otherwise used by Distributor, as instructed by
Manufacturer; and (b) Distributor shall cause any Marketing Materials provided
by Manufacturer to be translated into the principal language or languages of the
Territory within thirty (30) days after the date of receipt of such Marketing
Materials. Manufacturer shall have the right to review Distributor's Marketing
Materials, and upon Manufacturer's request, Distributor at its expense shall
promptly provide to Manufacturer copies of the Marketing Materials and shall
revise the Marketing Materials as may be requested by Manufacturer.

         2.4 Certain Marketing Obligations. In connection with the marketing and
sale of the Products, Distributor shall:

                  (a) make clear, in all dealings with customers and prospective
customers, that it is acting as distributor of the Products and not as agent of
Manufacturer; and

                  (b) comply with all legal requirements from time to time in
force relating to the importation, storage, marketing, distribution, and sale of
the Products and all other laws applicable to the Products and Distributor's
activities hereunder.

                  (c) The Manufacturer confirms that the products comply with
the CE and all relevant European directives as well as RoHs directive valid at
the date of signed Contract. The Manufacturer will provide the Distributor with
the copies of named documents.

         2.5      Sales Targets.

                  (a) Preparation Period. For the twelve (12) month period
following the date of this Agreement (the "Preparation Period"), Distributor
shall not be required to purchase any Products. If Distributor purchases an
initial order of 5,000 unit or more by January 2006 the manufacturer will
guarantee the sale with a buy back assurance on the initial order. The
Manufacture will also guarantee the price for the first 12 month period.

                  (b) Guaranteed Minimum Targets. During each of the periods set
forth in the table below, Distributor shall purchase a quantity of units of the
Products equal to at least the guaranteed minimum target (the "Guaranteed
Minimum Target") for the applicable period set forth below. Distributor shall
not be in violation of this Section 2.6(b) if, from the date of this Agreement
until the last day of any of the applicable periods below, Distributor has
purchased a quantity of units of the Products equal to at least the Aggregate
Minimum Target set forth above.

                                      -3-
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------- ---------------------- ------------------
                            Period                              Guaranteed Minimum      Aggregate Minimum
                                                                      Target                Target
---------------------------------------------------------------- ---------------------- ------------------
<S>                                                              <C>                     <C>
1 year commencing on the date of this Agreement                  0 units                 0 ,units
---------------------------------------------------------------- ---------------------- ------------------
1 year period  commencing on the 13th month  following the date  _______units           ________units
of this Agreement
---------------------------------------------------------------- ---------------------- ------------------
1 year period  commencing on the 24th month  following the date  ________units          ________units
of this Agreement
---------------------------------------------------------------- ---------------------- ------------------
</TABLE>

                  (c) Good Faith Negotiations. Prior to the 13th month following
the date of this Agreement, Manufacturer and Distributor shall negotiate in good
faith Guaranteed Minimum Targets for the following twelve (12) month period.
Prior to the commencement of each successive twelve (12) month period of the
Term thereafter, Manufacturer and Distributor shall negotiate in good faith
Guaranteed Minimum Targets for such twelve (12) month period. If the parties
fail to agree to Guaranteed Minimum Targets for any such period, then the
parties shall be deemed to have agreed that the Guaranteed Minimum Target for
such period shall be equal One Hundred and Twenty Five Percent (125%) of the
Guaranteed Minimum Target set for the immediately preceding twelve (12) month
period.

                  (d) Consequences of Non-Attainment of Minimum Targets. If at
the end of the applicable year, the Guaranteed Minimum Target has not been
attained, Manufacturer shall be entitled, at its option, subject to giving ten
(10) days notice, to (1) terminate this Agreement, or (2) cancel Distributor's
exclusivity, or (3) reduce the extent of the Territory, or (4) increase the
prices of the Products. This right shall, however, be exercised in writing not
later than three (3) months after the end of the year in which the Guaranteed
Minimum Target has not been attained.

