Document:

Exhibit 4.1

FORM OF

PROMISSORY NOTE

	
  

 	
  

 
	
 $400,000.00

 	
 August ___, 2010 

 

Apple REIT
Ten, Inc. 

814 East Main Street 

Richmond, Virginia 23219 

(Individually and collectively ‘Borrower’) 

[Bank of America] 

[Address] 

[Address] 

(Hereinafter referred to as “Bank”) 

IMPORTANT NOTICE

THIS NOTE CONTAINS A CONFESSION OF JUDGMENT
PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A
BORROWER AND ALLOWS BANK TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT FURTHER
NOTICE. 

Borrower promises to pay to the order of Bank, in lawful money of the
United States of America, at its office indicated above or wherever else Bank
may specify, the sum of Four Hundred Thousand and No/100 Dollars ($400,000.00)
or such sum as may be advanced and outstanding from time to time, with interest
on the unpaid principal balance at the rate and on the terms provided in this
Promissory Note (including all renewals, extensions or modifications hereof,
this “Note”). 

LINE OF CREDIT. Borrower
may borrow, repay and reborrow, and, upon the request of Borrower, Bank shall
advance and readvance under this Note from time to time until the maturity
hereof (each an “Advance” and together the “Advances”), so long as the total
principal balance outstanding under this Note at any one time does not exceed
the principal amount stated on the face of this Note, subject to the
limitations described in any loan agreement to which this Note is subject.
Bank’s obligation to make Advances under this Note shall terminate if Borrower
is in Default. As of the date of each proposed Advance, Borrower shall be
deemed to represent that each representation made in the Loan Documents is true
as of such date. 

If Borrower subscribes to Bank’s cash management services and such
services are applicable to this line of credit, the terms of such service shall
control the manner in which funds are transferred between the applicable demand
deposit account and the line of credit for credit or debit to the line of
credit. 

USE OF PROCEEDS.
Borrower shall use the proceeds of the loan(s) evidenced by this Note for the
commercial purposes of Borrower, as follows: to provide the initial start-up
capital investment for the creation of Apple REIT Ten, Inc. 

INTEREST RATE.
Interest shall accrue on the unpaid principal balance of this Note from the
date hereof at the Bank’s Prime Rate, as that rate may change from time to time
in accordance with changes in the Bank’s Prime Rate (“Interest Rate”). “Bank’s
Prime Rate” means that rate announced by Bank from time to time as its prime
rate and is one of several interest rate bases used by Bank. Bank lends at
rates both above and below Bank’s Prime Rate, and Borrower acknowledges that
Bank’s Prime Rate is not represented or intended to be the lowest or most
favorable rate of interest offered by Bank. 

DEFAULT RATE. In
addition to all other rights contained in this Note, if a Default (as defined
herein) occurs and as long as a Default continues, all outstanding Obligations,
other than Obligations under any swap agreements (as defined in Ii U.S.C. §
101, as in effect from time to time) between Borrower and Bank or its
affiliates, shall bear interest at the Interest Rate plus 3% (“Default Rate”).
The Default Rate shall also apply from acceleration until the Obligations or
any judgment thereon is paid in full. 

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360).
Interest and fees, if any, shall be computed on the basis of a 360-day year for
the actual number of days in the applicable period (“Actual/360 Computation”).
The Actual/360 Computation determines the annual effective interest yield by
taking the stated (nominal) rate for a years period and then dividing said rate
by 360 to determine the daily periodic rate to be applied for each day in the
applicable period. Application of the Actual/360 Computation produces an
annualized effective rate exceeding the nominal rate. 

REPAYMENT TERMS.
This Note shall be due and payable in consecutive monthly payments of accrued
interest only, commencing on __________ __, 2010, and continuing on the last day
of each month thereafter until fully paid. In any event, all principal and
accrued interest shall be due and payable on ______________ ______, 2011. 

APPLICATION OF PAYMENTS.
Monies received by Bank from any source for application toward payment of the
Obligations shall be applied to accrued interest and then to principal. If a
Default occurs, monies may be applied to the Obligations in any manner or order
deemed appropriate by Bank. 

If any payment received by Bank under this Note or other Loan Documents
is rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made. 

DEFINITIONS. Loan Documents.
The term “Loan Documents”, as used in this Note and the other Loan Documents,
refers to all documents executed in connection with or related to the loan
evidenced by this Note and any prior notes which evidence all or any portion of
the loan evidenced by this Note, and any letters of credit issued pursuant to
any loan agreement to which this Note is subject, any applications for such
letters of credit and any other documents executed 

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in connection therewith or related thereto, and may include, without
limitation, a commitment letter that survives closing, a loan agreement, this
Note, guaranty agreements, security agreements, security instruments, financing
statements, mortgage instruments, any renewals or modifications, whenever any
of the foregoing are executed, but does not include swap agreements (as defined
in ii U.S.C. § 101, as in effect from time to time). Obligations. The term “Obligations”, as used in this Note and
the other Loan Documents, refers to any and all indebtedness and other
obligations under this Note, all other obligations under any other Loan
Document(s), and all obligations under any swap agreements (as defined in 11
U.S.C. § 101, as in effect from time to time) between Borrower and Bank, or its
affiliates, whenever executed. Certain Other
Terms. All terms that are used but not otherwise defined in any of
the Loan Documents shall have the definitions provided in the Uniform
Commercial Code. 

