Document:

ex10_1.htm

    
      

    

    Exhibit
10.1

     

    
      $175,000,000

      

      

      REVOLVING
CREDIT LOAN AND SECURITY AGREEMENT

      

      

      

      by
and between

      

      

      

      HERSHA
HOSPITALTY LIMITED PARTNERSHIP,

      as
Borrower

      

      HERSHA
HOSPITALITY TRUST

      AND
THE OTHER GUARANTORS NOW OR HEREAFTER A PARTY HERETO,

      as
Guarantors

      

      

      EACH
OF THE FINANCIAL INSTITUTIONS

      NOW
OR HEREAFTER A PARTY HERETO,

      as
Lenders

      

      

      and

      

      

      

      TD
BANK, N.A.

      as
Lender and Agent

      

      

      

      Dated:  October
14, 2008

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      TABLE
OF CONTENTS

       

       

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 
      	 
      	
                                            Page

                                          
	 
      	 
      	 
      	 
      
	
                                            ARTICLE
      I DEFINITIONS

                                          	 
      	
                                            1

                                          
	 
      	 
      	 
      	 
      
	
                                            1.1

                                          	
                                            Definitions

                                          	 
      	
                                            1

                                          
	
                                            1.2

                                          	
                                            Other
      Definitional Provisions

                                          	 
      	
                                            17

                                          
	 
      	 
      	 
      	 
      
	
                                            ARTICLE
      II THE LINE: USE OF PROCEEDS

                                          	 
      	
                                            18

                                          
	 
      	 
      	 
      	 
      
	
                                            2.1

                                          	
                                            Line
      of Credit

                                          	 
      	
                                            18

                                          
	
                                            2.2

                                          	
                                            Letters
      of Credit

                                          	 
      	
                                            20

                                          
	
                                            2.3

                                          	
                                            Commitments

                                          	 
      	
                                            24

                                          
	
                                            2.4

                                          	
                                            Use
      of Proceeds

                                          	 
      	
                                            24

                                          
	
                                            2.5

                                          	
                                            Advances
      of the Line

                                          	 
      	
                                            25

                                          
	
                                            2.6

                                          	
                                            Conditions
      to Advances; Borrowing Base

                                          	 
      	
                                            26

                                          
	
                                            2.7

                                          	
                                            Commitment
      Increase

                                          	 
      	27
	 
      	 
      	 
      	 
      
	
                                            ARTICLE
      III INTEREST RATES

                                          	 
      	
                                            28

                                          
	 
      	 
      	 
      	 
      
	
                                            3.1

                                          	
                                            Interest
      on the Line

                                          	 
      	
                                            28

                                          
	
                                            3.2

                                          	
                                            Default
      Interest

                                          	 
      	
                                            28

                                          
	
                                            3.3

                                          	
                                            Calculation

                                          	 
      	
                                            29

                                          
	
                                            3.4

                                          	
                                            Limitation
      of Interest to Maximum Lawful Rate

                                          	 
      	
                                            29

                                          
	 
      	 
      	 
      	 
      
	
                                            ARTICLE
      IV PAYMENTS AND FEES; COLLATERAL

                                          	 
      	
                                            29

                                          
	 
      	 
      	 
      	 
      
	
                                            4.1

                                          	
                                            Interest
      Payments on the Line

                                          	 
      	
                                            29

                                          
	
                                            4.2

                                          	
                                            Principal
      Payments on the Line; Prepayments

                                          	 
      	
                                            29

                                          
	
                                            4.3

                                          	
                                            Facility
      Fee

                                          	 
      	
                                            30

                                          
	
                                            4.4

                                          	
                                            Arrangement
      Fee

                                          	 
      	
                                            31

                                          
	
                                            4.5

                                          	
                                            Unused
      Facility Fee

                                          	 
      	
                                            31

                                          
	
                                            4.6

                                          	
                                            Letter
      of Credit Fees

                                          	 
      	
                                            31

                                          
	
                                            4.7

                                          	
                                            Late
      Charge

                                          	 
      	
                                            31

                                          
	
                                            4.8

                                          	
                                            Payment
      Method

                                          	 
      	
                                            31

                                          
	
                                            4.9

                                          	
                                            Application
      of Payments

                                          	 
      	
                                            32

                                          
	
                                            4.10

                                          	
                                            Loan
      Account

                                          	 
      	
                                            32

                                          
	
                                            4.11

                                          	
                                            Indemnity;
      Loss of Margin

                                          	 
      	
                                            32

                                          
	
                                            4.12

                                          	
                                            Renewal
      of Line

                                          	 
      	
                                            34

                                          
	
                                            4.13

                                          	
                                            Collateral

                                          	 
      	
                                            34

                                          
	
                                            4.14

                                          	
                                            Release
      and Substitution of Collateral; Additional Collateral

                                          	 
      	
                                            34

                                          
	 
      	 
      	 
      	 
      
	
                                            ARTICLE
      V REPRESENTATIONS AND WARRANTIES

                                          	 
      	
                                            36

                                          
	 
      	 
      	 
      	 
      
	
                                            5.1

                                          	
                                            Valid
      Organization, Standing and Qualification

                                          	 
      	
                                            36

                                          
	
                                            5.2

                                          	
                                            Licenses

                                          	 
      	
                                            36

                                          
	
                                            5.3

                                          	
                                            Ownership
      Interests

                                          	 
      	
                                            36

                                          
	
                                            5.4

                                          	
                                            Subsidiaries

                                          	 
      	
                                            37

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  	
                          5.5

                        	
                          Financial
      Statements

                        	 
      	
                          37

                        
	
                          5.6

                        	
                          No
      Material Adverse Change

                        	 
      	
                          37

                        
	
                          5.7

                        	
                          Pending
      Litigation or Proceedings

                        	 
      	
                          37

                        
	
                          5.8

                        	
                          Due
      Authorization; No Legal Restrictions

                        	 
      	
                          37

                        
	
                          5.9

                        	
                          Enforceability

                        	 
      	
                          38

                        
	
                          5.10

                        	
                          No
      Default Under Other Obligations Orders or Governmental
      Obligations

                        	 
      	
                          38

                        
	
                          5.11

                        	
                          Governmental
      Consents

                        	 
      	
                          38

                        
	
                          5.12

                        	
                          Taxes

                        	 
      	
                          38

                        
	
                          5.13

                        	
                          Addresses

                        	 
      	
                          39

                        
	
                          5.14

                        	
                          Investment
      Company

                        	 
      	
                          39

                        
	
                          5.15

                        	
                          Current
      Compliance

                        	 
      	
                          39

                        
	
                          5.16

                        	
                          Deferred
      Compensation Plans

                        	 
      	
                          39

                        
	
                          5.17

                        	
                          Leases
      and Contracts

                        	 
      	
                          39

                        
	
                          5.18

                        	
                          Contingent
      Liabilities

                        	 
      	
                          39

                        
	
                          5.19

                        	
                          Encumbrances

                        	 
      	
                          39

                        
	
                          5.20

                        	
                          Environmental
      Matters

                        	 
      	
                          40

                        
	
                          5.21

                        	
                          Insurance

                        	 
      	
                          41

                        
	
                          5.22

                        	
                          Anti-Terrorism
      Laws

                        	 
      	
                          41

                        
	
                          5.23

                        	
                          Compliance
      with OFAC Rules and Regulations

                        	 
      	
                          41

                        
	
                          5.24

                        	
                          Securities
      Act

                        	 
      	
                          41

                        
	
                          5.25

                        	
                          Disclosure

                        	 
      	
                          41

                        
	
                          5.26

                        	
                          Margin
      Stock

                        	 
      	
                          42

                        
	
                          5.27

                        	
                          Bank
      Accounts

                        	 
      	
                          42

                        
	 
      	 
      	 
      	 
      
	
                          ARTICLE
      VI GENERAL AFFIRMATIVE COVENANTS

                        	 
      	
                          42

                        
	 
      	 
      	 
      	 
      
	
                          6.1

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

                        	 
      	
                          42

                        
	
                          6.2

                        	
                          Taxes;
      Claims for Labor and Materials

                        	 
      	
                          42

                        
	
                          6.3

                        	
                          Maintenance
      of Properties

                        	 
      	
                          43

                        
	
                          6.4

                        	
                          Insurance

                        	 
      	
                          43

                        
	
                          6.5

                        	
                          Inspections;
      Examinations

                        	 
      	
                          43

                        
	
                          6.6

                        	
                          Bank
      Accounts

                        	 
      	
                          43

                        
	
                          6.7

                        	
                          Maintenance
      of Management

                        	 
      	
                          44

                        
	
                          6.8

                        	
                          Notices

                        	 
      	
                          44

                        
	
                          6.9

                        	
                          Appraisals

                        	 
      	
                          44

                        
	
                          6.10

                        	
                          Further
      Assurances

                        	 
      	
                          44

                        
	 
      	 
      	 
      	 
      
	
                          ARTICLE
      VII FINANCIAL COVENANTS

                        	 
      	
                          44

                        
	 
      	 
      	 
      	 
      
	
                          7.1

                        	
                          Debt
      Service Coverage Ratio

                        	 
      	
                          44

                        
	
                          7.2

                        	
                          Total
      Funded Debt to Gross Asset Value

                        	 
      	
                          45

                        
	
                          7.3

                        	
                          EBITDA
      to Debt Service

                        	 
      	
                          45

                        
	
                          7.4

                        	
                          Tangible
      Net Worth

                        	 
      	
                          45

                        
	
                          7.5

                        	
                          Distributions

                        	 
      	45
	
                          7.6

                        	
                          Certain
      Indebtedness

                        	 
      	
                          45

                        
	
                          7.7

                        	
                          Changes
      to Financial Covenants

                        	 
      	
                          46

                        
	 
      	 
      	 
      	 
      
	
                          ARTICLE
      VIII NEGATIVE COVENANTS

                        	 
      	
                          46

                        

                

              

            

          

        

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    	
                            8.1

                          	
                            Limitation
      on Indebtedness

                          	 
      	
                            46

                          
	
                            8.2

                          	
                            Guaranties

                          	 
      	
                            47

                          
	
                            8.3

                          	
                            Disposition
      of Assets

                          	 
      	
                            47

                          
	
                            8.4

                          	
                            Liens

                          	 
      	
                            47

                          
	
                            8.5

                          	
                            Nature
      of Business

                          	 
      	
                            47

                          
	
                            8.6

                          	
                            Consolidation,
      Merger, Sale or Purchase of Assets

                          	 
      	
                            47

                          
	
                            8.7

                          	
                            Advances,
      Investments and Loans

                          	 
      	
                            48

                          
	
                            8.8

                          	
                            Default
      Under Other Indebtedness

                          	 
      	
                            48

                          
	
                            8.9

                          	
                            Deferred
      Compensation Plans

                          	 
      	
                            49

                          
	
                            8.10

                          	
                            Transactions
      with Affiliates

                          	 
      	
                            49

                          
	
                            8.11

                          	
                            Restriction
      on Transfer

                          	 
      	
                            49

                          
	
                            8.12

                          	
                            Corporate
      Changes

                          	 
      	
                            49

                          
	
                            8.13

                          	
                            Limitations
      on Restricted Actions

                          	 
      	
                            50

                          
	
                            8.14

                          	
                            Restricted
      Payments

                          	 
      	
