Document:

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                                                                   Exhibit 10.28

RESIDENCE INN - NASHVILLE AIRPORT,
NASHVILLE, TENNESSEE

                     AMENDED & RESTATED MANAGEMENT AGREEMENT

                                 by and between

                         RESIDENCE INN BY MARRIOTT, INC.

                                  as "MANAGER"

                                       and

                     APPLE HOSPITALITY FIVE MANAGEMENT, INC.

                                   as "OWNER"

                          Dated as of June 21, 2003

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                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                 <C>
ARTICLE I APPOINTMENT OF MANAGER.....................................................2

    1.01   Appointment...............................................................2
    1.02   Management of the Inn.....................................................2
    1.03   Services Provided by Manager..............................................4
    1.04   Employees.................................................................4
    1.05   Owner's Right to Inspect..................................................5
    1.06   Regular Meetings..........................................................5
    1.07   System Standards..........................................................5
    1.08   Limitations on Manager's Authority........................................5

ARTICLE II TERM......................................................................5

    2.01   Term......................................................................5
    2.02   Performance Termination...................................................6

ARTICLE III COMPENSATION OF MANAGER..................................................8

    3.01   Management Fees...........................................................8

ARTICLE IV ACCOUNTING, BOOKEEPING AND BANK ACCOUNTS..................................9

    4.01   Accounting, Distributions and Annual Reconciliation.......................9
    4.02   Books and Records.........................................................9
    4.03   Accounts, Expenditures...................................................10
    4.04   Annual Operating Projection..............................................11
    4.05   Working Capital..........................................................11
    4.07   Real Estate and Personal Property Taxes..................................12
    4.08   Sarbanes-Oxley Certification.............................................12

ARTICLE V REMAIRS, MAINTENANCE AND REPLACEMENTS.....................................13

    5.01   Repairs and Maintenance to be Paid from Gross Revenues...................13
    5.03   Major Repairs Alterations, Improvements, Renewals, and Replacements
              to be Funded by Owner.................................................15
    5.04   Ownership of Replacements................................................16
    5.06   Management of Hotel Renovation and Construction Projects.................16
    5.07   Completion and Funding of Property Improvement Plan......................16

ARTICLE VI INSURANCE................................................................17
</TABLE>

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<TABLE>
<S>                                                                                 <C>
    6.01   Property Insurance.......................................................17
    6.02   Operational Insurance....................................................18
    6.03   Coverage.................................................................19
    6.04   Costs and Expenses.......................................................19

ARTICLE VII DAMAGE AND REPAIR.......................................................19

    7.01   Damage and Repair........................................................19
    7.02   Condemnation.............................................................20

ARTICLE VIII OWNERSHIP OF THE INN...................................................21

    8.01   Ownership of the Inn.....................................................21
    8.02   Mortgages................................................................21
    8.03   Subordination, Non-Disturbance and Attornment............................22
    8.04   No Covenants, Conditions or Restrictions.................................23
    8.05   Liens; Credit............................................................24

ARTICLE IX DEFAULTS.................................................................24

    9.01   Events of Default........................................................24
    9.02   Remedies.................................................................25
    9.03   Additional Remedies......................................................26

ARTICLE X ASSIGNMENT AND SALE.......................................................26

   10.01   Assignment...............................................................26
   10.02   Sale of the Inn..........................................................27

ARTICLE XI MISCELLANEOUS............................................................30

   11.01   Right to Make Agreement..................................................30
   11.02   Consents and Cooperation.................................................30
   11.03   Relationship.............................................................30
   11.04   Applicable Law...........................................................31
   11.06   Headings.................................................................31
   11.07   Notices..................................................................31
   11.08   Environmental Matters....................................................32
   11.09   Confidentiality..........................................................33
   11.10   Projections..............................................................34
   11.11   Actions to be Taken Upon Termination.....................................34
   11.12   Trademarks and Intellectual Property.....................................36
   11.13   Waiver...................................................................37
   11.14   Partial Invalidity.......................................................38
   11.15   Survival.................................................................38
   11.16   Negotiation of Agreement.................................................38
</TABLE>

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<TABLE>
<S>                                                                                 <C>
   11.17   Intentionally Deleted....................................................38
   11.18   Estoppel Certificates....................................................38
   11.19   Affiliates...............................................................39
   11.20   Competing Facilities.....................................................39
   11.21   Expert Decisions.........................................................40
   11.22   Restrictions on Operating the Inn in Accordance with System Standards....40
   11.23   Waiver of Jury Trial and Consequential and Punitive Damages..............40
   11.24   Counterparts.............................................................41
   11.25   Extraordinary Events.....................................................41
   11.26   Entire Agreement.........................................................41

ARTICLE XII DEFINITION OF TERMS.....................................................42

   12.01   Definition of Terms......................................................42
</TABLE>

Exhibit A   -   Legal Description of the Site
Exhibit B   -   Equity Interest in Owner
Exhibit C   -   Memorandum of Amended & Restated Management Agreement
Exhibit D   -   Map of the Restricted Area
Exhibit E   -   Property Improvement Plan
Exhibit F   -   Environmental Assessment by Jones, Hill, McFarland & Ellis

                                       iv

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                    AMENDED & RESTATED MANAGEMENT AGREEMENT

     THIS AMENDED & RESTATED MANAGEMENT AGREEMENT ("Agreement") is executed as
of the 21ST day of June, 2003 ("Effective Date"), by and between APPLE
HOSPITALITY FIVE MANAGEMENT, INC. ("Owner"), a Virginia corporation with a
mailing address at c/o Apple REIT Companies, 10 South Third Street, Richmond,
Virginia 23219, and RESIDENCE INN BY MARRIOTT, INC. ("Manager"), a Delaware
corporation, with a mailing address at c/o Marriott International, Inc., 10400
Fernwood Road, Bethesda, Maryland 20817.

                                R E C I T A L S:

     A. Apple Hospitality Five, Inc., a Virginia corporation ("Landlord") has
acquired from WBL II Real Estate Limited Partnership ("Prior Owner") fee simple
title to that certain hotel containing One Hundred Sixty Eight (168) Guest
Rooms, a lobby, meeting rooms, administrative offices, parking, and certain
other amenities and related facilities (the "Buildings") located in the City of
Nashville, State of Tennessee, as more particularly set forth in Exhibit A
hereto (the "Site"). The Site and the Buildings, in addition to certain other
rights, improvements, and personal property as more particularly described in
the definition of "Inn" in Section 12.01 hereof, are collectively referred to as
the "Inn."

     B. Landlord and Owner have entered into that certain Master Hotel Lease
dated as of June 20, 2003 (the "Hotel Lease") pursuant to which Landlord leases
the Inn to Owner, and, pursuant to that certain Consent, Assignment, and
Assumption Agreement of even date therewith (the "Assignment"), Prior Owner
assigned to Owner all of its right, title, and interest under that certain
Management Agreement dated as of November 12, 1999 by and between Prior Owner
and Manager (the "Existing Management Agreement", and Owner agreed to accept
such assignment and to assume all obligations under the Existing Management
Agreement on the terms and conditions set forth in the Assignment.

     C. Owner and Manager desire to amend and restate the terms and conditions
of the Existing Management Agreement as set forth in this Agreement, and
Landlord, Owner, and Manager have entered into that certain Owner Agreement of
even date herewith (the "Owner Agreement") pursuant to which Landlord has, among
other things, agreed to be primarily liable as an obligor, and has guaranteed
all of Owner's obligations under this Agreement.

     D. All capitalized terms used in this Agreement shall have the meanings set
forth in Section 12.01 hereof.

     NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Owner and Manager agree as follows:

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                                    ARTICLE I

                             APPOINTMENT OF MANAGER

     1.01 Appointment

     Owner hereby appoints and employs Manager to supervise, direct and control
the management and operation of the Inn throughout the Term. Manager accepts
said appointment and agrees to manage the Inn during the Term in accordance with
the terms and conditions of this Agreement.

     1.02 Management of the Inn

     A. Manager shall manage the Inn under standards comparable to those
prevailing in other hotels in the System, in accordance with System Standards,
including all activities in connection therewith which are customary and usual
to such an operation. Manager shall, in connection with the Inn and in
accordance with standards comparable to those prevailing at other hotels in the
System and other terms of this Agreement, perform each of the following
functions (provided that in all cases, except as otherwise specifically set
forth in this Agreement, the costs and expenses of performing such functions
shall be Deductions):

          1. Recruit, employ, supervise, direct and discharge the employees at
the Inn.

          2. Establish prices, rates and charges for services provided in the
Inn, including Guest Room rates.

          3. Establish and revise, as necessary, administrative policies and
procedures, including policies and procedures for the control of revenue and
expenditures, for the purchasing of supplies and services, for the control of
credit, and for the scheduling of maintenance, and verify that the foregoing
procedures are operating in a sound manner.

          4. Make payments on accounts payable and collections of accounts
receivable.

          5. Arrange for and supervise public relations and advertising, and
prepare marketing plans.

          6. Procure all Inventories and replacement Fixed Asset Supplies.

          7. Prepare and deliver interim accountings, annual accountings, Annual
Operating Statements, Building Estimates, Repairs and Equipment Estimates, and
such other information as is required by this Agreement.

          8. Plan, execute and supervise repairs and maintenance at the Inn.

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          9. Provide, or cause to be provided, risk management services relating
to the types of insurance required to be obtained or provided by Manager under
this Agreement.

          10. Obtain and keep in full force and effect, either in its own name
or in Owner's name, as may be required by applicable law, any and all licenses
and permits to the extent same is within the control of Manager (or, if same is
not within the control of Manager, Manager shall use all due diligence and
reasonable efforts to obtain and keep same in full force and effect).

          11. Reasonably cooperate (provided that Manager shall not be obligated
to enter into any amendments of this Agreement) with Owner or Landlord in any
attempt(s) by Owner or Landlord to effectuate a Sale of the Inn (provided that
nothing herein shall affect the provisions of Section 10.02), or to obtain any
Mortgage.

     C. The operation of the Inn shall be under the exclusive supervision and
control of Manager which, except as otherwise specifically provided in this
Agreement, shall be responsible for the proper and efficient operation of the
Inn. In fulfilling its obligations under this Agreement, Manager will act as a
reasonable prudent operator of the Inn, having regard for the status of the Inn
and maintaining the System Standards, and shall have discretion and control,
free from interference, interruption or disturbance, in all matters relating to
management and operation of the Inn, including, without limitation, the
following: charges, terms and conditions for Guest Rooms and commercial space;
credit policies and services provided by the Inn; food and beverage services;
employment policies; granting of leases, subleases, licenses and concessions for
shops and businesses within the Inn, provided that the term of any such lease,
sublease, license or concession shall not exceed the Term; receipt, holding and
disbursement of funds; maintenance of bank accounts; procurement of Inventories,
supplies and services; promotion and publicity; payment of costs and expenses as
are specifically provided for in this Agreement or are otherwise reasonably
necessary for the proper and efficient operation of the Inn; and, generally, all
activities necessary for operation of the Inn.

     D. Manager will use its reasonable efforts to comply with and abide by all
applicable Legal Requirements pertaining to its operation of the Inn (except for
certain Legal Requirements which are Owner's responsibility under Section 5.03
and Section 11.08 hereof). Owner will use its reasonable efforts to comply with
and abide by all applicable Legal Requirements pertaining to the Inn or to
Owner's ownership interest in the Inn (including, without limitation, Owner's
obligations under Section 5.03 and Section 11.08 hereof). Either Owner or
Manager shall have the right, but not the obligation, in its reasonable
discretion, to contest or oppose, by appropriate proceedings, any such Legal
Requirements. The reasonable expenses of any such contest of a Legal Requirement
shall be paid from Gross Revenues as Deductions.

                                       3

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     1.03 Services Provided by Manager

     Commencing with the Effective Date and thereafter during the Term, Manager
shall cause to be furnished the following services:

     A. System divisional executive management, divisional financial planning,
divisional contracting, divisional product planning and development, divisional
human resources planning and development, divisional marketing planning, and
services of Manager's technical and operational experts making periodic
inspection and consultation visits to the Inn (but specifically excluding "line
management" personnel such as area managers and services of Manager's
Architecture and Construction personnel who provide design, procurement,
construction or related services) (collectively, "System Services");

     B. Marriott corporate planning and policy services, Marriott financial
planning and corporate financial services, Marriott corporate executive
management, in-house legal services pertaining to Marriott corporate matters,
and protection of the "Marriott" trade name, logos, trademarks, and service
marks ("Central Office Services"); and

     C. Certain services which are furnished generally on a central or regional
basis to other inns in the System which are managed by Manager, Marriott, or any
Affiliate, and which benefit each Inn as a participant in the System as follows:
(i) certain divisional executive management; (ii) programs for training and
manpower development; payroll, accounts payable, property and other accounting
services; and (iii) such additional central or regional services as may from
time to time be furnished for the benefit of inns in the "Residence Inn by
Marriott" System or in substitution for services required at individual inns
which may be more efficiently performed on a group basis ("Chain Services").

     1.04 Employees

     All personnel employed at the Inn shall at all times from and after the
Effective Date be the employees of Manager (or one of its Affiliates). Manager
shall have absolute discretion with respect to all personnel employed at the
Inn, including, without limitation, decisions regarding hiring, promoting,
transferring, compensating, supervising, terminating, directing and training all
employees at the Inn, and, generally, establishing and maintaining all policies
relating to employment. Manager shall use best efforts to notify Owner as soon
as practical of any anticipated changes in the persons who occupy the positions
of General Manager and Director of Sales and Marketing for the Inn; provided,
however, that the parties acknowledge and agree that any failure by Manager to
provide such notice shall neither constitute an "Event of Default" under this
Agreement nor constitute a material breach of this Agreement. Manager shall
decide which, if any, of the employees of the Inn shall reside at the Inn, and
shall be permitted to provide free accommodations and amenities to its employees
and representatives living at or visiting the Inn in connection with its
management or operation. No person shall otherwise be given gratuitous
accommodations or services without prior joint approval of Owner and Manager
except in accordance with usual practices of the hotel and travel industry.

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     1.05 Owner's Right to Inspect

     Owner, its agents, Affiliates and Mortgagees shall have access to the Inn
at any and all reasonable times for the purpose of inspection or showing the Inn
to prospective purchasers, tenants or Mortgagees.

     1.06 Regular Meetings

     At Owner's request, Owner and Manager shall have quarterly meetings at the
Inn and at mutually convenient times. Manager shall be represented at such
meetings by the general manager of the Inn and such other personnel as the
general manager may deem appropriate. The purpose of the meetings shall be to
discuss the performance of the Inn and other related issues, including any
variations from the Annual Operating Projection for the preceding quarter.

     1.07 System Standards.

     Owner shall take such actions consistent with this Agreement as are
necessary to enable the Inn to comply with the System Standards, and Manager
shall have discretion in operating the Inn in order that the Inn will comply
with System Standards.

     1.08 Limitations on Manager's Authority

     Manager shall not, without Owner's prior written approval, enter into any
FF&E Lease if (i) the fair market value of the FF&E subject to such FF&E Lease
at the time of entering into such FF&E Lease exceeds Fifty Thousand Dollars
($50,000), as adjusted by the GDP Deflator; (ii) the fair market value of the
FF&E subject to all FF&E Leases at the time of entering into such FF&E Lease
exceeds Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate, as
adjusted by the GDP Deflator; (iii) the FF&E subject to such FF&E Lease is FF&E
that is not customarily leased in the hotel industry in the United States; or
(iv) such FF&E Lease is on payment terms (including the amounts and schedule of
payments) that would be materially more favorable to the lessor thereof than
payment terms customary in the hotel industry in the United States for leases of
similar FF&E.

                                   ARTICLE II

                                      TERM

     2.01 Term

     The "Term" of this Agreement shall consist of an "Initial Term" and the
"Renewal Term." The "Initial Term" shall begin on the Effective Date and shall
continue until the expiration of the twentieth (20th) full Fiscal Year after the
expiration of the Fiscal Year in which the Effective Date occurs. Thereafter,
this Agreement shall automatically, and with no further action required by Owner
or Manager, be renewed on the same terms and conditions for one (1) period of
ten (10) Fiscal Years ("Renewal Term"), unless Manager shall have given prior
written

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notice to Owner of its election not to renew at least one hundred and eighty
(180) days prior to the expiration of the Initial Term.

     2.02 Performance Termination

     A. Subject to the provisions of Section 2.02.B and Section 2.02.C. below,
Owner shall have the option to terminate this Agreement and Owner or an operator
approved by Marriott in its sole discretion shall enter into a Residence Inn by
Marriott franchise agreement in the form as shall have been published by Manager
or its Affiliate in its then-current Uniform Franchise Offering Circular (the
"Franchise Agreement") if, with respect to any two (2) consecutive Fiscal Years
(not including any portion of any Fiscal Year prior to the expiration of the
fifth (5th) full Fiscal Year after the Effective Date):

          1. Operating Profit for each such Fiscal Year is less than the
Performance Termination Threshold for such Fiscal Year; provided that, for
purposes of this Section 2.02.A.1. only, Operating Profit shall be computed
without deducting any Impositions. Notwithstanding the foregoing, real estate
and personal property taxes in an amount not to exceed the amount of such taxes
paid during the second (2nd) Fiscal Year following the Effective Date shall be
deducted in computing Operating Profit for purposes of this Section 2.02.A.1.;
and

          2. The Revenue Index of the Inn during each such Fiscal Year is less
than the Revenue Index Threshold for such Fiscal Year; and

          3. The fact that the Inn has not met the tests set forth in Section
2.02.A.1. and Section 2.02.A.2. is not wholly or partially the result of (x) an
Extraordinary Event, (y) any major renovation of the Inn which has been approved
by Owner, or (z) any default by Owner. In the event that either clause (x),
clause (y) or clause (z) has affected the ability of the Inn to meet the tests
set forth in Section 2.02.A.1. or Section 2.02.A.2. in any given Fiscal Year,
then such Fiscal Year shall not be counted for purposes of the foregoing test,
and shall be treated as not having occurred for purposes of determining whether
the tests are satisfied for two consecutive Fiscal Years.

     Owner shall exercise such option to terminate by serving written notice
thereof on Manager no later than sixty (60) days after Owner's receipt of the
annual accounting under Section 4.01.B. for the second (2nd) of the two (2)
Fiscal Years referred to in Section 2.02.A. If Manager does not elect to avoid
such Termination pursuant to Section 2.02.B. below, this Agreement shall
terminate as of the end of the fourth (4th) full Accounting Period following the
later of the date on which Manager receives (i) the above-described notice from
Owner and (ii) the Franchise Agreement executed by Owner or an operator approved
by Marriott in its sole discretion; provided that such period of time shall be
extended as required by applicable Legal Requirements pertaining to the
termination of the employment of the employees at the Inn unless the entity
which succeeds Manager as the operator of the Inn hires a sufficient number of
the employees at the Inn to avoid the occurrence, in connection with such
Termination, of a "closing" under the WARN Act and otherwise complies with
applicable Legal Requirements. Owner's failure to exercise its right to
terminate this Agreement pursuant to Section 2.02.A. with respect to any given
Fiscal Year shall not be deemed an estoppel or waiver of Owner's right to

                                       6

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terminate this Agreement with respect to subsequent Fiscal Years to which this
Section 2.02.A. may apply.

     B. Upon receipt of Owner's written notice of Termination under Section
2.02.A., Manager shall have the option, to be exercised within sixty (60) days
after receipt of said notice, to avoid such Termination by electing (in a
written notice to Owner) to either (i) waive the payment of the Base Management
Fee (beginning as of the first (1st) day of the first (1st) full Accounting
Period following the date of such notice from Manager) until such time as the
total cumulative amount of such waived Base Management Fee equals the total
amount by which Operating Profit for each of the Fiscal Years in question (i.e.,
the two (2) Fiscal Years referred to in Section 2.02.A.1.) was less than the
Performance Termination Threshold for such Fiscal Years; or (ii) pay to Owner
the total amount by which Operating Profit for each of the Fiscal Years in
question (i.e., the two (2) Fiscal Years referred to in Section 2.02.A.1.) was
less than the Performance Termination Threshold for such Fiscal Years (the
amounts set forth in clauses (i) and (ii) shall be referred to as the "Cure
Payment"). Notwithstanding the foregoing, any such waived Base Management Fee
shall be deemed paid by Owner for purposes of computing Operating Profit for the
period during which such Base Management Fee is waived by Manager. In the event
Manager makes a Cure Payment pursuant to this Section 2.02.B., the then prior
two (2) Fiscal Years with respect to which such Cure Payment was made shall
thereafter not be treated, for purposes of subsequent elections by Owner
pursuant to Section 2.02.A., as Fiscal Years in which the circumstances
described in Section 2.02.A.1. have occurred. If Manager exercises such option
to make such Cure Payment, then the foregoing Owner's election to terminate this
Agreement under Section 2.02.A. shall be canceled and of no force or effect with
respect to the two (2) Fiscal Years in question, and this Agreement shall not
terminate. Such cancellation, however, shall not affect the right of Owner, as
to each subsequent Fiscal Year to which Section 2.02.A. applies, to again elect
to terminate this Agreement pursuant to the provisions of Section 2.02.A. (which
subsequent election shall again be subject to Manager's rights under this
Section 2.02.B.). If Manager does not exercise its option to make a Cure Payment
as aforesaid, then this Agreement shall be terminated as of the date set forth
in Section 2.02.A.

     C. Notwithstanding anything in this Section 2.02 to the contrary, if
Manager does not elect to avoid such Termination within the sixty (60) day
period set forth in Section 2.02.B, upon execution of the Franchise Agreement,
Owner shall cause a third party operator approved by Manager in its sole
discretion to operate the Inn. Manager shall provide to Owner a list of at least
five (5) operators acceptable to Manager within ten (10) Business Days after
Owner's request therefor. If Owner selects an operator from such list to operate
the Inn, Manager shall be deemed to have approved such operator.

                                       7

<PAGE>

                                   ARTICLE III

                             COMPENSATION OF MANAGER

     3.01 Management Fees

     In consideration of services to be performed during the Term, Manager shall
be paid the sum of the following as its management fees:

     A. the Base Management Fee, which shall be retained by Manager from Gross
     Revenues; plus

     B. the Incentive Management Fee.

     3.02 Operating Profit

     A. Operating Profit, to the extent available, shall be distributed to Owner
and to Manager in the following order of priority:

          1. An amount up to the maximum amount of Owner's Priority shall be
paid to Owner;

          2. The Incentive Management Fee shall be paid to Manager; and

          3. Any remaining balance of Operating Profit shall be paid to Owner.

     Owner's Priority is not cumulative from one Fiscal Year to the next, and to
the extent the maximum amount of Owner's Priority is unpaid in any Fiscal Year,
such unpaid amount shall not accrue or otherwise be payable in any subsequent
Fiscal Year.

     B. To the extent of available Operating Profit with respect to each
Accounting Period, Manager shall distribute a prorated portion of the Owner's
Priority to Owner for each such Accounting Period in accordance with Section
4.01.A., and shall be entitled to retain a prorated portion of the Incentive
Management Fee, which shall be retained by Manager from Operating Profit in
accordance with Section 3.02 and Section 4.01 for each such Accounting Period
based on its good faith estimate of the Incentive Management Fee for the full
Fiscal Year.

                                       8

<PAGE>

                                   ARTICLE IV

                    ACCOUNTING, BOOKKEEPING AND BANK ACCOUNTS

     4.01 Accounting, Distributions and Annual Reconciliation

     A. Within twenty (20) days after the close of each Accounting Period,
Manager shall deliver an interim accounting (the "Accounting Period Statement")
to Owner showing Gross Revenues, Deductions, Operating Profit, and applications
and distributions thereof for the preceding Accounting Period. Manager shall
transfer to Owner, with each Accounting Period Statement, any interim amounts
due Owner, subject to Working Capital needs, and shall retain any interim
amounts due Manager.

     B. Calculations and payments of the Incentive Management Fee, the Base
Management Fee, and distributions of Operating Profit made with respect to each
Accounting Period shall be accounted for cumulatively within a Fiscal Year, but
shall not be cumulative from one Fiscal Year to the next. Within the SEC Filing
Period, Manager shall deliver to Owner a statement (the "Annual Operating
Statement") in reasonable detail summarizing the operations of the Inn for the
immediately preceding Fiscal Year and a certificate of Manager's chief
accounting officer certifying that, to the best of his or her knowledge, such
Annual Operating Statement is true and correct. The parties shall, within five
(5) business days after Owner's receipt of such Annual Operating Statement, make
any adjustments, by cash payment, in the amounts paid or retained for such
Fiscal Year as are needed because of the final figures set forth in such Annual
Operating Statement. Such Annual Operating Statement shall be controlling over
the preceding Accounting Period Statements. No adjustments shall be made for any
Operating Loss in any preceding Fiscal Year.

     C. To the extent there is an Operating Loss for any Accounting Period,
additional funds in the amount of any such Operating Loss shall be provided by
Owner within thirty (30) days after Manager has delivered written notice thereof
to Owner. If Owner does not so fund such Operating Loss within the thirty (30)
day time period, Manager shall have the right (without affecting Manager's other
remedies under this Agreement) to withdraw an amount to cover such Operating
Loss from future distributions of funds otherwise due to Owner. Furthermore, if
Owner fails to fund a deficiency upon request by Manager, Manager may also
withdraw interest upon such sum from the date payment was due until repayment to
Manager at a rate equal to the Prime Rate plus three (3) percentage points.

     4.02 Books and Records

     A. Books of control and account pertaining to operations at the Inn shall
be kept on the accrual basis and in all material respects in accordance with the
Uniform System of Accounts. Owner may at reasonable intervals during Manager's
normal business hours examine such records. If Owner desires to audit, examine,
or review the Annual Operating Statement, Owner shall notify Manager in writing
within sixty (60) days after receipt of such Annual Operating Statement of its
intention to audit and begin such audit no sooner than thirty (30) days

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and no later than sixty (60) days after Manager's receipt of such notice. Owner
shall complete such audit within ninety (90) days after commencement thereof. If
Owner does not make such an audit, then such Annual Operating Statement shall be
deemed to be conclusively accepted by Owner as being correct, and Owner shall
have no right thereafter, except in the event of fraud by Manager, to question
or examine the same. If any audit by Owner discloses an understatement of any
amounts due Owner, Manager shall promptly pay Owner such amounts found to be
due, plus interest thereon (at the Prime Rate plus one percent (1%) per annum)
from the date such amounts should originally have been paid. If any audit
discloses that Manager has not received any amounts due it, Owner shall pay
Manager such amounts, plus interest thereon (at the Prime Rate plus one percent
(1%) per annum) from the date such amounts should originally have been paid. The
cost of the audit shall be paid by Owner; provided, however, Manager shall pay
for such cost if such audit discloses an underpayment to Owner for the Fiscal
Year so audited of more than five percent (5%) of the amount that should have
been paid to Owner for such Fiscal Year. Any dispute concerning the correctness
of an audit shall be settled by the Expert in accordance with Section 11.21.

     B. All information regarding the operation of the Inn which is obtained by
Owner through an audit, other than aggregated financial information regarding
the results of operations of the inns in Owner's portfolio, shall be considered
confidential information and Owner agrees not to disclose such information
except as necessary to its advisors, attorneys and consultants participating in
the audit process, who shall likewise be informed of the confidential nature of
the information and of the duty not to disclose such information to third
parties.

     4.03 Accounts, Expenditures

     A. All funds derived from operation of the Inn shall be deposited by
Manager in bank accounts (the "Operating Accounts") established by Manager in a
bank or banks designated by Manager. Withdrawals from said Operating Accounts
shall be made solely by representatives of Manager whose signatures have been
authorized. Reasonable petty cash funds shall be maintained at the Inn.

     B. All payments made by Manager hereunder shall be made from the Operating
Accounts, petty cash funds, or from the Reserve (in accordance with Section
5.02). Manager shall not be required to make any advance or payment with respect
to the Inn except out of such funds, and Manager shall not be obligated to incur
any liability or obligation with respect to the Inn. In any event, if any such
liability or obligation is incurred by Manager with respect to the Inn, Manager
shall have the option to deduct such amounts from Owner's share of Operating
Profit if Owner has not fully reimbursed Manager for said amounts within ten
(10) days after Owner's receipt of notice from Manager that said amounts are
due.

     C. Debts and liabilities incurred by Manager as a result of its operation
and management of the Inn pursuant to the terms hereof, whether asserted before
or after Termination, will be paid by Owner to the extent funds are not
available for that purpose from Gross Revenues; Owner shall indemnify, defend
and hold Manager harmless from and against all loss, costs, liability, and
damage (including, without limitation, attorneys' fees and expenses)

                                       10

<PAGE>

arising from Owner's failure to pay such debts and liabilities; and the
provisions of this Section 4.03.C. shall survive Termination.

     4.04 Annual Operating Projection

     Manager shall deliver to Owner for its review, at least thirty (30) days
prior to the beginning of each Fiscal Year after the first Fiscal Year following
the Effective Date, a preliminary draft of the business plan and a projection of
the estimated Gross Revenues, departmental profits, Deductions, and Operating
Profit for the forthcoming Fiscal Year for the Inn (the "Annual Operating
Projection"). Manager will consider in good faith suggestions made by Owner with
respect to the Annual Operating Projection and make modifications thereto that
Manager deems appropriate. Manager in good faith shall endeavor to adhere to the
Annual Operating Projection. It is understood, however, that the Annual
Operating Projection is an estimate only and that unforeseen circumstances such
as, but not limited to, the costs of labor, material, services and supplies,
casualty, operation of law, or economic and market conditions may make adherence
to the Annual Operating Projection impracticable, and Manager shall be entitled
to depart therefrom due to causes of the foregoing nature.

     4.05 Working Capital

     The parties recognize that, as of the Effective Date, the level of funds
for Working Capital is reasonably believed to be reasonably sufficient for the
operations of the Inn, subject at all times to seasonal differences and changes
in circumstances after the Effective Date. Owner shall from time to time during
the Term promptly, but no later than ten (10) days after written request by
Manager, advance any additional funds necessary to maintain Working Capital at
levels reasonably determined by Manager to be necessary to satisfy the needs of
the Inn as its operation may from time to time require. If Owner does not so
fund additional Working Capital within the said ten (10) day time period,
Manager shall have the right (without affecting Manager's other remedies under
this Agreement) to withdraw an amount equal to the funds requested by Manager
for additional Working Capital from future distributions of funds otherwise due
to Owner. All funds so advanced for Working Capital shall be utilized by Manager
for the purposes of this Agreement pursuant to cash-management policies
established for the System. Upon Termination, Manager shall, except as otherwise
provided in this Agreement, return the outstanding balance of the Working
Capital to Owner.

     4.06 Fixed Asset Supplies

     The parties recognize that, as of the Effective Date, the level of funds
for Fixed Asset Supplies is reasonably believed to be reasonably sufficient for
the operations of the Inn, subject at all times to seasonal differences and
changes in circumstances after the Effective Date. Any additional funds which
are necessary to maintain Fixed Asset Supplies at levels determined by Manager
to be necessary to satisfy the needs of the Inn, as its operation may from time
to time require, shall be paid from Gross Revenues as Deductions. Fixed Asset
Supplies shall remain the property of Owner throughout the term of this
Agreement and upon Termination, except for Fixed Asset Supplies purchased by
Manager pursuant to Section 11.11.E.

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<PAGE>

     4.07 Real Estate and Personal Property Taxes

     A. Except as specifically set forth in Section 4.07.B. below, all real
estate and personal property taxes, levies, assessments (including special
assessments (regardless of when due or whether they are paid as a lump sum or in
installments over time) imposed because of facilities which are constructed by
or on behalf of the assessing jurisdiction (for example, roads, sidewalks,
sewers, culverts, etc.) which directly benefit the Inn (regardless of whether or
not they also benefit other buildings)), "Impact Fees" (regardless of when due
or whether they are paid as a lump sum or in installments over time) which are
required of Owner as a condition to the issuance of zoning variances or building
permits, and similar charges on or relating to the Inn (collectively,
"Impositions") during the Term shall be paid by Manager from Gross Revenues,
before any fine, penalty, or interest is added thereto or lien placed upon the
Inn or upon this Agreement, unless payment thereof is in good faith being
contested and enforcement thereof is stayed. Any such payments shall be
Deductions in determining Operating Profit. Owner shall, within five (5) days
after receipt, furnish Manager with copies of official tax bills and assessments
which it may receive with respect to the Inn. Either Owner or Manager (in which
case Owner agrees to sign the required applications and otherwise cooperate with
Manager in expediting the matter) may initiate proceedings to contest any
negotiations or proceedings with respect to any Imposition, and all reasonable
costs of any such contest shall be paid from Gross Revenues and shall be a
Deduction in determining Operating Profit. Manager shall, as part of its contest
or negotiation of any Imposition, be entitled, on Owner's behalf, to waive any
applicable statute of limitations in order to avoid paying the Imposition during
the pendency of any proceedings or negotiations with applicable authorities.

     B. The word "Impositions" as used in this Agreement shall not include the
following, all of which shall be paid solely by Owner, not from Gross Revenues
nor from the Reserve:

          1. Any franchise, corporate, estate, inheritance, succession, capital
levy or transfer tax imposed on Owner, or any income tax imposed on any income
of Owner (including distributions to Owner pursuant to Article III hereof); or

          2. "Tax-increment financing" or similar financing whereby the
municipality or other taxing authority has assisted in financing the
construction of the Inn by temporarily reducing or abating normal Impositions in
return for substantially higher levels of Impositions at later dates.

     4.08 Sarbanes-Oxley Certification

     Owner may, in connection with its quarterly Securities and Exchange
Commission reporting requirements (and in any event no more than four (4) times
in any Fiscal Year), request that Manager deliver to Owner a certificate from an
accounting officer of Manager, in a form approved by Manager's accounting firm,
certifying that, to his or her knowledge, the information contained in the
Accounting Period Statements for the Accounting Periods contained within the
applicable quarter are true and correct in all material respects, subject to
final adjustment based on the annual review conducted by Manager in preparing
the Annual Operating Statement.

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<PAGE>

Owner shall submit such request in writing, along with the date by which such
certificate is to be delivered, not less than five (5) business days prior to
the requested delivery date, and Manager shall deliver the certificate by the
requested date or, if later, within five (5) business days after Manager's
receipt of Owner's request. If Owner and its Affiliates own more than one hotel
managed by Manager and its Affiliates, Manager and its Affiliates shall only be
required to deliver to Owner and its Affiliates one such certificate, which
certificate shall apply in the aggregate to the Accounting Period Statements
prepared by Manager and its Affiliates for all such hotels.