                  (e) Minimum Inventory. During the Term, Distributor shall
maintain an inventory of units of the Products sufficient to fulfill the
forecasted demand for the Product in the Territory.

3. Purchase and Delivery of Products.

         3.1      Purchase.

                  (a) Submission of Purchase Order. Distributor shall order the
Products from Manufacturer by submitting to Manufacturer a purchase order (the
"Purchase Order") in the form approved by Manufacturer. Each Purchase Order
shall be for a number of units of the Products equal to or greater than ten
percent (10%) of the Guaranteed Minimum Target for the year in which the
Purchase Order is placed. Distributor agrees to submit a Purchase Order no less
than every three months during the Term, with the first Purchase Order
__________to be submitted on or before the anniversary from the date hereof.

                                      -4-
<PAGE>

                  (b) Acceptance of Purchase Order. Promptly upon Manufacturer's
receipt of a Purchase Order, Manufacturer shall either accept or decline the
Purchase Order provided, however, that Manufacturer shall not unreasonably
reject Purchase Orders. Nothing in this Agreement shall entitle Distributor to
any priority of supply in relation to the Products as against Manufacturer's
other distributors or customers.

                  (c) Cancellation of Purchase Order. Distributor may cancel a
Purchase Order by delivering to Manufacturer written notice of intent to do so
no later than fifteen (15) days after delivery of the Purchase Order .in that
case the Distributor will pay 33% of the total order.

                  (d) Precedence of Terms. Sales of the Products pursuant to the
Purchase Orders shall be governed by this Agreement and the Manufacturer's
Standard Terms of Sale (the "Standard Terms") as they may be in effect from time
to time, which may be changed by Manufacturer in its sole discretion.
Manufacturer shall give to Distributor notice in writing of any material change
in such Standard Terms prior to such change taking effect. To the extent that
there is a conflict or inconsistency between the terms of this Agreement and the
Standard Terms, the terms of this Agreement shall take precedence.

                  (e) Additional duties of Distributor. With respect to each
Purchase Order, Distributor shall be responsible at Distributor's cost and
expense for: (1) ensuring the accuracy of the Purchase Order; (2) providing
Manufacturer with any information necessary to enable Manufacturer to process
the order; (3) complying with applicable legal requirements in the Territory,
including, without limitation, labeling and marketing legal requirements; and
(4) obtaining any necessary governmental permits, licenses, certificates of
origin, approvals, and other requisite documents in respect of the importation
of the Products into the Territory and their resale in the Territory.

         3.2      Delivery.

                  (a) Estimated Delivery Date. As soon as practicable after
Manufacturer's acceptance of a Purchase Order, Manufacturer shall notify
Distributor of the estimated delivery date (the "Estimated Delivery Date") for
the Products purchased. Manufacturer shall use its best efforts to schedule the
Estimated Delivery Date no later than sixty (60) days after Manufacturer's
acceptance of a Purchase Order and to deliver by the Estimated Delivery Date the
full quantity of Products ordered; however, time of delivery shall not be of the
essence and accordingly Manufacturer shall have no liability to Distributor if,
notwithstanding such efforts, there is any delay in delivery.

                  (b) Method of Delivery. Manufacturer shall deliver the
purchased Products at Distributor's expense in accordance with the method
specified in the Purchase Order.

                                      -5-
<PAGE>

         3.3 Title; Risk of Loss. The title to any of the Products shall not
pass to Distributor until Manufacturer has received payment in full of Purchase
Order; provided, nevertheless, that the risk of loss of or damage to any of the
Products shall pass to Distributor from the time Manufacturer notifies
Distributor that the Products are available for collection or from the time of
delivery to the carrier at Manufacturer's premises, whichever is earlier.

         3.4 Time Limit for Rejection or Revocation of Acceptance of the Goods.
Rejection or revocation of acceptance by Distributor of the Products must be
made within seven (7) days after delivery of the Products to Distributor. No
defective Products may be returned to Manufacturer unless first authorized in
writing by Manufacturer.