                            50

                          
	
                            8.15

                          	
                            Negative
      Pledges

                          	 
      	
                            50

                          
	
                            8.16

                          	
                            Name
      or Address Change

                          	 
      	
                            51

                          
	
                            8.17

                          	
                            Material
      Adverse Contracts

                          	 
      	
                            51

                          
	 
      	 
      	 
      	 
      
	
                            ARTICLE
      IX ACCOUNTING RECORDS, REPORTS AND FINANCIAL STATEMENTS

                          	 
      	
                            51

                          
	 
      	 
      	 
      	 
      
	
                            9.1

                          	
                            Annual
      Statements

                          	 
      	
                            51

                          
	
                            9.2

                          	
                            Quarterly
      Statements

                          	 
      	
                            51

                          
	
                            9.3

                          	
                            Requested
      Information

                          	 
      	
                            52

                          
	
                            9.4

                          	
                            Compliance
      Certificates

                          	 
      	
                            52

                          
	
                            9.5

                          	
                            Other
      Operating Information

                          	 
      	
                            52

                          
	
                            9.6

                          	
                            Annual
      Budget and Financial Projections

                          	 
      	
                            53

                          
	 
      	 
      	 
      	 
      
	
                            ARTICLE
      X CONDITIONS OF CLOSING

                          	 
      	
                            53

                          
	 
      	 
      	 
      	 
      
	
                            10.1

                          	
                            Conditions
      Precedent

                          	 
      	
                            53

                          
	
                            10.2

                          	
                            Representations
      and Warranties

                          	 
      	
                            56

                          
	
                            10.3

                          	
                            No
      Default

                          	 
      	
                            56

                          
	
                            10.4

                          	
                            Environmental
      Matters

                          	 
      	
                            56

                          
	
                            10.5

                          	
                            Additional
      Documents

                          	 
      	
                            56

                          
	
                            10.6

                          	
                            No
      Material Adverse Change

                          	 
      	
                            57

                          
	 
      	 
      	 
      	 
      
	
                            ARTICLE
      XI CERTAIN CONDITIONS TO SUBSEQUENT ADVANCES

                          	 
      	
                            57

                          
	 
      	 
      	 
      	 
      
	
                            11.1

                          	
                            Representations
      and Warranties

                          	 
      	
                            57

                          
	
                            11.2

                          	
                            No
      Default

                          	 
      	
                            57

                          
	
                            11.3

                          	
                            Additional
      Conditions

                          	 
      	
                            57

                          
	
                            11.4

                          	
                            Other
      Requirements

                          	 
      	
                            57

                          
	 
      	 
      	 
      	 
      
	
                            ARTICLE
      XII DEFAULT AND REMEDIES

                          	 
      	
                            58

                          
	 
      	 
      	 
      	 
      
	
                            12.1

                          	
                            Events
      of Default

                          	 
      	
                            58

                          
	
                            12.2

                          	
                            Acceleration;
      Remedies

                          	 
      	
                            60

                          

                  

                

              

            

          

        

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  ARTICLE
      XIII THE AGENT

                                	 
      	
                                  61

                                
	 
      	 
      	 
      	 
      
	
                                  13.1

                                	
                                  Appointment
      of Agent

                                	 
      	
                                  61

                                
	
                                  13.2

                                	
                                  Nature
      of Duties of Agent

                                	 
      	
                                  61

                                
	
                                  13.3

                                	
                                  Lack
      of Reliance on Agent

                                	 
      	
                                  61

                                
	
                                  13.4

                                	
                                  Certain
      Rights of the Agent

                                	 
      	
                                  62

                                
	
                                  13.5

                                	
                                  Reliance
      by Agent

                                	 
      	
                                  62

                                
	
                                  13.6

                                	
                                  Indemnification
      of Agent

                                	 
      	
                                  62

                                
	
                                  13.7

                                	
                                  The
      Agent in its Individual Capacity

                                	 
      	
                                  63

                                
	
                                  13.8

                                	
                                  Holders
      of Notes

                                	 
      	
                                  63

                                
	
                                  13.9

                                	
                                  Successor
      Agent

                                	 
      	
                                  63

                                
	
                                  13.10

                                	
                                  Collateral
      Matters

                                	 
      	
                                  64

                                
	
                                  13.11

                                	
                                  Actions
      with Respect to Defaults

                                	 
      	
                                  65

                                
	
                                  13.12

                                	
                                  Delivery
      of Information

                                	 
      	
                                  65

                                
	
                                  13.13

                                	
                                  Disbursements
      to Lenders

                                	 
      	
                                  65

                                
	 
      	 
      	 
      	 
      
	
                                  ARTICLE
      XIV COMMUNICATIONS AND NOTICES

                                	 
      	
                                  66

                                
	 
      	 
      	 
      	 
      
	
                                  14.1

                                	
                                  Communications
      and Notices

                                	 
      	
                                  66

                                
	14.2	Electronics
      Communications	 
      	67
	 	 	 	 
	
                                  ARTICLE
      XV WAIVERS

                                	 
      	
                                  68

                                
	 
      	 
      	 
      	 
      
	
                                  15.1

                                	
                                  Waivers

                                	 
      	
                                  68

                                
	
                                  15.2

                                	
                                  Forbearance

                                	 
      	
                                  68

                                
	
                                  15.3

                                	
                                  Limitation
      on Liability

                                	 
      	
                                  68

                                
	 
      	 
      	 
      	 
      
	
                                  ARTICLE
      XVI SUBMISSION TO JURISDICTION

                                	 
      	
                                  69

                                
	 
      	 
      	 
      	 
	
                                  16.1

                                	
                                  Submission
      to Jurisdiction

                                	 
      	
                                  69

                                
	 
      	 
      	 
      	 
      
	
                                  ARTICLE
      XVII MISCELLANEOUS

                                	 
      	
                                  70

                                
	 
      	 
      	 
      	 
      
	
                                  17.1

                                	
                                  Brokers

                                	 
      	
                                  70

                                
	
                                  17.2

                                	
                                  No
      Joint Venture

                                	 
      	
                                  70

                                
	
                                  17.3

                                	
                                  Survival

                                	 
      	
                                  70

                                
	
                                  17.4

                                	
                                  No
      Assignment by Borrower

                                	 
      	
                                  70

                                
	
                                  17.5

                                	
                                  Assignment
      or Sale by Bank

                                	 
      	
                                  70

                                
	
                                  17.6

                                	
                                  Binding
      Effect

                                	 
      	
                                  71

                                
	
                                  17.7

                                	
                                  Severability

                                	 
      	
                                  71

                                
	
                                  17.8

                                	
                                  No
      Third Party Beneficiaries

                                	 
      	
                                  71

                                
	
                                  17.9

                                	
                                  Modifications

                                	 
      	
                                  71

                                
	
                                  17.10

                                	
                                  Holidays

                                	 
      	
                                  72

                                
	
                                  17.11

                                	
                                  Law
      Governing

                                	 
      	
                                  72

                                
	
                                  17.12

                                	
                                  Integration

                                	 
      	
                                  72

                                
	
                                  17.13

                                	
                                  Exhibits
      and Schedules

                                	 
      	
                                  72

                                
	
                                  17.14

                                	
                                  Headings

                                	 
      	
                                  72

                                
	
                                  17.15

                                	
                                  Counterparts

                                	 
      	
                                  72

                                
	
                                  17.16

                                	
                                  Waiver
      of Right to Trial by Jury

                                	 
      	
                                  73

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      REVOLVING CREDIT LOAN
AND SECURITY
AGREEMENT

      

      

      THIS REVOLVING CREDIT LOAN
AND SECURITY AGREEMENT
(this “Agreement”) is made
effective the 14th day of October, 2008, by and between HERSHA HOSPITALITY LIMITED
PARTNERSHIP, a Virginia limited partnership (“Borrower”), HERSHA HOSPITALITY TRUST, a
Maryland real estate investment trust (the “Trust”), as
Guarantor, each of the other Guarantors party hereto, each of the financial
institutions identified as Lenders on Schedule A hereto
(together with each of their successors and assigns, referred to individually as
a “Lender” and
collectively as “Lenders”) and TD BANK, N.A. (“Bank”), as Lender and
as administrative agent for the Lenders hereunder, acting in the manner and to
the extent described herein (in such capacity, “Agent”).

      

      

      BACKGROUND

      

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

      

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

      

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

      

      

      ARTICLE
I

      DEFINITIONS

      

      Section
1.1             Definitions.

      

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

      

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

      

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

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      “Capital Expenditure
Reserve” means four percent (4%) of consolidated total revenues, on a
cumulative basis, calculated for the previous twelve (12) month period, for
periodic replacement and refurbishment of furniture, fixtures and equipment at
the hotel properties.

      

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

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

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

      

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

      

      “Closing Date” means
the date of this Agreement.

      

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

      

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

      

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

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      “Committed Amount”
means the aggregate revolving credit line extended by Lenders to Borrower for
Loans and Letters of Credit pursuant to and in accordance with the terms of this
Agreement, in an amount up to $135,000,000, subject to increase from time to
time pursuant to the terms hereof up to a maximum amount of
$175,000,000.

      

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

      

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

      

      “Commitment Amount”
means the aggregate revolving credit line extended by Lenders to Borrower for
Loans and Letters of Credit pursuant to and in accordance with the terms of this
Agreement, in an amount up to $175,000,000.

      

      “Commitment Increase”
has the meaning given to such term in Section 2.7
herein.

      

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

      

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

      

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

      

      “Debt Service
Coverage
Ratio” means the ratio of Free Cash Flow to Debt Service, measured
quarterly on a rolling four-quarter basis.

      

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

      

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

      

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

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      “EBITDA” means
Borrower’s consolidated net income less income from
unconsolidated joint venture investments,  interest income, land lease
revenues, interest income included in interest income from development loans;
plus land lease
expenses, income allocated to minority interests in continuing operations,
interest expense, depreciation and amortization, Interest and capital lease
expense allocated to discontinued operations, depreciation from discontinued
operations, non-cash stock expense, straight-line amortization of ground lease
expense, income allocated to minority interest for discontinued operations and
gain on disposition of hotel properties.

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

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

      

      “Existing Loan
Agreement” means the Revolving Credit Loan and Security Agreement between
Borrower, Guarantors, Agent and Lenders, dated January 17, 2006, as amended by
the Amendment to Revolving Credit Loan and Security Agreement dated as of March
30, 2006 (the “First
Amendment”), the Second Amendment to Revolving Credit Loan and Security
Agreement dated as of July 28, 2006 (the “Second
Amendment”) and the Third Amendment to Revolving Credit Loan and
Security Agreement dated as of September 26, 2006 (the “Third
Amendment”).

      

      “Expiration
Date” means December 31, 2011.

      

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

      

      “FBR Interest Rate
Option” has the meaning given to such term in Section 3.1
herein.

      

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

      

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

      

      “Fiscal Quarter” means
each three (3) month period ending on March 31, June 30, September 30 and
December 31 of each Fiscal Year.

       

      “Fiscal Year” means
each twelve (12) month period commencing on January 1 of each year and ending on
the following December 31.

      

      “Free Cash Flow” means
EBITDA less preferred distributions and less Capital Expenditure
Reserves.  For purposes of this definition, “preferred distributions”
means quarterly distributions to the existing and future holders of preferred
Capital Stock.