                                    ARTICLE V

                      REPAIRS, MAINTENANCE AND REPLACEMENTS

     5.01 Repairs and Maintenance to be Paid from Gross Revenues

     Manager shall maintain the Inn in good repair and condition, use its
commercially reasonable best efforts (which efforts shall not require Manager to
expend any of its own funds) to comply with and abide by all applicable Legal
Requirements pertaining to its operation of the Inn (except for certain Legal
Requirements which are Owner's responsibility under Section 5.03 and Section
11.08 hereof), and shall make or cause to be made such routine maintenance,
repairs and minor alterations as it determines are necessary for such purposes.
The phrase "routine maintenance, repairs, and minor alterations" as used in this
Section 5.01 shall include only those which are normally expensed under
generally accepted accounting principles. The cost of such maintenance, repairs
and alterations shall be paid from Gross Revenues (and not from the Reserve) and
shall be treated as a Deduction.

     5.02 Repairs, Maintenance and Equipment Replacements to be Paid from
Reserve

     A. Manager shall establish a reserve account (the "Reserve"), in a bank or
similar institution reasonably acceptable to both Manager and Owner, to cover
the cost of:

          1. Replacements, renewals and additions to the FF&E at the Inn; and

          2. Routine Capital Expenditures.

     B. During the period from the Effective Date to the expiration of the
thirteenth (13th) full Accounting Period after the Effective Date, Manager shall
transfer into the Reserve an amount equal to three percent (3%) of Gross
Revenues for such period; during the period from the beginning of the fourteenth
(14th) full Accounting Period to the expiration of the twenty-sixth (26th) full
Accounting Period, Manager shall transfer into the Reserve an amount equal to
four percent (4%) of Gross Revenues for each such Accounting Period; commencing
with the beginning of the twenty-seventh (27th) full Accounting Period and for
all Accounting Periods thereafter, subject to the provisions of Section 5.02.E.,
below, Manager shall transfer into the Reserve an amount equal to five percent
(5%) of Gross Revenues for each such Accounting Period. Transfers into the
Reserve shall be made at the time of each interim accounting

                                       13

<PAGE>

described in Section 4.01 hereof. All amounts transferred to the Reserve shall
be deducted from Gross Revenues in determining Operating Profit and shall be
deposited in the special Reserve account described in Section 5.02.A.

     C. Manager shall from time to time make such (1) replacements and renewals
to the FF&E of the Inn, and (2) Routine Capital Expenditures, as it deems
necessary, up to the balance in the Reserve. No expenditures will be made in
excess of said balance without the approval of Owner. At the end of each Fiscal
Year, any amounts remaining in the Reserve shall be carried forward to the next
Fiscal Year. Proceeds from the sale of FF&E no longer necessary to the operation
of the Inn shall be added to the Reserve. The Reserve will be kept in an
interest-bearing account, and any interest which accrues thereon shall be
retained in the Reserve. Neither (1) proceeds from the disposition of FF&E, nor
(2) interest which accrues on amounts held in the Reserve, shall (a) result in
any reduction in the required contributions to the Reserve set forth in Section
5.02.B. above, nor (b) be included in Gross Revenues.

     D. Manager shall prepare an estimate ("Repairs and Equipment Estimate") of
the expenditures necessary for (1) replacements, renewals and additions to the
FF&E of the Inn, and (2) Routine Capital Expenditures during the ensuing Fiscal
Year and shall deliver the Repairs and Equipment Estimate to Owner at the same
time it submits the Annual Operating Projection described in Section 4.04. The
Repairs and Equipment Estimate shall also indicate the estimated time schedule
for making such replacements, renewals and expenditures. Owner shall have thirty
(30) days after receipt to review and comment on such Repairs and Equipment
Estimate. Manager shall consider in good faith Owner's comments regarding the
Repairs and Equipment Estimate, provided that Owner's comments are consistent
with maintaining System Standards and acknowledging that FF&E replacements occur
at regular cycles for soft goods and case goods, which cycles are incorporated
in System Standards. Owner shall have the right to approve any individual
expenditure in the Repair and Equipment Estimate of $10,000 (as adjusted by the
GDP Deflator) or more, and in the event Owner disapproves any such individual
expenditure, Owner will provide Manager in writing with the specific reasons for
its disapproval within such thirty (30) day period; provided, however, Owner
shall not withhold its approval of any Routine Capital Expenditures or any
replacements, renewals and additions to the FF&E that are required, in Manager's
reasonable judgment, to keep the Inn in a first-class condition at least in
accordance with System Standards or otherwise required for the continued safe
and orderly operation of the Inn. Thereafter, in the thirty (30) day period
following Manager's receipt of Owner's disapproval of such individual
expenditure, the parties will attempt to resolve in good faith Owner's
objections and if one or more of Owner's objections have not been resolved as of
the end of such thirty (30) day period, such dispute shall be referred to the
Expert as provided in Section 11.21. FF&E Leases shall be subject to Section
1.08.

     E. As the Inn ages, these percentages may not be sufficient to keep the
Reserve at the levels necessary to make the replacements, renewals and additions
to the FF&E of the Inn, or to make the Routine Capital Expenditures which are
required to maintain the Inn in accordance with the System Standards therefor.
If the Repairs and Equipment Estimate prepared in good faith by Manager exceeds
the available funds in the Reserve, Owner shall:

                                       14

<PAGE>

          1. agree in writing to increase temporarily the annual percentage in
Section 5.02.B. to provide the additional funds required, or

          2. make a lump sum contribution to the Reserve in the necessary
amount; such amount (plus interest at the Prime Rate plus one percent (1%) per
annum) shall be fully repaid to Owner from Gross Revenues in equal installments
over the period of the next sixty-five (65) Accounting Periods, and such
installment repayments shall be Deductions.

     If Owner fails to elect one of the above alternatives within sixty (60)
days after Manager's request therefor, Owner shall be deemed to have elected the
alternative set forth in Section 5.02.E.1. above. If Owner elects the
alternative set forth in Section 5.02.E.2. above and fails to provide the
additional funds required thereunder within sixty (60) days after Owner's
receipt of Manager's request for additional funding, such failure shall
constitute an Event of Default by Owner.

     5.03 Major Repairs Alterations, Improvements, Renewals, and Replacements to
be Funded by Owner

     A. Manager shall prepare an annual estimate (the "Building Estimate") of
the expenses necessary for non-routine or major repairs, alterations,
improvements, renewals and replacements (which repairs, alterations,
improvements, renewals and replacements are not Routine Capital Expenditures) to
the Inn including, without limitation, the structure, the exterior facade, the
mechanical, electrical, heating, ventilating, air conditioning, plumbing or
vertical transportation elements of each of the Inn buildings, and other
non-routine repairs and maintenance to the Buildings. Manager shall not make any
expenditures for such purposes without the prior written consent of Owner unless
otherwise permitted herein. Manager shall submit the Building Estimate to Owner
for its approval at the same time the Annual Operating Projection is submitted.
Owner shall have thirty (30) days after receipt to review and approve such
Building Estimate, it being agreed that Owner shall not withhold its approval
with respect to Capital Expenditures as are required, in Manager's reasonable
judgment, to keep the Inn in a first-class, competitive, efficient and
economical operating condition in accordance with System Standards or otherwise
required for the continued safe and orderly operation of the Inn, including the
removal of Hazardous Materials in compliance with all Environmental Laws (as
more particularly described in Section 11.08). Manager shall be authorized to
take appropriate remedial action without receiving Owner's prior consent as
follows: (i) in an emergency threatening the Inn or the life or property of its
guests, invitees or employees; (ii) if the Capital Expenditures are necessary to
satisfy a Legal Requirement (subject to Owner's right to contest or oppose, by
appropriate proceedings, any such Legal Requirement); or (iii) if the
continuation of the given condition will subject Manager and/or Owner to civil
or criminal liability. Manager shall cooperate with Owner in the pursuit of any
such action and shall have the right to participate therein.

     B. The cost of all repairs, alterations, improvements, renewals or
replacements referred to in this Section 5.03 (including the expenses incurred
by either Owner or Manager in connection with any civil or criminal proceeding
described above) shall be borne solely by Owner, and shall not be paid from
Gross Revenues nor from the Reserve.

                                       15

<PAGE>

     C. If Owner fails to approve and fund any proposed expenditures described
in Section 5.03.A. within sixty (60) days after the submission to Owner of the
request therefor, Manager shall have, in addition to any other rights it may
have under this Agreement, the option of terminating this Agreement upon six (6)
months' written notice to Owner.

     5.04 Ownership of Replacements

     All repairs, alterations, improvements, renewals or replacements made
pursuant to this Article V, and all amounts kept in the Reserve, shall be the
property of Owner, subject to Manager's rights to such funds as otherwise
provided in this Agreement.

     5.05 Design Specifications

     Subject to brand design standards generally employed for the System, with
respect to any capital expenditure programs submitted to Owner by Manager, Owner
shall have the right to choose in its reasonable discretion one prototype
package for such capital expenditure program from the variety of standard
prototype packages available to complete such program. With respect to custom
design packages that fall outside the scope of the then-current brand design
standards and prototype packages generally employed for the System, Owner and
Manager must mutually agree upon the details of such custom design packages,
including design specifications.

     5.06 Management of Hotel Renovation and Construction Projects

     Owner shall have the right to manage the construction of any repair,
refurbishment (including FF&E replacement), renovation or construction project
at the Inn, that exceeds a total budgeted cost of Five Hundred Thousand Dollars
($500,000), as adjusted by the GDP Deflator; provided, however, that (i)
Marriott International Design & Construction Services, Inc. be allowed to bid on
all projects funded from the Reserve; (ii) prior to commencement of a renovation
or construction project, Owner shall submit to Manager's Hotel Design Review
Committee (or such similar committee), for its approval, all project plans,
drawings and specifications and shall ensure that the final plans, drawings and
specifications pursuant to which the project is undertaken conform to those
approved by such committee; (iii) all materials used and quality of installation
and finish shall be equal to or better than those required by System Standards;
(iv) the contractors, architects and other consultants utilized by Owner shall
be subject to the approval of Manager (based upon reputation and experience) and
shall be fully insured and bonded to the reasonable satisfaction of Manager; (v)
the project shall not be deemed completed until Manager, in its reasonable
judgment, certifies that the renovation or construction work conforms with all
project plans, drawings, and specifications approved by Manager; and (vi) Owner
shall work cooperatively with Manager to minimize interruption to Inn
operations, and to the experience of the Hotel's guests, from the project. Any
construction project or Inn renovation that has a total budgeted cost of Five
Hundred Thousand Dollars ($500,000), or less, as adjusted by the GDP Deflator,
shall be managed through Marriott International Design & Construction Services,
Inc. or such other design and construction firm selected by Manager.

     5.07 Completion and Funding of Property Improvement Plan.

                                       16

<PAGE>

     Owner agrees to complete, or cause to be completed, the renovation,
construction, furnishing and equipping of the Inn in accordance with the
Property Improvement Plan attached hereto as Exhibit E (the "PIP"), pursuant to
the terms and conditions therein no later than June 30, 2004. Owner further
agrees that all renovation, construction, furnishing and equipping of the Inn
pursuant to the PIP shall be in accordance with the requirements of Section 5.06
of this Agreement, System Standards, and all local, state and federal laws,
codes, statutes, rules and regulations that are applicable to the renovation and
operation of the Inn. Owner shall provide from Owner's own funds all funding
required to complete the renovation, construction, furnishing and equipping of
the Inn in accordance with the PIP; no funds from Gross Revenues or the Reserve
shall be used to complete the work items set forth in the PIP. Owner and Manager
agree that a failure by Owner to timely complete all of the work items set forth
in the PIP on or before June 30, 2004 shall constitute an Event of Default.

                                   ARTICLE VI

                                    INSURANCE

     6.01 Property Insurance

     A. Manager shall, commencing with the Effective Date and for the duration
of the Term, procure and maintain, using funds deducted from Gross Revenues in
determining Operating Profit, a minimum of the following insurance:

          1. Insurance on the Inn (including contents) against loss or damage by
all perils included in "all risk" (as such term is commonly used in the
insurance industry) coverage, in an amount not less than one hundred percent
(100%) of the replacement cost thereof, except that if such 100% replacement
cost coverage is not available on reasonable rates and terms, then such
insurance shall be in an amount not less than ninety percent (90%) of the
replacement cost thereof (less excavation and foundation costs), of the Inn;

          2. Earthquake (except in California) and flood insurance, if available
on reasonable rates and terms, to be determined at the discretion of Manager;

          3. Insurance against loss or damage from explosion of boilers,
pressure vessels, pressure pipes and sprinklers, to the extent applicable,
installed in the Inn;

          4. Business interruption insurance covering loss of profits and
necessary continuing expenses for interruptions caused by any occurrence covered
by the insurance referred to in Section 6.01.A.1, 2 and 3, for a period of not
less than one (1) year after the occurrence, of a type and in amounts and with
such deductible limits as are generally established by Manager at the other inns
it owns or manages under the Marriott Residence Inn name in the United States.

                                       17

<PAGE>

     B. All policies of insurance required under Section 6.01. A. 1, 2, 3 and 4
shall insure Owner, Manager, and the holder of the first mortgage indebtedness
with respect to the Inn (a "First Mortgage"); and any losses thereunder shall be
payable to the parties as and to the extent their respective interests, if any,
may appear.

     C. Any Mortgage on the Inn shall contain provisions to the effect that
proceeds of the insurance policies required to be carried under Section 6.01
shall be available for repair and restoration of the Inn.

     6.02 Operational Insurance

     Manager shall, commencing with the Effective Date and for the duration of
the Term, procure and maintain, using funds deducted from Gross Revenues in
determining Operating Profit, with insurance companies approved by Owner the
following insurance:

     A. Workers' compensation and employer's liability insurance as may be
required under applicable laws covering all of Manager's employees at the Inn,
with such deductible limits or self-insured retentions as are generally
established by Manager at the other inns it owns or manages under the "Residence
Inn by Marriott" name in the United States;

     B. Fidelity bonds, with reasonable limits and deductibles to be determined
by Manager, covering its employees in job classifications normally bonded in the
other inns it owns or manages under the "Residence Inn by Marriott" name in the
United States or as otherwise required by law, and comprehensive crime insurance
to the extent Manager and Owner mutually agree it is necessary for the Inn;

     C. Comprehensive general public liability insurance against claims for
personal injury, death or property damage occurring on, in, or about the Inn,
and automobile insurance on vehicles operated in conjunction with the Inn, with
a combined single limit of not less than Twenty-five Million Dollars
($25,000,000) for each occurrence for personal injury, death and property
damage, with such deductible limits or self-insured retentions as are generally
established by Manager at the other inns it owns or manages under the "Residence
Inn by Marriott" name in the United States; if Manager feels in its reasonable
discretion that higher limits are appropriate, it will obtain them; and

     D. Such other insurance in amounts as Manager in its reasonable judgment
deems advisable for protection against claims, liabilities and losses arising
out of or connected with the operation of the Inn or as reasonably required by
Owner's lenders holding Qualified Mortgages on the Inn.

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<PAGE>

     6.03 Coverage

     All insurance described in Sections 6.01 and 6.02 may be obtained by
Manager by endorsement or equivalent means under its or Marriott's blanket
insurance policies, provided that such blanket policies substantially fulfill
the requirements specified herein. Deductible limits and self-insured retentions
shall be as provided in the blanket policies covering the inns owned or managed
by Manager under the "Residence Inn by Marriott" name in the United States. In
addition, Manager may self-insure workers' compensation insurance (if it has
legally qualified to do so) or otherwise retain such risks or portions thereof
as it does with respect to other inns it owns or manages under the "Residence
Inn by Marriott" name in the United States.

     6.04 Costs and Expenses

     Insurance premiums and any costs or expenses with respect to the insurance
described in this Article VI shall be Deductions in determining Operating
Profit. Premiums on policies for more than one year shall be charged pro rata
against Gross Revenues over the period of the policies. The expenses incurred in
maintaining Manager's self-insurance program shall be charged on an equitable
basis to the inns participating in such programs. Any reserves, losses, costs,
damages or expenses which are uninsured, or fall within deductible limits, shall
be treated as a cost of insurance and shall be Deductions in determining
Operating Profit. Upon Termination, an escrow fund in an amount reasonably
acceptable to Manager (which amount, when funded, shall thereafter be final as
between Owner and Manager) shall be established from Gross Revenues (or, if
Gross Revenues are not sufficient, with funds provided by Owner) to cover the
amount of any deductible limits and all other costs which will eventually have
to be paid by Manager with respect to pending or contingent claims, including
those which arise after Termination for causes arising during the term of the
Agreement.

                                   ARTICLE VII

                                DAMAGE AND REPAIR

     7.01 Damage and Repair

     A. If, during the Term, the Inn is damaged or destroyed by fire, casualty
or other cause, Owner shall, at its cost and expense and with all reasonable
diligence, repair or replace the damaged or destroyed portion of the Inn to the
same condition as existed previously and Manager shall have the right to
discontinue operating the Inn to the extent it deems necessary to comply with
applicable law, ordinance, regulation or order or as necessary for the safe and
orderly operation of the Inn. To the extent available, proceeds from the
insurance described in this Agreement shall be applied to such repairs or
replacements. Notwithstanding the foregoing, Owner shall not be obligated to
repair or replace the damaged or destroyed portion of the Inn if one or more of
the following is true: (i) the Inn is so badly damaged or destroyed that it
cannot reasonably be repaired or replaced within eighteen (18) months of the
date on which the construction work relating to the repair and/or replacement
would begin; (ii) with respect to insurance obtained by Manager under Section
6.01, the proceeds of such insurance available for

                                       19

<PAGE>

such repair or replacement are less than ninety percent (90%) of the estimated
repair and replacement costs; or (iii) the remainder of the Term is less than
ten (10) years and, upon Owner's request, Manager fails to agree to extend the
Term to a date which is at least ten (10) years after the estimated date of the
completion of such repair and/or replacement. If Owner elects not to repair or
replace said damaged portion of the Inn for one or more of the foregoing
reasons, it shall so notify Manager by written notice within ninety (90) days
after the date of the casualty.

     B. In the event damage or destruction to the Inn from any cause materially
and adversely affects the operation of the Inn and (i) Owner fails to promptly
commence and complete the repairing, rebuilding or replacement of the same as
required by Section 7.01.A. so that the Inn shall be substantially the same as
it was prior to such damage or destruction, Manager may, at its option, elect to
either undertake such work for the account of Owner, terminate this Agreement by
written notice to Owner and this Agreement shall terminate on the date that is
sixty (60) days after receipt of such written notice by Owner, and/or pursue all
other rights and remedies pursuant to this Agreement; or (ii) Owner notifies
Manager within the time period set forth in Section 7.01.A. above, that Owner
will not repair or replace such damage for one or more of the reasons set forth
in Section 7.01.A., Manager may, at its option, terminate this Agreement by
written notice to Owner and this Agreement shall terminate on the date that is
sixty (60) days after receipt of such written notice by Owner.

     7.02 Condemnation

     A. In the event all or substantially all of the Inn shall be taken in any
eminent domain, condemnation, compulsory acquisition, or similar proceeding by
any competent authority for any public or quasi-public use or purpose, or in the
event a portion of the Inn shall be so taken, but the result is that it is
unreasonable to continue to operate the Inn in accordance with the standards
required by this Agreement, this Agreement shall terminate. Owner and Manager
shall each have the right to initiate such proceedings as they deem advisable to
recover any compensation to which they may be entitled.

     B. In the event a portion of the Inn shall be taken by the events described
in Section 7.02.A., or the entire Inn is affected but on a temporary basis, and
the result is not to make it unreasonable to continue to operate the Inn, this
Agreement shall not terminate. However, so much of any award for any such
partial taking or condemnation as shall be necessary to render the Inn
equivalent to its condition prior to such event shall be used for such purpose,
and the balance of such award shall be distributed in accordance with the
provisions of a Qualified Mortgage; provided, however, that such balance shall
be deemed to be included in Gross Revenues. Manager shall have the right to
discontinue operating the Inn to the extent it deems necessary for the safe and
orderly operation of the Inn.

                                       20

<PAGE>

                                  ARTICLE VIII

                              OWNERSHIP OF THE INN

     8.01 Ownership of the Inn

     A. Owner hereby covenants that (i) Owner holds leasehold title to the Site
pursuant to the Hotel Lease; (ii) Landlord holds good and marketable fee title
to the Site; and (iii) Landlord will have, keep, and maintain good and
marketable fee title to the Inn free and clear of any and all liens,
encumbrances or other charges, except as follows:

          1. easements or other encumbrances (other than those described in this
Section 8.01 below) that do not adversely affect the operation of the Inn by
Manager and that are not prohibited pursuant to Section 8.04 of this Agreement,
including, without limitation, (i) any encumbrances or other defects of title
subject to which title was conveyed to Landlord, or (ii) liens, encumbrances or
other charges resulting from Manager's acts that are the fault of Manager
pursuant to Section 8.05.

          2. Qualified Mortgages; or

          3. liens for taxes, assessments, levies or other public charges not
yet due or due but not yet payable.

     B. Owner (and its Affiliates) shall pay and discharge, or cause to be paid
and discharged, on or before the due date, any and all (i) payments due under
any Mortgage with respect to the Inn; and (ii) any rent due under the Hotel
Lease. Owner shall indemnify, defend, and hold Manager harmless from and against
all claims, Litigation and damages arising from the failure to make any such
payments as and when required; and this obligation of Owner shall survive
Termination. Manager shall have no responsibility for payment of debt service or
rent due with respect to the Inn, from Gross Revenues or otherwise, and such
responsibility shall be solely that of Owner (and its Affiliates).

     C. Owner covenants that Manager shall quietly hold, occupy and enjoy the
Inn in accordance with the terms of this Agreement throughout the Term hereof
free from hindrance, ejection or molestation by Owner or any other party
claiming under, through or by right of Owner. Owner agrees to pay and discharge
any payments and charges and, at its expense, to prosecute all appropriate
actions, judicial or otherwise, necessary to assure such free and quiet
occupation.

     8.02 Mortgages

     A. Owner shall be permitted to encumber the Inn and/or the Site with any
Mortgage, provided that such Mortgage meets all of the following requirements:

                                       21

<PAGE>

          1. The proposed Mortgage is from an Institutional Lender and is on
commercially reasonable terms and conditions;

          2. As of the date of the proposed financing, the aggregate principal
balance of all Mortgages encumbering the Inn, including the proposed Mortgage,
shall be no greater than the lesser of: (x) seventy percent (70%) of the fair
market value of the Inn; or (y) the dollar amount obtained by (a) dividing the
average annual Operating Profit for the twenty-six (26) most recent full
Accounting Periods by the Coverage Ratio; then (b) multiplying the result of
clause (a) by the Capitalization Multiple; and

          3. Owner, Manager and the holder of such Mortgage shall have entered
into a Subordination Agreement (to be recorded in the real property records in
the jurisdiction where the Site is located) as further described in Section 8.03
below.

     B. For purposes of this Section 8.02, the fair market value of the Inn
shall be (i) as set forth in any then current appraisal obtained or accepted by
an Institutional Lender in connection with a Qualified Mortgage, or (ii) in the
absence of such an appraisal, as reasonably determined by Owner and Manager. If
Owner and Manager do not agree on such fair market value, either party may
request that a licensed appraiser (reasonably acceptable to both parties) shall
determine the fair market value of the Inn. If the parties cannot agree on an
appraiser within thirty (30) days after the date on which either party notifies
the other that it wishes to have the fair market value of the Inn be determined
by an appraisal, either party may elect to have such fair market value
determined by the Expert pursuant to Section 11.21. Any Mortgage which meets all
of the requirements set forth in this Section 8.02 shall be referred to in this
Agreement as a "Qualified Mortgage."

     C. In the event Manager receives any reasonable request for information on
the Inn from the holder of any Qualified Mortgage (and including any Affiliate
of Manager providing any financing in connection with the Inn), Owner agrees
that Manager is hereby authorized to provide or distribute such information
directly to such lender.

     D. Without altering any of Manager's rights under this Agreement, and
provided that none of Manager's rights under this Agreement are adversely
affected, Manager shall cooperate, at no cost to Manager, in good faith with
Owner and its Mortgagee in connection with any Qualified Mortgage including the
negotiation and execution of any other agreements customarily required by
Institutional Lenders in connection with the Qualified Mortgage.

     8.03 Subordination, Non-Disturbance and Attornment

     A. Owner will obtain from any Mortgagee which holds a Mortgage as of the
Effective Date (or thereafter) an instrument (the "Subordination Agreement"),
reasonably satisfactory in all respects to Manager and such Mortgagee, which
shall be recordable in the jurisdiction where the Inn is located, pursuant to
which:

          1. This Agreement and any extensions, renewals, replacements or
modifications thereto, and all right and interest of Manager in and to the Inn,
shall be subject and

                                       22

<PAGE>

subordinate to such Mortgage, with notice and opportunity to cure rights and
post-default cure rights in favor of Mortgagee;

          2. Manager shall be obligated to each of the Subsequent Owners (as
defined below) to perform all of the terms and conditions of this Agreement for
the balance of the remaining Term hereof, with the same force and effect as if
such Subsequent Owner were the Owner; and

          3. In the event that there is a foreclosure of such Mortgage (or a
deed in lieu of foreclosure), or other exercise by such Mortgagee (or its
successor) of its remedies in the event of default, in connection with which
title or possession of the Inn is transferred to the Mortgagee (or its designee)
or to a purchaser at foreclosure or to a subsequent purchaser from the Mortgagee
(or from its designee) (all of the foregoing shall collectively be referred to
as "Subsequent Owners"), this Agreement shall not be terminated and Manager
shall not be disturbed in its rights under this Agreement.

     B. In the event that the Subordination Agreement contains provisions
requiring Manager (upon a default under the Mortgage, or upon various other
stipulated conditions) to pay certain amounts which are otherwise due to Owner
under this Agreement to the Mortgagee or its designee (rather than to Owner),
Owner hereby gives its consent to such provisions, which consent shall be deemed
to be irrevocable until the entire debt secured by the Mortgage has been
discharged.

     C. Prior to encumbering the Inn or the Site with any Mortgage, Owner shall
be obligated to obtain from the proposed Mortgagee an executed, recordable
Subordination Agreement. Manager agrees to execute such Subordination Agreement
for the benefit of such proposed Mortgagee. If Owner encumbers the Inn or the
Site with a Mortgage without first obtaining such a Subordination Agreement from
the Mortgagee: (i) it shall be a Default of Owner under this Agreement,
entitling Manager to all of the remedies set forth in Article IX; and (ii) in
addition, Manager shall thereafter have a continuing right to terminate this
Agreement upon sixty (60) days' prior written notice to Owner. In addition, any
Mortgage described in the preceding sentence shall be subject and subordinate to
Manager's rights under this Agreement.

     D. Notwithstanding the subordination of this Agreement which is described
in Section 8.03.A.1., if, in connection with the exercise by any Mortgagee of
its remedies under any Mortgage, there is a material adverse impact upon the
operation of the Inn by Manager in accordance with the System Standards, the
foregoing shall be deemed to be an Event of Default by Owner entitling Manager
to all of the remedies set forth in Article IX.

     8.04 No Covenants, Conditions or Restrictions

     A. Owner covenants that, as of the Effective Date and during the Term,
there will not be (unless Manager has given its prior consent thereto) any
covenants, conditions or restrictions, including reciprocal easement agreements
or cost-sharing arrangements (individually or collectively referred to as
"CC&R(s)") affecting the Site or the Inn which: (i) would prohibit or limit
Manager from operating the Inn in accordance with the System Standards; (ii)
would allow

                                       23

<PAGE>

the Inn facilities (for example, parking spaces) to be used by persons other
than guests, invitees or employees of the Inn; (iii) would allow the Inn
facilities to be used for specified charges or rates which have not been
approved by Manager; or (iv) would subject the Inn to exclusive arrangements
regarding food and beverage operation or retail merchandise.

     B. Unless otherwise agreed by both Owner and Manager, all financial
obligations imposed on Owner or on the Inn pursuant to any CC&Rs hereafter
affecting the Inn shall be paid by Owner from its own funds, and not from Gross
Revenues or from the Reserve. Manager's consent to any such CC&R shall be
conditioned (among other things) on satisfactory evidence that: (i) the CC&R in
question provides a reasonable and cost-effective benefit to the operation of
the Inn; (ii) the costs incurred (including administrative expenses) pursuant to
such CC&R will be both reasonable and allocated to the Inn on a reasonable
basis; and (iii) no capital expenditures incurred pursuant to said CC&R will be
paid from Gross Revenues or from the Reserve (but rather, such capital
expenditures will be paid separately by Owner).

     8.05 Liens; Credit

     Manager and Owner shall use commercially reasonable efforts to prevent any
liens from being filed against the Inn which arise from any maintenance,
repairs, alterations, improvements, renewals or replacements in or to the Inn,
and shall cooperate fully in obtaining the release of any such liens. If the
lien was not occasioned by the fault of either party, the cost of releasing any
lien shall be treated the same as the cost of the matter to which it relates. If
the lien arises as a result of the fault of either party, then the party at
fault shall bear the cost of obtaining the lien release. In no event shall
either party borrow money in the name of or pledge the credit of the other.

                                   ARTICLE IX

                                    DEFAULTS

     9.01 Events of Default

     Each of the following shall, to the extent permitted by applicable law,
constitute a "Default" under this Agreement.

     A. The filing of a voluntary petition in bankruptcy or insolvency or a
petition for reorganization under any bankruptcy law by either party, or the
admission by either party that it is unable to pay its debts as they become due.
Upon the occurrence of any Default by either party (referred to as the
"defaulting party") as described under this Section 9.01.A., said Default shall
be deemed an "Event of Default" under this Agreement.

     B. The consent to an involuntary petition in bankruptcy or the failure to
vacate, within ninety (90) days from the date of entry thereof, any order
approving an involuntary petition by either party. Upon the occurrence of any
Default by either party as described under this Section 9.01.B., said Default
shall be deemed an "Event of Default" under this Agreement.

                                       24

<PAGE>

     C. The entering of an order, judgment or decree by any court of competent
jurisdiction, on the application of a creditor, adjudicating either party as
bankrupt or insolvent or approving a petition seeking reorganization or
appointing a receiver, trustee, or liquidator of all or a substantial part of
such party's assets, and such order, judgment or decree's continuing unstayed
and in effect for an aggregate of sixty (60) days (whether or not consecutive).
Upon the occurrence of any Default by either party as described under this
Section 9.01.C., said Default shall be deemed an "Event of Default" under this
Agreement.

     D. The failure of either party to make any payment required to be made in
accordance with the terms of this Agreement, as of the due date as specified in
this Agreement. Upon the occurrence of any Default by either party as described
under this Section 9.01.D., said Default shall be deemed an "Event of Default"
under this Agreement if the defaulting party fails to cure such Default within
ten (10) days after receipt of written notice from the non-defaulting party
demanding such cure.

     E. Owner or any of Owner's Affiliates is or becomes a Specially Designated
National or Blocked Person. Upon the occurrence of any Default as described in
this Section 9.01.E., said Default shall be deemed an "Event of Default" under
this Agreement.

     F. The failure of either party to perform, keep or fulfill any of the other
covenants, undertakings, obligations or conditions set forth in this Agreement,
and the continuance of such default for a period of thirty (30) days after the
defaulting party's receipt of written notice from the non-defaulting party of
said failure. Upon the occurrence of any Default by either party as described
under this Section 9.01.F., said Default shall be deemed an "Event of Default"
under this Agreement if the defaulting party fails to cure the Default within
thirty (30) days after receipt of written notice from the non-defaulting party
demanding such cure, or, if the Default is such that it cannot reasonably be
cured within said thirty (30) day period of time, if the defaulting party fails
to commence the cure of such Default within said thirty (30) day period of time
or thereafter fails to diligently pursue such efforts to completion.

     9.02 Remedies

     Upon the occurrence of an Event of Default, the non-defaulting party shall
have the right to pursue any one or more of the following courses of action: (1)
if the Event of Default has a material adverse impact on the non-defaulting
party, to terminate this Agreement by written notice to the defaulting party,
which termination shall be effective as of the effective date which is set forth
in said notice, provided that said effective date shall be at least thirty (30)
days after the date of said notice and further provided that, if the defaulting
party is Manager, the foregoing period of thirty (30) days shall be extended to
seventy-five (75) days (or such longer period of time as may be necessary under
Legal Requirements pertaining to termination of employment); (2) to institute
forthwith any and all proceedings permitted by law or equity including, without
limitation (but subject to the provisions of Section 11.23 hereof), actions for
specific performance and/or damages; and/or (3) to avail itself of the remedies
described in Section 9.03.

                                       25

<PAGE>

     9.03 Additional Remedies

     A. Upon the occurrence of a Default by either party under the provisions of
Section 9.01.D., the amount owed to the non-defaulting party shall accrue
interest, at an annual rate equal to the Prime Rate plus three (3) percentage
points, from and after the date on which the Default occurred.

     B. Upon the occurrence of a Default by Owner under the provisions of
Section 9.01.D., Manager shall have the right (without affecting Manager's other
remedies under this Agreement) to withdraw the amount (plus accrued interest as
described in Section 9.03.A. above) owed to Manager by Owner from distributions
otherwise payable to Owner pursuant to Section 3.02 and Section 4.01 of this
Agreement.

     C. Manager and/or any Affiliate of Manager shall be entitled, in case of
any breach of the covenants of Section 11.11.E., Section 11.11.F. or Section
11.12 by Owner or others claiming through it, to injunctive relief and to any
other right or remedy available at law or in equity.

     D. The remedies granted under Section 9.02 and Section 9.03 shall not be in
substitution for, but shall be in addition, to, any and all rights and remedies
available to the non-defaulting party (including, without limitation, injunctive
relief and damages) by reason of applicable provisions of law or equity and
shall survive Termination.

                                    ARTICLE X

                               ASSIGNMENT AND SALE

     10.01 Assignment

     A. Manager shall not assign or transfer its interest in this Agreement
without the prior written consent of Owner; provided, however, that Manager
shall have the right, without Owner's consent, to (1) assign its interest in
this Agreement to Marriott or any Affiliate of Marriott which (i) has adequate
experience in managing hotels and has adequate capital to conduct its business
as Manager under this Agreement, and (ii) agrees in writing to be bound by and
comply with the terms of this Agreement (such written agreement to be delivered
to Owner), (2) lease shops or grant concessions at the Inn in accordance with
the terms hereof so long as the terms of any such leases or concessions do not
exceed the Term, (3) assign its interest in this Agreement in connection with a
merger or consolidation or a sale of all or substantially all of the assets of
Manager or Marriott, and (4) assign its interest in this Agreement in connection
with a merger or consolidation or a sale of all or substantially all of the
System assets owned by Manager, Marriott or any Affiliate of Manager or
Marriott, if the successor or purchaser (i) has adequate experience in managing
hotels and has adequate capital to conduct its business as Manager under this
Agreement, and (ii) agrees in writing to be bound by and comply with the terms
of this Agreement (such written agreement to be delivered to Owner).