LATE CHARGE. If any
payments are not timely made, Borrower shall also pay to Bank a late charge
equal to 5% of each payment past due for 8 or more days. This late charge shall
not apply to payments due at maturity or by acceleration hereof, unless such
late payment is in an amount not greater than the highest periodic payment due
hereunder. 

Acceptance by Bank of any late payment without an accompanying late
charge shall not be deemed a waiver of Bank’s right to collect such late charge
or to collect a late charge for any subsequent late payment received. 

ATTORNEYS’ FEES AND OTHER COLLECTION COSTS.
Borrower shall pay all of Bank’s reasonable expenses incurred to enforce or
collect any of the Obligations including, without limitation, reasonable
arbitration, paralegals’, attorneys’ and experts’ fees and expenses, whether
incurred without the commencement of a suit, in any trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding. 

USURY. If at any
time the effective interest rate under this Note would, but for this paragraph,
exceed the maximum lawful rate, the effective interest rate under this Note
shall be the maximum lawful rate, and any amount received by Bank in excess of
such rate shall be applied to principal and then to fees and expenses, or, if
no such amounts are owing, returned to Borrower. 

DEFAULT. If any of
the following occurs, a default (“Default”) under this Note shall exist: Nonpayment; Nonperformance. The failure of
timely payment or performance of the Obligations or Default under this Note or
any other Loan Documents. False Warranty.
A warranty or representation made or deemed made in the Loan Documents or
furnished Bank in connection with the loan evidenced by this Note proves
materially false, or if of a continuing nature, becomes materially false. Cross Default. At Bank’s option, any
default in payment or performance of any obligation under any other loans,
contracts or agreements of Borrower, any Subsidiary or Affiliate of Borrower,
any general partner of or the holder(s) of the majority ownership interests of
Borrower with Bank or its affiliates (“Affiliate” shall have the meaning as
defined in 11 U.S.C. § 101, as in effect from time to time, except that the
term “Borrower’ shall be substituted for the term “Debtor’ therein;
“Subsidiary” shall mean any business in which Borrower holds, directly or
indirectly, a controlling interest). Cessation;
Bankruptcy. The death of, appointment of a guardian for, dissolution
of, termination of existence of, loss of good standing status by, appointment
of a receiver for, assignment for the benefit of creditors of, or 

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commencement of any bankruptcy or insolvency proceeding by or against
Borrower, its Subsidiaries or Affiliates, if any, or any general partner of or
the holder(s) of the majority ownership interests of Borrower, or any party to
the Loan Documents. Material Capital
Structure or Business Alteration.
Without prior written consent of Bank, (i) a material alteration in the kind or
type of Borrower’s business or that of Borrower’s Subsidiaries or Affiliates,
if any; (ii) the sale of substantially all of the business or assets of
Borrower, any of Borrowers Subsidiaries or Affiliates or any guarantor, or a
material portion (10% or more) of such business or assets if such a sale is
outside the ordinary course of business of Borrower, or any of Borrowers
Subsidiaries or Affiliates or any guarantor, or more than 50% of the
outstanding stock or voting power of or in any such entity in a single
transaction or a series of transactions; (iii) the acquisition of substantially
all of the business or assets or more than 50% of the outstanding stock or
voting power of any other entity; or (iv) should any Borrower or any of
Borrower’s Subsidiaries or Affiliates or any guarantor enter into any merger or
consolidation. Material Adverse Change.
Bank determines in good faith, in its sole discretion, that the prospects for
payment or performance of the Obligations are impaired or there has occurred a
material adverse change in the business or prospects of Borrower, financial or
otherwise. 

REMEDIES UPON DEFAULT.
If a Default occurs under this Note or any Loan Documents, Bank may at any time
thereafter, take the following actions: Bank
Lien. Foreclose its security interest or lien against Borrower’s
accounts without notice. Acceleration Upon
Default. Accelerate the maturity of this Note and, at Bank’s option,
any or all other Obligations, other than Obligations under any swap agreements
(as defined in 11 U.S.C. § 101, as in effect from time to time) between
Borrower and Bank, or its affiliates, which shall be due in accordance with and
governed by the provisions of said swap agreements; whereupon this Note and the
accelerated Obligations shall be immediately due and payable; provided,
however, if the Default is based upon a bankruptcy or insolvency proceeding
commenced by or against Borrower or any guarantor or endorser of this Note, all
Obligations (other than Obligations under any swap agreement as referenced
above) shall automatically and immediately be due and payable. Cumulative. Exercise any rights and
remedies as provided under the Note and other Loan Documents, or as provided by
law or equity. 

ANNUAL FINANCIAL STATEMENTS.
Borrower shall deliver to Bank, within 90 days after the close of each fiscal
year, unaudited management-prepared financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the
preceding year. If unaudited statements are required, such statements shall be
certified as to their correctness by a principal financial officer of Borrower.