      

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

      

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

      

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

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      “Grantors” means each
fee owner of any Mortgaged Property, as grantor under each Mortgage in respect
of such Mortgaged Property.

      

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

      

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

      

      “Guaranty” means the
Guaranty of Payment and Performance of Guarantors.

      

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

      

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

      

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

      

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

      

      “Increasing Lender”
has the meaning given to such term in Section 2.7
herein.

      

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

      

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

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

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

      

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

      

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

      

      “Interest Period”
means, with respect to any LIBOR Rate Loan, a period of one month, two months,
three months or six months, subject to availability, as selected by the Borrower
in the Line Request given with respect thereto; provided however, (i) if any
Interest Period would end on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day (except that where
the next succeeding Business Day falls in the next succeeding calendar month,
then on the next preceding Business Day), (ii) no Interest Period shall extend
beyond the Expiration Date, (iii) any Interest Period with respect to a LIBOR
Rate Loan that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the
calendar  month at the end of such Interest Period) shall end on the
last Business Day of the relevant calendar month at the end of such Interest
Period, (iv) if the Borrower shall fail to give notice as provided above, the
Borrower shall be deemed to have selected a Prime Rate Loan to replace the
affected LIBOR Rate Loan and (v) no more than six (6) LIBOR Rate Loans may
be in effect at any time.  For purposes of clause (v) hereof, LIBOR
Rate Loans of different Interest Periods or Tranches shall be considered as
separate LIBOR Rate Loans, even if they shall begin on the same date and have
the same duration, although borrowings, extensions and conversions in the same
Tranche may, in accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new LIBOR Rate Loan with a single
Interest Period.

      

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

      

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

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      “Letter of Credit
Sublimit” shall mean Twenty-Five Million Dollars
($25,000,000).

      

      “Letters of Credit”
shall mean all letters of credit (whether documentary or stand-by) issued by
Lenders for the account of Borrower pursuant to this Agreement, and all
amendments, renewals, extensions or replacements thereof.  The Letters
of Credit outstanding as of the date hereof are listed in Schedule 1.1(b)
hereto.

      

      “LIBOR” means, with
respect to any LIBOR Rate Loan for the Interest Period applicable thereto, the
rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”) as
published by Bloomberg (or such other commercially available source providing
quotations of BBA LIBOR as designated by Lender from time to time) at
approximately 11:00 A.M. (London time) 2 Banking Days prior to the first day of
such Interest Period for a term comparable to such Interest Period; provided
however, if more than BBA LIBOR Rate is specified, the applicable rate shall be
the arithmetic mean of all such rates.  If, for any reason, such rate
is not available, the term LIBOR (London Interbank Offered Rate) shall mean,
with respect to any LIBOR Rate Loan for the Interest Period applicable thereto,
the rate of interest per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by Lender to be the average rates per annum at which
deposits in dollars are offered for such Interest Period to major banks in the
London Interbank market in London, England at approximately 11:00 A.M. (London
time) 2 Banking Days prior to the first day of such Interest Period for a term
comparable to such Interest Period.

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      “LIBOR Interest Rate
Option” has the meaning given to such term in Section 3.1
herein.

      

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

      

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

      

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

      

      
        
          	
                  LIBOR
      Rate =

                	
                  LIBOR

                
	 
      	
                  1.00
      - Eurodollar Reserve
Percentage

                

        

      

      

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

      

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

      

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

      

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

      

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

      

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

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

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

      

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

      

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

      

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

      

      “Mortgaged Property”
or “Mortgaged
Properties” means,
individually or collectively, as applicable, any of  the hotel
properties identified on Schedule 1.1(a) hereto and such
additions, replacements or substitutions thereto and therefore as may approved
by Lenders pursuant to Section 13.10 hereof.

      

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

      

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

      

      “Net Unencumbered Asset
Value of Borrower Properties” means an amount equal to the aggregate
purchase price paid for, and costs (if any) capitalized subsequent to the
acquisition of, land, buildings, related improvements, furniture, fixtures and
equipment constituting the hotel properties wholly-owned by the Borrower and/or
its Affiliates (excluding hotel properties owned by Borrower and/or its
Affiliates in a joint venture with any third party unaffiliated with Borrower)
(collectively, the “Borrower Hotel
Properties”), less the aggregate purchase
price paid for, and costs (if any) capitalized subsequent to the acquisition of
land, buildings, related improvements, furniture, fixtures and equipment
constituting the Mortgaged Properties, less the outstanding
principal balance of any Indebtedness secured by a mortgage, deed of trust or
other security instrument encumbering Borrower Hotel Properties other than the
Mortgaged Properties, in each case before making any deductions on account of
accumulated depreciation, as shown on Borrower’s financial statements provided
pursuant to Article IX of this Agreement.  A representative
calculation of Net Unencumbered Asset Value of Borrower Properties in accordance
with the foregoing definition is attached hereto as Schedule
B.

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

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

      

      “New Lender” has the
meaning given to such term in Section 2.7
herein.

      

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

      

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

      

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

      

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

      

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

      

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

      

      “Permitted
Investments” means:

      

      (a)          
 cash and Cash Equivalents;

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

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

      

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

      

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

      

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

      

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

      

      “Permitted Liens”
means:

      

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

      

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

      

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

      

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

      

      (e)         
  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or
other like Liens arising in the ordinary course of business which are not
overdue for a period of more than sixty (60) days or which are being contested
in good faith by appropriate proceedings; provided that a reserve or other
appropriate provision has been made therefor and the aggregate amount of such
Liens is less than $175,000;

      

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

      

      (g)      
     pledges or deposits in connection with workers’
compensation, unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements in an aggregate amount not to exceed
$175,000;

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      
        
           

        

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

      

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

      

      “RevPAR” means revenue
per available room.

      

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

      

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

      

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

      

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

      
        
           

        

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

      

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

      

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

      

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

      

      “Swingline Loan” has
the meaning given to such term in Section 2.5(a)(i) hereof.

      

      “Swingline Sublimit”
has the meaning given to such term in Section 2.5(a)(i) hereof.

      

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

      

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

      
        
           

        

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

      

      “Type B Loans” has the
meaning given to such term in Section 2.6.2(a)
herein.

      

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

      

      “Variable Rate Debt”
means any Indebtedness bearing interest at a variable rate.

      

      Section
1.2            Other Definitional
Provisions.

      

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

      

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

      

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

      
        
           

        

        
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      ARTICLE
II

      THE LINE: USE OF
PROCEEDS

      

      

      Section
2.1            
Line of
Credit.

      

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

      

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

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

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

      

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

      

      (e)       
    All Loans shall be repaid in full on the Expiration
Date, as the same may be renewed pursuant to Section 4.12.

      
        
           

        

        
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      Section
2.2            
Letters of
Credit.

      

      2.2.1         Issuance of Letters of
Credit.  Subject to the terms and conditions hereof and of the
Letter of Credit Documents, if any, and any other terms and conditions which the
Issuing Bank may reasonably require, the Lenders will participate in the
issuance by the Issuing Bank from time to time of such Letters of Credit in
Dollars from the Closing Date until the Expiration Date as Borrower may request,
in a form acceptable to the Issuing Bank; provided, however, that (a) the
Letter of Credit Obligations outstanding shall not at any time exceed
Twenty-Five Million Dollars ($25,000,000) (the “Letter of Credit Committed
Amount”) and (b) the sum of the aggregate principal amount of outstanding
Loans plus
Letter of Credit Obligations outstanding shall not at any time exceed the lesser of the
Committed Amount and the Borrowing Base.  No Letter of Credit shall
(x) have an original expiry date more than one year from the date of issuance or
(y) as originally issued or as extended, have an expiry date extending beyond
the Expiration Date.  Each Letter of Credit shall comply with the
related Letter of Credit Documents.  The issuance and expiry date of
each Letter of Credit shall comply with the related Letter of Credit
Documents.  The issuance and expiry date of each Letter of Credit
shall be a Business Day.

      

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

      

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

      

      2.2.4         Reimbursement.

      

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

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

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

      

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

      

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

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

      2.2.5         Repayment with
Loans.

      

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

      

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

      

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

      

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

      

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

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

      2.2.8         Indemnification; Nature of Issuing
Bank’s Duties.

      

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

      

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

      

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

      

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

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

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

      

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

      

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

      

      Section
2.3            
Commitments.

      

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

      

      Section
2.4            
Use of
Proceeds.

      

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

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

      Section
2.5            
Advances of the
Line.

      

      (a)           
Borrower shall give Agent prior written notice of a proposed advance of the Line
(each a “Line
Request”) in the form attached hereto as Exhibit B, as
follows:

      

      (i) 
           For a Prime
Rate Loan in an amount up to and including $10,000,000 (the “Swingline Sublimit”), Borrower
shall submit a Line Request to Agent not later than 2:00 p.m. on any Business
Day for an advance requested by Borrower to be made on the same Business Day,
and such advance (a “Swingline Loan”)
shall be made to Borrower on the same Business Day, subject to satisfaction of
the conditions set forth in Section 2.5(d).  In the event the Line
Request for such Prime Rate Loan is received by Agent after 2:00 p.m. on any
Business Day, such advance shall be made to Borrower on the next succeeding
Business Day, subject to satisfaction of the conditions set forth in Section
2.5(d).  The aggregate principal amount of the Swingline Loans
outstanding shall not at any time exceed the Swingline
Sublimit.  

      

      (ii)   
        For a Prime Rate Loan in the
amount of $10,100,000 or more, Borrower shall submit a Line Request to Agent not
later than 2:00 p.m. on any Business Day and not less than twenty-four (24)
hours prior to the time by which Borrower has requested that such advance be
made, and such advance shall be made to Borrower not later than the time
Borrower has requested that such advance by made in the Line Request, provided
such time is at least twenty-four (24) hours after the time Borrower has
submitted such Line Request and subject to satisfaction of the conditions set
forth in Section 2.5(d).

      

      (iii)           For
a LIBOR Rate Loan, Borrower shall submit a Line Request to Agent not later than
3:00 p.m. on any Business Day and not less than forty-eight (48) hours (not
including hours on any day not a Business Day) prior to the time by which
Borrower has requested that such advance be made, and such advance shall be made
to Borrower not later than the time Borrower has requested that such advance by
made in the Line Request, provided such time is at least forty-eight (48) hours
after the time Borrower has submitted such Line Request and subject to
satisfaction of the conditions set forth in Section 2.5(d).

      

      (b)         
  Each Line Request shall (i) state the principal amount to be
advanced and the use of the proceeds of the Line being requested (including any
acquisition to which such use relates), (ii) include a description of the
economics of any acquisition, (iii) designate the Interest Rate Option
(including the designation of the applicable Interest Period for any LIBOR Rate
Loan as 30, 60, 90 or 180 days) and (iv) contain such other information as Agent
may request in the exercise of its reasonable discretion.

      

      (c)          
 All advances requested by Borrower must be in the minimum amount of
$100,000 and integral multiples of $100,000 in excess thereof.

      

      (d)        
   Provided that all of the conditions precedent to Agent making
such advance have occurred, and provided further that the making of such advance
will not cause Borrower to be in default of the covenants and conditions set
forth in this Agreement (including without limitation Article VII herein), Agent
shall make the proceeds of such advance available to Borrower by crediting the
amount thereof to Borrower’s deposit account with Agent.