4.       Payment for Products.

         4.1 Prices. The prices for the Products shall be set forth in Exhibit
E, except as such prices may be adjusted pursuant to the terms of this
Agreement. Such prices may be adjusted by Manufacturer once for each calendar
year of the Term upon written notice delivered to Distributor no later than
October 1 of the preceding calendar year.

         4.2 Transportation Costs. Distributor shall, in addition to the price,
be liable for arranging and paying all costs of transportation and insurance. If
Manufacturer, at its option, agrees at the request of Distributor to arrange for
transportation and insurance as agent for Distributor, Distributor shall
reimburse Manufacturer the full shipping, handling, and other expenses thereof
and all the applicable provisions of this Agreement shall apply with respect to
the payment of such costs as they apply to payment of the price of the Products.

         4.3 Taxes; Duties. All prices for the Products are exclusive of any
applicable taxes, including sales tax or any other value-added tax, for which
Distributor shall be additionally liable. Distributor shall pay costs and
expenses of obtaining any necessary governmental permits, licenses, approvals,
and other requisite documents in connection with the import or export of the
Products and any applicable duties, customs, tariffs, or other charges thereon.

         4.4 Payment Method. Full payment in an amount equal to the purchase
price of the Products ordered and all other payments for which Distributor is
responsible pursuant to this Agreement shall be made in United States Dollars as
follows:

                  (a) Once confirmation by Smart Energy Solutions of a Purchase
Order the Distributor shall deliver to Manufacturer an irrevocable letter of
credit in favor of Manufacturer, issued or confirmed by a bank approved by
Manufacturer (the "Letter of Credit"). The Letter of Credit shall be in an
amount to cover the value of the Purchase Order plus freight and insurance on
said order; and

                  (b) If the Distributor wishes to pay for the Purchase Order by
wire transfer and use the Letter of Credit to support recurring orders then the
Distributor " shall deliver to Manufacturer a Wire Transfer equal to the amount
due in connection with such Purchase Order no later than the delivery of
purchase.

                                      -6-
<PAGE>

         4.5 Failure to Pay. If Distributor fails to pay the price and other
amounts due for any Products prior to or on the date such payment is due,
Manufacturer shall be entitled (without prejudice to any other right or remedy
it may have) to:

                  (a) cancel or suspend any further delivery to Distributor;

                  (b) sell or otherwise dispose of any Products which are the
subject of any order by Distributor, whether or not appropriated thereto, and
apply the proceeds of sale to the overdue payment; and

                  (c) charge Distributor interest on the price at the rate of
the lesser of one and one-half (1.5%) per cent per month from the date the
payment became due until actual payment is made.

5. After Sales Service Support. Distributor shall have the sole responsibility
to provide its customers with timely, professional, and adequate after sales
technical support for the Products and any part thereof, in accordance with
professional standards. Notwithstanding the foregoing, Distributor may refer to
Manufacturer any of its customers who present any extraordinarily unusual
problems that the Distributor is not capable of resolving, and the Manufacturer
shall use its best efforts to provide such after sales technical support to
Distributor's customers.

6. Manufacturer's Trademarks and Other Intellectual Property.

         6.1 Ownership by Manufacturer. Distributor understands and acknowledges
that all intellectual property rights relating to the Products shall be owned
solely by Manufacturer, and, except as expressly provided herein, Distributor
has no, and shall not acquire any, intellectual property rights relating to the
Products.

         6.2      Use of Trademarks.

                  (a) Manufacturer hereby authorizes Distributor to use
Manufacturer's trademarks and trade names (collectively, the "Trademarks") in
the Territory solely on or in relation to the Products for the purposes only of
exercising its rights and performing its obligations under this Agreement. Such
authorization shall cease immediately upon the expiration or termination, for
any reason, of this Agreement; provided, however, that Distributor shall have
the limited right to sell the Products in stock at the date of expiration of
this Agreement which bear the Trademarks.