TAX RETURNS.
Borrower shall deliver to Bank, within 30 days of filing, complete copies of
federal and state tax returns, as applicable, together with all schedules
thereto, each of which shall be signed and certified by Borrower to be true and
complete copies of such returns. In the event an extension is filed, Borrower
shall deliver a copy of the extension within 30 days of filing. 

FINANCIAL AND OTHER INFORMATION.
Borrower shall deliver to Bank such information as Bank may reasonably request
from time to time, including without limitation, 

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financial statements and information pertaining to Borrower’s financial
condition. Such information shall be true, complete, and accurate. 

CONFESSION OF JUDGMENT.
Each Borrower hereby constitutes and appoints _____________________ and _____________________
(each of whom is an officer of Bank), and Bank through an officer duly
authorized by Bank (any of the foregoing may act), as the true and lawful
attorneys-in-fact for them, in any or all of their names, place and stead, and
upon the occurrence of a Default in the payment of the Obligations due under
this Note, at maturity, or upon acceleration, to confess judgment against them
or any of them, in favor of Bank, before the Clerk of the Circuit Court for
City of Richmond, Virginia, in accordance with 1950 Code of Virginia, Section
8.01-431 et seq., and any successor statute, for all amounts owed with
respect to the Obligations under and pursuant to this Note including, without
limitation, all costs of collection and attorneys’ fees in an amount equal to
15% of the Obligations then outstanding (which shall be deemed reasonable
attorneys’ fees for the purposes of this paragraph), and court costs, hereby
ratifying and confirming the acts of said attorney-in-fact as if done by
themselves. Upon request of Bank, each Borrower will execute an amendment or
other agreement substituting attorneys-in-fact appointed to act for each
Borrower hereunder. 

WAIVERS AND AMENDMENTS.
No waivers, amendments or modifications of this Note and other Loan Documents
shall be valid unless in writing and signed by an officer of Bank. No waiver by
Bank of any Default shall operate as a waiver of any other Default or the same
Default on a future occasion. Neither the failure nor any delay on the part of
Bank in exercising any right, power, or remedy under this Note and other Loan
Documents shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. 

Except to the extent otherwise provided by the Loan Documents or
prohibited by law, each Borrower and each other person liable under this Note
waives presentment, protest, notice of dishonor, demand for payment, notice of intention
to accelerate maturity, notice of acceleration of maturity, notice of sale and
all other notices of any kind. Further, each agrees that Bank may (I) extend,
modify or renew this Note or make a novation of the loan evidenced by this
Note, and/or (ii) grant releases, compromises or indulgences with respect to
any collateral securing this Note, or with respect to any Borrower or other
person liable under this Note or any other Loan Documents, all without notice
to or consent of each Borrower and other such person, and without affecting the
liability of each Borrower and other such person; provided, Bank may not
extend, modify or renew this Note or make a novation of the loan evidenced by
this Note without the consent of the Borrower, or if there is more than one
Borrower, without the consent of at least one Borrower; and further provided,
if there is more than one Borrower, Bank may not enter into a modification of
this Note which increases the burdens of a Borrower without the consent of that
Borrower. 

MISCELLANEOUS PROVISIONS.
Assignment. This Note and the
other Loan Documents shall inure to the benefit of and be binding upon the
parties and their respective heirs, legal representatives, successors and
assigns. Bank’s interests in and rights under this Note and the other Loan
Documents are freely assignable, in whole or in part, by Bank. In addition,
nothing in this Note or any of the other Loan Documents shall prohibit Bank
from pledging or assigning this Note or any of the other Loan Documents or any
interest therein to any Federal Reserve 