      
        
           

        

        
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      Section
2.6            
Conditions
to Advances;
Borrowing Base.

      

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

      

      2.6.1         Type A Loans.

      

      (a)           
Lenders will advance such amounts as Borrower may request, up to Eighty-Seven
Million Seven Hundred Fifty Dollars ($87,750,000), for secured Loans
(“Type A
Loans”) (as such amount may be increased from time to time pursuant
to a Commitment Increase, up to a maximum amount of One Hundred Twenty-Five
Million Dollars ($125,000,000)); provided however, that the sum
of the aggregate amount of outstanding (i) Type A Loans, (ii) Type B
Loans and (iii) Letter of Credit obligations shall not at any time exceed
the Committed Amount.

      

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

      

      
        	
                 
      

              	
                (i)

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

              

      

      

      
        	
                 
      

              	
                (A)

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

              

      

      

      
        	
                 
      

              	
                (B)

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

              

      

      

      
        	
                 
      

              	
                (ii)

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

              

      

      

      
        	
                 
      

              	
                (iii)

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

              

      

      
        
           

        

        
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      2.6.2  
      Type B Loans.

      

      (a)           
Lenders will advance such amounts for Loans (“Type B Loans”) as
Borrower may request, up to an amount equal to the lesser of (i)
Forty-Seven Million Two Hundred Fifty Thousand Dollars ($47,250,000) (as such
amount may be increased from time to time pursuant to a Commitment Increase, up
to a maximum amount of Fifty Million Dollars ($50,000,000)) or (ii) fifty
percent (50%) of the Net Unencumbered Asset Value of Borrower Properties; provided, however, that the sum
of the aggregate amount of outstanding (A) Type A Loans, (B) Type B Loans and
(C) Letter of Credit obligations shall not at any time exceed the Committed
Amount.

      

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

      

      (c)           
Type B Loans shall be secured by a second priority lien and security interest in
the Mortgaged Properties in favor of the Agent, for the benefit of the Secured
Parties, which shall be subordinate and subject only to the first priority lien
and security interest in the Mortgaged Properties granted to Agent hereunder for
the benefit of the Secured Parties.

      

      2.6.3         All
Loans shall be Type A Loans or Type B Loans.

      

      Section
2.7            
Commitment
Increase.

      

      (a)           
Borrower may, at any time and from time to time, by notice to Agent, request an
increase (a “Commitment Increase”)
in the Committed Amount from One Hundred Thirty Five Million Dollars
($135,000,000) up to a maximum amount of One Hundred Seventy-Five Million
Dollars ($175,000,000).  The Committed Amount may be so increased
either by (i) admitting additional Lenders hereunder (each, a “New Lender”) or (ii)
increasing the Commitment and Commitment Percentage of any existing Lender
(each, an “Increasing
Lender”), provided that (A)
each Commitment Increase shall be in an amount not less than Five Million
Dollars ($5,000,000), (B) the aggregate Commitment Increase does not exceed
Forty Million Dollars ($40,000,000), (C) any Commitment Increase is subject to
satisfaction of the conditions set forth in subparagraph (b) hereof and (D) no
Lender shall be under any obligation to increase its Committed Amount
or  Commitment Percentage, and each Lender may decline to do so in its
sole and absolute discretion.

      

      (b)           
As conditions to a Commitment Increase, (i) each New Lender shall have delivered
a Joinder Agreement in the form of Exhibit D attached
hereto and the Agent shall have executed, acknowledged and agreed to same; (ii)
if requested by a New Lender, Borrower shall have executed and delivered to
Agent the applicable Line Note payable to the order of such New Lender; and
(iii) the Credit Parties and each New Lender shall have otherwise executed and
delivered such other instruments and documents as the Agent shall have
reasonably requested in connection with such Commitment Increase, including
opinions of counsel to the Credit Parties.  The form and substance of
the documents required under this subparagraph shall be fully acceptable to the
Agent in its discretion.  The Agent shall promptly provide written
notice to all Lenders of any Commitment Increase.

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

      (c)         
  After the admission of any New Lender or increase in the Commitment
of any Increasing Lender, Agent shall promptly provide to each Lender a new
Schedule A to the Loan Agreement (and each Lender acknowledges that its
Commitment Percentage under such Schedule will change in accordance with its pro
rata share of the increased Commitment Amount).  In the event that
there are any Loans outstanding after giving effect to a Commitment Increase,
upon notice from Agent to each Lender, the amount of such Loans owing to each
Lender shall be appropriately adjusted to reflect the new Commitment Percentage
of each Lender.

      

      (d)      
     Nothing contained herein shall constitute, or
otherwise be deemed to be, a commitment or agreement on the part of any Lender
to increase its Commitment or Commitment Percentage hereunder or a commitment or
agreement on the part of Borrower or Agent to give or grant to any Lender the
right to increase its Commitment or Commitment Percentage
hereunder.

      

      

      ARTICLE
III

      INTEREST
RATES

      

      Section
3.1            
Interest
on the Line.

      

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

      

      3.1.1         Prime Rate
Loans.  During such periods as a Loan is a Prime Rate Loan,
each such Prime Rate Loan shall bear interest at a per annum rate equal to the
Prime Rate (the “FBR Interest Rate
Option”); and

      

      3.1.2         LIBOR Rate
Loans.  During such periods as a Loan is a LIBOR Rate Loan,
each such LIBOR Rate Loan shall bear interest at a per annum rate equal to the
sum of the LIBOR Rate plus two and one-half
percent (2.50%) (the “LIBOR Interest Rate
Option”).

      

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

      

      Section
3.2            
Default
Interest.

      

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

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

      Section
3.3            
Calculation.

      

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

      

      Section
3.4            
Limitation
of Interest to Maximum Lawful Rate.

      

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

      

      

      ARTICLE
IV

      PAYMENTS AND FEES;
COLLATERAL

      

      

      Section
4.1            
Interest
Payments on the Line.

      

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

      

      Section
4.2            
Principal
Payments on the Line;
Prepayments.

      

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

      

      (b)           
Borrower may prepay any Loan in full or in part at any time upon not less than
two (2) Business Days prior via written notice to the Agent, without premium or
penalty, in a minimum principal amount of not less than One Hundred Thousand
Dollars ($100,000) or integral multiples thereof;
provided, however, that upon the prepayment of the principal amount of any LIBOR
Rate Loan, Borrower shall be subject to a breakage fee as set forth in
subparagraph (c) below.  In addition, upon the prepayment of any Loan
subject to a Hedging Agreement, Borrower may be obligated to pay an unwind fee
related to such Hedging Agreement and such unwind fee shall be governed by the
Hedging Agreement.  Any prepayment shall include accrued and unpaid
interest to the date of the prepayment on the principal amount prepaid and all
other sums due and payable hereunder including, without limitation, payment of
expenses including those costs associated with the termination of derivative
transactions. Nothing herein shall be
deemed to alter or affect any obligations that Borrower may have to a Lender or
Hedging Agreement Provider under any Hedging Agreement.  All costs,
expenses, and indemnity obligations that may be incurred by a Lender as a result
of any default under, or termination of, a Hedging Agreement shall be: (i)
subject to immediate reimbursement by Borrower; and (ii) secured by the
Collateral Documents.

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      Section
4.3            
Facility
Fee.

      

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

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

      Section
4.4            
Arrangement
Fee.

      

      Borrower
shall pay Agent an arrangement fee in the amount set forth in the Fee Letter, to
be paid to Agent upon execution of this Agreement.

      

      Section
4.5            
Unused Facility
Fee.

      

      Borrower
shall pay to Agent for the account of the Lenders on the last day of each
calendar quarter, as partial compensation for extending the Committed Amount to
Borrower, an unused facility fee which shall be determined by multiplying (a)
the positive difference, if any, between (i) the Committed Amount in effect at
such time and (ii) the average daily Loans of Borrower and the Letter of Credit
Obligations outstanding during such quarter by (b) one-quarter of one percent
(0.25%) for the number of days in such quarter.

      

      Section
4.6            
Letter of Credit
Fees.

      

      (a)           
In consideration of the issuance of Letters of Credit hereunder, Borrower
promises to pay to the Agent for the account of each Lender a fee (the “Letter of Credit
Fee”) on such Lender’s Commitment Percentage of the average daily maximum
amount available to be drawn under each such Letter of Credit, which fee shall
be equal to 1.50% of such available amount, computed at a per annum rate
for each day from the date of issuance to the date of expiration.  The
Letter of Credit Fee will be payable quarterly in arrears on the last day of
each calendar quarter.

      

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

      

      Section 4.7            
Late
Charge.

      

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

      

      Section 4.8            
Payment
Method.

      

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

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

      Section 4.9            
Application
of Payments.

      

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

      

      Section 4.10          Loan
Account.

      

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

      

      Section
4.11          Indemnity; Loss of
Margin.

      

      (a)           
Borrower will indemnify Lenders against any loss or expense which Lenders
sustain or incur as a consequence of an Event of Default, including, without
limitation, any failure of Borrower to pay when due (at maturity, by
acceleration or otherwise) any principal, interest, fee or any other amount due
under this Agreement or the other Loan Documents.  The Credit Parties,
jointly and severally, agree to indemnify and hold harmless Agent and Lenders,
their Affiliates and each of their respective directors, officers, employees and
agents against any and all claims, actions and suits, and from and against any
and all liabilities, losses, damages and expenses of every nature and character
arising out of or relating to this Agreement or any of the other Loan Documents
or the transactions contemplated hereby and thereby, in each case including,
without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding; provided however, that the
Credit Parties shall not be obligated under this paragraph to indemnify any
Person for liabilities arising from such Person’s own gross negligence or
willful misconduct as determined by a court of competent jurisdiction after the
exhaustion of all applicable appeals.  The provisions of this
paragraph shall survive the repayment of the Loans and the termination of the
obligations of the Lenders hereunder.  If a Lender sustains or incurs
any such loss or expense it will from time to time notify Agent in writing of
the amount determined in good faith by such Lender to be necessary to indemnify
such Lender for the loss or expense and Agent shall provide such notice to
Borrower.  Such amount will be due and payable by Borrower to such
Lender within ten (10) days after presentation by such Lender of a statement
setting forth a brief explanation of and such Lender’s calculation of such
amount, which statement shall be conclusively deemed correct absent manifest
error. Any amount payable to the Lenders under this Section will bear interest
at the default rate payable under the Line from the due date until paid, both
before and after judgment.

      
        
           

        

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

      

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

      

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

      

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

      
        
           

        

        
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      Section
4.12          Renewal
of Line.