                                       26

<PAGE>

     B. Owner shall not assign or transfer its interest in this Agreement
without the prior written consent of the Manager; provided, however, that Owner
shall have the right, without such consent, to (1) conditionally assign this
Agreement as security for a Mortgage of the Inn in accordance with this
Agreement, (2) assign its interest in this Agreement in connection with a Sale
of the Inn which complies with the provisions of Section 10.02 of this
Agreement, (3) assign its interest in this Agreement in connection with any
sale, assignment, transfer or other disposition of the Inn by Owner or Landlord
to an Affiliate of Owner, subject to compliance with the provisions of Section
10.02.A, and (4) assign its interest in this Agreement in connection with a
merger or consolidation or a sale of all or substantially all of the assets of
Apple Hospitality Five, Inc., subject to the provisions of Section 10.02.A.

     C. In the event either party consents to an assignment of this Agreement by
the other, no further assignment shall be made without the express consent in
writing of such party, unless such assignment may otherwise be made without such
consent pursuant to the terms of this Agreement. An assignment by either Owner
or Manager of its interest in this Agreement shall not relieve Owner or Manager,
as the case may be, from its respective obligations under this Agreement, and
shall inure to the benefit of, and be binding upon, its respective successors,
heirs, legal representatives, or assigns.

     10.02 Sale of the Inn

     A. Neither Owner nor Landlord shall enter into any Sale of the Inn to any
Person (or any Affiliate of any Person) who (1) does not, in Manager's
reasonable judgment, have sufficient financial resources to fulfill Owner's
obligations under this Agreement; (2) is known in the community as being of bad
moral character, or has been convicted of a felony in any state or federal
court, or is in control of or controlled by Persons who have been convicted of
felonies in any state or federal court; (3) either directly or indirectly, has
an ownership interest (other than the ownership of not more than five percent
(5%) of the outstanding common stock of any publicly-held company) in a brand of
hotels totaling at least twenty (20) hotels, or in a group of hotels totaling at
least twenty (20) hotels that are not affiliated with a brand but that are
marketed and operated as a collective group, if such brand or group of hotels
competes with Manager, Marriott or any Affiliate thereof; or (4) such Person or
any of its Affiliates is a Specially Designated National or Blocked Person. An
individual or entity shall not be deemed to be in the business of operating
hotels or other lodging facilities in competition with Manager, Marriott or any
Affiliate solely by virtue of (x) the ownership of such hotels or other lodging
facilities, either directly or indirectly through subsidiaries, affiliates and
partnerships, or (y) holding a mortgage or mortgages secured by one or more
hotels or other lodging facilities. Furthermore, Owner shall not enter into a
Sale of the Inn if Owner is at the time in Default under the terms of this
Agreement.

     B. If Owner or Landlord decides to sell or lease the Inn to a third party,
then prior to offering the Inn for sale or lease or negotiating a Sale of the
Inn with any third party, Owner and Landlord will give Manager notice of such
decision ("Notice of Intent to Sell"), and Owner and Landlord, as applicable,
and Manager will, during the period of thirty (30) days after such notice,
attempt in good faith to negotiate a mutually satisfactory agreement for the
purchase of the Inn. For purposes of this Section 10.02.B., a sale to a third
party shall not include any transfer, sale or

                                       27

<PAGE>

assignment to a Mortgagee nor to a sale at Foreclosure under a Mortgage. If,
after the expiration of thirty (30) days following the date of Owner's notice of
its desire to sell or lease the Inn, Owner, Landlord and Manager have not
entered into a mutually acceptable agreement for the purchase or lease of the
Inn, Owner or Landlord shall be free, subject to the conditions of this Section
10.02, to sell or lease the Inn to a third party provided; (i) the Inn is to be
sold or leased in conjunction with other hotels not operated by Manager or its
Affiliates, or other hotels operated by Manager or it Affiliates but for which
Manager or such Affiliates do not have a right of first negotiation as described
in this Section 10.02.B; or (ii) the Inn is sold as a single asset or is sold in
conjunction with other hotels operated by Manager or its Affiliates for which
Manager or such Affiliates have a right of first negotiation as described in
this Section 10.02.B, and the price or rental for the Inn to such third party
has not been reduced by more than five percent (5%) of the price or rental which
Owner or Landlord offered to sell or rent the Inn to Manager. Notwithstanding
the foregoing, any sale or lease shall be subject to the following further
conditions:

          1. Owner and Landlord shall deliver a written notice (the "Notice of
Proposed Sale") (which Notice of Proposed Sale may be given concurrently with
the Notice of Intent to Sell), of the proposed Sale of the Inn to Manager
stating: (i) the name of the prospective purchaser or tenant, as the case may
be; (ii) the price or rental; and (iii) the terms and conditions of such
proposed Sale of the Inn, together with all other information reasonably
requested by Manager.

          2. Within thirty (30) days after the date of receipt of such Notice of
Proposed Sale from Owner and such other information, if Manager and Landlord or
Owner have not entered into a mutually acceptable agreement for the purchase or
lease of the Inn, Manager shall elect, by written notice to Owner and Landlord,
one of the following two (2) alternatives:

               a. To consent to such Sale of the Inn and to the assignment of
this Agreement to such purchaser or tenant, provided that concurrently with the
closing thereof, the purchaser or tenant, as the case may be, shall, by
appropriate instrument in form satisfactory to Manager, assume all of Owner's
obligations under this Agreement. An executed original of such assumption
agreement shall be delivered to Manager; or

               b. To not consent to such proposed Sale of the Inn, based upon
such Sale of the Inn not being in compliance with Section 10.02.A. above,
specifying in reasonable detail the reasons for such decision, in which event
such Sale of the Inn shall not be permitted hereunder and it shall be an Event
of Default for Owner to proceed with such Sale of the Inn.

     C. If Manager shall fail to elect one of the alternatives set forth in
Section 10.02.B.2. above, within said thirty (30) day period, such failure shall
be deemed to constitute an election to consent under Section 10.02.B.2.a. above,
and the provisions thereof shall prevail as if Manager had consented in writing
thereto. Any proposed Sale of the Inn with respect to which a Notice of Proposed
Sale has been delivered by Owner to Manager hereunder must be finalized within
one hundred eighty (180) days following the date of Manager's written notice in
response to such Notice of Proposed Sale. Failing such finalization, such Notice
of Proposed Sale, and any response thereto given by Manager, shall be null and
void and all of the provisions of

                                       28

<PAGE>

Section 10.02.B. and Section 10.02.C. must again be complied with before Owner
or Landlord, as applicable, shall have the right to finalize a Sale of the Inn
upon the terms contained in said Notice of Proposed Sale, or otherwise.

     D. If Manager consents (or is deemed to have consented) to the proposed
Sale of the Inn, then Manager shall have the option to require (in lieu of
receipt of the assumption agreement described in Section 10.02.B.2.a.) that such
purchaser or tenant enter into a new management agreement with Manager, which
new management agreement will be on all of the terms and conditions of this
Agreement except that the Initial Term and Renewal Term(s) of any such new
agreement shall consist only of the balance of the Initial Term and Renewal
Term(s) remaining under this Agreement at the time of execution of any such new
management agreement. Such new management agreement shall be executed by Manager
and such new owner at the time of closing of the Sale of the Inn, and a
memorandum of such new management agreement shall be executed by the parties and
recorded immediately following recording of the deed or memorandum of lease (or
assignment) and prior to recordation of any other documents.

     E. Each party hereby represents and warrants to the other that neither such
party nor any of its Affiliates is a Specially Designated National or Blocked
Person. Owner hereby represents and warrants to Manager that its equity is
directly and (if applicable) indirectly owned as shown on Exhibit B. In
connection with the possibility of a Sale of the Inn achieved by means of a
transfer of the controlling interest in Owner or Landlord, Owner shall, from
time to time, within thirty (30) days after written request by Manager, furnish
Manager with a list of the names and addresses of the direct and indirect owners
of capital stock, partnership interest, or other proprietary interest of Owner
and Landlord, provided that Owner and Landlord shall not be required to provide
the names and addresses of shareholders of a public company.

     F. It is understood that no Sale of the Inn shall reduce, require any
increase or otherwise affect: (i) the current level of Working Capital; (ii) the
outstanding balance deposited in the Reserve; (iii) the outstanding balance in
any of the Operating Accounts maintained by Manager pursuant to this Agreement;
or (iv) Owner's Priority. If, in connection with any Sale of the Inn, the
selling Owner intends to withdraw, for its own use, any of the cash deposits
described in the preceding sentence, the selling Owner must obtain the
contractual obligation of the buying Owner to replenish those deposits (in the
identical amounts) simultaneously with such withdrawal. The selling Owner is
hereby contractually obligated to Manager to ensure that such replenishment in
fact occurs. The obligations described in this Section 10.02.F. shall survive
such Sale of the Inn and shall survive Termination.

     G. The terms and provisions of this Agreement shall be binding upon all
successors to Owner's and Landlord's interest in the Site and/or the Inn. Each
selling Owner shall be obligated to Manager to obtain from each buying Owner an
assumption (reasonably satisfactory to Manager) of this Agreement.

     H. To the extent permitted by applicable law, Manager shall have the right
(without prejudice to its rights to declare an Event of Default and seek damages
or other compensation) to terminate this Agreement, on thirty (30) days' written
notice, if title to or possession of the Inn is transferred by judicial or
administrative process (including, without limitation, a Foreclosure, or

                                       29

<PAGE>

a sale pursuant to an order of a bankruptcy court, or a sale by a
court-appointed receiver) to an individual or entity which would not qualify as
a permitted transferee under Section 10.02.A., regardless of whether or not such
transfer is the voluntary action of the transferring Owner, or whether (under
applicable law) the Owner is in fact the transferor.

                                   ARTICLE XI

                                  MISCELLANEOUS

     11.01 Right to Make Agreement

     Each party warrants, with respect to itself, that neither the execution of
this Agreement nor the finalization of the transactions contemplated hereby
shall violate any provision of law or judgment, writ, injunction, order or
decree of any court or governmental authority having jurisdiction over it;
result in or constitute a breach or default under any indenture, contract, other
commitment or restriction to which it is a party or by which it is bound; or,
require any consent, vote or approval which has not been taken, or at the time
of the transaction involved shall not have been given or taken. Each party
covenants that it has and will continue to have throughout the Term and any
extensions thereof, the full right to enter into this Agreement and perform its
obligations hereunder.

     11.02 Consents and Cooperation

     Wherever in this Agreement the consent or approval of Owner or Manager is
required, such consent or approval shall not be unreasonably withheld, delayed
or conditioned, shall be in writing and shall be executed by a duly authorized
officer or agent of the party granting such consent or approval. If either Owner
or Manager fails to respond within thirty (30) days to a request by the other
party for a consent or approval, such consent or approval shall be deemed to
have been given (except as otherwise provided in this Agreement). Additionally,
Owner agrees to cooperate with Manager by executing such leases, subleases,
licenses, concessions, equipment leases, service contracts and other agreements
negotiated in good faith by Manager and pertaining to the Inn that, in Manager's
reasonable judgment, should be made in the name of the Owner.

     11.03 Relationship

     In the performance of this Agreement, Manager shall act solely as an
independent contractor. Neither this Agreement nor any agreements, instruments,
documents, or transactions contemplated hereby shall in any respect be
interpreted, deemed or construed as making Manager a partner, joint venturer
with, or agent of, Owner. Owner and Manager agree that neither party will make
any contrary assertion, claim or counterclaim in any action, suit, Expert
resolution pursuant to Section 11.21, arbitration or other legal proceedings
involving Owner and Manager.

                                       30

<PAGE>

     11.04 Applicable Law

     This Agreement shall be construed under and shall be governed by the laws
of the State where the Inn is located, without regard to that state's conflict
of laws provisions.

     11.05 Recordation

     The terms and provisions of this Agreement shall run with the parcel of
land designated as the Site, and with Owner's interest therein, and shall be
binding upon all successors to such interest. Simultaneously with the execution
of this Agreement, the parties shall execute a recordable "Memorandum of Amended
& Restated Management Agreement," in the form which is attached hereto as
Exhibit C. Such memorandum shall be recorded or registered, at Manager's cost,
promptly following the Effective Date in the jurisdiction in which the Inn is
located. Upon Termination of this Agreement for any reason other than a default
by Owner, Manager shall, at its own expense, promptly record a release of any
such memorandum recorded hereunder.

     11.06 Headings

     Headings of articles and sections are inserted only for convenience and are
in no way to be construed as a limitation on the scope of the particular
articles or sections to which they refer.

     11.07 Notices

     Notices, statements and other communications to be given under the terms of
this Agreement shall be in writing and delivered by hand against receipt or sent
by certified or registered mail (with a copy by first class mail) or Express
Mail service, in each case postage prepaid, return receipt requested or by
nationally utilized overnight delivery service, addressed to the parties as
follows:

           To Owner:       Apple Hospitality Five Management, Inc.
                           c/o Apple REIT Companies
                           10 South Third Street
                           Richmond, Virginia 23219
                           Attn: Samuel F. Reynolds, Director of Acquisitions/
                                 Dispositions & Portfolio Management
                           Attn: General Counsel
                           Phone: (804) 344-8121
                           Fax:   (804) 344-8129

           To Manager:     Residence Inn by Marriott, Inc.
                           c/o Marriott International, Inc.
                           10400 Fernwood Road
                           Bethesda, Maryland 20817
                           Attn: Department 52/923-Lodging Operations
                           Phone: (301) 380-9555

                                       31

<PAGE>

                           Fax:   (301) 380-6727

           with copy to:   Residence Inn by Marriott, Inc.
                           c/o Marriott International, Inc.
                           10400 Fernwood Road
                           Bethesda, Maryland 20817
                           Attn: Dept. 51/911.95 - Global Asset Management
                           Phone: (301) 380-1380
                           Fax:   (301) 380-4700

or at such other address as is from time to time designated by the party
receiving the notice. Any such notice that is mailed in accordance herewith
shall be deemed received when delivery is received or refused, as the case may
be. Additionally, notices may be given by telephone facsimile transmission,
provided that an original copy of said transmission shall be delivered to the
addressee by nationally utilized overnight delivery service on the business day
following such transmission. Telephone facsimiles shall be deemed delivered on
the date of such transmission.

     11.08 Environmental Matters

     A. Owner hereby represents and warrants to Manager that, to Owner's actual
knowledge, as of the Effective Date, there are no Hazardous Materials (as
defined below) on any portion of the Site or the Inn, nor have any Hazardous
Materials been released or discharged on any portion of the Site or the Inn
except for Hazardous Materials, if any, described in that certain Environmental
Assessment of the Site and the Inn performed by Jones, Hill, McFarland & Ellis
and attached hereto as Exhibit F (the "JHM&E Environmental Assessment"). In
addition, Owner hereby represents and warrants that it has previously delivered
to Manager copies of all reports concerning environmental conditions which have
been received by Owner or any of its Affiliates. In the event of the discovery
of Hazardous Materials on any portion of the Site or in the Inn during the Term
(including, without limitation, any Hazardous Materials referenced in the JHM&E
Environmental Assessment), Owner shall promptly remove such Hazardous Materials,
together with all contaminated soil and containers, and shall otherwise remedy
the problem in accordance with (1) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as amended; (2)
the regulations promulgated thereunder, from time to time; (3) all federal,
state and local laws, rules and regulations (now or hereafter in effect) dealing
with the use, generation, treatment, storage, disposal or abatement of Hazardous
Materials; and (4) the regulations promulgated thereunder, from time to time
(collectively referred to as "Environmental Laws"). Owner shall indemnify,
defend and hold Manager harmless from and against all loss, costs, liability and
damage (including, without limitation, engineers' and attorneys' fees and
expenses, and the cost of Litigation) to the extent arising from the presence of
Hazardous Materials on the Site or in the Inn (including, without limitation,
any Hazardous Materials referenced in the JHM&E Environmental Assessment); and
this obligation of Owner shall survive Termination. "Hazardous Materials" shall
mean and include any substance or material containing one or more of any of the
following: "hazardous material," "hazardous waste," "hazardous substance,"
"regulated substance," "petroleum," "pollutant," "contaminant," "polychlorinated
biphenyls," "lead or lead-based paint" or

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<PAGE>

"asbestos" as such terms are defined in any applicable Environmental Law in such
concentration(s) or amount(s) as may impose clean-up, removal, monitoring or
other responsibility under the Environmental Laws, as the same may be amended
from time to time, or which may present a significant risk of harm to guests,
invitees or employees of the Inn.

     B. All costs and expenses of the aforesaid removal of Hazardous Materials
from the Site or the Inn (including, without limitation, any Hazardous Materials
referenced in the JHM&E Environmental Assessment), and of the aforesaid
compliance with all Environmental Laws, and any amounts paid to Manager pursuant
to the indemnity set forth in Section 11.08.A. (collectively, the "Environmental
Costs"), shall be paid by Owner from its own funds, and not from Gross Revenues
or from the Reserve. If the Environmental Costs exceed the combined Operating
Profit for the two full Fiscal Years immediately preceding the Fiscal Year(s) in
which such Environmental Costs are incurred, Owner shall provide written notice
to Manager thereof, and Manager shall have thirty (30) days from receipt of such
notice to elect by written notice to Owner to either (i) terminate this
Agreement in which event this Agreement shall terminate on the date that is
sixty (60) days after Owner's receipt of such written termination notice from
Manager; or (ii) increase Owner's Priority by an amount equal to twelve percent
(12%) of such Environmental Costs. If Manager does not provide notice of its
election to Owner, Manager shall be deemed to have elected to increase Owner's
Priority in accordance with Section 11.08.B(ii). If Manager elects, or is deemed
to have elected, to increase Owner's Priority in accordance with Section
11.08.B(ii), such increase shall be effective upon (and to the extent of) the
payment of such Environmental Costs. Notwithstanding anything to the contrary in
this Agreement, Environmental Costs shall not be added to Owner's Priority for
purposes of calculating the Performance Termination Threshold. Any dispute with
respect to such Environmental Costs shall be referred to the Expert as provided
in Section 11.21.

     11.09 Confidentiality

     Owner and Manager agree that the terms of this Agreement are strictly
confidential and will use their reasonable efforts to ensure that such matters
and information are not disclosed to any outside person or entities without the
prior written consent of the other party, except (1) as required by any law,
rule, regulation or judicial process, or by any regulatory or supervisory
authority having jurisdiction over the parties or their Affiliates or, (2) to
the extent necessary, (i) to obtain licenses, permits and other public
approvals, (ii) in connection with a financing of the Inn, Owner, Landlord or
any Affiliate thereof, (iii) in connection with a Sale of the Inn or other sale
of Owner, Landlord or any Affiliate thereof or its or their corporate assets,
(iv) in connection with a financing or sale of Manager, Marriott, or any
Affiliate thereof or its or their corporate assets, or (v) subject to the
provisions of Section 4.02, in connection with an audit or other investigation
conducted pursuant to this Agreement. Notwithstanding the foregoing or anything
to the contrary set forth herein, the terms of this Agreement shall not be
deemed confidential to the extent: (a) such information becomes generally
available to the public other than as a result of unauthorized disclosure by the
recipient or persons to whom such recipient has made the information available;
(b) the recipient can demonstrate that such information was received by such
recipient on a non-confidential basis, prior to receipt from the other party,
from a third party lawfully possessing and lawfully entitled to disclose such
information; (c) such confidential

                                       33

<PAGE>

information consists of aggregated historical financial information for the inns
in Owner's portfolio; and (d) the party seeking to disclose such confidential
information can demonstrate to the reasonable satisfaction of the other party
that the information sought to be disclosed is customarily disclosed by at least
80% of all hotel owners directly or indirectly owning hotels in the United
States.

     11.10 Projections

     Owner acknowledges that any written or oral projections, pro formas, or
other similar information that has been (prior to execution of this Agreement)
or will (during the Term) be provided by Manager or Marriott (or any Affiliate
of either) to Owner is for information purposes only, and that Manager,
Marriott, and any such Affiliate do not guarantee that the Inn will achieve the
results set forth in any such projections, pro formas, or other similar
information. Owner further acknowledges that any such projections, pro formas,
or other similar information are based on assumptions and estimates,
unanticipated events may occur subsequent to the date of preparation of such
projections, pro formas, and other similar information, and the actual results
achieved by the Inn are likely to vary from the estimates contained in any such
projections, pro formas, or other similar information and such variations might
be material.

     11.11 Actions to be Taken Upon Termination

     Upon a Termination, the following shall be applicable:

     A. Manager shall, within ninety (90) days after Termination, prepare and
deliver to Owner a final accounting statement with respect to the Inn, as more
particularly described in Section 4.01 hereof, along with a statement of any
sums due from Owner to Manager pursuant hereto, dated as of the date of
Termination. Within thirty (30) days of the receipt by Owner of such final
accounting statement, the parties will make whatever cash adjustments are
necessary pursuant to such final statement. The cost of preparing such final
accounting statement shall be a Deduction, unless the Termination occurs as a
result of a Default by either party, in which case the defaulting party shall
pay such cost. Manager and Owner acknowledge that there may be certain
adjustments for which the information will not be available at the time of the
final accounting and the parties agree to readjust such amounts and make the
necessary cash adjustments when such information becomes available; provided,
however, that all accounts shall be deemed final two (2) years after
Termination.

     B. Manager shall release and transfer to Owner any of Owner's funds which
are held or controlled by Manager with respect to the Inn with the exception of
funds to be held in accordance with Section 6.04.B. and Section 11.11.G. and
otherwise in accordance herewith.

     C. Manager shall make available to Owner such books and records respecting
the Inn (including those from prior years, subject to Manager's reasonable
records retention policies) as will be needed by Owner to prepare the accounting
statements, in accordance with the Uniform System of Accounts, for the Inn for
the year in which the Termination occurs and for any subsequent year.

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<PAGE>

     D. Manager shall (to the extent permitted by law) assign to Owner or to the
new manager all operating licenses and permits for the Inn which have been
issued in Manager's name (including liquor and restaurant licenses, if any);
provided that if Manager has expended any of its own funds in the acquisition of
any of such licenses or permits, Owner shall reimburse Manager therefor if it
has not done so already.

     E. Manager shall have the option, to be exercised within thirty (30) days
after Termination, to purchase, at their then book value, any items of the Inn's
Inventories and Fixed Asset Supplies as may be marked with any Marriott
Trademarks. Upon Termination, all use of or right to use the Marriott Trademarks
at or in connection with the Inn shall cease forthwith, and Owner shall (i)
immediately, as of the date of such Termination, place coverings over any signs
or similar identification which contain any of the Marriott Trademarks, or shall
otherwise render such signs or other similar identification not visible to the
public; (ii) remove any such signs or similar identification from the Inn by no
later than ten (10) days after the date of Termination; and (iii) no later than
ten (10) days after the date of such Termination, remove from the Inn all Fixed
Asset Supplies, Inventories and other items bearing any Marriott Trademark or
remove all Marriott Trademarks from such items. If Owner has not removed such
signs or other items bearing Marriott Trademarks within ten (10) days after
Termination, Manager shall have the right to do so at Owner's expense; and if
Owner fails to reimburse Manager for such expense within ten (10) days after
receipt of written notice thereof from Manager to Owner, then Manager shall have
the right (without affecting Manager's other remedies under this Agreement) to
withdraw the amount of such expenses from the Operating Accounts, the Reserve,
or any other funds of Owner held by or under the control of Manager. Manager
shall have the right to seek injunctive or other relief in a court of competent
jurisdiction to enforce the foregoing provisions, and if such enforcement shall
be necessary, Owner shall bear all of Manager's costs of such enforcement,
including attorneys' fees.

     F. All Software used at the Inn which is owned by any of the Marriott
Companies (or any Affiliates thereof) or the licensor of any of them is
proprietary to such Marriott Company (or such Affiliate) or the licensor of any
of them, and shall in all events remain the exclusive property of such Marriott
Company (or such Affiliate) or the licensor of any of them, as the case may be,
and nothing contained in this Agreement shall confer on Owner the right to use
any of such Software. Manager shall have the right to remove from the Inn
without compensation to Owner any Software (including upgrades and
replacements). Furthermore, upon Termination, notwithstanding Section 5.04
hereof, Manager shall be entitled to remove from the Inn any computer equipment
which is: (i) owned by a party other than Owner (without reimbursement to
Owner); or (ii) owned by Owner, but utilized as part of a centralized
reservation or property management system (with reimbursement to Owner of all
previous expenditures made by Owner with respect to such equipment, subject to a
reasonable allowance for depreciation). Manager shall provide Owner hard copies
(or to the extent technologically feasible, the electronic transfer) of guest
information contained on such Software, sufficient to allow Owner to service
existing guests of the Inn as of the Termination date and bookings (including
group and transient business) on dates following the Termination of this
Agreement.

     G. If this Agreement is terminated for any reason, other than a Termination
by reason of an Event of Default of Manager hereunder, a reasonable reserve
shall be established from

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<PAGE>

Gross Revenues to reimburse Manager for all costs and expenses incurred by
Manager in terminating its employees at the Inn, such as severance pay,
unemployment compensation, employment relocation, and other employee liability
costs arising out of the termination of employment of Manager's employees at the
Inn. If Gross Revenues are insufficient to meet the requirements of such
reserve, then Owner shall deliver to Manager, within ten (10) days after receipt
of Manager's written request therefor, the sums necessary to establish such
reserve; and if Owner fails to timely deliver such sums to Manager, Manager
shall have the right (without affecting Manager's other remedies under this
Agreement) to withdraw the amount of such expenses from the Operating Accounts,
the Reserve, or any other funds of Owner held by or under the control of
Manager.

     H. Other than in connection with a Termination by reason of an Event of
Default of Manager hereunder, Owner shall cause the entity which shall succeed
Manager as the operator of the Inn to hire a sufficient number of the employees
at the Inn to avoid the occurrence, in connection with such Termination, of a
"closing" under the WARN Act.

     I. Various other actions shall be taken, as described in this Agreement,
including, but not limited to, the actions described in Section 4.05 and Section
6.04.B.

     J. Manager shall peacefully vacate and surrender the Inn to Owner.

     The provisions of this Section 11.11 shall survive Termination.

     11.12 Trademarks and Intellectual Property

     A. During the Term, the Inn shall be known as a "Residence Inn by Marriott"
or a "Marriott Residence Inn," with such alternative identification determined
by Manager from time to time as may be necessary to provide local or specific
geographic definition to the name of the Inn. However, if the name of the
Residence Inn by Marriott system of hotels is changed, Manager will have the
right to change the name of the Inn to conform thereto.

     B. Owner acknowledges that Manager and its Affiliates are the sole and
exclusive owners of all rights, title and interest to the Marriott Trademarks,
which shall in all events remain the exclusive property of Manager (or one of
its Affiliates). All use of the Marriott Trademarks at or in connection with the
Inn, or as otherwise contemplated by this Agreement, shall be made solely by and
inure solely to the benefit of Manager and its Affiliates. Nothing in this
Agreement shall be construed to grant Owner any right of ownership in or right
to use or license others to use the Marriott Trademarks. Except for disclosure
to the extent required by applicable Legal Requirements, Owner may not use the
Marriott Trademarks without the prior written consent of Manager, which may be
withheld in Manager's sole and absolute discretion, in any manner whatsoever,
including, without limitation, the following:

          1. No reference to Manager, any Affiliate of Manager, or any Marriott
Trademark will be made in any prospectus, private placement memorandum, offering
circular or offering documentation related thereto (collectively referred to as
the "Prospectus"), issued by Owner or by one of Owner's Affiliates or by one or
more Mortgagees, which is designed to

                                       36

<PAGE>

interest potential investors in debt or equity securities related to the Inn,
unless Manager has given its prior written approval to each such reference,
which Manager may withhold in its sole and absolute discretion. However,
regardless of whether Manager has approved all such references, neither Manager
nor any Affiliate of Manager will be deemed a sponsor of the offering described
in the Prospectus, nor will it have any responsibility for the Prospectus, and
the Prospectus will so state. Owner shall indemnify, defend and hold Manager
harmless from and against all loss, costs, liability and damage (including
attorneys' fees and expenses, and the cost of Litigation) arising out of any
Prospectus or the offering described therein.

          2. No reference to Manager, any Affiliate of Manager, or any Marriott
Trademark will be made in any material prepared for the purpose of a Sale of the
Inn, unless Manager has given its prior written approval to each such reference.

          3. No Trade Name adopted by Owner or its Affiliates may include any
Marriott Trademark or a term that is confusingly similar to a Marriott
Trademark. Owner shall not apply for registration of any Marriott Trademark in
any jurisdiction.

     C. All right, title and interest (including copyright and patent rights) to
Intellectual Property shall at all times be the exclusive property of Manager
(or any other Marriott Company). Neither Manager nor any other Marriott Company
shall be restricted in disclosing or using any Intellectual Property directly or
indirectly by this Agreement, and Manager shall have the right to use it for any
purpose. Owner shall not have any rights to any Intellectual Property, shall
treat as confidential any Intellectual Property in its possession, and shall not
disclose to any third party any Intellectual Property or use any Intellectual
Property for any purpose whatsoever. Upon Termination, all Intellectual Property
shall be removed from the Inn by Manager, without compensation to Owner, subject
to the provisions of Section 11.11.E. regarding Marriott Trademarks.

     D. Manager and/or its Affiliates shall be entitled, in case of any breach
by Owner of any of the covenants of this Section 11.12, to injunctive relief and
to any other right or remedy available at law or in equity.

     E. The provisions of this Section 11.12 shall survive Termination.

     11.13 Waiver

     The failure of either party to insist upon a strict performance of any of
the terms or provisions of this Agreement, or to exercise any option, right or
remedy contained in this Agreement, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision, option, right or remedy,
but the same shall continue and remain in full force and effect. No waiver by
either party of any term or provision hereof shall be deemed to have been made
unless expressed in writing and signed by such party.

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<PAGE>

     11.14 Partial Invalidity

     If any portion of any term or provision of this Agreement, or the
application thereof to any person or circumstance shall be invalid or
unenforceable, at any time or to any extent, the remainder of this Agreement, or
the application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.

     11.15 Survival

     Except as otherwise specifically provided in this Agreement, the rights and
obligations of the parties herein shall not survive any Termination.

     11.16 Negotiation of Agreement

     Owner and Manager are both business entities having substantial experience
with the subject matter of this Agreement, and each has fully participated in
the negotiation and drafting of this Agreement. Accordingly, this Agreement
shall be construed without regard to the rule that ambiguities in a document are
to be construed against the draftsman. No inferences shall be drawn from the
fact that the final, duly executed Agreement differs in any respect from any
previous draft hereof.

     11.17 Intentionally Deleted

     11.18 Estoppel Certificates

     Each party to this Agreement shall at any time and from time to time, upon
not less than fifteen (15) days' prior notice from the other party, execute,
acknowledge and deliver to such other party, or to any third party specified by
such other party, a statement in writing: (a) certifying that this Agreement is
unmodified and in full force and effect (or if there have been modifications,
that the same, as modified, is in full force and effect and stating the
modifications); and (b) stating to the best knowledge of the certifying party
(i) whether or not there is a continuing Default or Event of Default by the
non-certifying party in the performance or observance of any covenant, agreement
or condition contained in this Agreement, (ii) whether or not there shall have
occurred any event which, with the giving of notice or passage of time or both,
would become a Default or Event of Default, and, if so, specifying each such
Default or Event of Default or occurrence of which the certifying party may have
knowledge; (iii) the amount, if any, of the Additional Capital Investment; (iv)
the amount, if any, of any past due fees or other past due amounts owed to
Manager; and (v) whether or not there are any past due and unpaid obligations
with respect to the Inn, other than in the ordinary course of business. Such
statement shall be binding upon the certifying party and may be relied upon by
the non-certifying party and/or such third party specified by the non-certifying
party as aforesaid. In addition, upon written request after a Termination, each
party agrees to execute and deliver to the non-certifying party and to any such
third party a statement certifying that this Agreement has been terminated.

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<PAGE>

     11.19 Affiliates

     Manager shall be entitled to contract with companies that are Affiliates
(or companies in which Manager has an ownership interest if such interest is not
sufficient to make such a company an Affiliate) to provide goods and/or services
to the Inn; provided that the prices and/or terms for such goods and/or services
are competitive. Additionally, Manager may contract for the purchase of goods
and services for the Inn with third parties that have other contractual
relationships with Manager, Marriott and their Affiliates, so long as the prices
and terms are competitive. In determining, pursuant to the foregoing, whether
such prices and/or terms are competitive, they will be compared to the prices
and/or terms which would be available to Owner from reputable and qualified
parties for goods and/or services of similar quality, and the goods and/or
services which are being purchased shall be grouped in reasonable categories,
rather than being compared item by item. Any dispute as to whether prices and/or
terms are competitive shall be referred to the Expert as provided in Section
11.21. The prices paid may include overhead and the allowance of a reasonable
return to Manager's Affiliates (or companies in which Manager has an ownership
interest if such interest is not sufficient to make such a company an
Affiliate). Owner acknowledges and agrees that, with respect to any purchases of
goods or services pursuant to this Section 11.19 and subject to the foregoing
qualification that prices and/or terms are competitive, Manager's Affiliates may
retain for their own benefit any allowances, credits, rebates, commissions and
discounts received with respect to any such purchases.

     11.20 Competing Facilities

     A. Neither Manager nor any of its Affiliates shall open for business, or
permit any other person to open for business, any Restricted Hotel within the
Restricted Area during the period from the Effective Date to the fifth (5th)
anniversary of the Effective Date.

     B. Except as set forth in Section 11.20.A, neither this Agreement nor
anything implied by the relationship between Manager and Owner shall prohibit
any of the Marriott Companies from constructing, operating, promoting, and/or
authorizing others to construct, operate, or promote one or more Marriott
Hotels, Marriott Resorts, Marriott Suites Hotels, RITZ-CARLTON Hotels, Bvlgari
Hotels, Renaissance Hotels, Renaissance Suites, Conference Centers by Marriott,
Residence Inn by Marriott Hotels, Courtyard by Marriott Hotels, Fairfield Inns,
Fairfield Suites, Marriott Vacation Club International, TownePlace Suites by
Marriott, SpringHill Suites by Marriott, or any other lodging concepts,
time-share facilities, restaurants, or other business operations of any type, at
any location, including a location proximate to the Site. Owner acknowledges,
accepts and agrees further that the Marriott Companies retain the right, from
time to time, to construct or operate, or both, or promote or acquire, or
authorize or otherwise license others to construct or operate, or both, or
promote or acquire any hotels, lodging concepts or products, restaurants or
other business operations of any type whatsoever, including, but not by way of
limitation, those listed above, at any location including one or more sites
which may be adjacent, adjoining or proximate to the Site, which business
operations may be in direct competition with the Inn and that any such exercise
may adversely affect the operation of the Inn.