                  (b) Distributor shall ensure that each reference to and use of
any of the Trademarks by Distributor is in a manner from time to time approved
by Manufacturer and accompanied by an acknowledgment, in a form approved by
Manufacturer, that the same is a trademark (or registered trademark) of
Manufacturer.

                                      -7-
<PAGE>

         6.3      Prohibited Conduct.  Distributor shall not:

                  (a) Make any modifications to the Products;

                  (b) Alter, remove or tamper with any Trademarks, numbers, or
other means of identification used on or in relation to the Products;

                  (c) Use any of the Trademarks in any way which might prejudice
their distinctiveness or validity or the goodwill of Manufacturer therein or in
any manner not previously approved by Manufacturer;

                  (d) Use in relation to the Products any trademarks other than
the Trademarks without obtaining the prior written consent of Manufacturer; or

                  (e) Use in the Territory any trademarks so resembling any
Trademark as to be likely to cause confusion or deception.

         6.4 Rights in Trademarks. Except as provided in this Section 6,
Distributor shall have no rights in respect of any Trademarks used by
Manufacturer in relation to the Products or of the goodwill associated
therewith, and Distributor hereby acknowledges that, except as expressly
provided in this Agreement, it shall not acquire any rights in respect thereof
and that all such rights and goodwill are, and shall remain, vested in
Manufacturer. Distributor shall not register any Trademarks (or which are
confusingly similar to the Trademarks) in the Territory or elsewhere.

         6.5 Enforceability of Intellectual Property Rights. Manufacturer shall
use its best efforts to secure adequate patent protection under the laws
applicable in the Territory for any new Products launched during the 2006
calendar year. Distributor shall take all such steps as Manufacturer may
reasonably require to assist Manufacturer in maintaining the validity and
enforceability of the intellectual property rights of Manufacturer in the
Territory provided that Manufacturer shall reimburse Distributor for all costs
or other liabilities arising from or in connection with such steps which have
previously been approved by Distributor in writing.

         6.6 Protection of Intellectual Property. Distributor shall not do or
authorize any third party to do any act which would or might invalidate or be
inconsistent with any intellectual property rights of Manufacturer.

         6.7 Notification of Infringement. Distributor shall promptly and fully
notify Manufacturer of any actual, threatened or suspected infringement in the
Territory of any intellectual property rights of Manufacturer which comes to
Distributor's attention, and of any claim by any third party so coming to its
attention that the importation of the Products into the Territory, or their sale
therein, infringes any rights of any other person, and Distributor shall at the
request and expense of Manufacturer do all such things as may be requested to
assist Manufacturer in taking or resisting any proceedings in relation to any
such infringement or claim.

                                      -8-
<PAGE>

         6.8      Confidential Information.

                  (a) "Confidential Information" means all items, materials and
information which belong to Manufacturer and are not generally known to the
public that have been or may hereafter be disclosed to Distributor by
Manufacturer or by the directors, officers, employees, agents, consultants,
advisors or other representatives, including legal counsel, accountants and
financial advisors ("Representatives") of Manufacturer, irrespective of the form
of the disclosure. Confidential Information is intended to be interpreted
broadly and includes trade secrets and other proprietary or confidential
information concerning the business and affairs of Manufacturer, product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current, and planned research and development, current and planned manufacturing
or distribution methods and processes, customer lists, current and anticipated
customer requirements, price lists, supplier lists, market studies, business
plans, computer software and programs (including object code and source code),
computer software and database technologies, systems, structures and
architectures (and related processes, formulae, composition, improvements,
devices, know-how, inventions, discoveries, concepts, ideas, designs, methods
and information); financial statements, financial projections and budgets,
historical and projected sales, capital spending budgets and plans, the names
and backgrounds of key personnel, and personnel training techniques and
materials. Confidential Information also includes all notes, analyses,
compilations, studies, summaries and other material prepared by Distributor
containing or based, in whole or in part, upon any Confidential Information,
including, without limitation, the Activity Reports.