      

      Provided
no Event of Default has occurred and is then continuing, Borrower, at least
ninety (90) days prior to the Expiration Date, may request in writing to Agent
that Lenders renew the Line for an additional period of one (1) year from the
Expiration Date then in effect.  In the event Borrower requests a
renewal of the Line in accordance with the preceding sentence, Agent will notify
Borrower not less than thirty (30) days prior to the Expiration Date that (a)
Lenders have renewed the Line and that the Expiration Date shall be twelve (12)
months after the Expiration Date then in effect, or (b) Lenders will not renew
the Line.  No Lender shall be under any obligation to renew the Line,
and each Lender may decline to do so in its sole and absolute
discretion.  A failure by Agent to send any such notice shall be
deemed to be a determination by Lenders not to renew the Line.  In the
event Lenders determine that they will renew the Line, Borrower shall, at least
five (5) days prior to the then current Expiration Date, pay to Lenders a
renewal fee in the amount of one-quarter of one percent (0.25%) of the Committed
Amount, to be paid to Agent for the account of each Lender.  If
Borrower shall fail to pay such renewal fee to Agent as and when required,
Lenders’ renewal of the Line shall be deemed to be canceled and shall be null
and void and of no further force or effect and the Expiration Date then in
effect shall continue as if Agent had not provided any notice of
renewal.

      

      Section
4.13          Collateral.

      

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

      

      Section
4.14          Release and Substitution of
Collateral;
Additional Collateral.

      

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

      

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

      
        
           

        

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      (ii)         
  An Appraisal of such Collateral;

      

      (iii)           a
Mortgage and Assignment of Leases in respect of such Collateral, granting to
Agent a first and second lien on such Collateral;

      

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

      

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

      

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

      
        
           

        

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

      

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

      

      ARTICLE
V

      REPRESENTATIONS
AND WARRANTIES

      

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

      

      Section
5.1            
Valid
Organization, Standing and Qualification.

      

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

      

      Section
5.2            
Licenses.

      

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

      

      Section
5.3            
Ownership
Interests.

      

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

      
        
           

        

        
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      Section
5.4            
Subsidiaries.

      

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

      

      Section
5.5            
Financial
Statements.

      

      Borrower
has furnished to Agent the audited consolidated financial statements of
Borrower, certified without qualification by independent public
accountants, for the fiscal years ended December 31, 2005, 2006 and 2007
and all management and comment letters from such accountants in connection
therewith, and its internally prepared interim financial statements as of June
30, 2008. Such financial statements of Borrower (together with the related notes
and comments), are correct and complete, fairly present the financial condition
and the assets and liabilities of Borrower at such date, and have been prepared
in accordance with GAAP. With respect to the interim statements, such statements
are subject to year-end adjustment and any accompanying footnotes.

      

      Section
5.6            
No
Material Adverse Change.

      

      There has
been no Material Adverse Change since December 31, 2007.

      

      Section
5.7           
 Pending
Litigation or Proceedings.

      

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

      

      Section
5.8            
Due
Authorization; No Legal Restrictions.

      

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

      
        
           

        

        
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      Section
5.9            
Enforceability.

      

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

      

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

      

      Section
5.10          No
Default Under Other Obligations Orders or Governmental Obligations.

      

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

      

      Section
5.11          Governmental
Consents.

      

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

      

      Section
5.12          Taxes.

      

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

      
        
           

        

        
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      Section
5.13          Addresses.

      

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

      

      
        Section
5.14          Investment
Company.

      

      

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

      

      Section 5.15          Current
Compliance.

      

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

      

      Section 5.16          Deferred
Compensation Plans.

      

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

      

      Section 5.17          Leases
and Contracts.

      

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

      

      Section 5.18          Contingent
Liabilities.

      

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

      

      Section 5.19          Encumbrances.

      

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

      
        
           

        

        
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      Section
5.20          Environmental
Matters.

      

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

      

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

      

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

      

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

      

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

      

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

      
        
           

        

        
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      Section
5.21          Insurance.

      

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

      

      Section
5.22          Anti-Terrorism
Laws.

      

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

      

      Section
5.23          Compliance with OFAC Rules
and Regulations.

      

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

      

      Section 5.24          Securities
Act.

      

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

      

      Section 5.25          Disclosure.

      

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

      
        
           

        

        
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      Section
5.26          Margin
Stock.

      

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

      

      Section 5.27          Bank
Accounts.

      

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

      

      

      ARTICLE
VI

      GENERAL
AFFIRMATIVE COVENANTS

      

      

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

      

      
        	
                Section
      6.1

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

              

      

      

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

      

      Section 6.2    
        Taxes;
Claims for Labor and Materials.

      

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

      
        
           

        

        
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      Section 6.3       
     Maintenance
of Properties.

      

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

      

      Section 6.4         
   Insurance.

      

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

      

      Section 6.5           
 Inspections;
Examinations.

      

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

      

      Section 6.6         
   Bank
Accounts.

      

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

      
        
           

        

        
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      Section 6.7       
     Maintenance
of Management.

      

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

      

      Section 6.8       
     Notices.

      

      Borrower
will promptly notify Agent of (a) any action or proceeding brought against
Borrower or any Guarantor wherein such action or proceeding would, if determined
adversely to Borrower or any Guarantor result in liability of Borrower or any
Guarantor in excess of $100,000 individually, or $500,000 in the aggregate, (b)
the occurrence of any Event of Default, (c) any fact, condition or event which,
with the giving of notice or the passage of time or both, could become an Event
of Default, (d) the failure of Borrower or any Guarantor to observe any of its
undertakings under the Loan Documents, or (e) any material adverse change in the
assets, business, operations or financial condition of Borrower.

      

      Section 6.9       
     Appraisals.

      

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

      

      Section
6.10          Further
Assurances.

      

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

      

      

      ARTICLE
VII

      FINANCIAL
COVENANTS

      

      

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

      

      Section 7.1            Debt
Service Coverage Ratio.

      

      Borrower
shall maintain a Debt Service Coverage Ratio, calculated for the previous twelve
(12) month period, of not less than 1.35:1.00, with such ratio to be tested on a
rolling four (4) quarter basis beginning with the Fiscal Quarter ending
September 30, 2008.

      
        
           

        

        
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      Section 7.2         
   Total
Funded Debt to Gross Asset Value.

      

      Borrower
shall maintain a ratio of Total Funded Debt to Gross Asset Value, calculated for
the previous twelve (12) month period, of not more than 0.67:1.00, calculated as
of the last day of each Fiscal Quarter.

      

      Section
7.3         
   EBITDA to Debt
Service.

      

      Borrower
shall maintain a ratio of EBITDA to Debt Service, calculated for the previous
twelve (12) month period, of not less than 1.40:1.00, with such ratio to be
tested on a rolling four (4) quarter basis beginning with the Fiscal Quarter
ending September 30, 2008.

      

      Section 7.4       
     Tangible
Net Worth.

      

      Borrower
shall maintain a minimum Tangible Net Worth, calculated as of June 30,
2008 on a cumulative basis, of not less than Three Hundred Million Dollars
($300,000,000). Borrower shall maintain a minimum Tangible Net Worth
calculated as of December 31, 2008 on a cumulative basis in an amount not less
than the sum of Three Hundred Million Dollars ($300,000,000) plus 100% of
Borrower’s net income for the 2008 Fiscal Year.  Borrower shall
maintain a minimum Tangible Net Worth calculated on a cumulative basis as of the
end of each subsequent Fiscal Year in an amount not less than the sum of the
required Tangible Net Worth for the prior Fiscal Year plus 100% of Borrower’s
net income for such Fiscal Year.  

      

      Section
7.5            
Distributions.

      

      Borrower’s
aggregate distributions on its Capital Stock or with respect to any interest or
participation in, or measured by, its profits, with respect to any Fiscal Year
shall not exceed ninety-five percent (95%) of Adjusted Funds from Operations for
such Fiscal Year.

      
 

      Section
7.6        
    Certain
Indebtedness.

      

      (a)      
     The aggregate of all accounts receivable, notes
receivable and loans receivable or due from officers, employees or Affiliates of
the Borrower shall not exceed One Hundred Twenty-Five Million Dollars
($125,000,000) as of June 30, 2008 and at all times thereafter.

      

      (b)       
    Borrower shall at all times maintain a ratio of Variable
Rate Debt to Total Funded Debt of not more than 0.30:1.00.  For
purposes of the calculation required pursuant to this clause 7.6(b), Variable
Rate Debt shall not include any Indebtedness subject to a Hedging Agreement
which provides that the Borrower shall pay to the Hedging Agreement Provider an
amount equal to the interest accruing at a fixed rate set forth in such Hedging
Agreement on a notional amount equal to the aggregate principal amount of such
Variable Rate Debt.

      
        
           

        

        
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      Section 7.7       
     Changes
to Financial Covenants.

      

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

      

      ARTICLE
VIII

      NEGATIVE
COVENANTS

      

      

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

      

      Section 8.1            
Limitation
on Indebtedness.

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      
        
           

        

        
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      Section 8.2            
Guaranties.

      

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

      

      Section 8.3            
Disposition
of Assets.

      

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

      

      Section 8.4           
 Liens.

      

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

      

      Section
8.5           
 Nature of
Business.

      

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

      

      Section
8.6           
 Consolidation,
Merger, Sale or Purchase of
Assets.

      

      The
Credit Parties will not:

      

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

      

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

      

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

      
        
           

        

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

      

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

      

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

      

      (vi)           payments
otherwise permitted under Section 8.7
hereof;

      

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

      

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

      

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

      

      Section
8.7         
   Advances, Investments and
Loans.

      

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

      

      Section 8.8        
    Default
Under Other Indebtedness.

      

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

      
        
           

        

        
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      Section 8.9        
    Deferred
Compensation Plans.

      

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

      

      Section 8.10          Transactions
with Affiliates.

      

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

      

      Section 8.11          Restriction
on Transfer.

      

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

      

      Section
8.12          Corporate
Changes.

      

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

      
        
           

        

        
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      Section
8.13          Limitation on Restricted
Actions.

      

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

      

      Section
8.14          Restricted
Payments.

      

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

      

      Section
8.15          Negative
Pledges.

      

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

      
        
           

        

        
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      Section 8.16          Name or
Address Change.

      

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

      

      Section 8.17          Material
Adverse Contracts.

      

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

      

      

      ARTICLE
IX

      ACCOUNTING RECORDS, REPORTS
AND FINANCIAL
STATEMENTS

      

      

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

      

      Section 9.1            
Annual
Statements.

      

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

      

      Section 9.2            
Quarterly
Statements.

      

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

      
        
           

        

        
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      Section 9.3            
Requested
Information.

      

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

      

      Section 9.4            
Compliance
Certificates.

      

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

      

      Section
9.5            
Other Operating Information.

      

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

      

      (b)           
As soon as available and in any event within forty-five (45) days after the
close of each Fiscal Quarter of the Credit Parties, beginning with the close of
the current Fiscal Quarter, EBITDA for each Borrower Hotel Property and for each
hotel property owned by Borrower and/or its Affiliates in a joint venture with
any third party unaffiliated with Borrower, calculated as of the last day of
such Fiscal Quarter for the quarter then ended.

      

      (c)           
As soon as available and in any event within forty-five (45) days after the
close of each Fiscal Quarter of the Credit Parties, beginning with the close of
the current Fiscal Quarter, a management prepared accounts receivable aging
report for each development loan.

      

      (d)           
As soon as available and in any event within forty-five (45) days after the
close of each Fiscal Quarter of the Credit Parties, beginning with the close of
the current Fiscal Quarter, a management prepared report of the Net Unencumbered
Asset Value of Borrower Properties (and such supplemental information as Agent
may request), as of the last day of such Fiscal Quarter for the quarter
then ended.

      
        
           

        

        
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      Section
9.6         
   Annual Budget and Financial
Projections.