5

Bank. Borrower shall not assign its rights and
    interest hereunder without the prior written consent of Bank, and any attempt
    by Borrower to assign without Bank’s prior written consent is null and
    void. Any assignment shall not release Borrower from the Obligations. Organization;
    Powers. Borrower represents that Borrower (i) is
(a) an adult individual and is sui juris, or (b) a corporation, general
partnership, limited partnership, limited liability company or other legal
entity, duly organized, validly existing and in good standing under the laws
of its state of organization, and is authorized to do business in each other
jurisdiction wherein its ownership of property or conduct of business legally
requires such organization (ii) has the power and authority to own its
properties and assets and to carry on its business as now being conducted and
as now contemplated; and (iii) has the power and authority to execute, deliver
and perform, and by all necessary action has authorized the execution, delivery
and performance of, all of its obligations under this Note and any other Loan
Document to which it is a party. Applicable
Law; Conflict Between Documents. This Note and, unless otherwise
provided in any other Loan Document, the other Loan Documents shall be governed
by and construed under the laws of the state named in Bank’s address on
the first page hereof without regard to that state’s conflict of laws principles.
If the terms of this Note should conflict with the terms of any loan agreement
or any commitment letter that survives closing, the terms of this Note shall
control. Borrower’s Accounts.
Except as prohibited by law, Borrower grants Bank a security interest in all
of Borrower’s accounts with Bank and any of its affiliates. Swap Agreements. All
swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to
time), if any, between Borrower and Bank or its affiliates are independent agreements
governed by the written provisions of said swap agreements, which will remain
in full force and effect, unaffected by any repayment, prepayment, acceleration,
reduction, increase or change in the terms of this Note, except as otherwise
expressly provided in said written swap agreements, and any payoff statement
from Bank relating to this Note shall not apply to said swap agreements unless
expressly referred to in such payoff statement. Jurisdiction.
Borrower irrevocably agrees to non-exclusive personal jurisdiction in the state
named in Bank’s address on the first page hereof. Severability. If
any provision of this Note or of the other Loan Documents shall be prohibited
or invalid under applicable law, such provision shall be ineffective but only
to the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Note or other such document. Notices. Any
notices to Borrower shall be sufficiently given, if in writing and mailed or
delivered to the Borrower’s
address shown above or such other address as provided hereunder, and to Bank,
if in writing and mailed or delivered to Bank of America, __________________________________________________________________________________________
or such other address as Bank may specify in writing from time to time. Notices
to Bank must include the mail code. In the event that Borrower changes Borrower’s
address at any time prior to the date the Obligations are paid in full,
Borrower agrees to promptly give written notice of said change of address by
registered or certified mail, return receipt requested, all charges prepaid. Plural;
Captions. All references in the
Loan Documents to Borrower, guarantor, person, document or other nouns of
reference mean both the singular and plural form, as the case may be, and the
term “person” shall mean any individual, person or entity. The captions
contained in the Loan Documents are inserted for convenience only and shall not
affect the meaning or interpretation of the Loan Documents. Advances. Bank
may, in its sole discretion, make other advances which shall be deemed to be
advances under this Note, even though the stated principal amount of this Note
may be exceeded as a result thereof. Posting of Payments. All
payments received during 

6

normal banking hours after 2:00 p.m. local time at the office of Bank
first shown above shall be deemed received at the opening of the next banking
day. Joint and Several Obligations.
If there is more than one Borrower, each is jointly and severally obligated. Fees and Taxes. Borrower shall promptly pay
all documentary, intangible recordation and/or similar taxes on this
transaction whether assessed at closing or arising from time to time. LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES.
EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN
ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY
BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH
THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN
OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO
EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1)
INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES.
EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR
EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION
WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY
ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. Patriot Act Notice. To help fight the funding of terrorism and
money laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person who opens an
account. For purposes of this section, account shall be understood to include
loan accounts. FINAL AGREEMENT.
This Note and the other Loan Documents represent the final agreement between
the parties and may not be contradicted by evidence of prior, contemporaneous
or subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties. 

WAIVER OF JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER BY EXECUTION HEREOF
AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE LOAN
DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS
NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEAUNG, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A
MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE. EACH OF THE PARTIES AGREES
THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED
TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT
OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH,
RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS NOTE.

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IN WITNESS WHEREOF,
Borrower, on the day and year first above written, has caused this Note to be
executed under seal. 

	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Apple REIT
 Ten, Inc.

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
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 [NAME],
 [TITLE]t

 	
  

 

8Exhibit
4.2

FORM OF

UNCONDITIONAL GUARANTY

August _, 2010

Apple REIT
Ten, Inc.

814 East Main Street

Richmond, Virginia 23219

(Individually and collectively “Borrower”)

Glade M.
Knight

814 East Main Street

Richmond, Virginia 23219

(Individually and collectively “Guarantor”)

[Bank of America]

[Address]

[Address]

(Hereinafter referred to as “Bank”)

IMPORTANT NOTICE

THIS INSTRUMENT CONTAINS A CONFESSION OF
JUDGMENT PROVISION WHICH CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE
AS GUARANTOR AND ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT
ANY FURTHER NOTICE.

To induce Bank to make, extend or renew loans, advances, credit, or
other financial accommodations to or for the benefit of Borrower, which are and
will be to the direct interest and advantage of the Guarantor, and in
consideration of loans, advances, credit, or other financial accommodations
made, extended or renewed to or for the benefit of Borrower, which are and will
be to the direct interest and advantage of the Guarantor, Guarantor hereby
absolutely, irrevocably and unconditionally guarantees to Bank and its
successors, assigns and affiliates the timely payment and performance of all
liabilities and obligations of Borrower to Bank and its affiliates, including,
but not limited to, all obligations under any notes, loan agreements, security
agreements, letters of credit, instruments, accounts receivable, contracts,
drafts, leases, chattel paper, indemnities, acceptances, repurchase agreements,
overdrafts, and the Loan Documents, as defined below, and all obligations of
Borrower to Bank or any of its affiliates under any swap agreement (as defined
in 11 U.S.C. § 101, as in effect from time to time), however and whenever
incurred or evidenced, whether primary, secondary, direct, indirect, absolute,
contingent, due or to become due, now existing or hereafter contracted or
acquired, and all modifications, extensions and renewals thereof,
(collectively, the “Guaranteed Obligations”).