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<PAGE>

     11.21 Expert Decisions

     Where this Agreement calls for a matter to be referred to an Expert for
determination, the following provisions shall apply:

     A. The use of the Expert shall be the exclusive remedy of the parties and
neither party shall attempt to adjudicate any dispute in any other forum. The
decision of the Expert shall be final and binding on the parties and shall not
be capable of challenge, whether by arbitration, in court or otherwise;

     B. Each party shall be entitled to make written submissions to the Expert,
and if a party makes any submission it shall also provide a copy to the other
party and the other party shall have the right to comment on such submission.
The parties shall make available to the Expert all books and records relating to
the issue in dispute and shall render to the Expert any assistance requested of
the parties. The costs of the Expert and the proceedings shall be borne as
directed by the Expert unless otherwise provided for herein. The Expert may
direct that such costs be treated as Deductions;

     C. The Expert shall make its decision with respect to the matter referred
for determination by applying the standards applicable to first-class hotels in
accordance with the System Standards (including compliance with the requirements
of any quality assurance program) and determining whether the matter at issue is
necessary to satisfy such standards; and

     D. The terms of engagement of the Expert shall include an obligation on the
part of the Expert to: (i) notify the parties in writing of his decision within
forty-five (45) days from the date on which the Expert has been selected (or
such other period as the parties may agree or as set forth herein); and (ii)
establish a timetable for the making of submissions and replies.

     11.22 Restrictions on Operating the Inn in Accordance with System Standards

     In the event of either (i) a Legal Requirement, including an order,
judgment or directive by a court or administrative body which is issued in
connection with any Litigation involving Owner, or (ii) any action taken by a
Mortgagee in connection with a Foreclosure, which in either case restricts or
prevents Manager, in a material and adverse manner, from operating the Inn in
accordance with System Standards (including without limitation, any restrictions
on expenditures by Manager from the Operating Accounts or from the Reserve,
other than restrictions which are set forth in this Agreement), Manager shall be
entitled, at its option, to terminate this Agreement upon sixty (60) days'
written notice to Owner. The foregoing shall not reduce or otherwise affect the
rights of the parties under Article IX.

     11.23 Waiver of Jury Trial and Consequential and Punitive Damages

     Owner and Manager each hereby absolutely, irrevocably and unconditionally
waive trial by jury and the right to claim or receive consequential, incidental,
special or punitive damages in any litigation, action, claim, suit or
proceeding, at law or in equity, arising out of, pertaining to or in any way
associated with the covenants, undertakings, representations or warranties set
forth

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<PAGE>

herein, the relationships of the parties hereto, whether as "Owner" or "Manager"
or otherwise, this Agreement or any other agreement, instrument or document
entered into in connection herewith, or any actions or omissions in connection
with any of the foregoing.

     11.24 Counterparts

     This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, and all of which shall constitute one and the
same instrument. Such executed counterparts may be delivered by facsimile which,
upon transmission to the other party, shall have the same force and effect as
delivery of the original signed counterpart. The submission of an unsigned copy
of this Agreement or an electronic instrument with or without electronic
signature to either party shall not constitute an offer or acceptance. This
Agreement shall become effective and binding only upon execution and delivery of
this Agreement in non-electronic form by both parties in accordance with this
Section 11.24.

     11.25 Extraordinary Events

     If either Owner's or Manager's failure to conform to, keep, perform,
fulfill, or satisfy any representation, warranty, covenant, undertaking,
obligation, standard, test, or condition set forth in this Agreement, other than
an obligation to make monetary payments or provide monetary funding, is caused
in whole or in part by one or more Extraordinary Events, such failure shall not
constitute an Event of Default or Default under this Agreement, and such failure
shall be excused for as long as the failure is caused in whole or in part by
such Extraordinary Event(s). In order to have any such failure excused pursuant
to this Section, the party claiming that an Extraordinary Event caused such
failure must notify the other party in writing within ninety (90) days after the
Extraordinary Event first begins to affect its performance.

     11.26 Entire Agreement

     This Agreement, together with any other writings signed by the parties
expressly stated to be supplemental hereto (including, without limitation, the
Owner Agreement) and together with any instruments to be executed and delivered
pursuant to this Agreement, constitutes the entire agreement between the parties
and supersedes all prior understandings and writings, and may be changed only by
a written non-electronic instrument that has been duly executed by the
non-electronic (which shall not be deemed to exclude facsimile) signature of an
authorized representative of the parties hereto.

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                                   ARTICLE XII

                               DEFINITION OF TERMS

     12.01 Definition of Terms

     The following terms when used in this Agreement shall have the meanings
indicated:

     "Accounting Period" shall mean the four (4) week accounting periods having
the same beginning and ending dates as Manager's four (4) week accounting
periods, except that an Accounting Period may occasionally contain five (5)
weeks when necessary to conform Manager's accounting system to the calendar.

     "Accounting Period Statement" shall have the meaning ascribed to it in
Section 4.01.A.

     "Additional Capital Investment" shall mean, as of any given point in time,
the total amount of Capital Expenditures funded by Owner pursuant to Section
5.03, through such point in time.

     "Affiliate" shall mean, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person. For purposes of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") of a Person
means the possession, directly or indirectly, of the power: (i) to vote more
than fifty percent (50%) of the voting stock of such Person; or (ii) to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting stock, by contract or otherwise.

     "Agreement" shall mean this Amended & Restated Management Agreement between
Owner and Manager, including the exhibits attached hereto.

     "Annual Operating Projection" shall have the meaning ascribed to it in
Section 4.04.

     "Annual Operating Statement" shall have the meaning set forth in Section
4.01.B.

     "Available Cash Flow" shall mean an amount, with respect to each Fiscal
Year or portion thereof during the Term, equal to the excess, if any, of the
Operating Profit over the Owner's Priority.

     "Base Management Fee" shall mean an amount payable to Manager as a
Deduction from Gross Revenues for Central Office Services, System Services and
Chain Services (except as provided in the definition of Chain Services),
pursuant to Section 3.01 and Section 4.01. The Base Management Fee shall be
calculated as follows: (i) five percent (5%) of Gross Revenues for the period
beginning on the Effective Date through the end of the 13th full Accounting
Period; (ii) six percent (6%) of Gross Revenues beginning with the 14th full
Accounting Period through the 26th full Accounting Period; and (iii) seven
percent (7%) of Gross Revenues

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beginning on the 27th full Accounting Period and continuing throughout the
remaining Term of the Agreement. Notwithstanding the foregoing, beginning on the
Effective Date through the 65th full Accounting Period of this Agreement,
Manager shall subordinate and waive a portion of its annual Base Fee, not to
exceed two percent (2%) of Gross Revenues in any Fiscal Year, to a ten percent
(10%) non-cumulative annual return on the sum (pro-rated for any partial Fiscal
Year) of the (i) Initial Investment, (ii) the cost of any Capital Expenditures
funded by Owner pursuant to Section 5.03, and (iii) the total funds expended by
Owner (from Owner's own funds, not funds from the Reserve or the Inn's Gross
Revenues) to complete the PIP pursuant to Section 5.07.

     "Building Estimate" shall have the meaning ascribed to it in Section
5.03.A.

     "Buildings" shall have the meaning ascribed to it in Section A of the
Recitals.

     "Capital Expenditure(s)" shall mean the costs necessary for non-routine,
major repairs, alterations, improvements, renewals, replacements, and additions
to the Inn including, without limitation, to the structure, the exterior facade
and all of the mechanical, electrical, heating, ventilating, air conditioning,
plumbing or vertical transportation elements of the Inn building, together with
all other expenditures which are classified as "capital expenditures" under
generally-accepted accounting principles. Capital Expenditures shall not include
Routine Capital Expenditures.

     "Capitalization Multiple" shall mean the number ten (10).

     "CC&R's" shall have the meaning ascribed to it in Section 8.04.A.

     "Central Office Services" shall have the meaning ascribed to it in Section
1.03.B.

     "Chain Services" shall have the meaning ascribed to it in Section 1.03;
provided, however, that the Base Management Fee is intended to cover only the
services currently listed (as of the Effective Date) in clause (i) and clause
(ii) of the definition of Chain Services in Section 1.03. Accordingly, if there
are expenditures that were originally treated as Deductions but that are later
determined to be more properly treated as Chain Services or if additional
central or regional services are (after the Effective Date) furnished for the
benefit of inns in the "Residence Inn by Marriott" System, the Inn's allocable
share of such expenditures shall be treated as Deductions (over and above the
Deductions listed in paragraph 7 and paragraph 8 of the definition of
Deductions) and shall not be covered by the Base Management Fee. Conversely, if
there are expenditures that were (as of the Effective Date) listed in clause (i)
or clause (ii) of the definition of Chain Services and included in Chain
Services (as of the Effective Date) but that are later determined to be more
properly furnished at the Inn instead of on a central or regional basis, such
expenditures shall not later be treated as Deductions (over and above the
Deductions listed in paragraph 7 and paragraph 8 of the definition of
Deductions) but shall continue to be covered by the Base Management Fee.

     "Competitive Set" shall mean the group of hotels which are closest in
geographical distance from the Inn and which are generally within the same hotel
market segment as the Inn. As of the Effective Date, the parties agree that the
Competitive Set shall consist of: the Hampton

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Inn Suites, Nashville Airport in Nashville, Tennessee; the Homewood Suites,
Nashville Airport in Nashville, Tennessee; the Homestead Studio Suites,
Nashville Airport in Nashville, Tennessee; the Doubletree Nashville in
Nashville, Tennessee; and the Hilton Garden Inn, Nashville Airport in Nashville,
Tennessee. If any of such hotels, subsequent to the Effective Date, either
changes its chain affiliation or ceases to operate or otherwise ceases to
reflect the general criteria set forth in the first sentence of this definition,
Owner and Manager agree to mutually, reasonably and in good faith, discuss
appropriate changes to the foregoing list of the hotels that shall comprise the
Competitive Set. Disputes regarding such changes to the Competitive Set will be
resolved by the Expert in accordance with the provisions of Section 11.21.

     "Coverage Ratio" shall mean the number one and four tenths (1.4).

     "Cure Payment" shall have the meaning set forth in Section 2.02.B.

     "Deductions" shall have the meaning ascribed to it in the definition of
Operating Profit.

     "Default" shall have the meaning ascribed to it in Section 9.01.

     "Effective Date" shall be 12:01 a.m. on the date set forth in the Preamble.

     "Environmental Laws" shall have the meaning ascribed to it in Section
11.08.A.

     "Event of Default" shall have the meaning ascribed to it in Section 9.01.

     "Expert" shall mean an independent, nationally recognized hotel consulting
firm or individual who is qualified to resolve the issue in question, and who is
appointed in each instance by agreement of the parties or, failing agreement,
each party shall select one (1) such nationally recognized consulting firm or
individual and the two (2) respective firms and/or individuals so selected shall
select another such nationally recognized consulting firm or individual to be
the Expert. Each party agrees that it shall not appoint an individual as an
Expert hereunder if the individual is, as of the date of appointment or within
six (6) months prior to such date, employed by such party or its Affiliates,
either directly or as a consultant, in connection with any other matter. In the
event that either party calls for an Expert determination pursuant to the terms
hereof, the parties shall have ten (10) days from the date of such request to
agree upon an Expert and, if they fail to agree, each party shall have an
additional ten (10) days to make its respective selection of a firm or
individual, and within ten (10) days of such respective selections, the two (2)
respective firms and/or individuals so selected shall select another such
nationally recognized consulting firm or individual to be the Expert. If either
party fails to make its respective selection of a firm or individual within the
ten (10) day period provided for above, then the other party's selection shall
be the Expert. Also, if the two (2) respective firms and/or individuals so
selected shall fail to select a third nationally recognized consulting firm or
individual to be the Expert, then such Expert shall be appointed by the American
Arbitration Association and shall be a qualified person having at least ten (10)
years recent professional experience as to the subject matter in question.

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<PAGE>

     "Extraordinary Event" shall mean any of the following events, regardless of
where it occurs or its duration: acts of nature without the interference of any
human agency (including hurricanes, typhoons, tornadoes, cyclones, other severe
storms, winds, lightning, floods, earthquakes, volcanic eruptions, fires,
explosions, disease, or epidemics); fires and explosions caused wholly or in
part by human agency; acts of war or armed conflict; riots or other civil
commotion; terrorism (including hijacking, sabotage, chemical or biological
attack, bombing, murder, assault and kidnapping), or the threat thereof; strikes
or similar labor disturbances; shortage of critical materials or supplies;
action or inaction of governmental authorities having jurisdiction over the Inn
(including the imposition of restrictions on room rates or wages or other
material aspects of operation, or the revocation or refusal to grant licenses or
permits, where such revocation or refusal is not due to the fault of the party
whose performance is to be excused for reasons of the Extraordinary Event); and
any other events beyond the reasonable control of Owner or Management Company,
excluding, however, general economic and/or market conditions not caused by any
of the events described herein.

     "FF&E" shall mean furniture, furnishings, fixtures, soft goods, case goods,
signage, audio-visual equipment, kitchen appliances, vehicles, carpeting and
equipment, including front desk and back-of-the house computer equipment, but
shall not include Fixed Asset Supplies or Software.

     "FF&E Lease" means a lease of any FF&E, which lease is properly capitalized
for financial accounting purposes.

     "Fiscal Year" shall mean Manager's Fiscal Year which as of the Effective
Date ends at midnight on the Friday closest to December 31 in each calendar
year; the new Fiscal Year begins on the Saturday immediately following said
Friday. Any partial Fiscal Year between the Effective Date and the commencement
of the first full Fiscal Year shall constitute a separate Fiscal Year. A partial
Fiscal Year between the end of the last full Fiscal Year and the Termination of
this Agreement shall also constitute a separate Fiscal Year. If Manager's Fiscal
Year is changed in the future, appropriate adjustment to this Agreement's
reporting and accounting procedures shall be made; provided, however, that no
such change or adjustment shall alter the term of this Agreement or in any way
reduce the distributions of Operating Profit or other payments due hereunder.

     "Fixed Asset Supplies" shall mean items included within "Property and
Equipment" under the Uniform System of Accounts including, but not limited to,
linen, china, glassware, tableware, uniforms, and similar items, whether used in
connection with public space or Guest Rooms.

     "Foreclosure" shall mean any exercise of the remedies available to a
Mortgagee, upon a default under the Mortgage held by such Mortgagee, which
results in a transfer of title to or possession of the Inn. The term
"Foreclosure" shall include, without limitation, any one or more of the
following events, if they occur in connection with a default under a Mortgage:
(i) a transfer by judicial foreclosure; (ii) a transfer by deed in lieu of
foreclosure; (iii) the appointment by a court of a receiver to assume possession
of the Inn; (iv) a transfer of either ownership or control of the Owner, by
exercise of a stock pledge or otherwise; (v) if title to the Inn is held by a

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tenant under a ground lease, an assignment of the tenant's interest in such
ground lease; or (vi) any similar judicial or non-judicial exercise of the
remedies held by the Mortgagee resulting in actual ownership or control of the
Inn by such Mortgagee or its designee.

     "GDP Deflator" shall mean the "Gross Domestic Product Implicit Price
Deflator" issued from time to time by the United States Bureau of Economic
Analysis of the Department of Commerce, or if the aforesaid GDP Deflator is not
at such time so prepared and published, any comparable index selected by Owner
and reasonably satisfactory to Manager (a "Substitute Index") then prepared and
published by an agency of the Government of the United States, appropriately
adjusted for changes in the manner in which such index is prepared and/or year
upon which such index is based. Any dispute regarding the selection of the
Substitute Index or the adjustments to be made thereto shall be settled by the
Expert in accordance with Section 11.21. Except as otherwise expressly stated
herein, whenever a number or amount is required to be "adjusted by the GDP
Deflator," or similar terminology, such adjustment shall be equal to the
percentage increase or decrease in the GDP Deflator which is issued for the
month in which such adjustment is to be made (or, if the GDP Deflator for such
month is not yet publicly available, the GDP Deflator for the most recent month
for which the GDP Deflator is publicly available) as compared to the GDP
Deflator which was issued for the month in which the Effective Date occurred.

     "Gross Revenues" shall mean all revenues and receipts of every kind derived
from operating the Inn and all departments and parts thereof, including, but not
limited to: income (from both cash and credit transactions) from rental of Guest
Rooms, telephone charges, stores, offices, exhibit or sales space of every kind;
license, lease and concession fees and rentals (not including gross receipts of
licensees, lessees and concessionaires); income from vending machines; income
from parking; health club membership fees; food and beverage sales; wholesale
and retail sales of merchandise; service charges; and proceeds, if any, from
business interruption or other loss of income insurance; provided, however, that
Gross Revenues shall not include the following: gratuities to employees of the
Inn; federal, state or municipal excise, sales or use taxes or any other taxes
collected directly from patrons or guests or included as part of the sales price
of any goods or services; proceeds from the sale of FF&E ; interest received or
accrued with respect to the funds in the Reserve or the other operating accounts
of the Inn; any refunds, rebates, discounts and credits of a similar nature,
given, paid or returned in the course of obtaining Gross Revenues or components
thereof; insurance proceeds (other than proceeds from business interruption or
other loss of income insurance); condemnation proceeds (other than for a
temporary taking); or any proceeds from any Sale of the Inn or from the
refinancing of any debt encumbering the Inn.

     "Guest Profile Data" shall mean personal guest profiles and information
regarding guest preferences, including, without limitation, any information
derived from or contained in any frequent traveler program.

     "Guest Room" shall mean a separately-keyed lodging unit in the Inn.

     "Guest Room Revenues" shall mean the portion of Gross Revenues of the Inn
which is attributed to the rental of Guest Rooms.

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<PAGE>

     "Hazardous Materials" shall have the meaning ascribed to it in Section
11.08.A.

     "Hotel Lease" shall have the meaning ascribed to it in Section B of the
Recitals.

     "Impositions" shall have the meaning ascribed to it in Section 4.07.

     "Incentive Management Fee" shall mean an amount payable to Manager,
pursuant to Section 3.01 and Section 4.01, that is equal to twenty-five percent
(25%) of Available Cash Flow in any Fiscal Year (or portion thereof).

     "Initial Investment" shall mean an amount equal to Nine Million Sixty-Four
Thousand Dollars ($9,064,000.00).

     "Initial Term" shall have the meaning ascribed to it in Section 2.01.

     "Inn" shall mean the Site together with the Buildings and all other
improvements constructed or to be constructed on the Site pursuant to this
Agreement, all FF&E and Fixed Asset Supplies installed or located on the Site or
in the Buildings, and all easements or other appurtenant rights thereto.

     "Institutional Lender" shall mean a foreign or domestic commercial bank,
trust company, savings bank, savings and loan association, life insurance
company, real estate investment trust, pension trust, pension plan or pension
fund, a public or privately-held fund engaged in real estate and/or corporate
lending, or any other financial institution or financial services company then
commonly known as an institutional lender (or any Affiliate thereof,) having a
minimum paid up capital or minimum net worth (or net assets in the case of a
pension fund) of One Hundred Million Dollars ($100,000,000); provided, however,
such lender shall be deemed to have satisfied this criteria if an Affiliate of
such lender satisfies such criteria.

     "Insurance Retention" shall have the meaning ascribed to it in Section
6.04.C.

     "Intellectual Property" shall mean: (i) all Software, including the data
and information processed or stored thereby; (ii) all manuals, brochures,
directives, policies, programs and other information issued by Manager to its
employees at the Inn or otherwise used in the operation of the Inn or any other
hotel in the Residence Inn by Marriott system of hotels; (iii) customer
information, customer lists and Guest Profile Data; (iv) all Marriott
Trademarks; and (v) all Marriott (or other Marriott Company) trade secrets,
confidential information and all other information, materials, and copyrightable
or patentable subject matter developed, acquired, licensed or used by any
Marriott Company in the operation of the Inn or in any other hotel in the
Residence Inn by Marriott System of hotels, including, without limitation,
materials relating to sales and marketing programs, revenue management programs,
brand and pricing strategies, business and technology plans, and research and
development reports. The foregoing shall apply regardless of the form or medium
involved (e.g., paper, electronic, tape, tangible or intangible).

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     "Inventories" shall mean "Inventories" as defined in the Uniform System of
Accounts, such as, but not limited to, provisions in storerooms, refrigerators,
pantries and kitchens; beverages in wine cellars and bars; other merchandise
intended for sale; fuel; mechanical supplies; stationery; and other expensed
supplies and similar items.

     "JHM&E Environmental Assessment" shall have the meaning ascribed to it in
Section 11.08.A.

     "Landlord" shall have the meaning ascribed to it in Section A of the
Recitals.

     "Legal Requirement(s)" shall mean any federal, state or local law, code,
rule, ordinance, regulation or order of any governmental authority or agency
having jurisdiction over the business or operation of the Inn or the matters
which are the subject of this Agreement, including, without limitation, the
following: (i) any building, zoning or use laws, ordinances, regulations or
orders; and (ii) Environmental Laws.

     "Litigation" shall mean: (i) any cause of action (including, without
limitation, bankruptcy or other debtor/creditor proceedings) commenced in a
federal, state or local court; or (ii) any claim brought before an
administrative agency or body (for example, without limitation, employment
discrimination claims).

     "Manager" shall have the meaning ascribed to it in the Preamble hereto or
shall mean any successor or permitted assign, as applicable.

     "Marketing Fund" shall mean that certain fund (or any successor to such
fund) maintained by Manager or one of its Affiliates, in its capacity as
franchisor of the System, to pay for the following System costs: all costs
associated with developing, preparing, producing, directing, administering,
conducting, maintaining and disseminating advertising, marketing, promotional
and public relations materials, programs, campaigns, sales and marketing
seminars and training programs, and similar activities of every kind and nature,
including the Residence Inn directory; conducting market research; and paying
the central operational costs of the Residence Inn reservation system; provided,
however, that any costs described in this definition of Marketing Fund may, at
the option of the Manager and any association which may be formed by the
Residence Inn by Marriott franchisees, be charged directly to each inn in the
System on the basis of actual use by or benefit to each inn and, in such event,
shall become Deductions. Owner shall contribute to the Marketing Fund. As of the
Effective Date, the current system-wide charge is two and one-half percent
(2.5%) of Guest Room Revenues, but is subject to change on an annual basis;
provided, however, the system-wide charge shall not be increased without a
majority vote by members of The Residence Inn Association or its successor in
favor of such increase.

     "Marriott" shall mean Marriott International, Inc., a Delaware corporation,
and its successors and assigns.

     "Marriott Company(ies)" shall mean Manager, Marriott, and any Affiliate of
Manager or Marriott.

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     "Marriott Trademark" shall mean (i) the name and mark "Marriott"; (ii) the
federally registered "M" logo; (iii) the name and mark "Residence Inn"; and (iv)
any word, name, device, symbol, logo, slogan, design, brand, service mark, Trade
Name, other distinctive feature or any combination of the foregoing, whether
registered or unregistered, and whether or not such term contains the "Marriott"
and/or "Residence Inn" mark, that is used in connection with the Inn or by
reason of extent of usage is associated with hotels in the Residence Inn by
Marriott and/or Marriott system of hotels.

     "Mortgage(s)" shall mean any mortgage, deed of trust, or security document
encumbering the Inn and/or the Site.

     "Mortgagee" shall mean the holder of any Mortgage encumbering the Inn or
the Site.

     "Notice of Intent to Sell" shall have the meaning set forth in Section
10.02.B.

     "Notice of Proposed Sale" shall have the meaning set forth in Section
10.02.B.

     "Operating Accounts" shall have the meaning set forth in Section 4.03.A.

     "Operating Loss" shall mean a negative Operating Profit.

     "Operating Profit" shall mean the excess of Gross Revenues over the
following deductions ("Deductions") incurred by Manager, on behalf of Owner, in
operating the Inn:

          1. the cost of sales, including, without limitation, compensation,
fringe benefits, payroll taxes and other costs related to Inn employees (the
foregoing costs shall not include salaries and other employee costs of executive
personnel of Manager who do not work at the Inn on a regular basis; except that
the foregoing costs shall include the equitably allocable portion of the salary
and other employee costs of any general manager or other supervisory personnel
assigned to a "cluster" of hotels which includes the Inn);

          2. departmental expenses incurred at departments within the Inn;
administrative and general expenses; the cost of marketing incurred by the Inn;
advertising and business promotion incurred by the Inn; heat, light, and power;
computer line charges; and routine repairs, maintenance and minor alterations
treated as Deductions under Section 5.01;

          3. the cost of Inventories and Fixed Asset Supplies consumed in the
operation of the Inn;

          4. a reasonable reserve for uncollectible accounts receivable as
reasonably determined by Manager;

          5. all costs and fees of independent professionals or other third
parties who are retained by Manager to perform services required or permitted
hereunder;

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          6. all costs and fees of technical consultants and operational experts
who are retained or employed by Manager and/or Affiliates of the Manager for
specialized services (including, without limitation, quality assurance
inspectors) and the cost of attendance by employees of the Inn at training and
manpower development programs sponsored by Manager;

          7. the Base Management Fee;

          8. insurance costs and expenses as provided in Section 6.04;

          9. taxes, if any, payable by or assessed against Manager related to
this Agreement or to Manager's operation of the Inn (exclusive of Manager's
income taxes or franchise taxes) and all Impositions;

          10. transfers to the Reserve required pursuant to Section 5.02;

          11. transfers required to be made, as they may change from time to
time, to the Marketing Fund in order for the Inn to remain a member of the
System (such contribution, as of the Effective Date, shall be two and one-half
percent (2.5%) of Guest Room Revenues); and

          12. such other costs and expenses incurred by Manager as are
specifically provided for elsewhere in this Agreement or are otherwise
reasonably necessary for the proper and efficient operation of the Inn.

     The term "Deductions" shall not include (a) debt service payments pursuant
to the First Mortgage or any other mortgage financing on the Inn, (b) payments
pursuant to FF&E Leases or other forms of financing obtained for the FF&E
located in or connected with the Inn, (c) rental payments pursuant to any ground
lease of the Site, or (d) rental payments under the Hotel Lease, all of which
shall be paid by Owner from its own funds.

     "Owner" shall have the meaning ascribed to it in the Preamble or shall mean
any successor or permitted assign, as applicable.

     "Owner Agreement" shall have the meaning ascribed to it in Section B of the
Recitals.

     "Owner's Priority" shall mean an amount per Fiscal Year (prorated for any
partial Fiscal Year) equal to twelve percent (12%) of the Initial Investment.
Owner's Priority for each Fiscal Year shall be paid to the extent of Operating
Profit available in such Fiscal Year, as provided in Section 3.02 of this
Agreement. During the Term, Owner's Priority automatically shall be increased by
an amount equal to twelve percent (12%) of the sum of (i) the cost of any
Capital Expenditures funded by Owner pursuant to Section 5.03, and (ii) the
total funds expended by Owner (from Owner's own funds, not funds from the
Reserve or the Inn's Gross Revenues) to complete the PIP pursuant to Section
5.07.

     "Performance Termination Threshold" shall mean an amount equal to eighty
percent (80%) of Owner's Priority.

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     "Person" means an individual (and the heirs, executors, administrators, or
other legal representatives of an individual), a partnership, a corporation,
limited liability company, a government or any department or agency thereof, a
trustee, a trust and any unincorporated organization.

     "PIP" shall have the meaning ascribed to it in Section 5.07.

     "Prime Rate" shall mean the "prime rate" of interest announced from time to
time in the "Money Rates" section of the Wall Street Journal (Eastern Edition).

     "Prospectus" shall have the meaning ascribed to it in Section 11.12.B.

     "Qualified Mortgage" shall have the meaning ascribed to it in Section 8.02.

     "Renewal Term" shall have the meaning ascribed to it in Section 2.01.

     "Repairs and Equipment Estimate" shall have the meaning ascribed to it in
Section 5.02.D.

     "Reserve" shall have the meaning ascribed to it in Section 5.02.A.

     "Restricted Area" shall mean that area within a five (5) mile radius of the
front door of the Inn and that is shown on the map attached hereto as Exhibit D.
In the event of any conflict between the description set forth in this
definition and the map attached hereto as Exhibit D, the description set forth
in this definition shall govern.

     "Restricted Hotel" shall mean any select-service hotel operating under the
"Residence Inn by Marriott" trade name as a member of the System. The term
"Restricted Hotel" shall not include any one or more of the following: (i) any
existing (as of the Effective Date) Residence Inn by Marriott hotel; (ii) any
full-service Marriott Hotel or Marriott Suites (or any similar full service
lodging product), RITZ-CARLTON hotel, Bvlgari hotel, Conference Center by
Marriott, Renaissance, Renaissance Suites, Courtyard by Marriott Hotel,
Fairfield Inn, Fairfield Suites, Marriott Vacation Club International,
SpringHill Suites, TownePlace Suites or any other lodging product (including
time share or interval ownership facilities) which is not operated as a
select-service hotel under the "Residence Inn by Marriott" trade name and as a
member of the System;(iii) any hotel or hotels which are members of a chain of
hotels (provided that such chain has a minimum of five (5) or more hotels in
operation), all or substantially all (but in no event less than four (4) hotels)
of which are acquired by, or merged with, or franchised by or joined through a
marketing agreement with, Manager or one of its Affiliates (or the operation of
which is transferred to Manager or one of its Affiliates); (iv) any hotel or
hotels which are members of a group of hotels which is (in a single transaction
with a single seller or transferor) acquired by, or merged with, or franchised
by or joined through a marketing agreement with, Manager or one of its
Affiliates, or the operation of which is transferred to Manager or one of its
Affiliates, provided that such group of hotels contains no fewer than five (5)
hotels; (v) any future lodging product developed by Manager or one of its
Affiliates which is not included within the System; or (vi) in the event that
any existing hotel in the Restricted Area described in clause (i) above

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<PAGE>

ceases to operate under the "Residence Inn by Marriott" trade name as a member
of the System, then for each such hotel (if any), an additional hotel which may
operate under the "Residence Inn by Marriott" trade name as a member of the
System.

     "Revenue Data Publication" shall mean Smith's STAR Report, a monthly
publication distributed by Smith Travel Research, Inc. of Gallatin, Tennessee,
or an alternative source, reasonably satisfactory to both parties, of data
regarding the Revenue Per Available Room of hotels in the general trade area of
the Inn. If such Smith's STAR Report is discontinued in the future, or ceases
(in the reasonable opinion of either Owner or Manager) to be a satisfactory
source of data regarding the Revenue Per Available Room of various hotels in the
general trade area of the Inn, Manager shall select an alternative source for
such data, subject to Owner's approval. If the parties fail to agree on such
alternative source within a reasonable period of time, the matter shall be
resolved by the Expert in accordance with the provisions of Section 11.21.

     "Revenue Index" shall mean that fraction that is equal to (a) the Revenue
Per Available Room for the Inn divided by (b) the average Revenue Per Available
Room for the hotels in the Competitive Set, as set forth in the Revenue Data
Publication. Appropriate adjustments to the Revenue Index shall be made in the
event of a major renovation of the Inn.

     "Revenue Index Threshold" shall mean ninety-five one-hundredths (0.95).
However, if the entry of a new hotel into the Competitive Set (or the removal of
a hotel from the Competitive Set) causes significant variations in the Revenue
Index that do not reflect the Inn's true position in the relevant market,
appropriate adjustments shall be made to the Revenue Index Threshold by mutual
consent of Owner and Manager each acting in good faith.

     "Revenue Per Available Room" shall mean (i) the term "revenue per available
room" as defined by the Revenue Data Publication, or (ii) if the Revenue Data
Publication is no longer being used (as more particularly set forth in the
definition of "Revenue Data Publication"), the aggregate gross room revenues of
the hotel in question for a given period of time divided by the total room
nights for such period. If clause (ii) of the preceding sentence is being used,
a "room" shall be an available hotel guestroom that is keyed as a single unit.

     "Routine Capital Expenditures" shall mean certain routine, non-major
expenditures which are classified as "capital expenditures" under
generally-accepted accounting principles, but which will be funded from the
Reserve (pursuant to Section 5.02), rather than pursuant to the provisions of
Section 5.03. Routine Capital Expenditures consist of the following types of
expenditures: exterior and interior repainting; resurfacing building walls and
floors; resurfacing parking areas; and miscellaneous similar expenditures (all
such types of expenditures to be in accordance with Manager's policies as then
generally implemented throughout the Residence Inn by Marriott system of
hotels).

     "Sale of the Inn" shall mean any sale, assignment, transfer or other
disposition, for value or otherwise, voluntary or involuntary, of the fee simple
title to the Site and/or the Inn. For purposes of this Agreement, a Sale of the
Inn shall also include: (i) a lease (or sublease) of all or substantially all of
the Inn or Site; or (ii) any sale, assignment, transfer or other disposition,
for

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<PAGE>

value or otherwise, voluntary or involuntary, in a single transaction or a
series of transactions, of the controlling interest in Owner. The phrase
"controlling interest," as used in the preceding sentence, shall mean either:
(x) the right to exercise, directly or indirectly, more than fifty percent (50%)
of the voting rights attributable to the shares of Owner (through ownership of
such shares or by contract); or (y) the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of
Owner. Subject to the provisions of Section 10.02.A, for purposes of this
Agreement, a Sale of the Inn shall not be deemed or construed to include (i) any
transfer, conversion, exchange or repurchase of publicly-held or publicly-traded
securities of Owner's ultimate parent entity, Apple Hospitality Five, Inc., a
Virginia corporation ("Apple Five"), by operation of law or otherwise, or any
issuance of additional securities of Apple Five; (ii) any merger, consolidation
or sale of all or substantially all of the assets of Apple Five; or (iii) any
sale, assignment, transfer or other disposition of the Inn or Hotel Lease (or
permitted amendment thereof) by Owner or Landlord to an Affiliate of Owner or
Landlord, provided that, a subsequent sale, assignment, transfer, lease,
sublease or other disposition of the Inn by, or a change in "controlling
interest" of, such Affiliate would constitute a "Sale of the Inn".

     "SEC Filing Period" shall mean such period of time (not to exceed sixty
(60) days) after the close of each Fiscal Year within which Owner must receive
the Annual Operating Statement from Manager with respect to such Fiscal Year in
order for Owner to have a reasonable period of time within which to prepare and
make all required filings with the Securities and Exchange Commission and other
applicable governmental agencies.

     "Site" shall have the meaning ascribed to it in Section A of the Recitals.

     "Software" shall mean all computer software and accompanying documentation
(including all future upgrades, enhancements, additions, substitutions and
modifications thereof), other than computer software which is generally
commercially available, which are used by Manager in connection with operating
or otherwise providing services to the Inn and/or the Residence Inn by Marriott
system of hotels, including without limitation the property management system,
the reservation system and the other electronic systems used by Manager in
connection with operating or otherwise providing services to the Inn and/or the
Residence Inn by Marriott system of hotels.

     "Specially Designated National or Blocked Person" shall mean (i) a person
designated by the U.S. Department of Treasury's Office of Foreign Assets Control
from time to time as a "specially designated national or blocked person" or
similar status, (ii) a person described in Section 1 of U.S. Executive Order
13224 issued on September 23, 2001, or (iii) a person otherwise identified by
government or legal authority as a person with whom Manager or its Affiliates
are prohibited from transacting business. Currently, a listing of such
designations and the text of the Executive Order are published under the
internet website address www.ustreas.gov/offices/enforcement/ofac.

     "Subordination Agreement" shall have the meaning ascribed to it in Section
8.02.A. and Section 8.03.