      

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

      

      ARTICLE
X

      CONDITIONS
OF CLOSING

      

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

      

      Section
10.1          Conditions
Precedent.

      

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

      

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

      

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

      

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

      

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

      

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

      
        
           

        

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

      

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

      

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

      

      (i)         
   a mortgagee title insurance commitment (“Title Commitment”)
dated within forty-five (45) days of the Closing Date, that provides for the
issuance of a policy that shall:  (A) be in an amount not less than
the amount of the Loan; (B) insure that each of the Mortgages creates a valid
first lien or second lien (as applicable) on the Mortgaged Property free and
clear of all defects and encumbrances (except those acceptable to the Agent);
(C) name the Agent as the insured party thereunder; (D) be in the form of ALTA
Loan Policy-2006 or other form approved by the Agent; (E) provide mechanic’s
lien protection; and (F) contain such endorsements and effective coverage as
Agent may reasonably require, including without limitation an ALTA Form 3 Zoning
Endorsement, an ALTA Form 6 Variable Rate Endorsement, an ALTA Form 9
Comprehensive Endorsement, a usury endorsement, an access endorsement, a “same
as survey” endorsement, a separate tax parcel endorsement, a doing business
endorsement, a first loss endorsement, a tie-in endorsement, a last dollar
endorsement, and a “future advances” endorsement, or the
equivalent;

      

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

      

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

      
        
           

        

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

      

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

      

      (vi)           a
management prepared accounts receivable aging report acceptable to Agent for
each development loan, including a description of internal policies and
procedures relating to development loans.

      

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

      

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

      

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

      

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

      

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

      
        
           

        

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

      

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

      

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

      

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

      

      Section
10.2          Representations
and Warranties.

      

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

      

      Section
10.3          No
Default.

      

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

      

      Section 10.4          Environmental
Matters.

      

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

      

      Section 10.5          Additional
Documents.

      

      Copies of
record searches (including UCC searches and judgments, suits, tax and other lien
searches) confirming that Agent, upon execution, delivery and, where
applicable, recordation of the Collateral Documents, will have a first priority
security interest in the Collateral (including the Mortgaged Property) and a
second priority interest in the Mortgaged Property, acceptable to Agent, shall
have been delivered to Agent.

      
        
           

        

        
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      Section 10.6          No
Material Adverse Change.

      

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

      

      

      ARTICLE
XI

      CERTAIN
CONDITIONS TO SUBSEQUENT ADVANCES

      

      

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

      

      Section
11.1          Representations
and Warranties.

      

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

      

      Section 11.2          No
Default.

      

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

      

      Section
11.3          Additional
Conditions.

      

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

      

      Section 11.4          Other
Requirements.

      

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

      
        
           

        

        
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      ARTICLE
XII

      DEFAULT
AND REMEDIES

      

      

      Section
12.1          Events of
Default.

      

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

      

      (a)           
Payment.

      

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

      

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

      

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

      

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

      

      (b)          
Misrepresentation.

      

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

      

      (c)           
Covenant.

      

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

      

      (d)           
Cross
Default.

      

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

      
        
           

        

        
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      (e)           
Bankruptcy.

      

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

      

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

      

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

      

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

      

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

      

      (f)            
Dissolution.

      

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

      
        
           

        

        
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      (g)           
Judgment.

      

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

      

      Section
12.2          Acceleration;
Remedies.

      

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

      

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

      

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

      
        
           

        

        
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      ARTICLE
XIII

      THE
AGENT

      

      

      Section
13.1          Appointment
of Agent.

      

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

      

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

      

      Section
13.2          Nature of
Duties of Agent.

      

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

      

      Section
13.3          Lack of Reliance on
Agent.

      

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

      
        
           

        

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

      

      Section
13.4          Certain
Rights of the Agent.

      

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

      

      Section
13.5          Reliance
by Agent.

      

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

      

      Section
13.6          Indemnification
of Agent. 

      

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

      
        
           

        

        
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      Section
13.7          The Agent
in its Individual Capacity.

      

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

      

      Section
13.8          Holders
of Notes.

      

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

      

      Section
13.9          Successor
Agent.

      

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

      

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

      
        
           

        

        
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      Section
13.10        Collateral
Matters.

      

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

      

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

      

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

      

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

      

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

      

      Upon
request by the Agent at any time, the Lenders will confirm in writing the
Agent’s authority to release particular types or items of Collateral pursuant to
this Section
13.10(b).

      

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

      
        
           

        

        
          64

          
            

          

        

        
           

        

      

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

      

      Section
13.11        Actions
with Respect to Defaults.

      

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

      

      Section
13.12        Delivery
of Information.

      

      The Agent
shall not be required to deliver to any Lender originals or copies of any
documents, instruments, notices, communications or other information received by
the Agent from Borrower, the Required Lenders, any Lender or any other Person
under or in connection with this Agreement or any other Loan Document except (a)
copies of all financial statements, compliance certificates, and credit or other
information with respect thereto, and information of the kind described in
Section 10.1, received by Agent, (b) as otherwise specifically provided in this
Agreement or any other Loan Document and (c) as specifically requested from time
to time in writing by any Lender with respect to a specific document instrument,
notice or other written communication received by and in the possession of the
Agent at the time of receipt of such request and then only in accordance with
such specific request.

      

      Section
13.13        Disbursements to
Lenders.

      

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

      
        
           

        

        
          65

          
            

          

        

        
           

        

      

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

      

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

      

      

      ARTICLE
XIV

      COMMUNICATIONS AND NOTICES

      

      

      Section
14.1          Communications
and Notices.

      

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

      
        
           

        

        
          66

          
            

          

        

        
           

        

      

      
        	
                 
      

              	
                To
      Credit
      Parties:         Hersha
      Hospitality Limited Partnership

              

      

      Hersha
Hospitality Trust

      44 Hersha
Drive

      Harrisburg,
PA 17102

      Attention:  Ashish
R. Parikh, CFO

      Facsimile
No.:  215-238-0157

      

      
        	
                 
      

              	
                With
      a copy
      to:           
      Franklin Firm, LLP

              

      

      Penn Mutual Towers

      510
Walnut Street, 9th
Floor

      Philadelphia,
PA 19106

      Attention:  Lokanath Mohapatra,
Esquire

      Facsimile
No.:  267-238-1874

      

      
        	
                 
      

              	
                To
      Agent:                    
      TD Bank, N.A.

              

      

      2005
Market Street, 2nd
Floor

      Philadelphia,
PA 19103

      Attention:  Thomas E. Lunny,
Vice President

      Facsimile
No.:  215-557-6209

      

      
        	
                 
      

              	
                With
      a copy
      to:           
      Obermayer Rebmann Maxwell & Hippel
LLP

              

      

      1617 John
F. Kennedy Boulevard, 19th
Floor

      Philadelphia,
PA 19103

      Attention:  John V. O’Hara,
Esquire

      Facsimile
No.:  215-665-3165

      

      

      Section
14.2          Electronic
Communications.

      

      (a)           
Notices and other communications to the Lenders and the Issuing Banks hereunder
may be delivered or furnished by electronic communication (including e-mail and
Internet or intranet websites) pursuant to procedures approved by the
Agent.

      

      (b)           
Unless the Agent otherwise prescribes, (i) notices and other communications sent
to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the "return receipt
requested" function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is not
sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

      
        
           

        

        
          67

          
            

          

        

        
           

        

      

      ARTICLE
XV

      WAIVERS

      

      Section
15.1          Waivers.

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

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

      

      Section
15.2          Forbearance.

      

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

      

      Section
15.3          Limitation
on Liability.

      

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

      

      (a)           
Safekeeping any Collateral;

      
        
           

        

        
          68

          
            

          

        

        
           

        

      

      (b)           
Any loss or damage to any Collateral;

      

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

      

      (d)           
Any act or default of another Person.

      

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

      

      

      ARTICLE
XVI

      SUBMISSION TO
JURISDICTION

      

      

      Section
16.1          Submission
to Jurisdiction.

      

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

      
        
           

        

        
          69

          
            

          

        

        
           

        

      

      

      ARTICLE
XVII

      MISCELLANEOUS

      

      

      Section
17.1          Brokers.

      

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

      

      Section
17.2          No Joint
Venture.

      

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

      

      Section
17.3          Survival.

      

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

      

      Section
17.4          No
Assignment by Borrower.

      

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

      

      Section
17.5          Assignment
or Sale by
Lenders.

      

      Each
Lender may, with the prior written consent of the Agent and, provided no Event
of Default has occurred and is continuing, the Borrower, sell, assign or
participate all or a portion of its interest in the Loan Documents in the
minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess
thereof, and in connection therewith may make available to any prospective
purchaser, assignee or participant any information relative to the Credit
Parties in its possession.  All sales and assignments shall be made
pursuant to an Assignment and Assumption Agreement substantially in the form of
Exhibit C
attached hereto and shall be subject to the approval of the Agent and to the
payment to the Agent of an administrative fee of $3,500.

      
        
           

        

        
          70

          
            

          

        

        
           

        

      

      Section
17.6          Binding
Effect.

      

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

      

      Section
17.7          Severability.

      

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

      

      Section
17.8          No Third
Party Beneficiaries.

      

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

      

      Section
17.9          Modifications.

      

      (a)         
  The Required Lenders may or, with the written consent of the
Required Lenders, the Agent may, from time to time, (i) enter into with the
Credit Parties written amendments, supplements or modifications hereto and to
the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights or
obligations of the Lenders or of the Credit Parties hereunder or thereunder or
(ii) waive or consent to the departure from, on such terms and conditions as the
Required Lenders may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and its
consequences.

      

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

      
        
           

        

        
          71

          
            

          

        

        
           

        

      

      Section
17.10        Holidays.

      

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

      

      Section
17.11        Law
Governing.

      

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

      

      Section
17.12        Integration.

      

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

      

      Section
17.13        Exhibits
and Schedules.

      

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

      

      Section
17.14        Headings.

      

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

      

      Section
17.15        Counterparts.

      

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

      
        
           

        

        
          72

          
            

          

        

        
           

        

      

      Section
17.16        Waiver of
Right to Trial by Jury.