Guarantor further covenants and agrees:

GUARANTOR’S
LIABILITY. This Guaranty is a continuing and
unconditional guaranty of payment and performance and not of collection. The
parties to this Guaranty are jointly and severally obligated hereunder. This
Guaranty does not impose any obligation on Bank to extend

or continue to extend credit or otherwise deal with Borrower at any
subsequent time. This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of the Guaranteed Obligations is
rescinded, avoided or for any other reason must be returned by Bank, and the
returned payment shall remain payable as part of the Guaranteed Obligations,
all as though such payment had not been made. Except to the extent the
provisions of this Guaranty give Bank additional rights, this Guaranty shall
not be deemed to supersede or replace any other guaranties given to Bank by
Guarantor; and the obligations guaranteed hereby shall be in addition to any
other obligations guaranteed by Guarantor pursuant to any other agreement of
guaranty given to Bank and other guaranties of the Guaranteed Obligations.

TERMINATION
OF GUARANTY. Guarantor may terminate this Guaranty
only by written notice, delivered personally to or received by certified or
registered United States Mail by an authorized officer of Bank at the address
for notices provided herein. Such termination shall be effective only with
respect to Guaranteed Obligations arising more than 15 days after the date such
written notice is received by said Bank officer. Such termination shall not be
effective with respect to Guaranteed Obligations (including any subsequent
extensions, modifications or compromises of the Guaranteed Obligations) then
existing, or Guaranteed Obligations arising subsequent to receipt by Bank of
said notice if such Guaranteed Obligations are a result of Bank’s obligation to
make advances pursuant to a commitment, or are based on Borrower’s obligations
to make payments pursuant to any swap agreement (as defined in 11 U.S.C. §101,
as in effect from time to time), entered into prior to expiration of the 15 day
notice period, or are a result of advances which are necessary for Bank to
protect its collateral or otherwise preserve its interests. Termination of this
Guaranty by any single Guarantor will not affect the existing and continuing
obligations of any other Guarantor hereunder.

CONSENT
TO MODIFICATIONS. Guarantor consents and agrees that Bank (and, with
respect to swap obligations, its affiliates) may from time to time, in its sole
discretion, without affecting, impairing, lessening or releasing the
obligations of Guarantor hereunder: (a) extend or modify the time,
manner, place or terms of payment or performance and/or otherwise change or
modify the credit terms of the Guaranteed Obligations; (b) increase, renew, or
enter into a novation of the Guaranteed Obligations; (c) waive or consent to
the departure from terms of the Guaranteed Obligations; (d) permit any change
in the business or other dealings and relations of Borrower or any other guarantor
with Bank; (e) proceed against, exchange, release, realize upon, or otherwise
deal with in any manner any collateral that is or may be held by Bank in
connection with the Guaranteed Obligations or any liabilities or obligations of
Guarantor; and (f) proceed against, settle, release, or compromise with
Borrower, any insurance carrier, or any other person or entity liable as to any
part of the Guaranteed Obligations, and/or subordinate the payment of any part
of the Guaranteed Obligations to the payment of any other obligations, which
may at any time be due or owing to Bank; all in such manner and upon such terms
as Bank may deem appropriate, and without notice to or further consent from
Guarantor. No invalidity, irregularity, discharge or unenforceability of, or
action or omission by Bank relating to any part of the Guaranteed Obligations
or any security therefor shall affect or impair this Guaranty.

WAIVERS
AND ACKNOWLEDGMENTS. Guarantor waives and releases the following rights,
demands, and defenses Guarantor may have with respect
to Bank (and, with respect to swap obligations, its affiliates) and collection
of the Guaranteed Obligations: (a) promptness and 

Page 2

diligence in collection of any of the Guaranteed Obligations from
Borrower or any other person liable thereon, and in foreclosure of any security
interest and sale of any property serving as collateral for the Guaranteed
Obligations; (b) any law or statute that requires that Bank (and, with respect
to swap obligations, its affiliates) make demand upon, assert claims against,
or collect from Borrower or other persons or entities, foreclose any security
interest, sell collateral, exhaust any remedies, or take any other action
against Borrower or other persons or entities prior to making demand upon,
collecting from or taking action against Guarantor with respect to the
Guaranteed Obligations, including any such rights Guarantor might otherwise
have had under Va. Code §§ 49-25 and 49-26, et seq., N.C.G.S. §§ 26-7, et
seq., Tenn. Code Ann. § 47-12-101, O.C.G.A. § 10-7-24, Mississippi Code
Ann. Section 87-5-1, and any successor statute and any other applicable law;
(c) any law or statute that requires that Borrower or any other person be
joined in, notified of or made part of any action against Guarantor; (d) that
Bank or its affiliates preserve, insure or perfect any security interest in
collateral or sell or dispose of collateral in a particular manner or at a
particular time, provided that Bank’s obligation to dispose of Collateral in a
commercially reasonable manner is not waived hereby; (e) notice of extensions,
modifications, renewals, or novations of the Guaranteed Obligations, of any new
transactions or other relationships between Bank, Borrower and/or any
guarantor, and of changes in the financial condition of, ownership of, or
business structure of Borrower or any other guarantor; (f) presentment,
protest, notice of dishonor, notice of default, demand for payment, notice of
intention to accelerate maturity, notice of acceleration of maturity, notice of
sale, and all other notices of any kind whatsoever to which Guarantor may be
entitled; (g) the right to assert against Bank or its affiliates any defense
(legal or equitable), set-off, counterclaim, or claim that Guarantor may have
at any time against Borrower or any other party liable to Bank or its
affiliates; (h) all defenses relating to invalidity, insufficiency,
unenforceability, enforcement, release or impairment of Bank or its affiliates’
lien on any collateral, of the Loan Documents, or of any other guaranties held
by Bank; (i) any right to which Guarantor is or may become entitled to be
subrogated to Bank or its affiliates’ rights against Borrower or to seek
contribution, reimbursement, indemnification, payment or the like, or participation
in any claim, right or remedy of Bank or its affiliates against Borrower or any
security which Bank or its affiliates now has or hereafter acquires, until such
time as the Guaranteed Obligations have been fully satisfied beyond the
expiration of any applicable preference period; (j) any claim or defense that
acceleration of maturity of the Guaranteed Obligations is stayed against
Guarantor because of the stay of assertion or of acceleration of claims against
any other person or entity for any reason including the bankruptcy or
insolvency of that person or entity; and (k) the right to marshalling of
Borrower’s assets or the benefit of any exemption claimed by Guarantor.
Guarantor acknowledges and represents that Guarantor has relied upon
Guarantor’s own due diligence in making an independent appraisal of Borrower,
Borrower’s business affairs and financial condition, and any collateral;
Guarantor will continue to be responsible for making an independent appraisal
of such matters; and Guarantor has not relied upon Bank or its affiliates for
information regarding Borrower or any collateral.