                                       53

<PAGE>

     "Subsequent Owners" shall have the meaning ascribed to it in Section
8.03.A.

     "System" shall mean all hotels which are operated under the "Residence
Inn," "Residence Inn by Marriott" or "Marriott Residence Inn" Trade Names.

     "System Services" shall have the meaning ascribed to it in Section 1.03.A.

     "System Standards" shall mean any one or more (as the context requires) of
the following three (3) categories of standards: (i) operational standards (for
example, services offered to guests, quality of food and beverages, cleanliness,
staffing and employee compensation and benefits, Chain Services, frequent
traveler programs such as the Marriott Rewards Program and other similar
programs, etc.); (ii) physical standards (for example, quality of the hotel,
FF&E, and Fixed Asset Supplies, frequency of FF&E replacements, etc.); and (iii)
technology standards (for example, those relating to software, hardware,
telecommunications, systems security and information technology); each of such
standards shall be the standard which is generally prevailing or in the process
of being implemented at other then existing hotels in the Residence Inn by
Marriott system of hotels, including all services and facilities in connection
therewith that are customary and usual at comparable hotels in the Residence Inn
by Marriott system of hotels.

     "Term" shall have the meaning ascribed to it in Section 2.01.

     "Termination" shall mean the expiration or sooner cessation of this
Agreement.

     "Trade Name" shall mean any name, whether informal (such as a fictitious
name or d/b/a) or formal (such as the full legal name of a corporation or
partnership) which is used to identify an entity.

     "Uniform System of Accounts" shall mean the Uniform System of Accounts for
the Lodging Industry, Ninth Revised Edition, 1996, as published by the
Educational Institute of the American Inn & Motel Association, as revised from
time to time to the extent such revision has been or is in the process of being
generally implemented within the Residence Inn by Marriott system of hotels.

     "WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. 2101 et seq.

     "Working Capital" shall mean funds that are used in the day-to-day
operation of the business of the Inn, including, without limitation, amounts
sufficient for the maintenance of change and petty cash funds, amounts deposited
in operating bank accounts, receivables, amounts deposited in payroll accounts,
prepaid expenses and funds required to maintain Inventories, less accounts
payable and accrued current liabilities.

                        [SIGNATURES FOLLOW ON NEXT PAGE]

                                       54

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal as of the day and year first written above.

                                        OWNER:

                                        APPLE HOSPITALITY FIVE MANAGEMENT, INC.,
ATTEST:                                 a Virginia corporation

By:    /s/ Kevin A. Chumney             By:    /s/ J. Philip Hart
       ------------------------------          ---------------------------------
Name:  Kevin A. Chumney                 Name:  J. Philip Hart
Title: Attorney                         Title: Senior Vice President

                                        MANAGER:

                                        RESIDENCE INN BY MARRIOTT, INC.,
ATTEST                                  a Delaware corporation

By:    /s/ Jeffrey Holdaway             By:    /s/ Kevin M. Kimball
       ------------------------------          ---------------------------------
Name:  Jeffrey Holdaway                 Name:  Kevin M. Kimball
Title: Attorney                         Title: Vice President

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF VIRGINIA     )
                      )  ss:
CITY OF RICHMOND      )

     On the 20th day of June, 2003, before me, the undersigned, a Notary Public,
in and for the State of Virginia, personally appeared J. Philip Hart, who
acknowledged himself to be the Senior Vice President of Apple Hospitality Five
Management, Inc., a corporation, and that he, as such Senior Vice President,
being authorized to do so, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by himself as Senior
Vice President.

     In witness whereof, I hereunto set my hand and official seal.

                                               /s/ Valerie C. Saunders
                                               ---------------------------------
                                               Notary Public

My commission expires: January 31, 2007

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF MARYLAND     )
                      )  ss:
COUNTY OF MONTGOMERY  )

     On the 27th day of June, 2003, before me, the undersigned, a Notary Public,
in and for the State of Maryland, personally appeared Kevin M. Kimball, who
acknowledged himself to be the Vice President of Residence Inn By Marriott,
Inc., a corporation, and that he, as such Vice President, being authorized to do
so, executed the foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as Vice President.

     In witness whereof, I hereunto set my hand and official seal.

                                               /s/ Karen E. Pence
                                               ---------------------------------
                                               Notary Public

My commission expires:  Karen E. Pence
                        Notary Public, State of Maryland
                        My commission Expires September 1, 2006

                                       2

<PAGE>

                                    EXHIBIT A

                                LEGAL DESCRIPTION

                                    [omitted]

                                       3

<PAGE>

                                    EXHIBIT B

                            EQUITY INTEREST IN OWNER

          Apple Hospitality Five, Inc. owns one hundred percent (100%)
                            of the equity of Owner.

<PAGE>

                                    EXHIBIT C

              MEMORANDUM OF AMENDED & RESTATED MANAGEMENT AGREEMENT

Prepared by and after Recording, return to:

Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Attn: Law Department - Lodging Operations
      Dept. 52-923.27

              MEMORANDUM OF AMENDED & RESTATED MANAGEMENT AGREEMENT

     THIS MEMORANDUM OF AMENDED & RESTATED MANAGEMENT AGREEMENT (the
"Memorandum") is made and entered into as of this 21stt day of June, 2003, by
and between APPLE HOSPITALITY FIVE MANAGEMENT, INC., a Virginia corporation
("Owner"), with a mailing address at c/o Apple Real Estate Investment Trust
Companies, 10 South Third Street, Richmond, Virginia 23219 and RESIDENCE INN BY
MARRIOTT, INC., a Delaware corporation ("Manager"), and acknowledged by APPLE
HOSPITALITY FIVE, INC., a Virginia corporation with a mailing address at c/o
Apple Real Estate Investment Trust Companies, 10 South Third Street, Richmond,
Virginia 23219 ("Landlord").

                               W I T N E S S E T H

     Owner and Manager have entered into that certain Amended & Restated
Management Agreement dated on even date herewith (herein, the "Management
Agreement") with respect to the operation of a hotel on the premises located in
the City of Nashville, County of             , State of Tennessee, as more
                                 ------------
particularly described in Exhibit A attached hereto (the "Site").

     Owner, as tenant, and Landlord, are parties to that certain Master Hotel
Lease executed on even date herewith wherein Owner leased the Site from
Landlord.

     The Management Agreement is in effect. The term of the Management Agreement
expires at the expiration of the twentieth (20th) full Fiscal Year after the
expiration of the Fiscal Year in which the Effective Date occurs. Subject to
certain conditions contained in the

                                       2

<PAGE>

Management Agreement, the Term will be automatically renewed, on the same terms
and conditions contained in the Management Agreement for one (1) period of ten
(10) Fiscal Years.

     The Management Agreement contains terms and restrictions relating to
financing of the Inn. The Management Agreement also contains terms and
conditions relating to Owner's ability to sell or transfer interests in itself
or the Inn or the Site.

     This Memorandum is not intended to alter or modify in any way the terms and
conditions of the Management Agreement. Terms not specifically defined in this
Memorandum are defined in the Management Agreement.

                        [SIGNATURES FOLLOW ON NEXT PAGE]

                                       3

<PAGE>

     IN WITNESS WHEREOF, Owner and Manager have caused this Memorandum to be
executed under seal by their duly authorized representatives as of the day first
above written, for the purpose of providing an instrument for recording and
giving notice of the Amended & Restated Management Agreement and certain of the
terms and conditions thereto.

                                        OWNER:

                                        APPLE HOSPITALITY FIVE MANAGEMENT, INC.,
ATTEST:                                 a Virginia corporation

By:                                     By:
    ---------------------------------       ------------------------------------
Print Name:                             Print Name: J. Philip Hart
            -------------------------
Title:                                  Title:      Senior Vice President
       ------------------------------

                                        MANAGER:

                                        RESIDENCE INN BY MARRIOTT, INC.
ATTEST:                                 a Delaware corporation

By:                                     By:
    ---------------------------------       ------------------------------------
Print Name:                             Print Name:
            -------------------------
Title:                                  Title:
       ------------------------------

                                       4

<PAGE>

                                 ACKNOWLEDGMENT

STATE OF              )
         -------------
                      )  ss:
COUNTY OF             )
          ------------

     On the       day of          , before me, the undersigned, a Notary Public,
            -----        ---------
in and for the State of                 , personally appeared J. Philip Hart,
                        ----------------
who acknowledged himself to be the Senior Vice President of Apple Hospitality
Five Management, Inc., a corporation, and that he, as such Senior Vice
President, being authorized to do so, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by himself as
Senior Vice President.

     In witness whereof, I hereunto set my hand and official seal.

                                        ----------------------------------------
                                        Notary Public

My commission expires:
                        -------------------

                                 ACKNOWLEDGMENT

STATE OF MARYLAND     )
                      )  ss:
COUNTY OF MONTGOMERY  )

     On the      day of          , before me, the undersigned, a Notary Public,
            ----       ----------
in and for the State of Maryland, personally appeared              , who
                                                     --------------
acknowledged himself to be the Vice President of Residence Inn By Marriott,
Inc., a corporation, and that he, as such Vice President, being authorized to do
so, executed the foregoing instrument for the purposes therein contained, by
signing the name of the corporation by himself as Vice President.

     In witness whereof, I hereunto set my hand and official seal.

                                        ----------------------------------------
                                        Notary Public

My commission expires:
                        -------------------

                                       5

<PAGE>

                                    EXHIBIT A
                                       TO
              MEMORANDUM OF AMENDED & RESTATED MANAGEMENT AGREEMENT
                                LEGAL DESCRIPTION

                                       6

<PAGE>

                                    EXHIBIT D

                             Map of Restricted Area

                                    [omitted]

                                       7

<PAGE>

                                    EXHIBIT E

                            Environmental Assessment

                                    [omitted]

                                       8Credit Agreement dated April 30, 2003

 Exhibit 4.1 
  

CREDIT AGREEMENT 
  
 Dated as of April 30, 2003 
  
 among 
  
 HOOKER FURNITURE CORPORATION 
 as Borrower, 
  
 BANK OF AMERICA, N.A., 
 as Administrative Agent, 
  
 WACHOVIA BANK, NATIONAL ASSOCIATION, 
  
 and 
  
 BRANCH BANKING & TRUST CO. OF VIRGINIA, 
  
 as Co-Agents, 
  
 and 
  
 The Lenders Party Hereto 
  

 TABLE OF CONTENTS 
  

	 	  	 	  	Page

	 ARTICLE I    DEFINITIONS AND ACCOUNTING TERMS
	  	1
	 Section 1.1
	  	Defined Terms	  	1
	 Section 1.02
	  	Other Interpretive Provisions	  	15
	 Section 1.03
	  	Accounting Terms	  	16
	 Section 1.04
	  	Rounding	  	16
	 Section 1.05
	  	References to Agreements and Laws	  	16
	 Section 1.06
	  	Letter of Credit Amounts	  	16
		
	 ARTICLE II   THE COMMITMENTS AND CREDIT EXTENSIONS
	  	17
	 Section 2.01
	  	Loans	  	17
	 Section 2.02
	  	Borrowings and Conversions of Loans	  	17
	 Section 2.03
	  	Letters of Credit	  	18
	 Section 2.04
	  	Prepayments	  	23
	 Section 2.05
	  	Reduction or Termination of Revolving Commitments	  	23
	 Section 2.06
	  	Repayment of Loans	  	24
	 Section 2.07
	  	Interest	  	25
	 Section 2.08
	  	Fees	  	26
	 Section 2.09
	  	Computation of Interest and Fees	  	26
	 Section 2.10
	  	Evidence of Debt	  	27
	 Section 2.11
	  	Payments Generally	  	27
	 Section 2.12
	  	Sharing of Payments	  	29
		
	 ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
	  	29
	 Section 3.01
	  	Taxes	  	29
	 Section 3.02
	  	Illegality	  	30
	 Section 3.03
	  	Inability to Determine Rates	  	30
	 Section 3.04
	  	Increased Cost and Reduced Return; Capital Adequacy; Reserves on LIBOR Rate Loans	  	31
	 Section 3.05
	  	Funding Losses	  	31
	 Section 3.06
	  	Matters Applicable to all Requests for Compensation	  	32
	 Section 3.07
	  	Survival	  	32
		
	 ARTICLE IV   CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
	  	32
	 Section 4.01
	  	Conditions of Initial Credit Extension	  	32
	 Section 4.02
	  	Conditions to all Credit Extensions and Conversions	  	34
		
	 ARTICLE V   REPRESENTATIONS AND WARRANTIES
	  	34
	 Section 5.01
	  	Existence, Qualification and Power; Compliance with Laws	  	34
	 Section 5.02
	  	Authorization; No Contravention	  	35
	 Section 5.03
	  	Governmental Authorization	  	35
	 Section 5.04
	  	Binding Effect	  	35

  

 i 

	 Section 5.05
	  	Financial Statements; No Material Adverse Effect	  	35
	 Section 5.06
	  	Litigation	  	36
	 Section 5.07
	  	No Default	  	36
	 Section 5.08
	  	Ownership of Property; Liens	  	36
	 Section 5.09
	  	Environmental Compliance	  	36
	 Section 5.10
	  	Insurance	  	36
	 Section 5.11
	  	Taxes	  	36
	 Section 5.12
	  	ERISA Compliance	  	37
	 Section 5.13
	  	Subsidiaries	  	37
	 Section 5.14
	  	Disclosure	  	37
	 Section 5.15
	  	Compliance with Laws	  	37
	 Section 5.16
	  	Margin Regulations; Investment Company Act; Public Utility Holding Company Act	  	38
	 Section 5.17
	  	Principal Place of Business	  	38
		
	 ARTICLE VI   AFFIRMATIVE COVENANTS
	  	38
	 Section 6.01
	  	Financial Statements	  	38
	 Section 6.02
	  	Certificates; Other Information	  	39
	 Section 6.03
	  	Notices	  	40
	 Section 6.04
	  	Payment of Obligations	  	40
	 Section 6.05
	  	Preservation of Existence, Etc	  	40
	 Section 6.06
	  	Maintenance of Properties	  	41
	 Section 6.07
	  	Maintenance of Insurance	  	41
	 Section 6.08
	  	Compliance with Laws	  	41
	 Section 6.09
	  	Books and Records	  	41
	 Section 6.10
	  	Inspection Rights	  	41
	 Section 6.11
	  	Use of Proceeds	  	41
	 Section 6.12
	  	Financial Covenants	  	42
		
	 ARTICLE VII   NEGATIVE COVENANTS
	  	43
	 Section 7.01
	  	Liens	  	43
	 Section 7.02
	  	Investments	  	44
	 Section 7.03
	  	Indebtedness	  	45
	 Section 7.04
	  	Fundamental Changes	  	45
	 Section 7.05
	  	Dispositions	  	45
	 Section 7.06
	  	Restricted Payments	  	46
	 Section 7.07
	  	Change in Nature of Business	  	47
	 Section 7.08
	  	Transactions with Affiliates	  	47
	 Section 7.09
	  	Margin Regulations	  	47
		
	 ARTICLE VIII  EVENTS OF DEFAULT AND REMEDIES
	  	47
	 Section 8.01
	  	Events of Default	  	47
	 Section 8.02
	  	Remedies Upon Event of Default	  	49
	 Section 8.03
	  	Application of Funds	  	50
		
	 ARTICLE IX   AGENT
	  	50
	 Section 9.01
	  	Appointment and Authorization of Agent	  	50

  

 ii 

	 Section 9.02
	  	Delegation of Duties	  	51
	 Section 9.03
	  	Liability of Agent	  	51
	 Section 9.04
	  	Reliance by Agent	  	51
	 Section 9.05
	  	Notice of Default	  	52
	 Section 9.06
	  	Credit Decision; Disclosure of Information by Agent	  	52
	 Section 9.07
	  	Indemnification of Agent	  	52
	 Section 9.08
	  	Agent in its Individual Capacity	  	53
	 Section 9.09
	  	Successor Agent	  	53
	 Section 9.10
	  	Agent May File Proofs of Claim	  	54
	 Section 9.10
	  	Other Agents	  	54
		
	 ARTICLE X MISCELLANEOUS
	  	55
	 Section 10.01
	  	Amendments, Etc	  	55
	 Section 10.02
	  	Notices and Other Communications; Facsimile Copies	  	56
	 Section 10.03
	  	No Waiver; Cumulative Remedies	  	56
	 Section 10.04
	  	Attorney Costs, Expenses and Taxes	  	57
	 Section 10.05
	  	Indemnification by Borrower	  	57
	 Section 10.06
	  	Payments Set Aside	  	58
	 Section 10.07
	  	Successors and Assigns	  	58
	 Section 10.08
	  	Confidentiality	  	60
	 Section 10.09
	  	Set–off	  	61
	 Section 10.10
	  	Interest Rate Limitation	  	61
	 Section 10.11
	  	Counterparts	  	61
	 Section 10.12
	  	Integration	  	62
	 Section 10.13
	  	Survival of Representations and Warranties	  	62
	 Section 10.14
	  	Severability	  	62
	 Section 10.15
	  	Governing Law; Submission to Jurisdiction	  	62
	 Section 10.16
	  	Waiver of Right to Trial by Jury	  	63
	 Section 10.17
	  	Time of the Essence	  	63

  

 iii 

	 SIGNATURES
	  	S-1
		
	 SCHEDULES
	  	 
			
	 2.01
	  	 	  	 
	 5.06
	  	Litigation	  	 
	 5.09
	  	Environmental Matters	  	 
	 5.13
	  	Subsidiaries	  	 
	 5.17
	  	Principal Place of Business	  	 
	 7.01
	  	Existing Liens	  	 
	 7.03
	  	Existing Indebtedness	  	 
	 10.02
	  	Addresses for Notices	  	 
		
	 EXHIBITS
	  	 
		
	 Form of
	  	 
			
	 A
	  	Revolving Loan Notice	  	 
	 B-1
	  	Revolving Note	  	 
	 B-2
	  	Tranche A Term Note	  	 
	 B-3
	  	Tranche B Term Note	  	 
	 C
	  	Compliance Certificate	  	 
	 D
	  	Assignment and Assumption Agreement	  	 

  

 iv 

 CREDIT AGREEMENT 
  
 This CREDIT AGREEMENT (“Agreement”) is entered into as of April 30, 2003, among HOOKER FURNITURE
CORPORATION, a Virginia corporation (“Borrower”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Agent.

  
 Borrower has requested that Lenders provide a revolving credit
facility, and Lenders are willing to do so on the terms and conditions set forth herein. 
  
 In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows: 
  
 ARTICLE I 
  
 DEFINITIONS AND ACCOUNTING TERMS 
  
 Section 1.1 Defined Terms. 
  
 As used in this Agreement, the following terms shall have the meanings set forth below: 
  
 “Administrative Agent” or “Agent” means Bank of America in its capacity as (a) Administrative Agent under any of the
Loan Documents and/or, (b) issuer of Letters of Credit hereunder, as the context requires, or any successor Agent. 
  
 “Affiliate” means, with respect to any Person, another Person that directly or indirectly through one or more intermediaries, Controls,
or is Controlled by or is under common Control with, the Person specified. “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to
vote 5% or more of the securities having ordinary voting power for the election of directors, managing general partners or equivalent governing body of such Person. 
  
 “Agent Fee Letter” has the meaning specified in Section 2.08(b). 
  
 “Agent’s Office” means Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or account as Agent may from time to time notify Borrower and Lenders. 
  
 “Agent-Related Persons” means Agent, together with its Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.  
  
 “Aggregate
Revolving Commitments” means the Revolving Commitments of all Lenders. The initial amount of the Aggregate Revolving Commitments in effect on the Closing Date is FIFTEEN MILLION DOLLARS ($15,000,000). 
  
 “Agreement” means this Credit Agreement. 

 “Applicable Rate” means, from time to time, the following percentages per annum, based
upon the Funded Debt to EBITDA ratio (the “Financial Covenant”) as set forth in the most recent Compliance Certificate received by Agent pursuant to Section 6.02(b): 
  

	 Pricing
 Level

	 	 Funded Debt to
 EBITDA Ratio

	 	 Commitment
 Fee

	 	 LIBOR Loans
 And
 Letters of
 Credit

	1	 	 <0.75:1
	 	0.125%	 	0.625%
	2	 	 30.75:1 but £1.25:1
	 	  0.15%    	 	0.75%  
	3	 	 >1.25:1 but £1.50:1
	 	0.175%	 	1.00%  
	4	 	 >1.50:1
	 	0.20%  	 	1.25%  

  
 Any increase or
decrease in the Applicable Rate resulting from a change in the Financial Covenant shall become effective as of the first Business Day of the month immediately following the date a Compliance Certificate is delivered pursuant to Section
6.02(b); provided, however, that if no Compliance Certificate is delivered when due in accordance with such Section, then Pricing Level 4 shall apply from the first Business Day of the month following the date such Compliance
Certificate was required to have been delivered until the later of the first Business Day of the following month and the first Business Day of the month following the date a Compliance Certificate is delivered; provided further,
however, with respect to the last quarter of any fiscal year, if the financial information delivered pursuant to Section 6.01(c) for such quarter differs from the financial information subsequently provided pursuant to Section
6.01(a) for such quarter and the calculation of the Financial Covenant pursuant to such subsequently delivered financial information would result in a different Pricing Level being applicable, then such new Pricing Level shall be immediately and
retroactively effective and the Borrower shall promptly pay to the Agent, for the benefit of the Lenders, any additional amounts due as a result of such retroactive pricing. Notwithstanding the foregoing, the Applicable Rate in effect from the
Closing Date through the first Business Day of the month immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b) for the fiscal year ending November 30, 2003 shall be determined based upon Pricing
Level 3. 
  
 “Approved Fund” means any Fund that
is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. 
  
 “Assignment and Assumption Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit D.

  
 “Attorney Costs” means and includes all
reasonable fees, expenses and disbursements of any law firm or other external counsel and, without duplication, the allocated cost of internal legal services and all reasonable expenses and disbursements of internal counsel. 
  
 “Attributable Indebtedness” means, on any date, (a) in
respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease. 
  

 2 

 “Audited Financial Statements” means the audited consolidated balance sheet of Borrower
and its Subsidiaries for the fiscal year ended November 30, 2002, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of Borrower and its Subsidiaries, including the notes
thereto. 
  
 “Availability Period” means the
period from and including the Closing Date to the earliest of (a) the Revolving Loan Maturity Date, (b) the date of termination of the Aggregate Revolving Commitments pursuant to Section 2.05, and (c) the date of termination of the commitment
of each Lender to make Loans and of the obligation of Agent to make L/C Credit Extensions pursuant to Section 8.02. 
  
 “Bank of America” means Bank of America, N.A. and its successors. 
  
 “Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds
Rate for such day plus  1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from
time to time by Bank of America as its “prime rate.” The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in
the public announcement of such change. 
  
 “Base
Rate Loan” means a Loan that bears interest based on the Base Rate. 
  
 “BB&T L/C Facility” means that certain letter of credit facility dated as of April 30, 2003 between the Borrower and Branch Banking & Trust Co. of Virginia. 
  
 “Borrower” has the meaning specified in the introductory
paragraph hereto. 
  
 “Borrowing” means a
borrowing consisting of simultaneous Loans of the same Type made by each Lender pursuant to Section 2.01. 
  
 “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws
of, or are in fact closed in, the state where Agent’s Office is located or the Commonwealth of Virginia and, if such day relates to any LIBOR Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks
in the London interbank eurodollar market. 
  
 “Cash
Collateralize” has the meaning specified in Section 2.03(g). 
  
 “Cash Flow” means, for any period (a) net income, after income tax, (b) less income or plus loss from discontinued operations and extraordinary items, (c) plus depreciation,
depletion, and amortization, (d) plus interest expense on all obligations, and (e) minus dividends, withdrawals, and other distributions, in each case for such period. 
  
 “Change of Control” means, with respect to any Person, an event or series of events by which: 

 
 (a) any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed 
  

 3 

 to have “beneficial ownership” of all securities that such person or group has the right to
acquire (such right, an “option right”), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the equity securities of such Person entitled to vote for members
of the board of directors or equivalent governing body of such Person on a fully diluted basis (and, taking into account all such securities that such person or group has the right to acquire pursuant to any option right); or 
  
 (b) during any period of 24 consecutive months, a majority
of the members of the board of directors or other equivalent governing body of such Person ceases to be composed of individuals: (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by a board or equivalent governing body a majority of which was composed of individuals referred to in clause (i) above at the time of such election or nomination, or (iii) whose
election or nomination to that board or other equivalent governing body was approved by a board or equivalent governing body a majority of which was composed of individuals referred to in clauses (i) and (ii) above at the time of such election or
nomination. 
  
 “Closing Date” means the date
hereof. 
  
 “Code” means the Internal Revenue
Code of 1986, as amended. 
  
 “Commitment” means,
as to each Lender, the Revolving Commitment of such Lender, the Tranche A Term Loan Commitment of such Lender and/or the Tranche B Term Loan Commitment of such Lender. 
  
 “Compliance Certificate” means a certificate substantially in the form of Exhibit C. 
  
 “Contractual Obligation” means, as to any Person, any
provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. 
  
 “Control” has the meaning specified in the definition of “Affiliate”. 
  
 “Credit Extension” means a Borrowing, or an L/C Credit
Extension. 
  
 “Debtor Relief Laws” means the
Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United
States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally. 
  
 “Debt Service Coverage Ratio” means, for any period, the ratio of Cash Flow 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, in each case for such period. 
  
 “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time,
or both, would be an Event of Default. 
  
 “Default
Rate” means an interest rate equal to (a) the Base Rate plus (b) the Applicable Rate, if any, applicable to Base Rate Loans plus (c) 2% per annum; provided, however, that with respect to a LIBOR Rate Loan, the
Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, in each case to the fullest extent permitted by applicable Laws. 
  

 4 

 “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the
Loans or participations in L/C Obligations required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to Agent or any other Lender any other amount required
to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding. 
  
 “Disposition” or “Dispose” means the sale,
transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or
any rights and claims associated therewith. 
  
 “Dollar” and “$” mean lawful money of the United States. 
  
 “EBIT” means, for any period, (a) net income, (b) less income or plus loss from discontinued operations and extraordinary
items, (c) plus income taxes, and (d) plus interest expense, in each case for such period. 
  
 “EBITDA” means, for any period, (a) net income, (b) less income or plus loss from discontinued operations and extraordinary
items, (c) plus income taxes, (d) plus interest expense, and (e) plus depreciation, depletion, and amortization, in each case for such period. 
  
 “Eligible Assignee” has the meaning specified in Section 10.07(h). 
  
 “Environmental Laws” means any and all federal, state,
local, and foreign statutes, laws, regulations, ordinances and rules; judgments, orders, decrees, permits, concessions, grants, franchises and licenses issued by a Governmental Authority; and agreements or restrictions imposed by a Governmental
Authority relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

  
 “Environmental Liability” means any
liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. 
  
 “ERISA” means the Employee Retirement Income Security Act of
1974, as amended. 
  
 “ERISA Affiliate” means any
trade or business (whether or not incorporated) under common control with Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

  
 “ERISA Event” means (a) a Reportable Event
with respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan 
  

 5 

 year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that
is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a
notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition
which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV
of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate. 
  
 “Event of Default” has the meaning specified in Section 8.01. 
  
 “Existing Letter of Credit” means that certain $783,587.00 Standby Letter of Credit #3041237 issued on
October 1, 2001 by Bank of America, N.A. with an expiry date of September 30, 2003 for the benefit of UBS (Cayman Islands) Ltd. 
  
 “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of  1/100 of 1%) charged to Bank of America on such day on such transactions as determined by Agent. 
  
 “Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of its business. 
  
 “Funded Debt” means, as of any date, all outstanding liabilities for borrowed money and other interest-bearing liabilities, including current and long-term debt, as of such date, less the
non-current portion of Subordinated Liabilities. 
  
 “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or, in the event that such principles collectively cease to exist, then such other successor principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied. 
  
 “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority,
instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. 
  
 “Guarantee” means, as to any Person, (a) any obligation,
contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or 
  

 6 

 supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner
the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person; provided that the term “Guarantee” shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated
or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning. 
  
 “Hazardous Materials” means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and
all other substances or wastes of any nature regulated pursuant to any Environmental Law. 
  
 “Indebtedness” means, as to any Person at a particular time, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP: 
  
 (a) all obligations of such Person for borrowed money and
all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; 
  
 (b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments; 
  
 (c) the obligation, if any, of such Person to pay the Swap Termination Value; 
  
 (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the
ordinary course of business); 
  
 (e)
indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse, provided that the amount of such indebtedness for purposes of this Agreement shall not exceed the greater of the book value and the fair market value of the property subject to such
Lien; 
  
 (f) capital leases and Synthetic Lease
Obligations; 
  
 (g) all purchase money
indebtedness; 
  
 (h) the principal portion of
all obligations under conditional sale or other title retention agreements relating to property purchased by the Borrower or any Subsidiary (other than customary reservations or retentions of title under agreements with suppliers entered into in the
ordinary course of business); 
  

 7 

 (i) all preferred stock or other equity interests providing for mandatory redemptions,
sinking fund or like payments prior to the Tranche A Term Loan Maturity Date (“Redeemable Stock”); provided that Redeemable Stock shall not include any preferred stock or other equity interest subject to mandatory redemption if such
mandatory redemption may be satisfied by delivering common stock or some other equity interest not subject to mandatory redemption; and 
  
 (j) all Guarantees of such Person in respect of any of the foregoing. 
  
 For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any capital
lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date. 
  
 “Indemnified Liabilities” has the meaning specified in Section 10.05. 
  
 “Indemnitees” has the meaning specified in Section
10.05. 
  
 “Information” has the meaning
specified in Section 10.08. 
  
 “Interest
Period” means each period from and including the first Business Day of a month but excluding the first Business Day of the following month; provided that: 
  
 (a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to
the next succeeding Business Day unless, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; 
  
 (b) any Interest Period 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 calendar month at the end of such Interest Period. 
  
 “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, Guarantee 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. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in
the value of such Investment. 
  
 “IRS” means the
United States Internal Revenue Service. 
  
 “Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed 
  

 8 

 duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law. 
  
 “L/C
Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Pro Rata Share. 
  
 “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has
not been reimbursed on the date when made or refinanced as a Borrowing of Revolving Loans. 
  
 “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof. 
  
 “L/C Obligations” means, as at any date of determination,
the aggregate undrawn face amount of all outstanding Letters of Credit as of such date plus the aggregate of all Unreimbursed Amounts as of such date, including all L/C Borrowings. 
  
 “Lender” has the meaning specified in the introductory paragraph hereto and, as the context requires,
includes Agent in its capacity as issuer of Letters of Credit hereunder. 
  
 “Lending Office” means, as to any Lender, the office or offices of such Lender described as such on Schedule 10.02, or such other office or offices as a Lender may from time to time notify
Borrower and Agent. 
  
 “Letter of Credit” means
any letter of credit issued hereunder and shall include the Existing Letter of Credit. A Letter of Credit may be a commercial letter of credit or a standby letter of credit. 
  
 “Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter
of Credit in the form from time to time in use by Agent. 
  
 “Letter of Credit Expiration Date” means the day that is seven days prior to the Revolving Loan Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day). 
  
 “Letter of Credit Sublimit” means an amount equal to
$3,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Revolving Commitments. 
  
 “LIBOR Base Rate” has the meaning set forth in the definition of LIBOR Rate. 
  

 9 

 “LIBOR Rate” means for any Interest Period with respect to any LIBOR Rate Loan, a rate
per annum determined by Agent pursuant to the following formula: 
  

		
	LIBOR Rate =	  	                 LIBOR Base
Rate                    

	 	  	 1.00 – LIBOR Reserve Percentage

	 	  	 
	 Where,
	  	 

  
 “LIBOR Base Rate” means, for such Interest Period: 
  
 (a) the rate per annum equal to the London interbank offered rate that appears on Page 3750 of the Telerate screen (or any successor thereto) for deposits in Dollars (for delivery on the first day of such Interest
Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or 
  
 (b) if the rate referenced in the preceding clause (a) does not appear on such page or service or such page
or service shall not be available, the rate per annum equal to the rate determined by Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in
Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or 

 
 (c) if the rates referenced in the preceding clauses (a)
and (b) are not available, the rate per annum determined by Agent as the rate of interest at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the LIBOR Rate Loan being
made or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 4:00 p.m.
(London time) two Business Days prior to the first day of such Interest Period. 
  
 “LIBOR Reserve Percentage” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal,
carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the Board of Governors of the Federal Reserve System of the United States for determining the maximum
reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The LIBOR Rate for each outstanding LIBOR Rate
Loan shall be adjusted automatically as of the effective date of any change in the LIBOR Reserve Percentage.  
  
 “LIBOR Rate Loan” means a Loan that bears interest at a rate based on the LIBOR Rate. 
  
 “Lien” means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect as any of the foregoing. 
  

 10 

 “Loan” means an extension of credit by a Lender to Borrower under Article II in
the form of a Revolving Loan, a Tranche A Term Loan, or a Tranche B Term Loan. 
  
 “Loan Documents” means this Agreement, each Note, and the Agent Fee Letter. 
  
 “Loan Notice” means a notice of (a) a Borrowing of Revolving Loans, or (b) a conversion of Loans from one Type to the other pursuant to
Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A. 
  
 “Loan Parties” means, collectively, Borrower and each Person (other than Agent or any Lender) executing a Loan Document. 
  
 “Material Adverse Effect” means (a) a material adverse
change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual and contingent), condition (financial or otherwise) or prospects of Borrower or Borrower and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan
Document to which it is a party. 
  
 “Multiemployer
Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been
obligated to make contributions. 
  
 “Note” or
“Notes” means the Revolving Notes, the Tranche A Term Notes and/or the Tranche B Term Notes, individually or collectively, as appropriate. 
  
 “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan
Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees
that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed
claims in such proceeding. 
  
 “Organization
Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any
limited liability company, the certificate or articles of formation and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement
of formation and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity. 
  
 “Outstanding Amount” means (i) with respect to any Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of any
Loans, as the case may be, occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes
in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of
Credit taking effect on such date. 
  

 11 

 “Participant” has the meaning specified in Section 10.07(d). 
  
 “PBGC” means the Pension Benefit Guaranty Corporation.

  
 “Pension Plan” means any “employee pension
benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA
Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years. 
  
 “Person” means any individual, trustee, corporation, general
partnership, limited partnership, limited liability company, joint stock company, trust, unincorporated organization, bank, business association, firm, joint venture or Governmental Authority. 
  
 “Plan” means any “employee benefit plan” (as such
term is defined in Section 3(3) of ERISA) established by Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate. 
  