      

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

      

      

      

      [Signature
page follows]

      
        
           

        

        
          73

          
            

          

        

        
           

        

      

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

      

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	 
      	
                                      BORROWER:

                                    
	 
      	 
      	 
      	 
      
	 
      	
                                      HERSHA
      HOSPITALITY LIMITED PARTNERSHIP, a

                                      Virginia
      limited partnership

                                    
	 
      	 
      	 
      	 
      
	 
      	
                                      By:

                                    	
                                      Hersha
      Hospitality Trust, a Maryland Real Estate

                                      Investment
      Trust, General Partner

                                    
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                      By:

                                    	 
      	 
      
	 
      	 
      	
                                      Ashish
      R. Parikh

                                    
	 
      	 
      	
                                      Chief
      Financial
Officer

                                    

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      

      GUARANTORS:

      

      
        
          
            
              
                
                  
                    
                      
                        	 
      	
                                HERSHA HOSPITALITY
      TRUST,

                              	 
      
	 
      	
                                A
      Maryland Real Estate Investment Trust

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	 
      	 
      
	 
      	
                                Name:

                              	
                                Ashish
      R. Parikh

                              	 
      
	 
      	
                                Title:

                              	
                                Chief
      Financial Officer

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                2844 ASSOCIATES, a
      Pennsylvania limited partnership

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                By:

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

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	
                                Hersha
      Hospitality Limited Partnership, A
      Virginia limited partnership, Its
      managing member

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	
                                Hersha
      Hospitality Trust, a Maryland Business trust, its sole general
      partner

                              	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                By:

                              	 
      	 
      
	 
      	
                                Name:

                              	
                                Ashish
      R. Parikh

                              	 
      
	 
      	
                                Title:

                              	
                                Chief
      Financial Officer

                              	 
      

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          74

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  	 
      	
                          HHLP VALLEY FORGE
      ASSOCIATES, a Pennsylvania limited partnership

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

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

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	
                          Hersha
      Hospitality Limited Partnership, A Virginia limited partnership, Its
      managing member

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	
                          Hersha
      Hospitality Trust, a Maryland Business trust, its sole general
      partner

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	 
      	 
      
	 
      	
                          Name:

                        	
                          Ashish
      R. Parikh

                        	 
      
	 
      	
                          Title:

                        	
                          Chief
      Financial Officer

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
                          44 LAUREL ASSOCIATES,
      LLC, a Maryland limited liability company

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	 
      	 
      
	 
      	
                          Name:

                        	
                          Ashish
      R. Parikh

                        	 
      
	 
      	
                          Title:

                        	
                          Manager

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
                          44 NEW ENGLAND MANAGEMENT
      COMPANY, a Virginia corporation

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	 
      	 
      
	 
      	
                          Name:

                        	
                          Ashish
      R. Parikh

                        	 
      
	 
      	
                          Title:

                        	
                          Vice
      President

                        	 
      

                

              

            

          

        

      

      
        
           

        

        
          75

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      	 
      	
                              3544 ASSOCIATES, a
      Pennsylvania limited partnership

                            	 
	 
      	 
      	 
      	 
	 
      	
                              By:

                            	
                              Hersha
      Hospitality Limited Liability Company – Danville, a Delaware limited
      liability company, its general partner

                            	 
	 
      	 
      	 
      	 
	 
      	
                              By:

                            	
                              Hersha
      Hospitality Limited Partnership, A Virginia limited partnership, Its
      managing member

                            	 
	 
      	 
      	 
      	 
	 
      	
                              By:

                            	
                              Hersha
      Hospitality Trust, a Maryland Business trust, its sole general
      partner

                            	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
                              By:

                            	 
      	 
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
	 
      	
                              Title:

                            	
                              Chief
      Financial Officer

                            	 
	 
      	 
      	 
      	 
	 
      	
                              AFFORDABLE HOSPITALITY
      ASSOCIATES, L.P., a Pennsylvania limited
partnership

                            	 
	 
      	 
      	 
      	 
	 
      	
                              By:

                            	
                              Race
      Street, LLC, a Pennsylvania limited liability company, its general
      partner

                            	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
                              By:

                            	 
      	 
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
	 
      	
                              Title:

                            	
                              Manager

                            	 

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          76

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	
                                  HHLP LANGHORNE TWO ASSOCIATES,
      LP, a Pennsylvania limited partnership

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	
                                  HHLP
      Langhorne Two, LLC, A Pennsylvania limited liability company, its general
      partner

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Manager

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  HHLP LANGHORNE TWO, LLC,
      a Pennsylvania limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Manager

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  HHLP NORWOOD ASSOCIATES,
      LLC, a Massachusetts limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	
                                  44
      Norwood Managing Member, LLC, A Massachusetts limited liability company,
      its Managing Member

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Manager

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  44 DARTMOUTH, LLC, a
      Delaware limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Manager

                                	 
      

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          77

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      	 
      	
                              44 NORWICH, LLC, a
      Delaware limited liability company

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	 
      	 
      
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
      
	 
      	
                              Title:

                            	
                              Manager

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              44 HERSHA NORWICH ASSOCIATES,
      LLC, a Connecticut limited liability company

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              44
      Norwich Manager, LLC, a Delaware limited liability company, its Managing
      Member

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	 
      	 
      
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
      
	 
      	
                              Title:

                            	
                              Manager

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              2144 ASSOCIATES – NEW
      COLUMBIA, a Pennsylvania limited partnership

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              Hersha
      Hospitality Limited Liability Company – New Columbia, a Delaware limited
      liability company, its general partner

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              Hersha
      Hospitality Limited Partnership, A Virginia limited partnership, Its
      managing member

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              Hersha
      Hospitality Trust, a Maryland Business trust, its sole general
      partner

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	 
      	 
      
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
      
	 
      	
                              Title:

                            	
                              Chief
      Financial Officer

                            	 
      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          78

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      	 
      	
                              2144 ASSOCIATES –
      HERSHEY, a Pennsylvania limited partnership

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              Hersha
      Hospitality Limited Liability Company – Hershey, a Delaware limited
      liability company, its general partner

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              Hersha
      Hospitality Limited Partnership, A Virginia limited partnership, Its
      managing member

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              Hersha
      Hospitality Trust, a Maryland Business trust, its sole general
      partner

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	 
      	 
      
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
      
	 
      	
                              Title:

                            	
                              Chief
      Financial Officer

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              HERSHA CAMP SPRINGS ASSOCIATES,
      LLC, a Maryland limited liability company

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              Hersha
      Camp Springs Managing Member, LLC, a Delaware limited liability company,
      its Managing Member

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	 
      	 
      
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
      
	 
      	
                              Title:

                            	
                              Manager

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              RISINGSAM HOSPITALITY,
      LLC, a New York limited liability company

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              Hersha
      Conduit Associates, LLC, a New York limited liability company, its
      Managing Member

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	 
      	 
      
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
      
	 
      	
                              Title:

                            	
                              Manager

                            	 
      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          79

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      	 
      	
                              HHLP CONDUIT LESSEE,
      LLC, a New York limited liability company

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	
                              44
      New England Management Company, a Virginia corporation, its sole
      member

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	 
      	 
      
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
      
	 
      	
                              Title:

                            	
                              Vice
      President

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              HERSHA CONDUIT ASSOCIATES,
      LLC, a New York limited liability company

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	 
      	 
      
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
      
	 
      	
                              Title:

                            	
                              Manager

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              PHILLY ONE TRS, LLC, a
      Pennsylvania limited liability company

                            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                              By:

                            	 
      	 
      
	 
      	
                              Name:

                            	
                              Ashish
      R. Parikh

                            	 
      
	 
      	
                              Title:

                            	
                              Manager

                            	 
      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          80

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	
                                  HERSHA CAMP SPRINGS LESSEE,
      LLC, a Maryland limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	
                                  44
      New England Management Company, a Virginia corporation, its sole
      member

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Vice
      President

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  HERSHA CAMP SPRINGS MANAGING
      MEMBER, LLC, a Delaware limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Manager

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  HERSHA WALTON ASSOCIATES,
      LLC, a Pennsylvania limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Manager

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  HERSHA HOSPITALITY LIMITED
      LIABILITY COMPANY – DANVILLE, a Delaware limited liability
      company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	
                                  Hersha
      Hospitality Limited Partnership, A Virginia limited partnership, Its sole
      member

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	
                                  Hersha
      Hospitality Trust, a Maryland Business trust, its sole general
      partner

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Chief
      Financial Officer

                                	 
      

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          81

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  	 
      	
                          HERSHA HOSPITALITY LIMITED
      LIABILITY COMPANY – HERSHEY, a Delaware limited liability
      company

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	
                          Hersha
      Hospitality Limited Partnership, A Virginia limited partnership, Its sole
      member

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	
                          Hersha
      Hospitality Trust, a Maryland Business trust, its sole general
      partner

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	 
      	 
      
	 
      	
                          Name:

                        	
                          Ashish
      R. Parikh

                        	 
      
	 
      	
                          Title:

                        	
                          Chief
      Financial Officer

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          HERSHA HOSPITALITY LIMITED
      LIABILITY COMPANY – NEW COLUMBIA, a Delaware limited liability
      company

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	
                          Hersha
      Hospitality Limited Partnership, A Virginia limited partnership, Its sole
      member

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	
                          Hersha
      Hospitality Trust, a Maryland Business trust, its sole general
      partner

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	 
      	 
      
	 
      	
                          Name:

                        	
                          Ashish
      R. Parikh

                        	 
      
	 
      	
                          Title:

                        	
                          Chief
      Financial Officer

                        	 
      

                

              

            

          

        

      

      
        
           

        

        
          82

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	
                                  HERSHA HOSPITALITY, LLC,
      a Virginia limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	
                                  Hersha
      Hospitality Limited Partnership, A Virginia limited partnership, Its sole
      member

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	
                                  Hersha
      Hospitality Trust, a Maryland Business trust, its sole general
      partner

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Chief
      Financial Officer

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  44 NORWICH MANAGER, LLC,
      a Delaware limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Manager

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  44 NORWOOD MANAGING MEMBER,
      LLC, a Massachusetts limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Manager

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  RACE STREET, LLC, a
      Pennsylvania limited liability company

                                	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                  By:

                                	 
      	 
      
	 
      	
                                  Name:

                                	
                                  Ashish
      R. Parikh

                                	 
      
	 
      	
                                  Title:

                                	
                                  Manager

                                	 
      

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          83

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    	 
      	
                            HERSHA HOSPITALITY CONDUIT
      MANAGEMENT, L.P., a Pennsylvania limited
partnership

                          	 
      
	 
      	 
      	 
      	 
      
	 
      	
                            By:  Hersha
      Hospitality Conduit Management Co., Inc., a Pennsylvania corporation, its
      sole general partner

                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                            By:

                          	 
      	 
      
	 
      	
                            Name:

                          	
                            Ashish
      R. Parikh

                          	 
      
	 
      	
                            Title:

                          	
                            Vice
      President

                          	 
      
	 
      	 
      	 
      	 
      
	 
      	
                            HERSHA HOSPITALITY CONDUIT
      MANAGEMENT CO., INC., a Pennsylvania corporation

                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                            By:

                          	 
      	 
      
	 
      	
                            Name:

                          	
                            Ashish
      R. Parikh

                          	 
      
	 
      	
                            Title:

                          	
                            Vice
      President

                          	 
      

                  

                

              

            

          

        

      

      
        
           

        

        
          84

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  	 
      	
                          HERSHA HOSPITALITY MANAGEMENT,
      LP, a Pennsylvania limited partnership

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:   Hersha
      Hospitality Management Co.,

                        	 
      
	 
      	
                          a
      Pennsylvania corporation, its sole general partner

                        	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                          By:

                        	 
      	 
      
	 
      	
                          Name:

                        	
                          Kanti
      D. Patel

                        	 
      
	 
      	
                          Title:

                        	
                          President

                        	 
      

                

              

            

          

        

      

      
        
           

        

        
          85

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  	 
      	
                          AGENT AND LENDER:

                        	 
	 
      	 
      	 
      	 
	 
      	
                          TD
      BANK, N.A.