                  (b) Distributor agrees that the Confidential Information (1)
shall be kept in the strictest of confidence by Distributor; (2) shall be used
only in the performance of its obligations hereunder and shall not at any time
be used by Distributor, directly or indirectly, in any other fashion, either for
its own account or the account of a third party; and (3) without limiting the
foregoing, shall not be disclosed by Distributor, directly or indirectly, to any
person, except with the specific prior written consent of the principal
executive officer of Manufacturer.

                  (c) Upon termination, expiration, or cancellation of this
Agreement for any reason, Distributor (i) shall promptly deliver to Manufacturer
all documents or other materials disclosed by Manufacturer or any of
Manufacturer's Representatives to Distributor constituting Confidential
Information, together with all copies and summaries thereof in the possession or
under the control of Distributor and (ii) shall destroy materials generated by
Distributor that include or refer to any part of the Confidential Information,
without retaining a copy of any such material.

7. Term and Termination.

         7.1 Term. The initial term of this Agreement shall be one (1) year ,
commencing as of the date hereof, unless cancelled or terminated earlier as
provided in Sections 2.6 or 7.2 hereof or elsewhere in this Agreement (the
"Initial Term"). Following the Initial Term, this Agreement shall be
automatically renewed for successive one (1) year periods (each a "Renewal
Term," and together with the Initial Term, the "Term") unless either party
hereto delivers to the other party written notice of its intent not to renew no
later than sixty (60) days prior to the expiration of the immediately preceding
period.

                                      -9-
<PAGE>

         7.2      Earlier Termination.

                  (a) Manufacturer shall be entitled to terminate this Agreement
by giving not less than twenty (20) days' written notice to Distributor if there
is any change in the management, ownership or control of Distributor.
Distributor agrees to provide notice to Manufacturer no earlier than thirty (30)
business days prior to the consummation of any change in the management,
ownership or control of Distributor.

                  (b) Without prejudice to any other provision in this
Agreement, Manufacturer shall be entitled to terminate this Agreement by giving
not less than five (5) days' written notice to Distributor upon the occurrence
of any of the following:

                           (i) Distributor fails to perform its obligations
under the Distributor's Business
Plan and such non-performance continues for thirty (30) days after written
notice giving full particulars of such non-performance and requiring it to be
remedied;

                           (ii) Distributor commits any breach of any of the
provisions of this Agreement and,
in the case of a breach of a payment obligation, fails to remedy the same within
five (5) days after written notice of such failure to pay, and in the case of a
breach of any other obligation, fails to remedy the same within thirty (30) days
after receipt of a written notice giving full particulars of the breach and
requiring it to be remedied;

                           (iii) Distributor goes into bankruptcy, moratorium,
receivership, liquidation, or
anything analogous to any of the foregoing under the law of any jurisdiction; or

                           (iv) Distributor ceases to carry on business or
Manufacturer reasonably believes
that Distributor will be ceasing to carry on business or otherwise be unable to
perform its obligations to Manufacturer.

                  (c) Distributor shall have no claim against Manufacturer for
compensation for loss of distribution rights, loss of goodwill or any similar
loss.

         7.3 Right to Buy Upon Termination. At any time after the Term,
Manufacturer, at its option, shall be entitled (but not obliged) to buy from
Distributor all or any part of the inventory of the Products then held by
Distributor at the price originally paid by Distributor.

8. Covenant Not to Compete; Non-Solicitation.

         8.1      Covenant Not to Compete.

                                      -10-
<PAGE>

                  (a) Distributor hereby covenants and agrees that, during the
Term and for a period of one (1) year thereafter, neither Distributor nor its
Affiliates (hereinafter defined) shall, directly or indirectly:

                           (1) engage in the research or development of any
products which are in direct competition with the Products (the "Competing
Products");

                           (2) represent, manufacture, market, or sell Competing
Products in the Territory;

                           (3) engage, invest, participate, or be interested in
any business which at any time currently or in the future competes with
Manufacturer (the "Restricted Business"), anywhere in the Territory; or