 “Pro Rata Share” means, with respect to each Lender, at any time, (a) with respect to such Lender’s
Revolving Commitment, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Revolving Commitment of such Lender at such time and the denominator of which is the amount of the
Aggregate Revolving Commitments at such time; provided that if the commitment of each Lender to make Revolving Loans and the obligation of Agent to make L/C Credit Extensions have been terminated pursuant to Section 8.02, then the Pro
Rata Share of each Lender shall be determined based on the Pro Rata Share of such Lender immediately prior to such termination and after giving effect to any subsequent assignments made pursuant to Section 10.07, (b) with respect to such
Lender’s outstanding Tranche A Term Loan, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the principal amount of the Tranche A Term Loan held by such Lender at such time and the
denominator of which is the aggregate principal amount of the Tranche A Term Loan at such time, and (c) with respect to such Lender’s outstanding Tranche B Term Loan, a fraction (expressed as a percentage, carried out to the ninth decimal
place), the numerator of which is the principal amount of the Tranche B Term Loan held by such Lender at such time and the denominator of which is the aggregate principal amount of the Tranche B Term Loan at such time. The initial Pro Rata Share of
each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption Agreement pursuant to which such Lender becomes a party hereto, as applicable. 
  
 “Quick Assets” means cash, short-term cash investments, net
trade receivables and marketable securities not classified as long-term investments. 
  
 “Register” has the meaning set forth in Section 10.07(c). 
  
 “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period
has been waived. 
  
 “Request for Credit
Extension” means (a) with respect to a Borrowing or conversion of Loans, a Loan Notice, and (b) with respect to an L/C Credit Extension, a Letter of Credit Application. 
  

 12 

 “Required Lenders” means, as of any date of determination, (a) Lenders having more than
66.6% of the Aggregate Revolving Commitments and the outstanding Tranche A Term Loans and outstanding Tranche B Term Loans or, (b) if the Revolving Commitments have been terminated pursuant to Section 8.02, Lenders holding in the aggregate
more than 66.6% of the Total Revolving Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations being deemed “held” by such Lender for purposes of this definition) and the
outstanding Tranche A Term Loans and outstanding Tranche B Term Loans; provided that the Revolving Commitment of, and the portion of the Total Revolving Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes
of making a determination of Required Lenders. 
  
 “Responsible Officer” means the chief executive officer, president, chief financial officer, chief accounting officer, treasurer or controller of a Loan Party. Any document delivered hereunder that is signed by a
Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have
acted on behalf of such Loan Party. 
  
 “Restricted
Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other equity interest of Borrower or any Subsidiary, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other equity interest or of any option, warrant or other right to
acquire any such capital stock or other equity interest. 
  
 “Revolving Commitment” means, as to each Lender, its obligation to (a) make Revolving Loans to Borrower pursuant to Section 2.01, and (b) purchase participations in L/C Obligations, in an aggregate principal amount
at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01, or in the Assignment and Assumption Agreement pursuant to which such Lender becomes a party hereto, as applicable, as such
amount may be adjusted from time to time in accordance with this Agreement. 
  
 “Revolving Loan” has the meaning specified in Section 2.01(a). 
  
 “Revolving Loan Maturity Date” means April 30, 2005. 
  
 “Revolving Note” has the meaning specified in Section 2.10(a). 
  
 “Subordinated Liabilities” means liabilities subordinated to
the Obligations in a manner reasonably acceptable to Agent its sole discretion. 
  
 “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having
ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is
otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of Borrower. 
  
 “Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or
bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward 
  

 13 

 foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement with respect to transactions described in clause (a) above (any such master agreement, together with any
related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement. 
  
 “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided in good faith and in a
commercially reasonable manner by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender). 
  
 “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax
retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment). 
  
 “Tangible Net Worth” means, as of any date, the value of 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, and other like intangibles, and monies due from Affiliates, officers, directors, employees, shareholders, members or managers of
Borrower) less Total Liabilities, including but not limited to accrued and deferred income taxes, but excluding the non-current portion of Subordinated Liabilities, in each case as of such date. 
  
 “Taxes” has the meaning specified in Section 3.01(a).

  
 “Threshold Amount” means $2,000,000.

  
 “Total Liabilities” means, as of any date,
the sum of Borrower’s current liabilities plus long term liabilities as of such date. 
  
 “Total Revolving Outstandings” means the aggregate Outstanding Amount of all Revolving Loans and all L/C Obligations. 
  
 “Tranche A Term Loan” has the meaning specified in Section 2.01(b). 
  
 “Tranche A Term Loan Commitment” means, as to each Lender,
its obligation to make its portion of the Tranche A Term Loan to the Borrower pursuant to Section 2.01(b), in the principal amount set forth opposite such Lender’s name on Schedule 2.01. The aggregate principal amount of the
Tranche A Term Loan Commitments of all of the Lenders as in effect on the Closing Date is EIGHTEEN MILLION 
  

 14 

 THREE HUNDRED NINETEEN THOUSAND ONE HUNDRED EIGHTY-FOUR AND 65/100THS DOLLARS ($18,319,184.65). 
  
 “Tranche A Term Loan Maturity Date” means September 1, 2010.

  
 “Tranche A Term Note” has the meaning
specified in Section 2.10(a). 
  
 “Tranche B Term
Loan” has the meaning specified in Section 2.01(b). 
  
 “Tranche B Term Loan Commitment” means, as to each Lender, its obligation to make its portion of the Tranche B Term Loan to the Borrower pursuant to Section 2.01(c), in the principal amount set forth opposite such
Lender’s name on Schedule 2.01. The aggregate principal amount of the Tranche B Term Loan Commitments of all of the Lenders as in effect on the Closing Date is TWENTY-FOUR MILLION FIVE HUNDRED THOUSAND AND 00/100THS DOLLARS
($24,500,000.00). 
  
 “Tranche B Term Loan Maturity
Date” means March 1, 2008. 
  
 “Tranche B Term
Note” has the meaning specified in Section 2.10(a). 
  
 “Type” means, with respect to a Loan, its character as a Base Rate Loan or a LIBOR Rate Loan. 
  
 “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. 
  
 “United States,” and “U.S.” mean the United
States of America. 
  
 “Unreimbursed Amount” has
the meaning set forth in Section 2.03(c)(i). 
  
 “Wachovia L/C Facility” means that certain agreement whereby Wachovia Bank, National Association may provide the Borrower with letters of credit up to an aggregate outstanding amount of $12,000,000 at any one time.

  
 Section 1.02 Other Interpretive Provisions. 

 
 With reference to this Agreement and each other Loan Document, unless
otherwise specified herein or in such other Loan Document: 
  
 (a)
The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. 
  
 (b) (i) The words “herein”, “hereto”, “hereof” and “hereunder” and words of similar
import when used in any Loan Document shall refer to such Loan Document as a whole and not to any particular provision thereof; (ii) Article, Section, Exhibit and Schedule references are to the Loan Document in which such reference appears; (iii)
the term “including” is by way of example and not limitation; and (iv) the term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other
writings, however evidenced, whether in physical or electronic form. 
  

 15 

 (c) In the computation of periods of time from a specified date to a later specified date, the word
“from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and
including.” 
  
 (d) Section headings herein and in the
other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document. 
  
 Section 1.03 Accounting Terms. 
  
 (a) All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in
preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. 
  
 (b) If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either
Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the
Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Agent and Lenders financial
statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

  
 Section 1.04 Rounding. 
  
 Any financial ratios required to be maintained by any Loan Party pursuant to
this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the
nearest number (with a rounding-up if there is no nearest number). 
  
 Section 1.05 References to Agreements and Laws. 
  
 Unless otherwise expressly provided herein, (a) references to Organization Documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any Law shall include
all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law. 
  
 Section 1.06 Letter of Credit Amounts. 
  
 Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to mean the maximum face amount of such
Letter of Credit after giving effect to all increases thereof contemplated by such Letter of Credit or the Letter of Credit Application therefor, whether or not such maximum face amount is in effect at such time. 
  

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 ARTICLE II 
  
 THE COMMITMENTS AND CREDIT EXTENSIONS 
  
 Section 2.01 Loans. 
  
 (a) Revolving Loans. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a
“Revolving Loan”) to Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Revolving Commitment; provided,
however, that after giving effect to any Borrowing of Revolving Loans, (i) the Total Revolver Outstandings shall not exceed the Aggregate Revolving Commitments, and (ii) the aggregate Outstanding Amount of the Revolving Loans of any Lender,
plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C Obligations shall not exceed such Lender’s Revolving Commitment. Within the limits of each Revolving Lender’s Commitment, and subject to the other terms and
conditions hereof, Borrower may borrow under this Section 2.01, prepay under Section 2.04, and reborrow under this Section 2.01. Revolving Loans may be Base Rate Loans or LIBOR Rate Loans, as further provided herein. 

 
 (b) Tranche A Term Loan. Subject to the terms and conditions set
forth herein, each Lender severally agrees to make its portion of a term loan (the “Tranche A Term Loan”) to the Borrower in Dollars on the Closing Date in an amount not to exceed such Lender’s Tranche A Term Loan Commitment.
Amounts repaid on the Tranche A Term Loan may not be reborrowed. Each Tranche A Term Loan shall initially bear interest at a rate based on the LIBOR Rate. 
  
 (c) Tranche B Term Loan. Subject to the terms and conditions set forth herein, each Lender severally agrees to make its portion of a term loan (the
“Tranche B Term Loan”) to the Borrower in Dollars on the Closing Date in an amount not to exceed such Lender’s Tranche B Term Loan Commitment. Amounts repaid on the Tranche B Term Loan may not be reborrowed. Each Tranche B Term
Loan shall initially bear interest at a rate based on the LIBOR Rate. 
  
 Section 2.02 Borrowings and Conversions of Loans. 
  
 (a) Each Borrowing or conversion of Loans shall be made upon Borrower’s irrevocable notice to Agent, which may be given by telephone; provided, however, the Borrower need not deliver to Agent notice of the Borrowing of the Tranche A
Term Loan or the Tranche B Term Loan. Each such notice must be received by Agent not later than 11:00 a.m., New York time on the requested date of any Borrowing or conversion. Each telephonic notice by Borrower pursuant to this Section
2.02(a) must be confirmed promptly by delivery to Agent of a written Loan Notice, appropriately completed and signed by a Responsible Officer of Borrower. Except as provided in Section 2.03(c), each Borrowing or conversion of Revolving
Loans shall be in a principal amount of $500,000 or a whole multiple of $500,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall specify (i) the requested date of the Borrowing or conversion (which shall be a Business Day),
(ii) the principal amount of Loans to be borrowed and (iii) the initial Type of the Loans to be borrowed or converted. 
  
 (b) Following receipt of a Loan Notice, Agent shall promptly notify each Lender of the amount of its Pro Rata Share of the applicable Loans. In the case
of a Borrowing, each Lender shall make the amount of its Loan available to Agent in immediately available funds at Agent’s Office not later than 1:00 p.m., New York time, on the Business Day specified in the applicable Loan Notice. In the case
of a Borrowing, upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), Agent shall make all funds so received available to Borrower in like funds
as received by Agent either by (i) crediting the account of Borrower on the 
  

 17 

 books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance
with instructions provided to (and reasonably acceptable to) Agent by Borrower; provided, however, that if, on the date of the Loan Notice with respect to such Borrowing is given by Borrower there are L/C Borrowings outstanding, then
the proceeds of such Borrowing shall be applied, first, to the payment in full of any such L/C Borrowings, and second, to Borrower as provided above. 
  
 (c) Agent shall promptly notify Borrower and Lenders of the interest rate applicable to any Interest Period for LIBOR Rate
Loans upon determination of such interest rate. The determination of the LIBOR Rate by Agent shall be conclusive in the absence of manifest error. 
  
 Section 2.03 Letters of Credit. 
  
 (a) The Letter of Credit Commitment. 
  
 (i) Subject to the terms and conditions set forth herein, (A) Agent agrees, in reliance upon the agreements of the other Lenders set forth
in this Section 2.03: (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of Borrower or any Subsidiary, and to amend or
renew Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drafts under the Letters of Credit; and (B) Lenders severally agree to participate in Letters of Credit issued for the account of Borrower or
any Subsidiary; provided that Agent shall not be obligated to make any L/C Credit Extension with respect to any Letter of Credit, and no Lender shall be obligated to participate in, any Letter of Credit if as of the date of such L/C Credit
Extension, (x) the Total Revolving Outstandings would exceed the Aggregate Revolving Commitments, (y) the aggregate Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of
all L/C Revolving Obligations would exceed such Lender’s Revolving Commitment, or (z) the Outstanding Amount of the L/C Obligations would exceed the Letter of Credit Sublimit. Within the foregoing limits, and subject to the terms and conditions
hereof, Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and
reimbursed. Each Existing Letter of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof. 
  
 (ii) Agent shall be under no obligation to issue any Letter
of Credit if: 
  
 (A) any order, judgment or
decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain Agent from issuing such Letter of Credit, or any Law applicable to Agent or any request or directive (whether or not having the force of law) from
any Governmental Authority with jurisdiction over Agent shall prohibit, or request that Agent refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon Agent with respect to such Letter of
Credit any material restriction, reserve or capital requirement (for which Agent is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon Agent any unreimbursed loss, cost or expense which was not applicable on
the Closing Date and which Agent in good faith deems material to it; 
  
 (B) the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance, unless the Required Lenders have approved such expiry date; 
  

 18 

 (C) the expiry date of such requested Letter of Credit would occur after the Letter of
Credit Expiration Date, unless all Lenders have approved such expiry date; 
  
 (D) the issuance of such Letter of Credit would violate one or more policies of Agent; or 
  
 (E) such Letter of Credit is in an initial amount less than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the
case of a standby Letter of Credit, or is to be denominated in a currency other than Dollars. 
  
 (iii) Agent shall be under no obligation to amend any Letter of Credit if (A) Agent would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit. 
  
 (b) Procedures for Issuance and Amendment of Letters of Credit.  
  
 (i) Each Letter of Credit shall be issued or amended, as the
case may be, upon the request of Borrower delivered to Agent in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of Borrower. Such Letter of Credit Application must be received by Agent not
later than 11:00 a.m., New York time, at least five Business Days (or such later date and time as Agent may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be.

  
 (ii) Promptly after receipt of any Letter of
Credit Application by Agent at the address set forth in Schedule 10.02 for receiving Letter of Credit Applications and related correspondence, if the requested issuance or amendment is permitted in accordance with the terms hereof, then,
subject to the terms and conditions hereof, Agent shall, on the requested date, issue a Letter of Credit for the account of Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with Agent’s usual and
customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from Agent a risk participation in such Letter of Credit in an
amount equal to the product of such Lender’s Pro Rata Share times the amount of such Letter of Credit. 
  
 (iii) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto
or to the beneficiary thereof, Agent will also deliver to Borrower a true and complete copy of such Letter of Credit or amendment. 
  
 (c) Drawings and Reimbursements; Funding of Participations. 
  
 (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of drawing under such Letter of
Credit, Agent shall notify Borrower thereof. Not later than 11:00 a.m., New York time, on the date of any payment by Agent under a Letter of Credit (each such date, an “Honor Date”), Borrower shall reimburse Agent in an amount equal
to the amount of such drawing. If Borrower fails to so reimburse Agent by such time, Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of
such Lender’s Pro Rata Share thereof. In such event, Borrower shall be deemed to have requested a Borrowing of Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and 

 

 19 

 multiples specified in Section 2.02 for the principal amount of Loans, but subject to the amount
of the unutilized portion of the Aggregate Revolving Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Loan Notice). Any notice given by Agent pursuant to this Section 2.03(c)(i) may be given by
telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. 
  
 (ii) Each Lender (including Agent in its capacity as a Lender) shall upon any notice pursuant to Section
2.03(c)(i) make funds available to Agent at Agent’s Office in an amount equal to its Pro Rata Share of the Unreimbursed Amount not later than 1:00 p.m., New York time, on the Business Day specified in such notice by Agent, whereupon,
subject to the provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Loan to Borrower in such amount. 
  
 (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Borrowing of Loans because
the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, Borrower shall be deemed to have incurred from Agent an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to Agent pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03. 
  
 (iv) Until each Lender funds its Revolving Loan or L/C Advance pursuant to this Section 2.03(c) to
reimburse Agent for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Pro Rata Share of such amount shall be solely for the account of Agent. 
  
 (v) Each Lender’s obligation to make Revolving Loans or L/C Advances to reimburse Agent for amounts
drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such
Lender may have against Agent, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default; or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing. No such making of
an L/C Advance shall relieve or otherwise impair the obligation of Borrower to reimburse Agent for the amount of any payment made by Agent under any Letter of Credit, together with interest as provided herein. 
  
 (vi) If any Lender fails to make available to Agent any
amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), Agent shall be entitled to recover from such Lender, on demand, such amount with
interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to Agent at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of Agent
submitted to any Lender with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error. 
  
 (d) Repayment of Participations. 
  
 (i) At any time after Agent has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance
in respect of such payment in accordance with Section 2.03(c), if Agent receives any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or otherwise, including proceeds of 
  

 20 

 Cash Collateral applied thereto by Agent), Agent will distribute to such Lender its Pro Rata Share
thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by Agent. 
  
 (ii) If any payment received by Agent pursuant to Section
2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by Agent in its discretion, each Lender shall pay to Agent its Pro Rata Share thereof on
demand of Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. 
  
 (e) Obligations Absolute. The obligation of Borrower to reimburse
Agent for each drawing under each Letter of Credit, and to repay each L/C Borrowing, shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the
following: 
  
 (i) any lack of validity or
enforceability of such Letter of Credit, this Agreement, or any other agreement or instrument relating thereto; 
  
 (ii) the existence of any claim, counterclaim, set-off, defense or other right that Borrower may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), Agent or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction; 
  
 (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit; 
  
 (iv) any payment by Agent under such Letter of Credit
against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by Agent under such Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or 
  
 (v) any other
circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower. 
  
 Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower’s instructions or other irregularity, Borrower will immediately notify Agent. Borrower shall be conclusively deemed to have waived any such
claim against Agent and its correspondents unless such notice is given as aforesaid. 
  
 (f) Role of Agent. Each Lender and Borrower agree that, in paying any drawing under a Letter of Credit, Agent shall not have any responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or inquire as to 
  

 21 

 the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.
None of Agent, any Agent-Related Person nor any of the respective correspondents, participants or assignees of Agent shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of
Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to
any Letter of Credit or Letter of Credit Application. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption
is not intended to, and shall not, preclude Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of Agent, any Agent-Related Person, nor any of the
respective correspondents, participants or assignees of Agent, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e); provided, however, that anything in such clauses to
the contrary notwithstanding, Borrower may have a claim against Agent, and Agent may be liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower which Borrower
proves were caused by Agent’s willful misconduct or gross negligence or Agent’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of such Letter of Credit. In furtherance and not in limitation of the foregoing, Agent may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice
or information to the contrary, and Agent shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. 
  
 (g) Cash Collateral. Upon the request of Agent, if, as of the Letter of Credit Expiration Date, any Letter of Credit may for any reason remain outstanding and partially or wholly undrawn, Borrower shall
immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount determined as of the date of such L/C Borrowing or the Letter of Credit Expiration Date, as the case may be). For
purposes hereof, “Cash Collateralize” means to pledge and deposit with or deliver to Agent, for the benefit of Agent, as issuer of Letters of Credit and Lenders, as collateral for the L/C Obligations, cash or deposit account
balances pursuant to documentation in form and substance satisfactory to Agent (which documents are hereby consented to by Lenders). Derivatives of such term have corresponding meanings. Borrower hereby grants to Agent, for the benefit of Agent, as
issuer of Letters of Credit and Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank
of America. 
  
 (h) Applicability of ISP98 and UCP. Unless
otherwise expressly agreed by Agent and Borrower when a Letter of Credit is issued, (i) the rules of the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version
thereof as may be in effect at the time of issuance) shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce
(the “ICC”) at the time of issuance shall apply to each commercial Letter of Credit.  
  
 (i) Letter of Credit Fees. Borrower shall pay to Agent for the account of each Lender in accordance with its Pro Rata Share a letter of credit fee
for each Letter of Credit equal to the Applicable Rate times the daily maximum amount available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit). Such letter of credit
fees shall be computed on a quarterly basis in arrears. Such letter of credit fees shall be due and payable on the first Business Day of each March, June, September and December, commencing with the first such date to 
  

 22 

 occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. If
there is any change in the Applicable Rate during any quarter, the daily maximum amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that
such Applicable Rate was in effect. 
  
 (j) Fronting Fee and
Documentary and Processing Charges Payable to Agent. Borrower shall pay directly to Agent for its own account a fronting fee in an amount with respect to each Letter of Credit, equal to  1/4 of 1% per annum of the daily maximum amount available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under
such Letter of Credit), due and payable quarterly in arrears on the first Business Day of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, and on the Letter of Credit
Expiration Date. In addition, Borrower shall pay directly to Agent for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of Agent relating to letters of credit as from
time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable. 
  
 (k) Conflict with Letter of Credit Application. In the event of any conflict between the terms hereof and the terms of any Letter of Credit
Application, the terms hereof shall control. 
  
 (l)
Designation of Subsidiaries as Account Parties. Notwithstanding anything to the contrary set forth in this Agreement, including without limitation Section 2.03(a), a Letter of Credit issued hereunder may contain a statement to the effect that
such Letter of Credit is issued for the account of a Subsidiary of the Borrower, provided that notwithstanding such statement, the Borrower shall be the actual account party for all purposes of this Credit Agreement for such Letter of Credit and
such statement shall not affect the Borrower’s reimbursement obligations hereunder with respect to such Letter of Credit. 
  
 Section 2.04 Prepayments. 
  
 (a) Borrower may, upon notice to Agent, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty;
provided that (i) such notice must be received by Agent not later than 11:00 a.m., New York time, on the date of the prepayment; (ii) any such prepayment shall be in a principal amount of $2,000,000 or a whole multiple of $500,000 in excess
thereof; or, if less, the entire principal amount thereof then outstanding and (iii) any prepayment of the Tranche A Term Loan or the Tranche B Term Loan shall be applied to the remaining principal amortization payments in inverse order of maturity.
Each such notice shall specify the date and amount of such prepayment. Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Pro Rata Share of such prepayment. If such notice is given by
Borrower, Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Loan shall be accompanied by all accrued interest thereon, together with any
additional amounts required pursuant to Section 3.05. Each such prepayment shall be applied to the Loans of Lenders in accordance with their respective Pro Rata Shares. 
  
 (b) If for any reason the Total Revolving Outstandings at any time exceed the Aggregate Revolving Commitments then in
effect, Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided, however, that Borrower shall not be required to Cash Collateralize the L/C Obligations
pursuant to this Section 2.04(b) unless after the prepayment in full of the Revolving Loans the Total Revolving Outstandings exceed the Aggregate Revolving Commitments then in effect. 
  
 Section 2.05 Reduction or Termination of Revolving Commitments.

  

 23 

 Borrower may, upon notice to Agent, terminate the Aggregate Revolving Commitments, or from time to time
permanently reduce the Aggregate Revolving Commitments; provided that (i) any such notice shall be received by Agent not later than 11:00 a.m., five Business Days prior to the date of termination or reduction, (ii) any such partial reduction
shall be in an aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) Borrower shall not terminate or reduce the Aggregate Revolving Commitments if, after giving effect thereto and to any concurrent prepayments
hereunder, the Total Revolving Outstandings would exceed the Aggregate Revolving Commitments and (iv) if, after giving effect to any reduction of the Aggregate Revolving Commitments, the Letter of Credit Sublimit exceeds the amount of the Aggregate
Revolving Commitments, such Sublimit shall be automatically reduced by the amount of such excess. Agent will promptly notify Lenders of any such notice of termination or reduction of the Aggregate Revolving Commitments. Once reduced in accordance
with this Section, the Aggregate Revolving Commitments may not be increased. Any reduction of the Aggregate Revolving Commitments shall be applied to the Revolving Commitment of each Lender according to its Pro Rata Share. All facility utilization
fees accrued until the effective date of any termination of the Aggregate Revolving Commitments shall be paid on the effective date of such termination. 
  
 Section 2.06 Repayment of Loans. 
  
 (a) Revolving Loans. Borrower shall repay to Lenders on the Revolving Loan Maturity Date the aggregate principal amount of Revolving Loans
outstanding on such date. 
  
 (b) Tranche A Term Loan. The
Borrower shall repay the outstanding principal amount of the Tranche A Term Loan in installments on the dates and in the amounts set forth in the table below (as such installments may hereafter be adjusted as a result of prepayments made pursuant to
Section 2.04), unless accelerated sooner pursuant to Section 9.02: 
  

	 Payment Dates

	 	 Principal Amortization
 Payment

	 June 1, 2003
	 	$461,911.66
	 September 1, 2003
	 	$470,480.09
	 December 1, 2003
	 	$478,934.50
	 March 1, 2004
	 	$488,369.80
	 June 1, 2004
	 	$497,151.00
	 September 1, 2004
	 	$506,373.14
	 December 1, 2004
	 	$515,766.37
	 March 1, 2005
	 	$525,333.83
	 June 1, 2005
	 	$535,078.78
	 September 1, 2005
	 	$545,004.48
	 December 1, 2005
	 	$555,114.32
	 March 1, 2006
	 	$565,411.70
	 June 1, 2006
	 	$575,900.07
	 September 1, 2006
	 	$586,583.03
	 December 1, 2006
	 	$597,464.14
	 March 1, 2007
	 	$608,547.10
	 June 1, 2007
	 	$619,835.64
	 September 1, 2007
	 	$631,333.60
	 December 1, 2007
	 	$643,044.84
	 March 1, 2008
	 	$654,973.32
	 June 1, 2008
	 	$667,123.08
	 September 1, 2008
	 	$679,498.20
	 December 1, 2008
	 	$692,102.90
	 March 1, 2009
	 	$704,941.41
	 June 1, 2009
	 	$718,018.07
	 September 1, 2009
	 	$731,337.31
	 December 1, 2009
	 	$744,903.61
	 March 1, 2010
	 	$758,721.58
	 June 1, 2010
	 	$772,795.86
	 September 1, 2010
	 	$787,131.22

  

 24 

 (c) Tranche B Term Loan. The Borrower shall repay the outstanding principal amount of the Tranche
B Term Loan in installments on the dates and in the amounts set forth in the table below (as such installments may hereafter be adjusted as a result of prepayments made pursuant to Section 2.04), unless accelerated sooner pursuant to
Section 9.02: 
  

	 Payment Dates

	 	 Principal Amortization
 Payment

	 June 1, 2003
	 	$1,225,000
	 September 1, 2003
	 	$1,225,000
	 December 1, 2003
	 	$1,225,000
	 March 1, 2004
	 	$1,225,000
	 June 1, 2004
	 	$1,225,000
	 September 1, 2004
	 	$1,225,000
	 December 1, 2004
	 	$1,225,000
	 March 1, 2005
	 	$1,225,000
	 June 1, 2005
	 	$1,225,000
	 September 1, 2005
	 	$1,225,000
	 December 1, 2005
	 	$1,225,000
	 March 1, 2006
	 	$1,225,000
	 June 1, 2006
	 	$1,225,000
	 September 1, 2006
	 	$1,225,000
	 December 1, 2006
	 	$1,225,000
	 March 1, 2007
	 	$1,225,000
	 June 1, 2007
	 	$1,225,000
	 September 1, 2007
	 	$1,225,000
	 December 1, 2007
	 	$1,225,000
	 March 1, 2008
	 	$1,225,000
	 	 	 

  
 Section 2.07
Interest. 
  

 25 

 (a) Subject to the provisions of subsection (b) below, (i) each LIBOR Rate Loan shall bear interest on
the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the LIBOR Rate for such Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount
thereof at a rate per annum equal to the Base Rate. 
  
 (b) If any
amount payable by Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest
rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Furthermore, while any Event of Default exists (or after acceleration), Borrower shall pay interest on the principal amount of all outstanding
Obligations at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due
and payable upon demand. 
  
 (c) Interest on each Revolving Loan
shall be due and payable in arrears on the first Business Day of each month and the Revolving Loan Maturity Date and at such other times as may be herein specified. Interest on the Tranche A Term Loan and the Tranche B Term Loan shall be due and
payable in arrears on the first Business Day of each March, June, September and December and the Tranche A Term Loan Maturity Date or the Tranche B Term Loan Maturity Date, as applicable, and at such other times as may be specified herein. Interest
hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law. 
  
 Section 2.08 Fees. 
  
 In addition to certain fees described in subsections (i) and (j) of Section 2.03: 
  
 (a) Commitment Fee. Borrower shall pay to Agent for the account of each Lender in accordance with its Pro Rata Share,
a commitment fee equal to the Applicable Rate times the actual daily amount by which the Aggregate Revolving Commitments exceed the sum of (i) the Outstanding Amount of Revolving Loans and (ii) the Outstanding Amount of L/C Obligations. The
commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the first Business Day of each March,
June, September and December, commencing with the first such date to occur after the Closing Date, and on the Revolving Loan Maturity Date. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable
Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. 
  
 (b) Agency Fees. Borrower shall pay an agency fee to Agent for
Agent’s own account, in the amounts and at the times specified in the letter agreement, dated January 2, 2003 (the “Agent Fee Letter”), between Borrower and Agent. Such fees shall be fully earned when paid and shall be
nonrefundable for any reason whatsoever. 
  
 Section 2.09
Computation of Interest and Fees. 
  
 All computations of
interest for Base Rate Loans when the Base Rate is determined by Bank of America’s prime rate shall be made on the basis of a year of 365 or 366 days, as the case may be. All other computations of interest and all fees shall be made on the
basis of a year of 360 days and the actual 

  

 26 

 
number of days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365 day year). Interest shall
accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is
made shall, subject to Section 2.11(a), bear interest for one day. 
  
 Section 2.10 Evidence of Debt. 
  
 (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by Agent in the ordinary course of business. The accounts or records maintained by Agent and each Lender shall
be conclusive absent manifest error of the amount of the Credit Extensions made by Lenders to Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the
obligation of Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of Agent in respect of such matters, the
accounts and records of Agent shall control in the absence of manifest error. Upon the request of any Lender made through Agent, Borrower shall execute and deliver to such Lender (through Agent) a promissory note, which shall evidence such
Lender’s Loans, in addition to such accounts or records. Each such promissory note shall (i) in the case of Revolving Loans, be in the form of Exhibit B-1 (a “Revolving Note”), (ii) in the case of a Tranche A Term Loan, be in
the form of Exhibit B-2 (a “Tranche A Term Note”) and (iii) in the case of a Tranche B Term Loan, be in the form of Exhibit B-3 (a “Tranche B Term Note”). Each Lender may attach schedules to its Note and endorse
thereon the date, Type (if applicable), amount and maturity of the applicable Loans and payments with respect thereto. 
  
 (b) In addition to the accounts and records referred to in subsection (a), each Lender and Agent shall maintain in accordance with its usual practice
accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by Agent and the accounts and records of any Lender in respect of
such matters, the accounts and records of Agent shall control in the absence of manifest error. 
  
 Section 2.11 Payments Generally. 
  
 (a) (i) All payments to be made by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Agent, for the account of the respective Lenders to which such payment is owed, at Agent’s Office in Dollars and in immediately available funds not later
than 12:00 noon, New York time, on the date specified herein. Agent will promptly distribute to each Lender its Pro Rata Share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such
Lender’s Lending Office. All payments received by Agent after 12:00 noon, New York time, shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. 
  
 (ii) On each date when the payment of any principal, interest or fees are due
hereunder or under any Note, Borrower agrees to maintain on deposit in an ordinary checking account maintained by Borrower with Agent (as such account shall be designated by Borrower in a written notice to Agent from time to time, the
“Borrower Account”) an amount sufficient to pay such principal, interest or fees in full on such date. Borrower hereby authorizes Agent (A) to deduct automatically all principal, interest or fees when due hereunder or under any Note
from Borrower Account, and (B) if and to the extent any payment of principal, interest or fees under this Agreement or any Note is not made when due to deduct any such amount from any or all of the accounts of Borrower maintained at Agent. Agent
agrees to provide written 

  

 27 

 
notice to Borrower of any automatic deduction made pursuant to this Section 2.11(a)(ii) showing in reasonable detail the amounts of such deduction.
Lenders agree to reimburse Borrower based on their Pro Rata Share for any amounts deducted from such accounts in excess of amount due hereunder and under any other Loan Documents. 
  
 (b) If any payment to be made by Borrower shall come due on a day other than a Business Day, payment shall be made on the
next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. 
  
 (c) Unless Borrower or any Lender has notified Agent, prior to the date any payment is required to be made by it to Agent hereunder, that Borrower or such
Lender, as the case may be, will not make such payment, Agent may assume that Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding
amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to Agent in immediately available funds, then: 
  
 (i) if Borrower failed to make such payment, each Lender shall forthwith on demand repay to Agent the portion of such assumed payment that
was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by Agent to such Lender to the date such amount is repaid to Agent in
immediately available funds, at the Federal Funds Rate from time to time in effect; and 
  
 (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to Agent the amount thereof in immediately
available funds, together with interest thereon for the period from the date such amount was made available by Agent to Borrower to the date such amount is recovered by Agent (the “Compensation Period”) at a rate per annum equal to
the Federal Funds Rate from time to time in effect. If such Lender pays such amount to Agent, then such amount shall constitute such Lender’s Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon
Agent’s demand therefor, Agent may make a demand therefor upon Borrower, and Borrower shall pay such amount to Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the
applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which Agent or Borrower may have against any Lender as a result of any default by such Lender
hereunder. 
  
 A notice of Agent to any Lender or Borrower with
respect to any amount owing under this subsection (c) shall be conclusive, absent manifest error. 
  
 (d) If any Lender makes available to Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and
such funds are not made available to Borrower by Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, Agent shall return such funds (in like funds as
received from such Lender) to such Lender, without interest. 
  
 (e) The obligations of Lenders hereunder to make Loans and to fund participations in Letters of Credit are several and not joint. The failure of any Lender to make any Loan or to fund any such participation on any date required hereunder
shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or purchase its participation. 
  

 28 

 (f) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any
particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner. 
  
 Section 2.12 Sharing of Payments. 
  
 If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of Loans made by it, or the
participations in L/C Obligations held by it, any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall
immediately (a) notify Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them and/or such subparticipations in the participations in L/C Obligations held by them, as the case may be, as shall be
necessary to cause such purchasing Lender to share the excess payment in respect of such Loans or such participations, as the case may be, pro rata with each of them; provided, however, that if all or any portion of such excess payment
is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 10.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be
rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying
Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest
thereon. Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 10.09) with
respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participation. Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section shall from and after such purchase have the right to give all notices,
requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. 

 
 ARTICLE III 
  
 TAXES, YIELD PROTECTION AND ILLEGALITY 
  
 Section 3.01 Taxes. 
  
 (a) Any and all payments by Borrower to or for the account of Agent or any
Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect
thereto, excluding, in the case of Agent and each Lender, taxes imposed on or measured by its overall net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof)
under the Laws of which Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being
hereinafter referred to as “Taxes”). If Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to Agent or any Lender, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), each of Agent and such Lender receives an amount equal to 
  

 29 

 the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, (iii) Borrower
shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, Borrower shall furnish to Agent (which shall forward the same to
such Lender) the original or a certified copy of a receipt evidencing payment thereof. 
  