FINANCIAL
CONDITION. Guarantor warrants, represents and
covenants to Bank and its affiliates that on and after the date hereof: (a) the
fair saleable value of Guarantor’s assets exceeds its liabilities, Guarantor is
meeting its current liabilities as they mature, and Guarantor is and shall
remain solvent; (b) all financial statements of Guarantor furnished to Bank are
correct and accurately reflect the financial condition of Guarantor as of the
respective dates thereof; (c) since the date of such financial statements,
there has not occurred a material adverse change in

Page 3

the financial condition of Guarantor; (d) there are not now pending any
court or administrative proceedings or undischarged judgments against
Guarantor, no federal or state tax liens have been filed or threatened against
Guarantor, and Guarantor is not in default or claimed default under any
agreement; and (e) at such reasonable times as Bank requests, Guarantor will
furnish Bank and its affiliates with such other financial information as Bank
and its affiliates may reasonably request.

INTEREST
AND APPLICATION OF PAYMENTS. Regardless of any other
provision of this Guaranty or other Loan Documents, if for any reason the
effective interest on any of the Guaranteed Obligations should exceed the
maximum lawful interest, the effective interest shall be deemed reduced to and
shall be such maximum lawful interest, and any sums of interest which have been
collected in excess of such maximum lawful interest shall be applied as a
credit against the unpaid principal balance of the Guaranteed Obligations.
Monies received from any source by Bank or its affiliates for application
toward payment of the Guaranteed Obligations may be applied to such Guaranteed
Obligations in any manner or order deemed appropriate by Bank and its
affiliates.

DEFAULT.
If any of the following events occur, a default (“Default”) under this Guaranty
shall exist: (a) failure of timely payment or performance of the Guaranteed
Obligations or a default under any Loan Document; (b) a breach of any agreement
or representation contained or referred to in the Guaranty, or any of the Loan
Documents, or contained in any other contract or agreement of Guarantor with
Bank or its affiliates, whether now existing or hereafter arising; (c) the
death of, appointment of a guardian for, dissolution of, termination of
existence of, loss of good standing status by, appointment of a receiver for,
assignment for the benefit of creditors of, or the commencement of any
insolvency or bankruptcy proceeding by or against Guarantor or any general
partner of or the holder(s) of the majority ownership interests of Guarantor;
and/or (d) Bank determines in good faith, in its sole discretion, that the
prospects for payment or performance of the Guaranteed Obligations are impaired
or a material adverse change has occurred in the business or prospects of
Borrower or Guarantor, financial or otherwise.

If a Default occurs, the Guaranteed Obligations shall be due
immediately and payable without notice, other than Guaranteed Obligations under
any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to
time) with Bank or its affiliates, which shall be due in accordance with and
governed by the provisions of said swap agreements, and, Bank and its
affiliates may exercise any rights and remedies as provided in this Guaranty
and other Loan Documents, or as provided at law or equity. Guarantor shall pay
interest on the Guaranteed Obligations from such Default at the highest rate of
interest charged on any of the Guaranteed Obligations.

ATTORNEYS’
FEES AND OTHER COSTS OF COLLECTION. Guarantor shall
pay all of Bank’s and its affiliates’ reasonable expenses incurred to enforce
or collect any of the Guaranteed Obligations, including, without limitation,
reasonable arbitration, paralegals’, attorneys’ and experts’ fees and expenses,
whether incurred without the commencement of a suit, in any suit, arbitration,
or administrative proceeding, or in any appellate or bankruptcy proceeding.