                           (4) have any interest in, own, manage, operate,
control, be connected with as a stockholder (other than as a stockholder of less
than one percent (1%) of the issued and outstanding stock of a publicly held
corporation), joint venturer, officer, director, agent, lender, representative,
partner, employee or consultant, or otherwise engage or invest or participate in
any Restricted Business;

                  (b) During the Term, Manufacturer shall not (1) take any
action which may jeopardize Distributor's exclusive right and license hereunder
or Distributor's appointment as its exclusive Distributor in the Territory, and,
(2) except with respect to Reserved Customers, make any solicitation in the
Territory without Distributor's prior written approval and coordination or make
any sale of Products (or cause the sale of its Products) to customers in the
Territory without complying with the terms of this Agreement.

         8.2 Non-solicitation. Distributor hereby covenants and agrees that,
during the Term, and continuing until the one (1) year anniversary of the
expiration of the Term, neither Distributor nor its Affiliates (hereinafter
defined) shall, directly or indirectly:

                  (a) solicit or recruit, or attempt to solicit or recruit, for
employment or for independent contract in connection with any Restricted
Business operating in the Territory, any employee or independent contractor who
is or was employed or under contract with Manufacturer during the Term; or

                  (b) solicit the business of any customer or prospective
customer of Manufacturer's (i) whose needs became known to Distributor during
the term of this Agreement, or (ii) with whom Distributor has had dealings as a
result of this Agreement, wherein such solicitation involves any service or
product that is similar to or in competition with any service or product of
Manufacturer either existing or in the process of being developed at the time of
the termination of this Agreement;

                                      -11-
<PAGE>

         8.3 Modification. If any provision of this Agreement is held by any
court of competent jurisdiction to be unenforceable because of the scope,
duration or area of its applicability, a court of competent jurisdiction shall
have the right to modify such scope, duration or area or all of them so as to
render them enforceable, and such provision shall then be applicable in such
modified form.

         8.4 Injunctive Relief. Distributor acknowledges that Manufacturer will
have no adequate remedy at law if Distributor or any of its Affiliates breaches
any covenant contained in Section 6 or Section 8. In the event of any such
breach or threatened breach, Manufacturer shall have the right, in addition to
any other remedy that it may have, to obtain in any court of competent
jurisdiction, injunctive relief to restrain any breach or threatened breach of
or otherwise to specifically enforce any of the covenants contained in Section 6
and/or Section 8, as the case may be.

         8.5 Affiliate. The term "Affiliate", as used herein, shall be deemed to
mean, with respect to any individual, any individual directly related to such
individual, whether through blood or marriage, and any Entity directly or
indirectly controlled by such individual, through the ownership of all or any
part of such Entity; and, with respect to any Entity, any individual or Entity
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Entity, through employment or ownership, in whole or in
part. The term "Entity", as used herein, shall be deemed to mean a corporation,
partnership, association, trust, estate or other entity or organization.

9. Limited Product Warranty; Indemnification.

         9.1      Limited Product Warranty.

                  (a) Limited Product Warranty. For purposes of this Agreement,
"Covered Person" means the ultimate end-user that originally purchases the
Products from Distributor or Distributor's agents or sub-distributors.
Manufacturer shall provide to Covered Persons a limited product warranty (the
"Limited Warranty") that the Products shall be free from defects in material and
workmanship for a period of twenty four (24) months from the date of purchase
(the "Warranty Period"), subject to the conditions and limitations set forth
herein. The Limited Warranty shall be provided only to the Covered Person and no
other person. The sole and exclusive remedy for defects in Products covered by
this Limited Warranty shall be limited to the correction of the defect by repair
or replacement, at Manufacturer's option. The Limited Warranty shall not apply
to Products that have been subjected to mishandling, misuse, neglect, improper
or inadequate storage, improper testing, improper installation, repair,
alteration, damage, assembly, or processing that alters physical or electrical
properties. This Limited Warranty shall terminate upon expiration of the
Warranty Period.