 (b) In addition, Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any
Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as “Other Taxes”). 
  
 (c) If Borrower shall be required to deduct or pay any Taxes or Other Taxes
from or in respect of any sum payable under any Loan Document to Agent or any Lender, Borrower shall also pay to Agent or to such Lender, at the time interest is paid, such additional amount that Agent or such Lender specifies is necessary to
preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that Agent or such Lender would have received if such Taxes or Other Taxes had not been imposed. 
  
 (d) Borrower agrees to indemnify Agent and each Lender for (i) the full
amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by Agent and such Lender, (ii) amounts payable under Section 3.01(c) and (iii) any
liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental
Authority. Payment under this subsection (d) shall be made within 30 days after the date Lender or Agent makes a demand therefor. 
  
 Section 3.02 Illegality. 
  
 If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund LIBOR Rate Loans, or to determine or charge interest rates based upon the LIBOR Rate, then, on notice thereof by such Lender to Borrower through Agent, any obligation of such Lender to make LIBOR
Rate Loans shall be suspended until such Lender notifies Agent and Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, Borrower shall, upon demand from such Lender (with a copy to Agent),
prepay or, if applicable, convert all LIBOR Rate Loans of such Lender to Base Rate Loans, either on the following Interest Payment Date, if such Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or immediately, if such
Lender may not lawfully continue to maintain such LIBOR Rate Loans. Upon any such prepayment or conversion, Borrower shall also pay accrued interest on the amount so prepaid or converted and all amounts due under Section 3.05 in accordance
with the terms thereof due to such prepayment or conversion. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be
materially disadvantageous to such Lender. Borrower and Agent shall promptly negotiate in good faith to determine a new interest rate for all Loans. 
  
 Section 3.03 Inability to Determine Rates. 
  
 If Agent determines in connection with any request for or conversion to a LIBOR Rate Loan for any reason that (a) Dollar deposits are not being offered to
banks in the London interbank eurodollar market for the applicable amount and Interest Period of such LIBOR Rate Loan, (b) adequate and 
  

 30 

 reasonable means do not exist for determining the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan, or (c) the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Loan does not adequately and fairly reflect the cost to Lenders of funding such LIBOR Rate Loan, Agent will promptly so notify Borrower
and all Lenders. Thereafter, the obligation of Lenders to make or maintain LIBOR Rate Loans shall be suspended until Agent revokes such notice. Upon receipt of such notice, Borrower may revoke any pending request for a Borrowing of or conversion to
LIBOR Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein. Borrower and Agent shall promptly negotiate in good faith to determine a new interest
rate for all Loans. 
  
 Section 3.04 Increased Cost and Reduced
Return; Capital Adequacy; Reserves on LIBOR Rate Loans. 
  
 (a) If any Lender determines that as a result of the introduction of or any change in or in the interpretation of any Law, in each case after the Closing Date, or such Lender’s compliance therewith, there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or maintaining LIBOR Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with
any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern), (ii) changes in the basis of taxation of
overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements
utilized, as to LIBOR Rate Loans, in the determination of the LIBOR Rate), then from time to time upon demand of such Lender (with a copy of such demand to Agent), Borrower shall pay to such Lender such additional amounts as will compensate such
Lender for such increased cost or reduction. 
  
 (b) If any Lender
determines that the introduction of any Law regarding capital adequacy or any change therein or in the interpretation thereof, in each case after the Closing Date, or compliance by such Lender (or its Lending Office) therewith, has the effect of
reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such
Lender’s desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to Agent), Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction.

  
 Section 3.05 Funding Losses. 
  
 Upon demand of any Lender (with a copy to Agent) from time to time, Borrower
shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of: 
  
 (a) any conversion, payment or prepayment of any Tranche A Term Loan or Tranche B Term Loan other than a Base Rate Loan on a day other than the last day
of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or 
  
 (b) any failure by Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, or convert any Loan other than a Base
Rate Loan on the date or in the amount notified by Borrower; 
  

 31 

 including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds
obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. 

 
 For purposes of calculating amounts payable by Borrower to Lenders under this Section
3.05, each Lender shall be deemed to have funded each LIBOR Rate Loan made by it at the LIBOR Base Rate used in determining the LIBOR Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such LIBOR Rate Loan was in fact so funded. 
  
 Section 3.06 Matters Applicable to all Requests for Compensation. 
  
 Each Lender shall promptly notify Borrower and Agent of any event of which it has knowledge that will entitle it to
compensation under Section 3.01 or 3.04. In such event, such Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender,
otherwise be materially disadvantageous to such Lender. A certificate of Agent or any Lender claiming compensation under this Article III and setting forth in reasonable detail the calculation of the additional amount or amounts to be paid to
it hereunder shall be conclusive in the absence of manifest error. In determining such amount, Agent or such Lender may use any reasonable averaging and attribution methods. 
  
 Section 3.07 Survival. 
  
 All of Borrower’s obligations under this Article III shall survive termination of the Aggregate Revolving Commitments and repayment of all
other Obligations hereunder. 
  
 ARTICLE IV 
  
 CONDITIONS PRECEDENT TO CREDIT EXTENSIONS 
  
 Section 4.01 Conditions of Initial Credit Extension. 
  
 The obligation of each Lender to make its initial Credit Extension hereunder
is subject to satisfaction of the following conditions precedent: 
  
 (a) Agent’s receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the
Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to Agent and its legal counsel: 
  
 (i) executed counterparts of this Agreement, sufficient in
number for distribution to Agent, each Lender and Borrower; 
  
 (ii) a Revolving Note, a Tranche A Term Loan Note and a Tranche B Term Loan Note each executed by Borrower in favor of each Lender requesting such Notes; 
  
 (iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of
Responsible Officers of each Loan Party as Agent may require evidencing the 
  

 32 

 identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party; 
  
 (iv) such documents and certificates as Agent may reasonably require to evidence that each Loan Party is duly organized or formed and that
Borrower is, validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that
failure to do so could not reasonably be expected to have a Material Adverse Effect; 
  
 (v) a favorable opinion of counsel to the Loan Parties acceptable to Agent, addressed to Agent and each Lender, as to such matters
concerning the Loan Parties and the Loan Documents in form and substance satisfactory to Agent; 
  
 (vi) a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses and approvals
required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or approvals are so required; 
  
 (vii) a certificate signed by a Responsible Officer of Borrower certifying (A) that the conditions specified in Sections 4.02(a)
and (b) have been satisfied, (B) that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could reasonably be expected to have a Material Adverse Effect, and (C) a calculation of the
financial covenants set forth in Section 6.12 as of the last day of the fiscal quarter of Borrower most recently ended prior to the Closing Date with said calculation showing each component of each calculation; 
  
 (viii) evidence that all insurance required to be maintained
pursuant to the Loan Documents has been obtained and is in effect; 
  
 (ix) evidence that (A) the Term Loan Agreement dated as of September 18, 2000, as amended, between Borrower and SunTrust Bank, (the “Existing Credit Agreement”) has been or concurrently with the
Closing Date is being terminated and all Liens securing obligations under the Existing Credit Agreement have been or concurrently with the Closing Date are being released, (B) the Amended, Restated and Substituted Promissory Note dated as of April
2, 2003 executed by the Borrower in favor of Bank of America, N.A. (the “Existing Promissory Note”) has been or concurrently with the Closing Date is being terminated and all Liens securing obligations under the Existing Promissory Note
have been or concurrently with the Closing Date are being released, and (C) the $10,000,000 Line of Credit between the Borrower and Bank of America, N.A. (the “Existing Line of Credit”) has been or concurrently with the Closing Date is
being terminated and all Liens securing obligations under the Existing Line of Credit have been or concurrently with the Closing Date are being released; and 
  

(x) such other assurances, certificates, documents, consents or opinions as Agent or the Required Lenders reasonably may
require. 
  
 (b) Any fees required to be paid on or before the
Closing Date shall have been paid. 
  
 (c) Unless waived by Agent,
Borrower shall have paid all Attorney Costs of Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall 
  

 33 

 constitute its reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude a final settling of accounts between Borrower and Agent). 
  
 (d) The Closing Date shall have occurred on or before April 30, 2003. 
  
 Section 4.02 Conditions to all Credit Extensions and Conversions. 
  
 The obligation of each Lender to honor any Request for Credit Extension is
subject to the following conditions precedent: 
  
 (a) The
representations and warranties of Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith, shall be true and correct in
all material respects on and as of the date of such Credit Extension or conversion, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material
respects as of such earlier date, and except that for purposes of this Section 4.02, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of Section 6.01. 
  
 (b) No Default shall exist, or would result from such proposed Credit Extension or conversion. 
  
 (c) Agent shall have received a Request for Credit Extension in accordance with the requirements hereof. 
  
 (d) Agent shall have received, in form and substance satisfactory to it, such
other assurances, certificates, documents or consents related to the foregoing as Agent or the Required Lenders reasonably may require. 
  
 Each Request for Credit Extension submitted by Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections
4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension. 
  
 ARTICLE V 
  
 REPRESENTATIONS AND WARRANTIES 
  
 Borrower
represents and warrants to Agent and Lenders that: 
  
 Section
5.01 Existence, Qualification and Power; Compliance with Laws. 
  
 Each Loan Party (a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental
licenses, authorizations, consents and approvals to (i) own its assets and carry on its business and (ii) execute, deliver, and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and in
good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or licenses, except in each case referred to in clause (b)(i) or (c), to the extent
that failure to do so could not reasonably be expected to have a Material Adverse Effect. 
  

 34 

 Section 5.02 Authorization; No Contravention. 
  
 The execution, delivery and performance by each Loan Party of each Loan
Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or
result in any breach or contravention of, or the creation of any Lien under, (i) any Contractual Obligation to which such Person is a party or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which
such Person or its property is subject; or (c) violate any Law, except in each case referred to in clause (b) or (c), to the extent such conflict, breach, contravention, Lien or violation could not reasonably be expected to have a Material Adverse
Effect. 
  
 Section 5.03 Governmental Authorization.

  
 No approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan
Document, except such as have been obtained, taken, given or made and are in full force and effect and except where the failure to obtain such approval, consent, exemption or authorization, to take such other action, to give such notice or to make
such filing could not reasonably be expected to have a Material Adverse Effect. 
  
 Section 5.04 Binding Effect. 
  
 This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except in each case as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally and by equitable principles of general applicability (regardless of whether such enforceability is considered in a proceeding in
equity or at law). 
  
 Section 5.05 Financial Statements; No
Material Adverse Effect. 
  
 (a) The Audited Financial
Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of Borrower and its
consolidated Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and
(iii) show all material indebtedness and other liabilities, direct or contingent, of Borrower and its consolidated Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness to the extent required
under GAAP. 
  
 (b) The unaudited consolidated balance sheet of
Borrower and its Subsidiaries dated February 28, 2003, and the related consolidated statements of income or operations and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout
the period covered thereby, except as otherwise expressly noted therein, and; (ii) fairly present in all material respects the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period
covered thereby, subject in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments. 
  

 35 

 (c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect. 
  
 Section 5.06 Litigation. 
  
 Except as specifically disclosed in Schedule 5.06 hereto, there are no actions, suits, proceedings, claims or disputes pending or, to the knowledge
of Borrower, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain
to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect. 
  
 Section 5.07 No Default. 
  
 Neither Borrower nor any Subsidiary is in default under or with respect to
any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document. 
  
 Section 5.08 Ownership of Property; Liens. 
  
 Each of Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary in the ordinary conduct of its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by Section 7.01. 
  
 Section 5.09 Environmental Compliance. 
  
 Borrower and its Subsidiaries conduct in the ordinary course of business a
review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof Borrower has
reasonably concluded that, except as specifically disclosed in Schedule 5.09 hereto, such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
  
 Section 5.10 Insurance. 
  
 The properties of Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of Borrower, in such amounts, after giving effect to any self-insurance compatible with the following standards, with such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar properties in localities where Borrower or the applicable Subsidiary operates. 
  
 Section 5.11 Taxes. 
  
 Borrower and its Subsidiaries have filed all federal, state and other material tax returns and reports required to be filed, and have paid all federal,
state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise 
  

 36 

 due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and
for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against Borrower or any Subsidiary that would, if made, have a Material Adverse Effect. 
  
 Section 5.12 ERISA Compliance. 
  
 (a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being
processed by the IRS with respect thereto and, to the knowledge of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. Borrower and each ERISA Affiliate have made all required contributions to each Plan
subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. 
  
 (b) There are no pending or, to the knowledge of Borrower, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules
with respect to any Plan that has resulted or could reasonably be expected to have a Material Adverse Effect. 
  
 (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither Borrower nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to
a Multiemployer Plan; and (v) neither Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA. 
  

Section 5.13 Subsidiaries. 
  
 As of the Closing Date, Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13 and has no equity
investments in any other corporation or entity other than those specifically disclosed in Part(b) of Schedule 5.13. 
  
 Section 5.14 Disclosure. 
  
 As of the Closing Date, there is no fact known to a Responsible Officer of the Borrower that could reasonably be expected to result in a Material Adverse
Effect that has not been set forth herein or otherwise delivered to the Agent. No report, financial statement, certificate or other written information furnished by or on behalf of any Loan Party in connection with any Loan Document to Agent or any
Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state
any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 
  
 Section 5.15 Compliance with Laws. 
  

 37 

 Borrower, each Subsidiary and each other Loan Party is in compliance in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 
  
 Section 5.16 Margin Regulations; Investment Company Act; Public Utility
Holding Company Act. 
  
 (a) Borrower is not engaged and will
not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

  
 (b) Neither Borrower nor any Subsidiary (i) is a “holding
company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company,” within the meaning of the
Public Utility Holding Company Act of 1935, or (ii) is or is required to be registered as an “investment company” under the Investment Company Act of 1940. 
  
 Section 5.17 Principal Place of Business. 
  
 Set forth on Schedule 5.17 is the chief executive office of each Loan Party as of the Closing Date. The exact legal
name and state of organization of each Loan Party is as set forth on the signature pages hereto. 
  
 ARTICLE VI 
  
 AFFIRMATIVE COVENANTS 
  
 So long as any Lender
shall have any Commitment hereunder, any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01,
6.02, 6.03, 6.11 and 6.12) cause each Subsidiary to: 
  
 Section 6.01 Financial Statements. 
  
 Deliver to Agent a sufficient number of copies for delivery by Agent to each Lender, of the following, in form and detail satisfactory to Agent and the Required Lenders: 
  
 (a) as soon as available, but in any event no later than 120 days after the
end of each fiscal year of Borrower, a consolidated balance sheet of Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such
fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied by a report and opinion of BDO Seidman, LLP, KPMG, LLP or
other independent certified public accountant of nationally recognized standing reasonably acceptable to the Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any
“going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; 
  

 38 

 (b) as soon as available, but in any event within 45 days after the end of each of the first three
quarters of each fiscal year of Borrower, a consolidated balance sheet of Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations for such fiscal quarter and for the portion
of Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable
detail and certified by a Responsible Officer of Borrower as fairly presenting the financial condition, results of operations and cash flows of Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments
and the absence of footnotes; and 
  
 (c) as soon as available,
but in any event no later than 45 days after the end of the last quarter of each fiscal year of Borrower, a press release reporting on the financial performance of Borrower during such fiscal quarter and attaching a consolidated balance sheet of
Borrower and its Subsidiaries as at the end of such fiscal quarter and the related consolidated statements of income for such fiscal quarter and for such fiscal year, setting forth in each case in comparative form the figures for the last fiscal
quarter of the previous fiscal year and the previous fiscal year. 
  
 Section 6.02 Certificates; Other Information. 
  
 Deliver to Agent a sufficient number of copies for delivery to each Lender, of the following, in form and detail satisfactory to Agent and the Required Lenders: 
  
 (a) concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its
independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default or, if any such Default shall exist, stating the nature and status
of such event; 
  
 (b) concurrently with the delivery of the
financial statements referred to in Sections 6.01(b) and (c), a duly completed Compliance Certificate signed by a Responsible Officer of Borrower, such Compliance Certificate to include a calculation of the financial covenants set
forth in Section 6.12 as of the last day of the fiscal quarter of Borrower most recently ended with said calculation showing each component of each calculation; 
  

(c) promptly after any request by Agent or any Lender, copies of any audit reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of Borrower by independent accountants in connection with the accounts or books of Borrower or any Subsidiary, or any audit of any of them; 
  
 (d) promptly after the same are available, copies of each annual report,
proxy or financial statement or other report or communication sent to the shareholders of Borrower, and copies of all annual, regular, periodic and special reports and registration statements which Borrower may file or be required to file with the
Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to Agent pursuant hereto, provided however, that such documents shall be deemed to be delivered to Agent
hereunder upon the filing of the same by the Borrower with the Securities and Exchange Commission via the EDGAR system; and 
  
 (e) promptly, such additional information regarding the business, financial condition or corporate affairs of Borrower or any Subsidiary, or compliance
with the terms of the Loan Documents, as Agent or any Lender may from time to time reasonably request. 
  

 39 

 Section 6.03 Notices. 
  
 Promptly upon any Responsible Officer obtaining knowledge thereof notify Agent and each Lender: 
  
 (a) of the occurrence of any Default or Event of Default; 
  
 (b) of any matter that has resulted or could reasonably be expected to result
in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Borrower or any
Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws; 
  
 (c) of the occurrence of any ERISA Event; and 
  
 (d) of any material change in accounting policies or financial reporting
practices by Borrower or any Subsidiary. 
  
 Each notice pursuant
to this Section (other than a notice pursuant to Section 6.03(d)) shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and stating what action Borrower has taken
and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached. Each notice pursuant to
Section 6.03(d) may be delivered via telephone or e-mail as more fully set out in Section 10.02. 
  
 Section 6.04 Payment of Obligations. 
  
 Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by Borrower or
such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness, unless, in each case, (i) the failure to pay or discharge such obligations or liabilities could not reasonably be expected to have a Material Adverse Effect or (ii) such obligations or liabilities are being contested in
good faith by appropriate proceedings diligently conducted, adequate reserves in accordance with GAAP are being maintained by Borrower or such Subsidiary and the failure to pay or discharge such obligations or liabilities pending resolution of such
contest could not reasonably be expected to have a Material Adverse Effect 
  
 Section 6.05 Preservation of Existence, Etc. 
  
 (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization, except in a transaction permitted by Section 7.04 or
7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect. 

 

 40 

 Section 6.06 Maintenance of Properties. 
  
 (a) Maintain, preserve and protect all of its material properties and
equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof; and (c) use the standard of care typical in the
industry in the operation and maintenance of its facilities except in each case referred to in clause (a), (b) or (c) above, to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. 
  
 Section 6.07 Maintenance of Insurance. 
  
 Maintain with financially sound and reputable insurance companies not
Affiliates of Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect
to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days’ prior notice to Agent of termination, lapse or cancellation of
such insurance. 
  
 Section 6.08 Compliance with Laws.

  
 Comply in all material respects with the requirements of
all Laws, and all orders, writs, injunctions and decrees issued by a Governmental Authority applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. 
  
 Section 6.09 Books and Records. 
  
 (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters involving the assets and business of Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower or such Subsidiary, as the case may be.  
  
 Section 6.10 Inspection Rights. 
  
 Permit representatives and independent contractors of Agent and each Lender to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of Borrower and at such
reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Borrower; provided however, that, so long as there has been no material change in the economic profile of the
Borrower, the Borrower shall be responsible for the expense of only the first two such examinations in each 12 month period; provided further however, that when a Default exists Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of the foregoing at the expense of Borrower at any time during normal business hours and without advance notice. 
  
 Section 6.11 Use of Proceeds. 
  

 41 

 Use the proceeds of the Credit Extensions for the refinancing of existing Indebtedness and for general
corporate purposes not in contravention of any Law or of any Loan Document. 
  
 Section 6.12 Financial Covenants 
  
 (a) Tangible Net Worth. Maintain on a consolidated basis at all times Tangible Net Worth at least equal to the amounts indicated during each period specified below: 
  

	 Period

	  	Amounts

	 From the Closing Date through November 30, 2003
	  	$	84,000,000
	 From December 1, 2003 through November 30, 2004
	  	$	92,000,000
	 From December 1, 2004 through November 30, 2005
	  	$	100,000,000
	 From December 1, 2005 and thereafter
	  	$	108,000,000

  
 (b) Debt Service
Coverage Ratio. Maintain on a consolidated basis a Debt Service Coverage Ratio of at least the ratio indicated for each period specified below: 
  

	 Period

	  	Ratios

	 From the Closing Date through November 30, 2003
	  	1.50:1.0
	 From December 1, 2003 and thereafter
	  	1.75:1.0

  
 This ratio will be
calculated at the end of each reporting period for which Section 6.01(b) of this Agreement requires Borrower to deliver financial statements, using the results of the twelve-month period ending with that reporting period. The current portion of
long-term liabilities will be measured as of the date twelve (12) months prior to the current financial statement. 
  
 (c) Funded Debt to EBITDA Ratio. Maintain on a consolidated basis a ratio of Funded Debt to EBITDA not exceeding the ratio indicated for each
period specified below: 
  

	 Period

	  	Ratios

	 From the Closing Date through August 31, 2003
	  	2.25:1.0
	 From September 1, 2003 through November 30, 2003
	  	1.60:1.0
	 From December 1, 2003 through November 30, 2004
	  	1.35:1.0
	 From December 1, 2004 and thereafter
	  	1.25:1.0

  

 42 

 This ratio will be calculated at the end of each reporting period for which Section 6.01(b) of this
Agreement requires Borrower to deliver financial statements, using the results of the twelve-month period ending with that reporting period. 
  
 (d) Capital Expenditures. Not to spend or incur obligations to spend, on a consolidated basis, during any fiscal year ending during any period
specified below, more than the amounts specified below for such fiscal year to acquire fixed assets (including the total amount of any capital leases): 
  

	 Period

	  	Amounts

	 From the Closing Date through November 30, 2006
	  	$	12,000,000
	 From December 1, 2006 and thereafter
	  	$	15,000,000

  
 ARTICLE VII

  
 NEGATIVE COVENANTS 
  
 So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly: 
  
 Section 7.01 Liens. 
  
 Create, incur, assume or suffer to exist, any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the
following: 
  
 (a) Liens pursuant to any Loan Document;

  
 (b) Liens existing on the date hereof and listed on
Schedule 7.01 hereto and any renewals or extensions thereof, provided that the property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby is permitted by Section
7.03(b); 
  
 (c) Liens for taxes not yet due or which are
being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; 
  
 (d) 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 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP; 
  

 43 

 (e) pledges or deposits in the ordinary course of business in connection with workers’ compensation,
unemployment insurance and other social security legislation, other than any Lien imposed by ERISA; 
  
 (f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than
bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business; 
  
 (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which do not materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person; 
  
 (h) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h) or securing appeal or other surety
bonds relating to such judgments; 
  
 (i) liens securing
Indebtedness permitted under Section 7.03(e); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the
cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition; 
  
 (j) Liens pursuant to the BB&T L/C Facility or the Wachovia L/C Facility that exist from time to time and secure the letters of credit issued
thereunder; and 
  
 (k) Liens in addition to the Liens described
above, provided that the aggregate amount of Indebtedness secured by such Liens at any one time outstanding does not exceed $500,000. 
  
 Section 7.02 Investments. 
  
 Make any Investments, except: 
  
 (a) Investments held by Borrower or such Subsidiary in the form of cash equivalents or short-term marketable debt securities; 
  
 (b) Investments of Borrower in any wholly-owned Subsidiary and Investments of
any wholly-owned Subsidiary in Borrower or in another wholly-owned Subsidiary; 
  
 (c) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in
satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; 
  
 (d) Guarantees permitted by Section 7.03; 
  
 (e) bank deposits in the ordinary course of business; 
  
 (f) Investments in securities of any account debtor received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy of
insolvency of such account debtor; and 
  
 (g) Investments in
addition to the Investments described above, provided that the aggregate amount of such additional Investments at any one time outstanding does not exceed $2,500,000. 
  

 44 

 Section 7.03 Indebtedness. 
  
 Create, incur, assume or suffer to exist any Indebtedness, except: 
  
 (a) Indebtedness under the Loan Documents; 
  
 (b) Indebtedness outstanding on the date hereof and listed on Schedule
7.03 hereto and any refinancings, refundings, renewals or extensions thereof; provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder; 
  
 (c) Guarantees of Borrower or any Subsidiary in respect of Indebtedness
otherwise permitted hereunder of Borrower or any Subsidiary; 
  
 (d) obligations (contingent or otherwise and including any Swap Termination Value) of Borrower or any Subsidiary existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such
Person in the ordinary course of business for the purpose of directly managing risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities
issued by such Person and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make the Swap Termination Value
payment, if any, on outstanding transactions to the defaulting party; and 
  
 (e) Indebtedness in addition to the Indebtedness described above, provided that the aggregate amount of such additional Indebtedness at any one time outstanding does not exceed $5,000,000. 
  
 Section 7.04 Fundamental Changes. 
  
 Merge, dissolve, liquidate or consolidate with or into, another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result
therefrom: 
  
 (a) any Person (other than the Borrower) may merge
with (i) Borrower, provided that Borrower shall be the continuing or surviving Person, or (ii) any one or more Subsidiaries, provided that a wholly-owned Subsidiary shall be the continuing or surviving Person; 
  
 (b) any Subsidiary may dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise), to Borrower or to another Subsidiary; provided that if the transferor in such a transaction is a wholly-owned Subsidiary, then the transferee must also be a wholly-owned Subsidiary; and 

 
 (c) any Subsidiary may merge into or consolidate with another Person, or
may dissolve or liquidate, if Borrower determines in good faith that such merger, consolidation, dissolution or liquidation is in the best interests of Borrower and could not reasonably be expected to have a Material Adverse Effect. 
  
 Section 7.05 Dispositions. 
  

 45 

 Make any Disposition or enter into any agreement to make any Disposition, except: 
  
 (a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business; 
  
 (b)
Dispositions of inventory in the ordinary course of business; 
  
 (c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property, (ii) the proceeds of such Disposition are reasonably promptly applied to
the purchase price of such replacement property or (iii) such equipment or property is in the judgment of Borrower no longer required for the conduct of Borrower’s or any Subsidiary’s business; 
  
 (d) Dispositions of property by any Subsidiary to Borrower or to a
wholly-owned Subsidiary; and 
  
 (e) Dispositions permitted by
Section 7.04. 
  
 provided, however, that any
Disposition pursuant to this Section 7.05 shall be for fair market value (as determined in good faith by the chief financial officer of the Borrower). 
  
 Section 7.06 Restricted Payments. 
  
 Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that: 
  
 (a) each Subsidiary may make Restricted Payments to Borrower and to
wholly-owned Subsidiaries (and, in the case of a Restricted Payment by a non-wholly-owned Subsidiary, to Borrower and any Subsidiary and to each other owner of capital stock or other equity interests of such Subsidiary on a pro rata basis based on
their relative ownership interests); 
  
 (b) Borrower and each
Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common equity interests of such Person; 
  
 (c) Borrower and each Subsidiary may purchase, redeem or otherwise acquire shares of its common stock or other common equity interests or warrants or
options to acquire any such shares with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common equity interests; 
  
 (d) Borrower may, unless a Default or Event of Default has occurred and is continuing, declare and make dividend payments or
other distributions to its shareholders, provided that Borrower is in pro forma compliance with the financial covenants set forth in Section 6.12 after giving effect to such dividend payment or other distribution;

  
 (e) Borrower or any Subsidiary may, unless a Default or Event
of Default has occurred and is continuing, purchase or redeem any of its common stock or any warrants, options or other rights in 
  

 46 

 respect thereof from (i) employees, officers and directors of Borrower or such Subsidiary (or their estates) upon the
death, permanent disability, retirement or termination of employment of any such Person or otherwise in accordance with any stock incentive plan, employee stock purchase plan or other similar employee benefit plan maintained by Borrower or such
Subsidiary or (ii) in the case of Borrower, other shareholders of Borrower so long as the purpose of such purchase or redemption is to acquire common stock in accordance with any such stock incentive plan, employee stock purchase plan or other
similar employee benefit plan or for reissuance to new employees, officers or directors (or their estates) of Borrower or any Subsidiary and such common stock is reissued within 12 months of such purchase or redemption, provided, in each
case, that Borrower is in pro forma compliance with the financial covenants set forth in Section 6.12 after giving effect to such purchase or redemption; and 
  
 (f) Borrower may, unless a Default or Event of Default has occurred and is continuing, purchase shares of its common stock
pursuant to a share repurchase program approved by Borrower’s board of directors, provided that Borrower is in pro forma compliance with the financial covenants set forth in Section 6.12 after giving effect to such
purchase. 
  
 Section 7.07 Change in Nature of Business.

  
 Engage to any material extent in any material line of
business substantially different from those lines of business conducted by Borrower and its Subsidiaries on the date hereof and businesses reasonably related thereto. 
  
 Section 7.08 Transactions with Affiliates. 
  
 Enter into any transaction of any kind with any Affiliate of Borrower, whether or not in the ordinary course of business,
other than on fair and reasonable terms substantially as favorable to Borrower or such Subsidiary as would be obtainable by Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate,
provided that the foregoing restriction shall not apply to transactions between or among Borrower and any of its wholly-owned Subsidiaries or between and among any wholly-owned Subsidiaries. 
  
 Section 7.09 Margin Regulations. 
  
 Use the proceeds of any Credit Extension, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States) or to extend credit to others for the purpose of
purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose. 
  
 ARTICLE VIII 
  
 EVENTS OF DEFAULT AND REMEDIES 
  
 Section 8.01 Events of Default. 
  
 Any of the
following shall constitute an Event of Default: 
  
 (a)
Non-Payment. Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or any L/C Obligation, or (ii) within five Business 
  

 47 

 Days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any commitmentor other fee
due hereunder or any other amount payable hereunder or under any other Loan Document; or 
  
 (b) Specific Covenants. (i) Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.03, 6.05(a), 6.10, 6.12 or Article VII ; or (ii)
Borrower fails to perform or observe any term, covenant or agreement contained in either of Section 6.01 or 6.02 and such failure continues for 5 days after the earlier of a Loan Party receiving notice of such failure or a Responsible
Officer of the Borrower obtaining knowledge of such failure; 
  
 (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure
continues for 30 days after the earlier of a Loan Party receiving notice of such failure or a Responsible Officer of the Borrower obtaining knowledge of such failure; or 
  
 (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed
made by or on behalf of Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed; or

  
 (e) Cross-Default. (i) Borrower or any Subsidiary (A)
fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of (i) the Wachovia L/C Facility or the BB&T L/C Facility, or (ii) any Indebtedness or Guarantee (other than
Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of
more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee (including, for the avoidance of doubt, the Wachovia L/C Facility and the BB&T L/C Facility) or
contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, in each case the effect of which failure or other event is to cause, or to permit the holder or holders of such Indebtedness or the
beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made prior to its stated maturity, or such Guarantee to become payable or cash collateral in
respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which Borrower or any Subsidiary is the
Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value
owed by Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or 
  
 (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any
Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or
an order for relief is entered in any such proceeding; or 
  

 48 

 (g) Inability to Pay Debts; Attachment. (i) Borrower or any Subsidiary becomes unable or admits in
writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is
not released, vacated or fully bonded within 30 days after its issue or levy; or 
  
 (h) Judgments. There is entered against Borrower or any Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or
otherwise, is not in effect; or 
  
 (i) ERISA. (i) An ERISA
Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate
amount in excess of the Threshold Amount, or (ii) Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of
ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or 
  
 (j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or satisfaction in full of all the Obligations,
ceases to be in full force and effect; or any Loan Party or any Governmental Authority contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any
Loan Document, or purports to revoke, terminate or rescind any Loan Document; or 
  
 (k) Change of Control. There occurs any Change of Control with respect to Borrower. 
  
 Section 8.02 Remedies Upon Event of Default. 
  
 If any Event of Default occurs, Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following
actions: 
  
 (a) declare the commitment of each Lender to make
Loans and any obligation of Agent to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated; 
  
 (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower; 
  
 (c) require that Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and 
  

 49 

 (d) exercise on behalf of itself and Lenders all rights and remedies available to it and Lenders under
the Loan Documents or applicable law; 
  
 provided, however, that
upon the occurrence of an actual or deemed entry of an order for relief with respect to Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of Agent to make L/C Credit Extensions
shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of Borrower to Cash Collateralize the L/C Obligations
as aforesaid shall automatically become effective, in each case without further act of Agent or any Lender. 
  
 Section 8.03 Application of Funds. 
  
 After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall be applied by Agent in the following order: 
  
 First, to payment of that portion of the Obligations
constituting fees, indemnities, expenses and other amounts (including Attorney Costs and amounts payable under Article III) payable to Agent in its capacity as such; 
  
 Second, to payment of that portion of the Obligations constituting fees, indemnities and other
amounts (other than principal and interest) payable to Lenders (including Attorney Costs and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them; 
  
 Third, to payment of that portion of the Obligations
constituting accrued and unpaid interest on the Loans and L/C Borrowings, ratably among Lenders in proportion to the respective amounts described in this clause Third payable to them; 
  
 Fourth, to payment of that portion of the Obligations
constituting unpaid principal of the Loans and L/C Borrowings, ratably among Lenders in proportion to the respective amounts described in this clause Fourth held by them; 
  
 Fifth, to Agent, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate
undrawn amount of Letters of Credit; and 
  
 Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to Borrower or as otherwise required by Law. 
  
 Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth
above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above. 
  
 ARTICLE IX 
  
 AGENT 
  
 Section 9.01 Appointment and Authorization of Agent. 
  
 Each Lender hereby irrevocably appoints, designates and authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any 
  

 50 

 other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the
contrary contained elsewhere herein or in any other Loan Document, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender or
participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent. Without limiting the generality of the foregoing
sentence, the use of the term “agent” herein and in the other Loan Documents with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law.
Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. All benefits and immunities provided to Agent in this Article IX
shall apply to Agent as issuer of Letters of Credit with respect to any acts taken or omissions suffered by Agent in connection with Letters of Credit issued by it or proposed to be issued by it and the applications and agreements for letters of
credit pertaining to such Letters of Credit, and as additionally provided herein with respect to Agent as issuer of Letters of Credit. 
  
 Section 9.02 Delegation of Duties. 
  
 Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects in the absence of gross
negligence or willful misconduct. 
  
 Section 9.03 Liability of
Agent. 
  
 No Agent-Related Person shall (a) be liable for
any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its
duties expressly set forth herein), or (b) be responsible in any manner to any Lender or Participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or in any other Loan
Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender or Participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records
of any Loan Party or any Affiliate thereof. 
  
 Section 9.04
Reliance by Agent. 
  
 (a) Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or
other document or 
  

 51 

 conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under any Loan
Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by all Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request
or consent of the Required Lenders (or such greater number of Lenders as may be expressly required by any instance), and such request and any action taken or failure to act pursuant thereto shall be binding upon all Lenders. 
  