SUBORDINATION
OF OTHER DEBTS. Guarantor agrees: (a) to subordinate
the obligations now or hereafter owed by Borrower to Guarantor (“Subordinated
Debt”) to any and all 

Page 4

obligations of Borrower to Bank or its affiliates now or hereafter
existing while this Guaranty is in effect, provided however that Guarantor may
receive regularly scheduled principal and interest payments on the Subordinated
Debt so long as (i) all sums due and payable by Borrower to Bank and its
affiliates have been paid in full on or prior to such date, and (ii) no event
or condition which constitutes or which with notice or the lapse or time would
constitute an event of default with respect to the Guaranteed Obligations shall
be continuing on or as of the payment date; (b) Guarantor will either place a
legend indicating such subordination on every note, ledger page or other
document evidencing any part of the Subordinated Debt or deliver such documents
to Bank; and (c) except as permitted by this paragraph, Guarantor will not
request or accept payment of or any security for any part of the Subordinated
Debt, and any proceeds of the Subordinated Debt paid to Guarantor, through
error or otherwise, shall immediately be forwarded to Bank by Guarantor,
properly endorsed to the order of Bank, to apply to the Guaranteed Obligations.

MISCELLANEOUS.
Assignment. This Guaranty and other Loan Documents shall inure to the benefit
of and be binding upon the parties and their respective heirs, legal
representatives, successors and assigns. Bank’s interests in and rights
under this Guaranty and other Loan Documents are freely assignable, in whole
or in part, by Bank. Any assignment shall not release Guarantor from the Guaranteed
Obligations. Organization; Powers. Guarantor (i) is (a) an adult individual
and is sui juris, or (b) a corporation, general partnership, limited
partnership, limited liability company or other legal entity (as indicated
below), duly organized, validly existing and in good standing under the laws
of its state of organization, and is authorized to do business in each other
jurisdiction wherein its ownership of property or conduct of business legally
requires such organization, (ii) has the power and authority to own its properties
and assets and to carry on its business as now being conducted and as now
contemplated; and (iii) has the power and authority to execute, deliver and
perform, and by all necessary action has authorized the execution, delivery and
performance of, all of its obligations under this Guaranty and any other Loan
Document to which it is a party. Applicable Law; Conflict Between Documents.
This Guaranty shall be governed by and construed under the laws of the state
named in Bank’s address shown above without regard to that state’s
conflict of laws principles. If the terms of this Guaranty should conflict with
the terms of any commitment letter that survives closing, the terms of this Guaranty
shall control. Guarantor’s Accounts. Except as prohibited by law,
Guarantor grants Bank and its affiliates a security interest in all of Guarantor’s
accounts with Bank and its affiliates. Jurisdiction. Guarantor irrevocably
agrees to non-exclusive personal jurisdiction in the state named in Bank’s
address shown above. Severability. If any provision of this Guaranty or
of the other Loan Documents shall be prohibited or invalid under applicable law,
such provision shall be ineffective but only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty or other Loan Documents. Notices.
Any notices to Guarantor shall be sufficiently given if in, writing and mailed
or delivered to Guarantor’s address shown above or such other address as
provided hereunder, and to Bank, if in writing and mailed or delivered to Bank
of America, ___________________________________________________________________________________
or such other address as Bank may specify in
writing from time to time. Notices to Bank must include the mail code. In the
event that Guarantor changes Guarantor’s address at any time prior to the
date the Guaranteed Obligations are paid in full, Guarantor agrees to promptly
give written notice of said change of address to Bank by registered or certified
mail, return receipt requested, 

Page 5

all charges prepaid. Plural; Captions. All references in the
Loan Documents to borrower, guarantor, person, document or other nouns of
reference mean both the singular and plural form, as the case may be, and the
term “person” shall mean any individual person or entity. The captions
contained in the Loan Documents are inserted for convenience only and shall not
affect the meaning or interpretation of the Loan Documents. Binding
Contract. Guarantor by execution of and Bank by acceptance of this
Guaranty agree that each party is bound to all terms and provisions of this
Guaranty. Amendments,
Waivers and Remedies. No waivers, amendments or modifications of
this Guaranty and other Loan Documents shall be valid unless in writing and
signed by an officer of Bank. No waiver by Bank or its affiliates of any
Default shall operate as a waiver of any other Default or the same Default on a
future occasion. Neither the failure nor any delay on the part of Bank or its
affiliates in exercising any right, power, or privilege granted pursuant to
this Guaranty and other Loan Documents shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. All remedies
available to Bank or its affiliates with respect to this Guaranty and other
Loan Documents and remedies available at law or in equity shall be cumulative
and may be pursued concurrently or successively. Partnerships. If Guarantor is
a partnership, the obligations, liabilities and agreements on the part of
Guarantor shall remain in full force and effect and fully applicable
notwithstanding any changes in the individuals comprising the partnership. The
term “Guarantor” includes any altered or successive partnerships, and
predecessor partnership(s) and the partners shall not be released from any
obligations or liabilities hereunder. Loan Documents. The term “Loan Documents”
refers to all documents executed in connection with or related to the
Guaranteed Obligations and may include, without limitation, commitment letters
that survive closing, loan agreements, other guaranty agreements, security
agreements, instruments, financing statements, mortgages, deeds of trust, deeds
to secure debt, letters of credit and any amendments or supplements (excluding
swap agreements as defined in 11 U.S.C. § 101, as in effect from time to time).
LIMITATION
ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE PARTIES
HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL,
MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR
AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY CONNECTED WITH THIS
AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG
THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL
ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT,
SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF
THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY
DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY
SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY
ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. FINAL AGREEMENT. This
Agreement and the other Loan Documents represent the final agreement between
the parties and may not be contradicted by evidence of prior, contemporaneous
or subsequent oral agreements of the parties. There are no unwritten oral
agreements between the parties.