                  (b) Limited Warranty Claim Procedure. If a Product is
defective, the Covered Person shall, during the Warranty Period, return the
product to Distributor, who shall inspect the returned Product for defects. If
Distributor reasonably believes that the returned Product is defective and is
covered under the Limited Warranty, it shall promptly forward the returned
product to Manufacturer for repair or replacement. Manufacturer shall pay the
shipping charges to return the product to Distributor and bear the risk of loss
during transit, unless Manufacturer determines that the defect is not covered by
the Limited Warranty. In the event that Distributor or Manufacturer determines
that a returned product is not covered by the Limited Warranty, it shall
immediately notify the Covered Person and request instructions regarding
disposition.

                                      -12-
<PAGE>

                  (c) Restocking Fee. Within six (6) months after the date
hereof, Distributor shall establish a division in its organization that is
responsible and able to fulfill Distributor's obligations with respect to the
Limited Warranty, including, without limitation, the testing of returned
Products and their delivery to Manufacturer. The Restocking Fee shall be deemed
waived by Manufacturer for any Product that is received by Manufacturer at any
time prior to six (6) months after the purchase date. In any case Manufacturer
will not pay back the cost of the returned. Returned product that will be found
not operative will be exchanged for new ones

                  (d) Annual Warranty Claim Report. No later than thirty (30)
days after the end of each 12 (twelve) month period of the Term, Distributor
shall provide to Manufacturer a written report of all warranty claims received
by Distributor during such 12 (twelve) month period.

         9.2      Indemnity.

                  (a) Indemnity by Distributor. Distributor shall indemnify and
hold harmless Manufacturer and its Affiliates, officers, directors,
stockholders, employees, and agents, and the successors and assigns of all of
them (the "Indemnified Parties"), and shall reimburse the Indemnified Parties
for, any loss, liability, claim, damage, expense (including, but not limited to,
costs of investigation and defense and attorneys' fees) directly or indirectly
arising from or in connection with (a) any failure by Distributor or its
sub-distributors or agents to perform or comply with any agreement, covenant or
obligation in this Agreement, (b) any claim made at any time by any governmental
authority with respect to the business of Distributor or its sub-distributors or
agents and the marketing, distribution, or sale of the Product; and (c) any
warranty claim pursuant to Section 9.1 hereof, if the Product that is asserted
to be defective has been subjected by Distributor to mishandling, misuse,
neglect, improper or inadequate storage, improper testing, repair, alteration,
damage, assembly, or processing that alters physical or electrical properties.
This Section 9.2 shall survive the expiration of the Term.

                  (b) Indemnity by Manufacturer. Manufacturer represents and
warrants that it has sufficient coverage to cover product and applicable
liability claims with respect to the Products to be sold hereunder and
Distributor shall be covered by such Manufacture's liability insurance policy as
an additional insured party. Manufacturer shall indemnify and hold Distributor
harmless from all claims damages, and expenses (including reasonable attorneys'
fees) based on any product and applicable liability claims with respect to the
Products to be sold hereunder.

                                      -13-
<PAGE>

10.      Miscellaneous.

         10.1 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly given (a) if by personal
delivery, when so delivered, (b) if mailed, two (2) business days after having
been sent by registered or certified mail, return receipt requested, postage
prepaid and addressed to the intended recipient as set forth on the first page
of this Agreement, (c) if sent through an overnight delivery service in
circumstances to which such service guarantees next day delivery, the day
following being addressed to the intended recipient as set forth on the first
page of this Agreement; or (d) if given by facsimile, once such notice is
transmitted to the facsimile number specified in writing by the intended
recipient for such purpose and the appropriate answer back or telephonic
confirmation is received. Any party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other parties notice in the manner herein set forth.

         10.2 Choice of Law. This Agreement shall be governed, construed and
enforced in accordance with the laws of the State of New Jersey, United States,
without giving effect to principles of conflicts of law.