 (b) For purposes of determining compliance with the conditions specified in
Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto. 
  
 Section 9.05 Notice of Default. 
  
 Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to Agent for the account of Lenders, unless Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Default and stating that such notice is a “notice
of default.” Agent will notify Lenders of its receipt of any such notice. Agent shall take such action with respect to such Default as may be directed by the Required Lenders in accordance with Article VIII; provided,
however, that unless and until Agent has received any such direction, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable or in the best
interest of Lenders. 
  
 Section 9.06 Credit Decision;
Disclosure of Information by Agent. 
  
 Each Lender
acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate
thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents
to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Loan Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter
into this Agreement and to extend credit to Borrower and the other Loan Parties hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to Lenders by
Agent herein, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan
Parties or any of their respective Affiliates which may come into the possession of any Agent-Related Person. 
  
 Section 9.07 Indemnification of Agent. 
  

 52 

 Whether or not the transactions contemplated hereby are consummated, Lenders shall indemnify upon demand
each Agent-Related Person (to the extent not reimbursed by or on behalf of any Loan Party and without limiting the obligation of any Loan Party to do so), pro rata, and hold harmless each Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities to the extent determined in a final, nonappealable judgment by a
court of competent jurisdiction to have been caused primarily by such Agent-Related Person’s own gross negligence or willful misconduct; it being agreed by all Lenders that no action taken in accordance with the directions of the Required
Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including Attorney Costs and costs and expenses in connection with the use of IntraLinks, Inc. or other similar information transmission systems in connection with this Agreement) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document,
or any document contemplated by or referred to herein, to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrower. The undertaking in this Section shall survive termination of the Aggregate Revolving Commitments, the
payment of all other Obligations and the resignation of Agent. 
  
 Section 9.08 Agent in its Individual Capacity. 
  
 Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or
other business with each of the Loan Parties and their respective Affiliates as though Bank of America were not Agent hereunder and without notice to or consent of Lenders. Lenders acknowledge that, pursuant to such activities, Bank of America or
its Affiliates may receive information regarding any Loan Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that Agent shall be under no
obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not Agent, and the
terms “Lender” and “Lenders” include Bank of America in its individual capacity. 
  
 Section 9.09 Successor Agent. 
  
 Agent may resign as Agent upon 30 days’ written notice to Lenders and Borrower; provided that any such resignation by Bank of America shall also
constitute its resignation as Agent in its capacity of issuer of Letters of Credit. If Agent resigns under this Agreement, the Required Lenders shall appoint from among Lenders a successor Agent for Lenders, which successor Agent shall be consented
to by Borrower at all times other than during the existence of a Default (which consent of Borrower shall not be unreasonably withheld or delayed). If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with Lenders and Borrower, a successor Agent from among Lenders. Upon the acceptance of its appointment as successor Agent hereunder, the Person acting as such successor Agent shall succeed to all the rights, powers and
duties of the retiring Agent 
  

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 (including those in its capacity as issuer of Letters of Credit) and the term “Agent” shall mean such successor
Agent in all such capacities and the retiring Agent’s appointment, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such retiring Agent or any other Lender, other than the obligation of the
successor Agent to issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or to make other arrangements satisfactory to the retiring Agent to effectively assume the obligations of the
retiring Agent with respect to such Letters of Credit. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. If no successor Agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent’s notice of resignation, the retiring Agent’s
resignation shall nevertheless thereupon become effective and Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. 
  
 Section 9.10 Agent May File Proofs of Claim. 
  
 In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or
by declaration or otherwise and irrespective of whether Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise: 
  
 (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans,
L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of Lenders and Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of Lenders and Agent and their respective agents and counsel and all other amounts due Lenders and Agent under Sections 2.03(i) and (j), 2.08 and 10.04) allowed in such judicial proceeding; and

  
 (b) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same; 
  
 and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to Agent and, in the event that Agent shall consent
to the making of such payments directly to Lenders, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent under Sections 2.08
and 10.04. 
  
 Nothing contained herein shall be deemed to
authorize Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize Agent to vote in respect
of the claim of any Lender in any such proceeding. 
  
 Section
9.11 Other Agents. 
  
 None of the Lenders or other Persons
identified on the facing page or signature pages of this Agreement as a “co-agent” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lenders, those applicable to
all Lenders as such. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely,
on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. 
  

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 ARTICLE X 
  

MISCELLANEOUS 
  
 Section 10.01 Amendments, Etc. 
  
 No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by Borrower or any other Loan Party
therefrom, shall be effective unless in writing signed by the Required Lenders and Borrower or the applicable Loan Party, as the case may be, and acknowledged by Agent, and each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall: 
  
 (a) waive any condition set forth in Section 4.01(a) without the written consent of each Lender; provided, however, in the sole
discretion of Agent, only a waiver by Agent shall be required with respect to immaterial matters or items specified in Section 4.01(a)(iii) or (iv) with respect to which Borrower has given assurances satisfactory to Agent that such
items shall be delivered promptly following the Closing Date; 
  
 (b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender; 
  
 (c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or
other amounts due to Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; 
  

(d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (ii) of the second proviso
to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required
Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any obligation of Borrower to pay interest at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even
if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder; 
  
 (e) change Section 2.12 or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written
consent of each Lender; or 
  
 (f) change any provision of this
Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender. 
  
 and,
provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by Agent in addition to Lenders required above, affect the rights or duties of Agent under this Agreement or any other Loan Document, (A) as
Administrative Agent, or (B) as Letter of Credit issuer or under any Letter of Credit Application relating to any Letter of Credit issued or to be issued by it 
  

 55 

 (including, without limitation, any reduction in any fee, charge, expense, cost or other amount payable to Agent for its
own account under this Agreement in any such capacity); and (ii) the Agent Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the respective parties thereto. Notwithstanding anything to the contrary
herein, No Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender. 
  
 Section 10.02 Notices and Other Communications; Facsimile Copies.

  
 (a) General. Unless otherwise expressly provided
herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered, to the applicable address, facsimile number or (subject to
subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, specified for such Person on Schedule 10.02 or to
such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties. All such notices and other communications shall be deemed to be given or made upon the earlier
to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, upon delivery; (B) if delivered by mail, four Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when
sent and the sender has received electronic confirmation of error free receipt; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of subsection (c) below), when delivered; provided, however,
that notices and other communications to Agent pursuant to Article II shall not be effective until actually received by Agent. In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder.

  
 (b) Effectiveness of Facsimile Documents and
Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals and shall be binding
on all Loan Parties, Agent and Lenders. Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not
limit the effectiveness of any facsimile document or signature. 
  
 (c) Limited Use of Electronic Mail. Except as specifically set forth in Section 6.03, electronic mail and internet and intranet websites may be used only to distribute routine communications, such as financial statements, and
to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose. 
  
 (d) Reliance by Agent and Lenders. Agent and Lenders shall, in the absence of gross negligence or willful misconduct, be entitled to rely and act
upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the
reliance by such Person on each notice purportedly given by or on behalf of Borrower (except for losses, costs, expenses or liabilities resulting from the gross negligence or willful misconduct of such Agent-Related Person or Lender). All telephonic
notices to and other communications with Agent may be recorded by Agent, and each of the parties hereto hereby consents to such recording. 
  
 Section 10.03 No Waiver; Cumulative Remedies. 
  
 No failure by any Lender or Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and 
  

 56 

 privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by
law. 
  
 Section 10.04 Attorney Costs, Expenses and Taxes.

  
 Borrower agrees (a) to pay or reimburse Agent for all
reasonable costs and expenses incurred in connection with the development, preparation, negotiation and execution of this Agreement and the other Loan Documents and any amendment, waiver, consent or other modification of the provisions hereof and
thereof (whether or not the transactions contemplated hereby or thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs and costs and expenses in connection
with the use of IntraLinks, Inc. or other similar information transmission systems in connection with this Agreement, and (b) to pay or reimburse Agent and each Lender for all reasonable costs and expenses incurred in connection with the
enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement or the other Loan Documents (including all such costs and expenses incurred during any “workout” or restructuring in respect of the
Obligations and during any legal proceeding, including any proceeding under any Debtor Relief Law), including all Attorney Costs. The foregoing costs and expenses shall include all search, filing, recording, title insurance and appraisal charges and
fees and taxes related thereto, and other out-of-pocket expenses incurred by Agent and the cost of independent public accountants and other outside experts retained by Agent or any Lender. The agreements in this Section shall survive the termination
of the Aggregate Revolving Commitments and repayment of all other Obligations. 
  
 Section 10.05 Indemnification by Borrower. 
  
 Whether or not the transactions contemplated hereby are consummated, Borrower shall indemnify and hold harmless each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, employees,
counsel, agents and attorneys-in-fact (collectively the “Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements
(including Attorney Costs) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery,
enforcement, performance or administration of any Loan Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b) any
Commitment, Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by Agent to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (c) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by Borrower, any Subsidiary or any other Loan Party, or
any Environmental Liability related in any way to Borrower, any Subsidiary or any other Loan Party, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, investigation, litigation or proceeding) and regardless of whether Indemnitee is a party thereto (all the foregoing, collectively, the
“Indemnified Liabilities”); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits,
costs, expenses or disbursements are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. No 
  

 57 

 Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained
through IntraLinks or other similar information transmission systems in connection with this Agreement, nor shall any Indemnitee have any liability for any indirect or consequential damages relating to this Agreement or any other Loan Document or
arising out of its activities in connection herewith or therewith (whether before or after the Closing Date). The agreements in this Section shall survive the resignation of Agent, the replacement of any Lender, the termination of the Aggregate
Revolving Commitments and the repayment, satisfaction or discharge of all the other Obligations. All amounts due under this Section 10.05 shall be payable within ten Business Days after demand therefor. 
  
 Section 10.06 Payments Set Aside. 
  
 To the extent that any payment by or on behalf of Borrower is made to Agent
or any Lender, or Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay
to Agent upon demand its applicable share of any amount so recovered from or repaid by Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time
in effect. 
  
 Section 10.07 Successors and Assigns.

  
 (a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent
of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any
party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement. 
  
 (b) Any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder)
subject to each such assignment, determined as of the date the Assignment and Assumption Agreement with respect to such assignment is delivered to Agent, shall not be less than $5,000,000 unless each of Agent and, so long as no Event of Default has
occurred and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment assigned, (iii) 
  

 58 

 any assignment of a Commitment or any Loan (or portion thereof) must be approved by Agent (which approval the Agent may
withhold in its sole discretion), unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee), and (iv) the parties to each assignment shall execute and
deliver to Agent an Assignment and Assumption Agreement, together with a processing and recordation fee of $5,000. Subject to acceptance and recording thereof by Agent pursuant to subsection (c) of this Section, from and after the effective date
specified in each Assignment and Assumption Agreement, the Eligible Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption Agreement, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption Agreement covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.04,
3.05, 10.04 and 10.05 with respect to facts and circumstances occurring prior to the date of such assignment). Upon request, Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance
with subsection (d) of this Section. 
  
 (c) Agent, acting solely
for this purpose as an agent of Borrower, shall maintain at Agent’s Office a copy of each Assignment and Assumption Agreement delivered to it and a register for the recordation of the names and addresses of Lenders, and the Commitments of, and
principal amount of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and Borrower, Agent and Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower and any Lender,
at any reasonable time and from time to time upon reasonable prior notice. 
  
 (d) Any Lender may, without the consent of, or notice to, Borrower or Agent, sell participations to any Person (other than a natural person or Borrower or any of Borrower’s Affiliates or Subsidiaries (each a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations)
owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii)
Borrower, Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first provision to Section 10.01 that directly affects such Participant. Subject to subsection (e) of
this Section, Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection
(b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.09 as though it were a Lender, provided such Participant agrees to be subject to Section 2.12 as though
it were a Lender. 
  
 (e) A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant
is made with Borrower’s prior written consent. 
  
  

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 (f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights
under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release a
Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. 
  
 (g) If the consent of Borrower to an assignment to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet
the minimum assignment threshold specified in clause (i) of the proviso to the first sentence of Section 10.07(b)), Borrower shall be deemed to have given its consent five Business Days after the date notice thereof has been delivered to
Borrower by the assigning Lender (through Agent) unless such consent is expressly refused by Borrower prior to such fifth Business Day. 
  
 (h) As used herein, “Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender; (c) an Approved Fund; and (d) any other Person
(other than a natural Person) approved by (i) the Agent and (ii) unless an Event of Default has occurred and is continuing, Borrower (such approval referred to in (i) and (ii) not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include Borrower or any of Borrower’s Affiliates or Subsidiaries. 
  
 (i) Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to
subsection (b) above, Bank of America may, upon 30 days’ notice to Borrower and Lenders, resign in its capacity as issuer of Letters of Credit hereunder (the “L/C Issuer”). In the event of any such resignation as L/C Issuer, Borrower
shall be entitled to appoint from among Lenders a successor L/C Issuer hereunder; provided, however, that no failure by Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer. If Bank of
America resigns as L/C Issuer, it shall retain all the rights and obligations of Agent as the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations
with respect thereto (including the right to require Lenders to make Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). Borrower, Lenders and Bank of America agree that they shall amend this Agreement as
necessary to reflect that Bank of America remains Agent for purposes of administering this Agreement, but has resigned in its capacity as L/C Issuer and another Lender(s) shall provides such service, including the obligation of the successor to Bank
of America as L/C Issuer to issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or to make other arrangements satisfactory to Bank of America to effectively assume the obligations of
Bank of America with respect to such Letters of Credit. 
  
 Section 10.08 Confidentiality. 
  
 Each of Agent
and Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent requested by any
regulatory authority; (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or any other Loan
Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or under any other Loan 
  

 60 

 Document; (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any
Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any direct or indirect contractual counterparty or prospective counterparty (or such
contractual counterparty’s or prospective counterparty’s professional advisor) to any credit derivative transaction relating to obligations of a Loan Party; (g) with the consent of Borrower; (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii) becomes available to Agent or any Lender on a nonconfidential basis from a source other than Borrower; or (i) to the National Association of Insurance Commissioners or any
successor organization. In addition, Agent and Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to Agent and
Lenders in connection with the administration and management of this Agreement, the other Loan Documents, the Commitments, and the Credit Extensions. For the purposes of this Section, “Information” means all information received from any
Loan Party relating to any Loan Party or its business, other than any such information that is available to Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan Party. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own
confidential information. 
  
 Section 10.09 Set-off.

  
 In addition to any rights and remedies of Lenders
provided by law, upon the occurrence and during the continuance of any Event of Default, each Lender is authorized at any time and from time to time, without prior notice to Borrower or any other Loan Party, any such notice being waived by Borrower
(on its own behalf and on behalf of each Loan Party) to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time
owing by, such Lender to or for the credit or the account of the respective Loan Parties against any and all Obligations owing to such Lender hereunder or under any other Loan Document, now or hereafter existing, irrespective of whether or not Agent
or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or Indebtedness. Each
Lender agrees promptly to notify Borrower and Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

  
 Section 10.10 Interest Rate Limitation. 
  
 Notwithstanding anything to the contrary contained in any Loan Document, the
interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If Agent or any Lender shall receive interest in an amount that
exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to Borrower. In determining whether the interest contracted for, charged, or received by Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder. 
  
 Section 10.11 Counterparts. 
  

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one
and the same instrument. 
  

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 Section 10.12 Integration. 
  
 This Agreement, together with the other Loan Documents, comprises the complete and integrated agreement of the parties on
the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this
Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of Agent or Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof. 
  
 Section 10.13 Survival of Representations and Warranties. 
  
 All representations and warranties made hereunder and in any other Loan
Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by Agent and
each Lender, regardless of any investigation made by Agent or any Lender or on their behalf and notwithstanding that Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. 
  
 Section 10.14 Severability. 
  
 If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable
provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. 
  
 Section 10.15 Governing Law; Submission to Jurisdiction. 
  
 (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH COMMONWEALTH;
PROVIDED THAT AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. 
  
 (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF VIRGINIA SITTING IN THE CITY OF ROANOKE OR OF THE UNITED STATES FOR THE
WESTERN DISTRICT OF VIRGINIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER, AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. BORROWER, AGENT AND EACH LENDER
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE 
  

 62 

 GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. BORROWER, AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF THE
COMMONWEALTH OF VIRGINIA. 
  
 Section 10.16 Waiver of
Right to Trial by Jury. 
  
 EACH PARTY HERETO HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS 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 SIGNATORIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY. 
  
 Section 10.17 Time of the
Essence. 
  
 Time is of the essence of the Loan
Documents. 
  
 [the remainder of this page intentionally
left blank] 
  
  

 63 

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

	 HOOKER FURNITURE CORPORATION, 
 a Virginia corporation

		
	 By:
	 	 /s/    PAUL B. TOMS,
JR.        

	Name:	 	Paul B. Toms, Jr.
	Title:	 	Chairman and CEO

  

		
	 By:
	 	 /s/    EDWIN L.
RYDER        

	Name:	 	Edwin L. Ryder
	Title:	 	EVP Finance & Administration 

  

	
	BANK OF AMERICA, N.A., as agent
		
	 By:
	 	 /s/    GREG L.
RICHARDS        

	Name:	 	Greg L. Richards
	Title:	 	Vice President

  

	
	BANK OF AMERICA, N.A., as a Lender
		
	 By:
	 	 /s/    GREG L.
RICHARDS        

	Name:	 	Greg L. Richards
	Title:	 	Vice President 

  

	
	 WACHOVIA BANK, NATIONAL
ASSOCIATION

		
	 By:
	 	 /s/    SUSAN K. STILL
        

	Name:	 	Susan K. Still
	Title:	 	Senior Vice President

  

	
	 BRANCH BANKING & TRUST CO. OF
VIRGINIA

		
	 By:
	 	 /s/    BENJAMIN T.
PHELPS        

	Name:	 	Benjamin T. Phelps
	Title:	 	Senior Vice President

  
  

 EXHIBIT A 
  
 FORM OF LOAN NOTICE 
  
 Date:             , 20     
  
 To: Bank of America, N.A., as Agent 
  
 Ladies and Gentlemen: 
  
 Reference is made to that certain Credit Agreement, dated as of April 30,
2003 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Credit Agreement;” the terms defined therein being used herein as therein defined), among Hooker Furniture Corporation (
“Borrower”), Lenders from time to time party thereto, and Bank of America, N.A., as Agent. 
  
 The undersigned hereby requests (select one): 
  

	 ̈      A Borrowing of
Loans                          ̈       A conversion or continuation of Loans
	 	  	 
	1.      On                                
                                        
          (a Business Day).
	 	  	 
	2.      In the amount of
$                                        
                                .
	 	  	 
	3.      Comprised of
                                        
                                     
 .
	 [Type of Loan requested]

	 	  	 
	4.      For LIBOR Rate Loans: with an Interest Period of          months.

  
 The Borrowing
requested herein complies with the proviso to the first sentence of Section 2.01 of the Credit Agreement. 
  

	HOOKER FURNITURE CORPORATION 
		
	 By:
	 	

	 Name:
	 	

	 Title:
	 	

  
  

 A-1 
 Form of Loan Notice 

 EXHIBIT B-1 
  
 FORM OF REVOLVING NOTE 
  

	$                                      
  	 	April 30, 2003

  
 FOR VALUE RECEIVED,
the undersigned (“Borrower”), hereby promises to pay to the order of
                             or registered assigns (“Lender”), in accordance with the
provisions of the Agreement (as hereinafter defined) the principal amount of each Revolving Loan from time to time made by Lender to Borrower under that certain Credit Agreement, dated as of April 30, 2003 (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Borrower, Lenders from time to time party thereto, and Bank of America, N.A.,
as Agent. 
  
 Borrower promises to pay interest on the unpaid
principal amount of each Revolving Loan from the date of such Revolving Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to
Agent for the account of Lender in Dollars in immediately available funds at Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until
the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement. 
  
 This Revolving Note is one of the Revolving Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part
subject to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Revolving Note shall become, or may be
declared to be, immediately due and payable all as provided in the Agreement. Loans made by Lender shall be evidenced by one or more loan accounts or records maintained by Lender in the ordinary course of business. Lender may also attach schedules
to this Revolving Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto. 
  
 Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Revolving Note. 
  
 THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA. 
  

	HOOKER FURNITURE CORPORATION 
		
	 By:
	 	

	 Name:
	 	

	 Title:
	 	

  

 B-1-1 
 Form of Revolving Note 

 LOANS AND PAYMENTS WITH RESPECT THERETO 
  

	 Date

	  	Type of Loan
Made

	  	Amount of
Loan Made

	  	End of Interest
Period

	  	Amount of
Principal or
Interest Paid
This Date

	  	Outstanding
Principal
Balance This
Date

	  	Notation
Made By

	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________

  
  

 B-1-2 
 Form of Revolving Note 

 EXHIBIT B-2 
  
 FORM OF TRANCHE A TERM NOTE 
  

	$                                      
  	 	April 30, 2003

  
 FOR VALUE RECEIVED,
the undersigned (“Borrower”), hereby promises to pay to the order of
                             or registered assigns (“Lender”), in accordance with the
provisions of the Agreement (as hereinafter defined) the principal amount of each Tranche A Term Loan from time to time made by Lender to Borrower under that certain Credit Agreement, dated as of April 30, 2003 (as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Borrower, Lenders from time to time party thereto, and Bank of America, N.A.,
as Agent. 
  
 Borrower promises to pay interest on the unpaid
principal amount of each Tranche A Term Loan from the date of such Tranche A Term Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall
be made to Agent for the account of Lender in Dollars in immediately available funds at Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date
thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement. 
  
 This Note is one of the Tranche A Term Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part
subject to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement. Tranche A Term Loans made by Lender shall be evidenced by one or more loan accounts or records maintained by Lender in the ordinary course of business. Lender may also attach schedules to
this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto. 
  
 Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note. 
  
 THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA. 
  

	HOOKER FURNITURE CORPORATION 
		
	 By:
	 	

	 Name:
	 	

	 Title:
	 	

  

 B-2-1 
 Form of Tranche A Term Note 

 LOANS AND PAYMENTS WITH RESPECT THERETO 
  

	 Date

	  	Type of Loan
Made

	  	Amount of
Loan Made

	  	End of Interest
Period

	  	Amount of
Principal or
Interest Paid
This Date

	  	Outstanding
Principal
Balance This
Date

	  	Notation
Made By

	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________
	 __________
	  	____________	  	___________	  	____________	  	___________	  	__________	  	__________

  

 B-2-2 
 Form of Tranche A Term Note 

 EXHIBIT B-3 
  
 FORM OF TRANCHE B TERM NOTE 
  

	$                                      
  	 	April 30, 2003

  
 FOR VALUE RECEIVED,
the undersigned (“Borrower”), hereby promises to pay to the order of
                             or registered assigns (“Lender”), in accordance with the
provisions of the Agreement (as hereinafter defined) the principal amount of each Loan from time to time made by Lender to Borrower under that certain Credit Agreement, dated as of April 30, 2003 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Borrower, Lenders from time to time party thereto, and Bank of America, N.A., as Agent.

  
 Borrower promises to pay interest on the unpaid principal
amount of each Tranche B Term Loan from the date of such Tranche B Term Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to
Agent for the account of Lender in Dollars in immediately available funds at Agent’s Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until
the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement. 
  
 This Note is one of the Tranche B Term Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part
subject to the terms and conditions provided therein. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable all as provided in the Agreement. Tranche B Term Loans made by Lender shall be evidenced by one or more loan accounts or records maintained by Lender in the ordinary course of business. Lender may also attach
schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto. 
  
 Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Note. 
  
 THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA. 
  

	HOOKER FURNITURE CORPORATION 
		
	 By:
	 	

	 Name:
	 	

	 Title:
	 	

  

 B-3-1 
 Form of Tranche B Term Note 

 LOANS AND PAYMENTS WITH RESPECT THERETO 
  
  

	 Date

	 	 Type of Loan
Made

	 	 Amount of
Loan Made

	 	 End of
Interest
Period

	 	 Amount of
Principal or
Interest Paid
This Date

	 	 Outstanding
Principal
Balance This
Date

	 	 Notation
Made By

	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________
							
	 ______________
	 	_____________	 	_____________	 	_____________	 	_____________	 	______________	 	_____________

  

 B-3-2 
 Form of Tranche B Term Note 

 EXHIBIT C 
  
 FORM OF COMPLIANCE CERTIFICATE 
  
 Financial Statement Date:
                ,              
  

	To:	 	Bank of America, N.A., as Agent 

  
 Ladies and Gentlemen: 
  
 Reference is made to that certain Credit Agreement, dated as of April 30, 2003 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used herein as therein defined), among Hooker Furniture Corporation (“Borrower”), Lenders from time to time party thereto, and Bank of
America, N.A., as Agent. 
  
 The undersigned Responsible Officer
hereby certifies as of the date hereof that he/she is the                 of Borrower, and that, as such, he/she is authorized to execute and deliver this
Certificate to Agent on behalf of Borrower, and that: 
  
 [Use
following for fiscal year-end financial statements] 
  
 1. Attached hereto as Schedule 1 are the year-end audited financial statements required by Section 6.01(a) of the Agreement for the fiscal year of Borrower ended as of the above date, together with the report and opinion of an
independent certified public accountant required by such section. 
  
 [Use following for fiscal quarter-end financial statements] 
  
 1. Attached hereto as Schedule 1 are the unaudited financial statements required by Section 6.01(b) of the Agreement for the fiscal quarter of Borrower ended as of the above date. Such financial
statements fairly present the financial condition, results of operations and cash flows of Borrower and its Subsidiaries in accordance with GAAP as at such date and for such period, subject only to normal year-end audit adjustments and the absence
of footnotes. 
  
 2. The undersigned has reviewed and is familiar
with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of Borrower during the accounting period covered by the attached financial
statements. 
  
 3. A review of the activities of Borrower during
such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period Borrower performed and observed all its Obligations under the Loan Documents, and 
  
 [select one:] 
  
 [to the best knowledge of the undersigned during such fiscal period,
Borrower performed and observed each covenant and condition of the Loan Documents applicable to it.] 
  
 —or— 
  
 [the following covenants or conditions have not been performed or observed and the following is a list of each such Default or Event of Default and its nature and status:] 
  

 C-1 
 Form of Compliance Certificate 

 4. The representations and warranties of the Borrower contained in Article V of the Agreement,
or which are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Compliance Certificate, the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the
Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Agreement, including the statements in connection with which this Compliance Certificate is
delivered. 
  
 5. The financial covenant analyses and
information set forth on Schedule 2 attached hereto are true and accurate on and as of the date of this Certificate. 
  

 C-2 
 Form of Compliance Certificate 

 IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
            , 20        . 
  

	HOOKER FURNITURE CORPORATION
		
	 By:
	 	

	 Name:
	 	

	 Title:
	 	

  

 C-3 
 Form of Compliance Certificate 

 For the Quarter/Year ended
            (“Statement Date”) 
  
 SCHEDULE 2  
 to the Compliance Certificate 
 ($ in 000’s) 
  

	 I.
	 	Section 6.12(a)—Tangible Net Worth.	  	 	  	 
					
	 	 	 A.
	 	Tangible Net Worth at Statement Date:	  	 	  	$
                                
						
	 	 	 	 	 1.
	 	 Total Assets:
	  	 	  	$
                                
						
	 	 	 	 	 2.
	 	 Total Liabilities:
	  	 	  	$
                                
						
	 	 	 	 	 3.
	 	 Tangible Net Worth (Line I.A.1 less Line I.A.2): 
	  	 	  	$
                                
					
	 	 	 B.
	 	 Minimum Required Tangible Net Worth :
	  	 	  	$
                                
				
	 	 	 C.
	 	 Excess (deficient) for covenant compliance
 (Line I.A.3 less Line I.B):
	  	$
                                
				
	II.	 	Section 6.12(b)—Debt Service Coverage Ratio.	  	 	  	 
					
	 	 	 A.
	 	Cash Flow:	  	 	  	 
						
	 	 	 	 	 1.
	 	 net income, after income tax
	  	 	  	$
                                
						
	 	 	 	 	2.	 	less income or plus loss from discontinued operations and extraordinary items, plus	  	 	  	$
                                
						
	 	 	 	 	 3.
	 	 depreciation, depletion and amortization, plus
	  	 	  	$
                                
						
	 	 	 	 	 4.
	 	 interest expense on all obligations, minus
	  	 	  	$
                                
						
	 	 	 	 	 5.
	 	 dividend, withdrawals and other distributions
	  	 	  	$(                              )
						
	 	 	 	 	 6.
	 	 Total Cash Flow
	  	 	  	$
                                
						
	 	 	 B.
	 	Liabilities:	 	 	  	 	  	 
	 	 	 	 	 1.
	 	Current portion of long term liabilities and current portion of capitalized lease obligations, plus	  	 	  	$
                                
						
	 	 	 	 	 2.
	 	 interest expense on all obligations
	  	 	  	$
                                
						
	 	 	 	 	 3.
	 	 Total (Line II.B.1 + Line II.B.2)
	  	 	  	$
                                
				
	 	 	 C.
	 	 Debt Service Coverage Ratio (Line II.A.6 ÷ Line II.B.3): 
 Minimum Required:              to 1.0
	  	                         to
1.0
				
	 III.
	 	 Section 6.12(c)—Funded Debt to EBITDA Ratio.
	  	 	  	 
					
	 	 	 A.
	 	 Funded Debt
	  	 	  	 
						
	 	 	 	 	1.	 	all outstanding liabilities for borrowed money plus other interest-bearing liabilities, including current and long-term liabilities, less	  	 	  	$
                                
						
	 	 	 	 	2.	 	The non-current portion of Subordinated Liabilities	  	 	  	$(                              )
						
	 	 	 	 	3.	 	Total Funded Debt	  	 	  	$
                                
						
	 	 	B.	 	EBITDA	 	 	  	 	  	 
						
	 	 	 	 	1.	 	net income	  	 	  	$
                                
						
	 	 	 	 	2.	 	less income or plus loss from discontinued operations and extraordinary items, plus	  	 	  	$
                                
						
	 	 	 	 	3.	 	income taxes, plus	  	 	  	$
                                

  

 C-4 
 Form of Compliance Certificate 

						
	 	 	 	 	 4.
	 	 interest expense, plus
	  	 	  	$
                                
					
	 	 	 	 	 5. 
	 	 depreciation, depletion and amortization
	  	$
                                
						
	 	 	 	 	 6.
	 	 Total EBITDA
	  	 	  	$
                                
				
	 	 	C.	 	 Ratio (Line III.A.3 ÷ Line III.B.6): 
 Minimum Required:              to 1.0
	  	                         to
1.0
				
	IV.	 	 Section 6.12(d)—Capital Expenditures.
	  	 	  	 
					
	 	 	 A.
	 	Obligations incurred (including capital leases) for fixed assets during fiscal year to date:	  	 	  	$
                                
					
	 	 	 B.
	 	 Maximum permitted capital expenditures:
	  	 	  	$
                                
					
	 	 	 C.
	 	 Excess (deficient) for covenant compliance 
 (Line IV.A – IV.B):
	  	 	  	$
                                

  

 C-5 
 Form of Compliance Certificate 

 EXHIBIT D 
  
 ASSIGNMENT AND ASSUMPTION AGREEMENT 
  
 This Assignment and Assumption Agreement (this “Assignment”)
is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set
forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full. 
  
 For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes
from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by Agent as contemplated below, (i) all of the Assignor’s rights and obligations as a Lender
under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the
respective facilities identified below (including, to the extent included in any such facilities, Letters of Credit) included in such facilities and, (ii) to the extent permitted to be assigned under applicable law, all claims, including, without
limitation, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at
law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, (the
“Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment, without representation or warranty by the Assignor. 
  

	1.	 	Assignor:
                                     

 

	2.	 	Assignee:
                                     [and is an Affiliate
of Assignor] 

  

	3.	 	Borrower(s): Hooker Furniture Corporation 

  

	4.	 	Agent: Bank of America, N.A., as Agent under the Credit Agreement 

  

	5.	 	Credit Agreement: The Credit Agreement, dated as of April 30, 2003, among Hooker Furniture Corporation, Lenders parties thereto, and Agent 

  

	6.	 	Assigned Interest: 

  

 D-1 
 Form of Assignment and Assumption Agreement 

	 Facility Assigned

	 	 Aggregate Amount of
 Commitment/Loans
 for all Lenders

	 	 Amount of
 Commitment/Loans
 Assigned

	 	 Percentage
 Assigned of
 Commitment/Loans

	 _________________
	 	$
                             	 	$
                             	 	                             %
	 _________________
	 	$
                             	 	$
                             	 	                             %
	 _________________
	 	$
                             	 	$
                             	 	                             %

  
 Effective Date:
            , 20         [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR.] 
  

 D-2 
 Form of Assignment and Assumption Agreement 

 The terms set forth in this Assignment are hereby agreed to: 
  

	 ASSIGNOR
 [NAME OF ASSIGNOR]

		
	 By:
	 	  

	Title:

  
  
  

	 ASSIGNEE
 [NAME OF ASSIGNEE]

		
	 By:
	 	  

	Title:

  
 Consented to and Accepted: 
  

	Bank of America, N.A., as Agent
		
	 By:
	 	  

	Title:

  
 [Consented to:] 
  

	Hooker Furniture Corporation
		
	 By:
	 	  

	Title:

  

 D-3 
 Form of Assignment and Assumption Agreement 

 ANNEX 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT 
  
 STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT 
  
 AND ASSUMPTION AGREEMENT 
  
 1. Representations and Warranties. 
  
 1.1. Assignor. The Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan
Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents, or any collateral thereunder, (iii) the financial condition of Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document. 
  
 1.2. Assignee. The Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an
Eligible Assignee under the Credit Agreement, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a
Lender thereunder, and (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, 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 to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on Agent or any
other Lender; and (b) agrees that (i) it will, independently and without reliance on Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender. 
  
 1.3 Assignee’s Address for Notices, etc. Attached hereto as
Schedule 1 is all contact information, address, account and other administrative information relating to the Assignee. 
  
 2. Payments. From and after the Effective Date, Agent shall make all payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignee whether such amounts have accrued prior to or on or after the Effective Date. The Assignor and the Assignee shall make all appropriate adjustments in payments by Agent for periods prior to the
Effective Date or with respect to the making of this assignment directly between themselves. 
  
 3. General Provisions. This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment. This
Assignment shall be governed by, and construed in accordance with, the laws of the Commonwealth of Virginia. 
  
  

 D-4 
 Annex 1 to Form of Assignment and Assumption Agreement 

 SCHEDULE 1 TO ASSIGNMENT AND ASSUMPTION AGREEMENT 
  
 ADMINISTRATIVE DETAILS 
  
 (ASSIGNEE TO LIST NAMES OF CREDIT CONTACTS, ADDRESSES, PHONE AND
FACSIMILE NUMBERS, ELECTRONIC MAIL ADDRESSES AND ACCOUNT AND PAYMENT INFORMATION) 
  

 D-5 
 Schedule 1 to Form of Assignment and Assumption Agreement

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