                        	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	 
      	
                          By:

                        	 
      	 
      	 
	 
      	 
      	
                          Thomas E. Lunny

                        	 
	 
      	 
      	
                          Vice
      President

                        	 

                

              

            

          

        

      

      

      

      

      [Signatures
continued on following page]

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    	 
      	
                                                            LENDERS:

                                                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                            COMMERCE
      BANK/HARRISBURG, N.A

                                                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	By:	
                                                             

                                                          	 
      	 
      
	 
      	 
      	
                                                            Eric Warfel

                                                          	 
      
	 
      	 
      	
                                                            Vice
      President

                                                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                            MANUFACTURERS
      AND TRADERS TRUST COMPANY

                                                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	By:	
                                                             

                                                          	 
      	 
      
	 
      	 
      	
                                                            Peter J. Ostrowski

                                                          	 
      
	 
      	 
      	
                                                            Vice
      President

                                                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                            THE
      PROVIDENT BANK

                                                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	By:	
                                                             

                                                          	 
      	 
      
	 
      	 
      	
                                                            Ronald Romeo

                                                          	 
      
	 
      	 
      	
                                                            Vice
      President

                                                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                                                            RAYMOND
      JAMES BANK, FSB

                                                          	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	By:	
                                                             

                                                          	 
      	 
      
	 
      	 
      	
                                                            Steven Paley

                                                          	 
      
	 
      	 
      	
                                                            Vice
      PresidentUnassociated Document

    SETTLEMENT
      AGREEMENT AND GENERAL RELEASE

    

    The
      following is a Settlement Agreement and General Release (the "Agreement") by
      and
      among THE SMALL BUSINESS COMPANY, INC. (hereafter referred to as "SBCO") and,
      DAVID LARSON (hereafter referred to as “LARSON”, regarding any and all past and
      present known and unknown claims and disputes (and their future effects) that
      have arisen or could arise out of the events described in the recitals below.
      SBCO and LARSON may be collectively referred to herein as the
      "PARTIES".

    

    For
      the
      purposes of this Agreement, the PARTIES addresses of record are 674 Via de
      la
      Valle, Ste. 226, Solana Beach, CA 92075.

    

    Definitions

    

    “Effective
      date”
      shall
      mean “effective date” shall mean that all of the transactions contemplated
      herein, including but not limited to those related to the issuance of stock
      pursuant to the terms of this Agreement will have occurred on or before June
      30,
      2008.

    

    Recitals

    

    A.
      SBCO
      is a corporation duly formed, existing, and operating in good standing under
      the
      laws of the State of Delaware. 

    

    B.
      On or
      about January 1, 2008, LARSON and SBCO entered into a written note by which
      LARSON lent SBCO aggregate sums totaling forty thousand dollars ($40,000.00).
      Specifically, LARSON’S payments to SBCO occurred on:

    

    -
      January
      29, 2008 for $10,000

    -
      February 14, 2008 for $20,000

    -
      March
      31, 2008 for $10,000

    

    The
      note
      is attached to this settlement agreement and incorporated herein by reference.
      The terms of the note provided that SBCO would repay LARSON the principal and
      interest on demand. LARSON has made demand upon SBCO for repayment of the note
      in both principal and interest. SBCO offered to pay LARSON, in lieu of cash,
      restricted stock as satisfaction of both the principal and interest owed by
      SBCO. LARSON is amenable to this resolution, and the PARTIES agree that the
      acceptable price per share for this restricted stock issuance shall be two
      cents
      [$0.02] per share.

    

    C.
      The
      PARTIES, having negotiated in good faith, with a view to resolve the claims
      of
      LARSON without formal mediation, arbitration or litigation, agree to the
      following.

    

    Incorporation
      of Recitals

    

    1. The
      contents of the Recitals above are incorporated herein by reference as though
      fully set out. The PARTIES waive any rules of construction making the Recitals
      inapplicable in construing or enforcing this Agreement.

    

    Terms
      and Conditions

    

    2. Settlement
      Amount.
      After
      this Agreement is signed by all the PARTIES, SBCO agrees to take action by
      resolution of its board of directors to [1] formally accept the terms of this
      Agreement; and, [2] direct its transfer agent to issue two million [2,000,000]
      shares of restricted common stock in SBCO as full and final payment to LARSON
      for all sums of interest and principal due and payable to him under the
      note.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.
      Release
      of Claims.
      In
      further consideration of the mutual covenants hereto, and except as otherwise
      provided herein, the PARTIES agree on behalf of themselves their heirs,
      executors, administrators, successors, agents, employees, officers, and board
      members as the case may be, to irrevocably and unconditionally release and
      forever discharge each and the other, their agents, directors, officers,
      employees, representatives, insurance carriers, attorneys, divisions,
      subsidiaries, affiliates (and agents, directors, officers, employees,
      representatives, insurance carriers, and attorneys of such divisions,
      subsidiaries, and affiliates), and their predecessors, successors, heirs,
      executors, administrators, and assigns, and all persons acting by, through,
      under, or in concert with any of them (collectively "Releasees"), of and from
      any and all claims, actions, causes of action, suits, debts, charges,
      complaints, claims, liabilities, obligations, promises, agreements,
      controversies, damages, and expenses (including attorney fees and costs actually
      incurred), of any nature whatsoever, known or unknown, in law or equity, arising
      out of the facts contained in the Recitals [incorporated by reference herein
      as
      though fully set out], as well as any other claims based on constitutional,
      statutory, common law, or regulatory grounds.

    

    5.
      Limitation
      of Waiver,
      Future
      Suits and Proceedings. Except as provided for herein, the PARTIES promise not
      to
      institute any future suits or proceedings at law or in equity or any
      administrative proceedings against each and the other for or on account of
      any
      claim or cause of action arising out of the facts in the Recitals herein
      [incorporated by reference as though fully set out].

    

    6.
      Disclaimer
      of Liability and Future References.
      This
      General Release and Settlement Agreement does not constitute and shall not
      be
      construed as an admission of liability or wrongdoing by any party, its agents,
      employees, or successors, with respect to any claims asserted by
      LARSON.

    

    7.
      Full
      Knowledge and Volition; Civil Code §1542 Waiver.
      This is
      intended, as a full and complete release and discharge of any or all claims
      that
      LARSON may or might have or had against SBCO, and in accepting said sum and
      stated terms and conditions LARSON does so in full settlement, release and
      discharge of any and all such claims, and intends to and does hereby release
      and
      discharge SBCO of and from any and all liability of any nature whatsoever for
      all claims arising out of the Recitals herein, specifically including, but
      not
      limited to, all contract and consequential damages to LARSON on account of
      said
      events alleged in the Recitals, as well as for all consequences, effects and
      results thereto and resulting damages to LARSON, whether the same or any
      circumstances pertaining thereto are now known or unknown to LARSON or anyone
      else, expected or unexpected by LARSON or anyone else, or have already appeared
      or developed or may now be latent or may in the future appear or develop or
      become known to LARSON or anyone else, and all rights under Section 1542 of
      the
      Civil Code of the State of California are hereby expressly waived by LARSON,
      who
      understands, and has had the opportunity to meet and confer with counsel of
      his
      choice as to the effects of waiving Section 1542, that said Section provides
      as
      follows:

    

    "A
      general release does not extend to claims which the creditor does not know
      or
      suspect to exist in his favor at the time of executing the release, which if
      known by him must have materially affected his settlement with the
      debtor."

    

    8.
      Resolution
      of All Claims.
      LARSON
      acknowledges and understands that this Agreement specifically includes and
      resolves any and all claims that he may individually have against SBCO regarding
      the subject matter hereof. 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    9.
      Materiality
      of All Conditions and Obligations.
      Except
      as otherwise expressly provided in this agreement the PARTIES understand and
      acknowledge that all of the conditions and obligations in this Agreement are
      material and that the non-occurrence or breach of any such condition or
      obligation by a party is not allowed and shall result in the other party being
      entitled to assert any and all rights it may have in law or equity.

    

    10.
      Complete
      Agreement.
      This
      General Release and Settlement Agreement contains the entire Agreement between
      LARSON and SBCO and there is no agreement on the part of either PARTY to do
      any
      act or thing other than as expressly stated in this Agreement. There will also
      be no modifications or amendments to this Agreement unless they are in writing,
      signed by all of the PARTIES.

    

    11.
      Counterpart
      Originals.
      This
      Agreement may be signed in counterparts and facsimile signatures are agreed
      to
      be as effective as the original for purposes of this Agreement. It is also
      agreed by the PARTIES that counterpart signatures, once collected and exchanged
      unilaterally, shall all be collectively construed to be a complete document
      when
      combined with other counterpart signatures.

    

    12.
      Governing
      Law; Jurisdiction.
      This
      Agreement shall be construed and enforced under California law. The PARTIES
      agree that the Superior Court for the State of California, County of San Diego,
      shall have jurisdiction over any dispute arising over the terms, conditions,
      application or interpretation of this Agreement. Should any legal dispute
      between the PARTIES arise, and legal action is commenced, then the prevailing
      party to any such litigation shall recover, as an element of costs, their
      reasonable attorney fees.

    

    13.
      Corporate
      Authority.
      All
      necessary corporate action has been taken to enter into this Agreement and
      comply with its terms. The corporate and other business entities who execute
      this Agreement on behalf of the PARTIES have complete and sole authority to
      enter into this Agreement on behalf of their respective entities.

    

    14.
      Notices;
      Delivery.
      Any
      covenants herein requiring SBCO to deliver stock certificates to LARSON shall
      be
      made to 674 Via de la Valle, Ste. 226, Solana Beach, CA 92075.

    

    15.
      ACKNOWLEDGMENT.
      THE
      PARTIES ACKNOWLEDGE THAT THEY HAVE CAREFULLY READ THIS GENERAL RELEASE AND
      SETTLEMENT AGREEMENT AND UNDERSTAND ITS CONTENTS AND CONSEQUENCES; THAT EACH
      HAS
      BEEN GIVEN THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF CHOICE; THAT LARSON
      UNDERSTANDS THE EFFECT OF HIS WAIVER OF CALIFORNIA CIVIL CODE SECTION 1542;
      THAT
      THE ONLY PROMISES MADE TO LARSON TO SIGN THIS AGREEMENT ARE THOSE STATED IN
      THE
      AGREEMENT; THAT LARSON HAS HAD SUFFICIENT TIME TO REVIEW THIS AGREEMENT; AND,
      THAT LARSON IS SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, WITHOUT ANY
      COERCION, OR DURESS. LARSON ALSO ACKNOWLEDGES THAT HE HAS NOT RELIED ON ANY
      REPRESENTATIONS, PROMISES, OR AGREEMENT OF ANY KIND MADE TO HIM IN CONNECTION
      WITH HIS DECISION TO ACCEPT THE SETTLEMENT EXCEPT THOSE SET FORTH IN THIS
      DOCUMENT.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    "LARSON”

    “DAVID
      LARSON"

     

    
      	
              By:
                

            	
                      
                

            	
              Dated:
                JUNE 1, 2008

            
	 	
              DAVID
                LARSON

            	 

    

     

    "SBCO”

    “THE
      SMALL BUSINESS COMPANY, INC."

     

    
      	
              By:
                

            	
                        
                

            	
              Dated:
                June 1, 2008

            
	 	
              THE
                SMALL BUSINESS COMPANY, INC.

            
	 	
              By:
                [Printed Name]: _______________________________

            
	 	
              Position:
                ________________________________________

            

    

    

    
      
         

      

      
        4

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