FINANCIAL
AND OTHER INFORMATION. Guarantor shall deliver to Bank
such information as Bank may reasonably request from time to time, including
without limitation, 

Page 6

financial statements and information pertaining to Guarantor’s
financial condition. Such information shall be true, complete, and accurate.

NEGATIVE
COVENANTS. Guarantor agrees that from the date hereof
and until final payment in full of the Guaranteed Obligations, unless Bank
shall otherwise consent in writing, Guarantor will not: Default on Other Contracts or
Obligations. Default on any material contract with or obligation
when due to a third party or default in the performance of any obligation to a
third party incurred for money borrowed. Government Intervention. Permit the
assertion or making of any seizure, vesting or intervention by or under
authority of any governmental entity, as a result of which the management of
Guarantor or any guarantor is displaced of its authority in the conduct of its
respective business or such business is curtailed or materially impaired. Judgment
Entered. Permit the entry of any monetary judgment or the assessment
against, the filing of any tax lien against, or the issuance of any writ of
garnishment or attachment against any property of or debts due. Retire or
Repurchase Capital Stock. Retire or otherwise acquire any of its
capital stock.

PERSONAL
FINANCIAL STATEMENTS. Each Guarantor who is an
individual shall deliver to Bank annually, within thirteen months of the
previous statement date on file with Bank, Guarantor’s financial statement.
Said financial statement shall disclose all of Guarantor’s assets, liabilities,
net worth, income and contingent liabilities, all in reasonable detail and
acceptable to Bank and submitted on a form to be provided by Bank or on such
other form acceptable to Bank, signed by Guarantor and certified by Guarantor
to Bank to be true, correct and complete.

TAX
RETURNS. Guarantor shall deliver to Bank, within 30
days of filing, complete copies of federal and state tax returns, as
applicable, together with all schedules thereto, each of which shall be signed
and certified by Guarantor to be true and complete copies of such returns. In
the event an extension is filed, Guarantor shall deliver a copy of the extension
within 30 days of filing.

WAIVER
OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH OF GUARANTOR BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS GUARANTY, THE LOAN DOCUMENTS OR ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS GUARANTY, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO
BANK TO ACCEPT THIS GUARANTY. EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF
SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF
DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY LOAN DOCUMENT OR ANY OTHER
DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR
BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS GUARANTY.

Page 7

CONFESSION
OF JUDGMENT. Each Guarantor hereby constitutes and
appoints John G. Fox, Douglas A. Carson (each of whom is an officer of Bank),
and Bank through an officer duly authorized by Bank (any of the foregoing may
act), as the true and lawful attorneys-in-fact for them, in any or all of their
names, place and stead, and upon the occurrence of a Default in the payment of
the Guaranteed Obligations due under this Guaranty, at maturity, or upon
acceleration, to confess judgment against them or any of them, in favor of Bank,
before the Clerk of the Circuit Court for City of Richmond, Virginia, in
accordance with 1950 Code of Virginia, Section 8.01-431 et seq., and any
successor statute, for all amounts owed with respect to the Guaranteed
Obligations under and pursuant to this Guaranty including, without limitation,
all costs of collection and attorneys’ fees in an amount equal to 15% of the
Guaranteed Obligations then outstanding (which shall be deemed reasonable
attorneys’ fees for the purposes of this paragraph), and court costs, hereby
ratifying and confirming the acts of said attorney-in-fact as if done by
themselves. Upon request of Bank, each Guarantor will execute an amendment or
other agreement substituting attorneys-in-fact appointed to act for each
Guarantor hereunder.

IN
WITNESS WHEREOF, Guarantor, on the day and year first
written above, has caused this Unconditional Guaranty to be executed under
seal.

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (SEAL)

 
	
  

 	

 

 	
  

 
	
  

 	
           Glade M.
 Knight

 	
  

 

Commonwealth
of Virginia

City/County of_________

Individual
Acknowledgment

          I certify
that Glade M. Knight, a person(s) known to me, appeared before me this day, and
being informed of the contents thereof, acknowledged execution of the foregoing
instrument.

Witness my hand and official seal, this _____ day of ___________,
_________.

	
  

 	
  

 	
  

 	
  

 	
  

 
	
 Notary Seal

 	
  

 	
  

 	
 , Notary
 Public

 	
  

 
	
  

 	

 

 	
  

 	
  

 
	
  

 	
 (Printed Name of Notary)

 	
  

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 My
 Commission Expires:

 	
  

 	
  

 	
  

 
	
  

 	
  

 	

 

 	
  

 

Page 8

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