         10.3 Jurisdiction. The parties hereby irrevocably consent to the in
personam jurisdiction of the state or federal courts located in the state of New
Jersey, United States, in connection with any action or proceeding arising out
of or relating to this Agreement or the transactions and the relationships
established thereunder. The parties hereby agree that such courts shall be the
venue and exclusive and proper forum in which to adjudicate such matters and
that they will not contest or challenge the jurisdiction or venue of these
courts.

         10.4 WAIVER OF ANY AND ALL RIGHTS TO A TRIAL BY JURY. ALL PARTIES TO
THIS AGREEMENT UNCONDITIONALLY, IRREVOCABLY, AND EXPRESSLY WAIVE ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING, SUIT, COUNTERCLAIM, OR CROSS-CLAIMS
ARISING DIRECTLY OR INDIRECTLY IN ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) IN ANY WAY ARISING OUT OF OR OTHERWISE RELATING TO THIS
AGREEMENT OR TRANSACTIONS OR THE RELATIONSHIPS ESTABLISHED THEREUNDER. ALL
PARTIES CONFIRM THAT THE FOREGOING WAIVER OF A TRIAL BY JURY IS INFORMED AND
FREELY MADE.

         10.5 Entire Agreement. This Agreement and the Annexes attached hereto
set forth the entire agreement and understanding of the parties in respect of
the transactions contemplated hereby and supersedes all prior or contemporaneous
agreements, arrangements and understandings of the parties relating to the
subject matter hereof. No representation, promise, inducement, waiver of rights,
agreement or statement of intention has been made by any of the parties which is
not expressly embodied in this Agreement, such other agreements, notes or
instruments related to this transaction executed simultaneously herewith, or the
written statements, certificates, schedules or other documents delivered
pursuant to this Agreement or in connection with the transactions contemplated
hereby.

                                      -14-
<PAGE>

         10.6 Assignment. Except as permitted in Section 2.5, Distributor's
rights and obligations under this Agreement shall not be assigned or delegated,
by operation of law or otherwise, without Manufacturer's prior written consent,
and any such assignment or attempted assignment shall be void, of no force or
effect, and shall constitute a material default by such party.

         10.7 Amendments. This Agreement may be amended, modified, superseded or
cancelled, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by a written instrument executed by all of
the parties hereto or, in the case of a waiver, by the party waiving compliance.

         10.8 Waivers. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by any party of any condition, or the
breach of any term, covenant, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other term, covenant, representation or
warranty of this Agreement.

         10.9 Counterparts; Fascimile Signatures. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Signatures transmitted by facsimile shall have the same force and
effect as original signatures.

         10.10 Survival. All covenants and agreements of the parties contained
herein which are to be performed after the expiration of the Term shall survive
the expiration of the Term.

         10.11 Interpretation. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. Reference to any agreement, document, or
instrument means such agreement, document, or instrument as amended or modified
and in effect from time to time in accordance with the terms thereof.

                                      -15-
<PAGE>

         IN WITNESS WHEREOF, the parties have duly executed this International
Exclusive Distributorship Agreement as of the date first above written.

                                               DISTRIBUTOR:

                                               ELCART DISTRIBUTION S.P.A.

                                               By:      /s/ Roberto Muzzetta
                                               Name: Roberto Muzzetta
                                               Title:   Legal Representative

                                               MANUFACTURER:

                                               SMART ENERGY SOLUTIONS, INC.

                                               By:      /s/ Edward Braniff
                                               Name: Edward Braniff
                                               Title:   Chief Financial Officer

                                      -16-
<PAGE>

                                    EXHIBIT A

                              THE PRODUCTS & PRICE

                            Battery Brain Type I  $*

                            Battery Brain Type II $*

                            Battery Brain Type III $*

----------
* Omitted pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission.

                                      -17-
<PAGE>

                                    EXHIBIT B

                            DESCRIPTION OF TERRITORY

The Territory is the geographical area within the national borders of each of
the following states:

                                      Italy

                                      -18-
<PAGE>

                                    EXHIBIT C

                        DESCRIPTION OF MARKETING, SALES,
                       AND CUSTOMER SERVICE ORGANIZATION

                                      -19-

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